Bixby & Bixby
[2015] FCCA 816
•10 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BIXBY & BIXBY | [2015] FCCA 816 |
| Catchwords: PRACTICE AND PROCEDURE – Where a party’s solicitor addressed correspondence directly to the Judge – it is inappropriate for any communication to be forwarded directly to a Judge relating to the case under consideration. PRACTICE AND PROCEDURE – Affidavits – an affidavit should be filed at the Court Registry – an affidavit may be filed in Court by leave of the Court – it is inappropriate for an affidavit to be forwarded directly to the trial Judge. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 117 Federal Circuit Court Rules 2001, Sch. 1, Part 1 |
| Cases cited: Bixby & Bixby [2014] FCCA 1992 Browne & Green [2002] FamCA 791; (2002) 29 Fam LR 428; FLC 93-115 Colan Products Pty Ltd v Luxon Pty Ltd (No.2) [2002] FMCA 90 Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248 Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd (No.2) 2000] FCA 602 Edwards & Simpson (No.2) [2013] FCCA 315 In the Marriage of Fisher (1990) 13 Fam LR 806; 99 FLR 93-115 TRF & LRL [2005] FamCA 158; ((2005) 33 Fam LR 123 In the Marriage of Jensen (1982) 8 Fam LR 594; FLC 91-263 In the Marriage of Kelly (No.2) (1981) 7 Fam LR 762; FLC 91-108 In the Marriage of Kohan (1992) 16 Fam LR 245; (1993) FLC 92-340 Maitland Hospital v Fisher (No.2) (1992) 27 NSWLR 721 Messiter v Hutchinson (1987) 10 NSWLR 525 Minister for Community Welfare v Y (1988) 12 Fam LR 477; FLC 91-973 Prantage & Prantage [2013] FamCAFC 105; (20130 49 Fam LR 197; FLC 93-544 Rhazi & Rhazi (Costs) [2011] FamCA 428 Vijayakumar v Qantas Airways Limited (No.2) 2009] FMCA 966 | ||
| Applicant: | MR BIXBY | |
| Respondent: | MS BIXBY |
| File Number: | SYC 4748 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | In chambers |
| Date of Last Submission: | 10 November 2014 |
| Delivered at: | Sydney |
| Delivered on: | 10 April 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Fay Marie Nicholls & Associates |
| Solicitors for the Respondent: | M.G. O'Callaghan & Associates |
ORDERS
The Husband is to pay the Wife’s costs of the final hearing from and after 23 April 2014 fixed in the sum of $8,965.00.
The Husband is to pay the Wife’s costs of the Application in a Case filed on 30 September 2014 fixed in the sum of $2,262.00.
IT IS NOTED that publication of this judgment under the pseudonym Bixby & Bixby is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4748 of 2012
| MR BIXBY |
Applicant
And
| MS BIXBY |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for costs by the Respondent Wife in property proceedings finalised by a decision of this Court handed down on 3rd September 2014 (Bixby & Bixby[1]). In that decision, Orders were made under s.79 of the Family Law Act 1975 (Cth) that (essentially):
a)the parties should sell the former matrimonial home at Property G, New South Wales for sale;
b)that the parties were to divide the net proceeds between themselves as to 55% to the wife and the remainder to the husband;
c)the parties were to retain all other assets they currently held; and
d)the parties were to be responsible for their own respective debts and indemnify each other accordingly.
[1] [2014] FCCA 1992
The Wife has now filed an Application in a Case seeking that the Husband should pay her legal costs in the sum of $8,965.00. She also seeks an order for her costs of this Application.
The Husband opposes the Application for Costs and seeks an Order that the parties should pay their own costs.
Evidence and Submissions
The Wife relies on the following:
a)her affidavit sworn 23rd September 2014 and filed on 30th September; and
b)a written submission dated 25th November 2014.
The Husband relies on the following:
a)his affidavit dated 8th November 2014; and
b)an undated written submission by his solicitor.
It is a matter of concern that the Husband’s solicitor forwarded the written submission and the original of the Husband’s affidavit under cover of a letter of 10th November 2014 addressed directly to me. Under no circumstances should correspondence about a case be forwarded directly to the Judge deciding the case.
All correspondence about a case, whether written or electronic, should be forwarded to the Judge’s Associate, with a copy sent to the solicitor for the other party. There is a specific email address for the Associate of each Judge for this purpose.
