Blake & Blake

[2007] FamCA 743

FAMILY COURT OF AUSTRALIA

BLAKE & BLAKE [2007] FamCA 743

FAMILY LAW – APPEAL AGAINST PROPERTY ORDER - Wife seeks that the husband pay her costs of her successful appeal against property settlement orders – Wife also asks that the husband pay her costs of the husband’s unsuccessful cross-appeal - Costs certificate awarded to the wife pursuant to s 9 Federal Proceedings (Costs) Act 1981 (Cth) – Costs certificate awarded to the husband pursuant to s 6 Federal Proceedings (Costs) Act 1981 (Cth)

FAMILY LAW – APPEAL AGAINST TRIAL JUDGE’S COSTS ORDER – Costs order made based on husband’s offer to settle exceeding amount ordered to be paid to the wife – Sum payable to the wife increased on appeal – Appeal against costs order successful – Husband ordered to repay to the wife any monies paid by her in respect of the costs order

FAMILY LAW – COST OF THE COSTS APPEAL – Wife seeks an order for costs of the appeal against the costs orders of the appeal – No order as to costs

Family Law Act 1975 (Cth)

Federal Proceedings Costs Act 1981 (Cth)

Browne and Green (2002) FLC 93-115
C & C [2006] FamCA 300
House v The King (1936) 55 CLR 499
I & I (No 2) (1995) FLC 92-625
Marinko and Marinko (1983) FLC 91-307
Rosati & Rosati (1998) FLC 92-804
TWN & PAQ [2006] FamCA 430

APPELLANT: K R Blake

RESPONDENT: T J Blake

FILE NUMBER: BRF 4991 of 2000

APPEAL NUMBER: NA 65 of 2005

DATE DELIVERED: 27 July 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: Finn, Coleman & May JJ

HEARING DATE: By written submissions

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 20 March 2006

LOWER COURT MNC: [2006] FamCA 162

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Kirk of Senior Counsel

SOLICITOR FOR THE APPELLANT: Neumann & Turnour Lawyers

SOLICITOR FOR THE RESPONDENT: Butler McDermott & Egan Solicitors

Orders

1. That the Court grants to the appellant wife a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant wife in respect of the costs incurred by the appellant wife in relation to the appeal from the orders made 5 August 2005 which was the subject of the Full Court judgment delivered 19 January 2007.

2. That the Court grants to the respondent husband a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal from the orders made 5 August 2005 which was the subject of the Full Court judgment delivered 19 June 2007.

3. That the appeal of the wife filed 11 April 2006 against orders 1 and 2 of the orders with respect to costs made 20 March 2006 be allowed and that those orders be set aside.

4. That the respondent husband repay to the wife any monies paid to him in relation to the costs order within 60 days of today.

5. In relation to other applications for costs there be no orders as to costs.

IT IS NOTED THAT IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Blake and Blake.

FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 65  of 2005
File Number: BRF 4991  of 2000

K R BLAKE

Appellant

And

T J BLAKE

Respondent

REASONS FOR JUDGMENT

Finn J:  

1. On 19 January 2007 this Full Court delivered reasons for judgment and made orders allowing an appeal by the wife and dismissing a cross appeal by the husband against orders for property settlement made by Buckley J on 5 August 2005. In allowing the wife’s appeal we varied the amount which the husband was required to pay her under his Honour’s orders from $393,857.15 to $491,185.15.

2. In our orders of 19 January 2007 we made directions for the parties to file written submissions in relation to the costs of the appeal and of the cross appeal and also in relation to an appeal which the wife had filed against orders made by Buckley J on 20 March 2006 requiring her to pay both the husband’s costs (fixed at $30,000) of the property settlement proceedings before his Honour, and also the costs (to be taxed in default of agreement) of the husband’s application for the costs of those proceedings. Such written submissions were duly filed by the parties.

3. It will be convenient in the circumstances of this case to consider the issue of the costs of the appeal and cross appeal against the property settlement orders before considering the appeal against the trial Judge’s costs order.