Affidavits should be filed at the Court Registry in the usual way. An affidavit may be filed in court with the leave of the Court, but in all other circumstances the affidavit must be filed in the usual way.
Evidence and Submissions
In her affidavit, the wife deposes that on 23rd April 2014, a week prior to the hearing, she instructed her solicitors to make a written offer to settle the matter. A copy of the letter forms Annexure “A” to her affidavit. It can be seen, upon reading the letter, that the offer contained in the letter was that:
a)The home at Property G was to be sold and the net proceeds was to be divided between the parties as to 55% to the wife and the remainder to the husband;
b)The parties were to retain all other property currently in their possession; and
c)The parties were to be liable for all debts currently held by them and indemnify the other party.
The Wife’s affidavit also annexes a copy of a letter of that same date from the Husband’s solicitor, rejecting her offer. The letter stated, relevantly:
We are in receipt of your offer of settlement and are instructed to respond that it is not acceptable and enclose our offer of settlement in the orders sought by the husband encased with the Case outline for the husband, also enclosed…
Our client is only prepared to settle as per the orders sought.[2]
[2] Affidavit of Ms Bixby 23.9.2014 Annexure “B”
I note from reading the Husband’s Case Outline that he sought an order for the sale of the former matrimonial home with a distribution of the net proceeds of 60% to the husband and the balance to the Wife.
The Wife also annexes to her affidavit copies of two memoranda of fees from Mr Cook of Counsel, who appeared for her at the hearing on 30th April 2014 and at the handing down of the judgment on 3rd September 2014. In respect of the hearing, the amount of the fee is $5,500.00 and in respect of the appearance to take judgment the amount sought is $660.00.
In her Submission, the Wife submits that the Court should make an order under s.117(2) of the Family Law Act 1975, and sets out a list of reasons, relying on the paragraphs in s.117(2A) of the Act.
The Wife’s reasons are, in summary:
a)Her financial circumstances are that she is not currently working and relies upon a student allowance. From her share of the sale proceeds from the former matrimonial home the Wife has purchased a relocatable home in a caravan park where she resides with her daughter, who is still at school. The Husband has maintained his business and the other child of the marriage is now in full time employment. The former matrimonial home sold for just under $1,000,000.00 and had a mortgage balance of less than $300,000.00.
b)The Wife was represented at all court events and complied with all requirements for filing documents
c)The Wife attended every Court event and filed all documents when required except her Response. However, the Husband had been served with an unsealed copy of her response and there was no delay in the proceedings.
d)The Wife made an offer of settlement in writing. The offer was in the same terms as the final judgment. The Husband immediately rejected the offer and did not seek to make any offer of compromise of his own. The Wife submits that where she had made a reasonable offer of settlement but the husband refused to do so, the Court should make an order for costs in her favour to discourage a party in the position of the Husband from refusing to negotiate a settlement and bringing about an unnecessary hearing.
The Wife seeks solicitors’ costs according to scale and Counsel’s fees as a disbursement. In the alternative she seeks that costs should be assessed according to scale. She also seeks her costs of this Application.
The Wife seeks an order for costs in the sum of $8,965.00. Counsel’s fees amount to $6,160.00, made up as follows:
a)Preparation for hearing and drafting Case Outline: $1,000.00
b)Appearance at Court on 30th April 2014: $4,000.00
c)Attendance on 3rd September 2014 to take judgment: $660.00.
The Wife’s solicitor, Mr O’Callaghan, has referred the Court to the following authorities:
a)Edwards & Simpson (No. 2)[3]; and
b)Rhazi & Rhazi (Costs).[4]
[3] [2013] FCCA 315
[4] [2011] FamCA 428
It is noteworthy that the Wife only seeks costs from 23rd April 2014, being the date that her offer of settlement was made and rejected.
The Husband’s solicitor submits that the parties should pay their own costs. She gives the following reasons:
a)The Husband was financially disadvantaged during the separation period in that the Wife lived in the matrimonial home and did not maintain the mortgage payments, thereby incurring penalty fees each month;
b)As a result the Husband bore half the cost of the increased payout figure to discharge the mortgage;
c)The Husband submitted that the Wife’s behaviour was “destructive” in that she unsuccessfully sought to vacate the conciliation conference with the Registrar and the Husband’s solicitor was still seeking financial information from the Wife’s solicitor two weeks out from the hearing;
d)Whilst it was conceded that the Wife had made an offer of settlement on 23rd April 2014, the Husband had incurred significant legal costs by that stage; and
e)An offer of settlement is only one of the circumstances to be considered in deciding whether to make a costs order.
The Husband’s solicitor referred the Court to the following authorities:
a)In the Marriage of Jensen[5];
b)In the Marriage of Kelly (No. 2)[6];
c)Minister for Community Welfare v Y[7];
d)In the Marriage of Fisher[8]; and
e)Browne & Green[9].
[5] (1982) 8 Fam LR 594; FLC 91-263
[6] (1981) 7 Fam LR 762; FLC 91-108
[7] (1988) 12 Fam LR 477; FLC 91-973
[8] (1990) 13 Fam LR 806; 99 FLR 357
[9] [2002] FamCA 791; (2002) 29 Fam LR 428; FLC 93-115
Costs in Family Law Proceedings
Costs in family law proceedings are governed by the provisions of section 117 of the Family Law Act. Whilst subsection 117(1) provides that each party to proceedings under the Act shall bear his or her own costs, this subsection is subject to, inter alia the provisions of s.117(2), which states:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Subsection 117(2A) provides that in considering what order (if any) should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) inclusive of the subsection. Subsections (4), (4A) and (5) are not relevant to this application.
It is the usual case that where costs are ordered against a party they are ordered on a party and party basis. Costs will normally be ordered in accordance with the Court scale, which in this case is contained in Part 1 of Schedule 1 of the Rules.
Costs will only be ordered on an indemnity basis where there are unusual or exceptional circumstances (see Colgate Palmolive Co v Cussons Pty Ltd[10]; In the Marriage of Kohan[11]; Prantage & Prantage[12]).
[10] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
[11] (1992) 16 Fam LR 245; (1993) FLC 92-340
[12] [2013] FamCAFC 105; (2013) 49 Fam LR 197; FLC 93-544
Conclusions
The first matter for the Court to decide is whether to make an order for costs at all. Having regard to the matters set out in paragraphs (a) to (g) of s.117(2A), I note that both parties’ financial circumstances are relatively modest, except that they each received a significant amount of money from the proceeds of sale of the former matrimonial home. The Husband has retained his business intact and his earning capacity is unchanged.
Neither party was in receipt of assistance by way of legal aid.
The Husband criticises the “destructive” actions of the Wife in respect of her attempt to adjourn the Conciliation Conference and her alleged failure to make a full financial disclosure some two weeks out from the hearing. However, it should be borne in mind that the Wife’s claim for costs only dates from 23rd April 2014, the date she made her offer of settlement.
I am not satisfied that in the time frame covered by the application either party failed to comply with an order of the Court.
The Respondent Husband was wholly unsuccessful in the proceedings. He did not obtain the property orders that he sought.
It is significant that the Wife made a written offer of settlement, which was rejected. The offer to settle was essentially identical to the Orders made by the Court. It would appear that the Wife’s legal advisers made an accurate assessment of the likely outcome of the proceedings and put that figure to the Husband’s solicitors a week prior to the hearing. The significance of this is that, had he accepted the Wife’s offer of settlement, the Husband would have obtained exactly the same result as he did by insisting that the matter proceeded to a final hearing.
Putting it another way, the Wife had to bear the costs of briefing counsel to conduct her case at the hearing where she was ultimately successful.
This is, to my mind, a most telling matter to be taken into account. Whilst it is submitted on behalf of the Husband that the Wife’s offer of settlement is only one factor that the Court should consider, it is an overwhelmingly persuasive factor to be considered in a costs application. It was held by the Full Court of the Family Court in TRF & LRL[13] that nowhere in s.117(2A) or elsewhere in s.117 is there any prescription that more than one factor must be present before an order for costs is made, nor any indication as to the comparative weight of the factors set out in subsection 2A. As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.[14]
[13] [2005] FamCA 158; (2005) 33 Fam LR 123
[14] Per Kay, Warnick and Boland JJ at [41]
It would appear to me that the Husband’s refusal of the Wife’s offer of settlement was imprudent and led to an entire day’s hearing, with the result that the parties incurred a significant liability for legal costs.
The Husband’s imprudent refusal of the offer of settlement and the fact that he was unsuccessful in the proceedings constitute circumstances that would justify the making of an order for costs against him. I am satisfied that an order for costs should be made against the Husband.
The Wife seeks to claim the amount of $6,160.00 by way of counsel’s fees as a disbursement. However, it is established by the decision of Raphael FM[15] in Colan Products Pty Ltd v Luxon Pty Ltd (No 2)[16] that, when applying the scale provided by the Rules, counsel’s fees are not claimable as a disbursement. What is to be claimed is the advocacy loading on the daily hearing fee.
[15] Later Judge Raphael
[16] [2002] FMC 90
However, paragraph 117(2A)(g) of the Act requires the Court to have regard to such other matters as the Court considers relevant.
To my mind, it is highly relevant that a week before the final hearing the Husband chose not to accept the Wife’s offer of settlement and declined to make any sort of a counter offer. Instead, he made the choice to proceed to a final hearing, at significant cost to both parties. Clearly, he made a significant miscalculation in deciding not to accept the offer, which was imprudent.
An imprudent refusal of an offer to compromise a claim can be a reason for a court to exercise its discretion to depart from the usual rule that costs are awarded on a party and party basis. Such a circumstance was referred to by Sheppard J in the leading case of Colgate Palmolive Company v Cussons Pty Ltd[17] at [24].
[17] supra
In that decision, his Honour cited the decisions of Messiter v Hutchinson[18] and Maitland Hospital v Fisher (No. 2)[19] in support of that proposition.
[18] (1987) 10 NSWLR 525
[19] (1992) 27 NSWLR 721
In Messiter v Hutchinson, the defendant had made an offer to compromise the plaintiff’s claim shortly prior to the hearing with an offer of $120,000.00, contained in a Calderbank[20] letter. The offer was not accepted by the plaintiff. The hearing proceeded and, as a result, the plaintiff only received a verdict of $100,000.00, and it was agreed that even with the award of interest the amount received by the plaintiff was under the $120,000.00 that was offered. Rogers J held at 528 that a Calderbank letter “should be permitted to be taken into account by the Court in determining whether a special order displacing that which generally obtains of costs following the event should be made”.
[20] A Calderbank letter takes its name from the comments of Cairns LJ in Calderbank v Calderbank [1976] Fam 93; [1975] 3 WLR 586; [1975] All ER 333
Maitland Hospital v Fisher (No. 2) concerned an application to the NSW Court of Appeal for indemnity costs of an appeal against a decision awarding the plaintiff at first instance had received a judgment in the sum of $206,090.00. The respondent to the appeal (i.e. the plaintiff) had offered to accept payment of $200,000.00 together with costs to compromise her claim. The appellant rejected the offer of compromise and pressed on with the appeal. The appeal was unsuccessful and the respondent retained her judgment of $206,090.00.
The Court of Appeal (Kirby P, Mahoney JA and Samuels A-JA) held that it was appropriate that the respondent should have the indemnity costs order that she sought. Their Honours held that a rule relating to costs should apply, saying at 724:
The objects of the rule include:
1. To encourage the saving of private costs and the avoidance of the inherent risks, delays and uncertainties of litigation by promoting early offers of compromise by defendants which amount to a realistic assessment of the plaintiff’s real claim which can be placed before its opponent that its “bottom line” will be revealed to the court;
2. To save the public costs which are necessarily incurred in litigation which events demonstrate to be unnecessary, having regard to an earlier (and, as found, reasonable) offer of compromise made by a plaintiff to a defendant; and
3. To indemnify the plaintiff who has made the offer of compromise, later found to have been reasonable, against the costs thereafter incurred. This is deemed appropriate because, from the time of the rejection or deemed rejection of the compromise offer, notionally the real cause and occasion of the litigation is the attitude adopted by the defendant which has rejected the compromise. In such circumstances, that party should ordinarily pay the costs of litigation.
Their Honours were untroubled by the fact that the amount of the offer of compromise was only slightly less than the amount of the judgment, holding at 725:
Although the amount of the deficit is small, being only 2.5 per cent of the judgment sum, it is real and not trivial or contemptuous.
The decision of the Court of appeal was to order that the appellant was to pay the costs of the appeal from the date of service of the respondent’s offer of compromise, taxed on an indemnity basis, in addition to her costs before that date taxed on a party and party basis.
Both Messiter v Hutchinson and Maitland Hospital v Fisher (No.2) were cited in argument before me in Vijayakumar v Qantas Airways Limited (No.2)[21], where the respondent sought indemnity costs after having made a genuine offer of compromise to the ultimately unsuccessful applicant two days before the commencement of the hearing. The offer was made in a Calderbank letter to the applicant’s solicitor. The offer was not accepted and the applicant proceeded with his application, which was subsequently summarily dismissed.
[21] [2009] FMCA 966
As I was satisfied that the Applicant took an imprudent approach in rejecting the offer of compromise, I ordered that he should pay the Respondent’s costs calculated in accordance with the scale set out in Schedule 1 to the Court’s Rules up to and including the date of the offer, and from and after the date the offer was rejected, the Applicant was to pay the costs on an indemnity basis.
In the present case, it is slightly different, in that the Wife is only seeking her costs from and after the date her offer of settlement was offered and rejected. Here, the Husband chose to reject a genuine offer of settlement which was clearly reasonable, as it was exactly the amount that the Wife was awarded by the judgment. This was clearly an imprudent course for the Husband to take, as he was legally represented at the time and must have been aware that he was taking the risk that his claim would not be any more successful than the amount of the offer of compromise, with a costs order, and even an order for costs on an indemnity basis, being a not unlikely consequence.
As Goldberg J said in Dr Martens Australia Pty Ltd v Figgins Holdings Pty Ltd[22] [17]:
If, in all the circumstances, it was unreasonable for the offeree to reject the offer and not accept it then there are strong grounds for the Court ordering indemnity costs on the basis that the offeror has made a fair and reasonable attempt to resolve the proceedings and has given the offeree the opportunity at a relevant point of time in the proceeding to consider the reasonableness of the offer.
[22] [2000] FCA 602
The failure by the Husband to accept the offer of settlement on 23rd April 2014, a week before the hearing, clearly justifies an order for costs in favour of the Wife. It is clear from the memoranda of counsel’s fees annexed to the Wife’s affidavit that those fees were only incurred after her offer to settle the matter was rejected and it became clear that the matter had to proceed to a defended hearing.
Accordingly, there should be an order for costs indemnifying the Wife for the entire amount of her counsel’s fees, namely $6,160.00.
The Wife seeks an order for her costs of preparation for a one day hearing and her costs of this application for costs.
Item 6 of Part 1 allows the amount of $4,365.00 for preparation for the final hearing of a one day matter. If I were to allow that amount in full, the total, when added to the amount of $6,160.00 allowed for counsel’s fees would reach an amount of $10,525.00, which is significantly more than the Wife seeks in her Application in a Case. The Application in a Case seeks only the sum of $8,965.00.
In my view it would not do justice to the Husband to award the Wife more than the amount that she seeks by way of costs. Accordingly, I propose to allow the amount of $6,160.00 for counsel’s fees and $2,805.00 for solicitors’ costs of the property proceedings, making a total of $8,965.00, the amount claimed in the Wife’s Application in a Case.
The Application for Costs
The Wife also seeks an order for her costs of this Application. Clearly, she must succeed, as she has been successful and the Husband has been wholly unsuccessful.
The amount provided by Item 3 for an interim or summary hearing as a discrete event is $1,706.00 plus the daily hearing fee. The Application in a Case was returnable before the Court on 4th November 2014, on which date I made an order for costs against the Husband in the sum of $400.00 and ordered that he file and serve his written submissions as to costs within fourteen days.
I do not propose to make any further order for the costs of 4th November.
The Wife’s application for costs has been decided in chambers without any need for appearance by either party. The only appearance that will be necessary is for the attendance to take the judgment under Item 9 and the applicable daily hearing fee under Item 13, a total of $556.00.
Accordingly, I will order that the Husband pay the Wife’s costs as follows:
a)As to the final hearing from 23rd April 2014 until the date of judgment, fixed in the sum of $8,965.00; and
b)As to the Application in a Case until the date of judgment, fixed in the sum of $2,262.00 (in addition to the amount of $400.00 ordered on 4th November 2014).
I will hear submissions on time to pay.
I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 8 April 2015
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