The costs of the appeal and the cross appeal against the property settlement orders

1. In the written submissions filed on her behalf on 16 February 2007, the wife seeks that the husband should pay her costs of her successful appeal against the property settlement orders, or alternatively, that she should be granted a certificate under the Federal Proceedings (Costs) Act 1981 in respect of such costs, and also that the husband pay her costs of his unsuccessful cross appeal.

2. In written submissions filed on his behalf on 15 February 2007 and again on 13 March 2006, the husband opposed the wife’s applications that he pay her costs of the appeal and cross appeal, and he also seeks a certificate under the Federal Proceedings (Costs) Act 1981 in respect of his own costs incurred in the appeal.

3. As recognised in the submissions of both parties, the wife’s appeal succeeded on the basis that the trial Judge had erred in his calculation of the net value of the parties’ assets by making provision for the payment of capital gains tax of $216,298.00 on a property (known as “the former matrimonial home”), and thus the amount which the husband was required to pay to the wife by way of property settlement had to be increased from $393,851.15 to $491,185.15. However, as is emphasised in the submissions on behalf of the husband, this was the only basis on which the wife’s appeal succeeded, notwithstanding that the wife raised and pursued a number of other challenges to the trial Judge’s decision. Having regard to this circumstance and the other circumstances of the case, an order that the husband pay the wife’s costs of the appeal would not, in my opinion, be justified.

4. The error on the part of the trial Judge relating to capital gains tax, on the basis on which, as I have said, the appeal succeeded, was an error of law. Thus it is appropriate that both the appellant wife and the respondent husband be granted certificates under s 9 and s 6 respectively of the Federal Proceedings (Costs) Act 1981 in relation to their costs incurred in the appeal.

5. In relation to the wife’s application that the husband pay her costs in relation to his unsuccessful cross appeal against the property settlement orders, I consider that there is much force in the submission made on behalf of the husband that “the time which the cross appeal took in argument and consideration could be defined as nominal when compared with the arguments advanced on the appeal”, and accordingly, I am not persuaded that the circumstances justify an order that the husband pay the wife’s costs in relation to the cross appeal.

The wife’s appeal against the trial judge’s costs orders

1. After the trial Judge made his orders for property settlement on 5 August 2005, the husband filed an application on 8 September 2005 seeking that the wife pay his costs in relation to the property settlement proceedings “as and from 9 September 2004”. The husband also sought that the wife pay his costs which had been reserved in earlier interlocutory hearings in relation to the property settlement proceedings.

2. This application for costs by the husband, which was opposed by the wife, was heard by Buckley J on 2 December 2005. His Honour delivered his reserved judgment on 20 March 2006.

3. In his judgment his Honour concluded (at para 27) that there were no circumstances which would justify the making of an order in the husband’s favour on account of the reserved costs. However he also concluded (at para 49) that there were circumstances which would justify the making of an order that the wife pay the husband’s costs of and incidental to the property settlement proceedings “from 9 September 2004 fixed in the sum of $30,000.” His Honour also determined (at para 50) that the wife should pay the husband’s costs of his application for costs.

4. The precise terms of the orders made by his Honour on 20 March 2006 were as follows:

   1.That the Wife pay the Husband’s costs of and incidental to these proceedings fixed in the sum of $30,000.00 within a period of 30 days of the date of this Order.

   2.That the Wife pay the Husband’s costs of and incidental to this application to be taxed on a party and party basis or as agreed between the parties.

5. On 11 April 2006 the wife filed a notice of appeal against the costs orders of 20 March 2006. The grounds of appeal directed to those orders are set out in the joint judgment of Coleman and May JJ. In summary they allege error on the part of the trial Judge in failing to make findings regarding the various offers of settlement made by the parties, in his conclusion that the wife was “wholly unsuccessful” and in the adequacy of his reasoning to support that conclusion, and in failing to consider certain aspects of the parties’ financial circumstances.

6. However, as will be seen, the written submissions of counsel for the wife do not appear to be directed to the complaints contained in the grounds of appeal, but rather are directed to the fact that the effect of the Full Court’s decision in relation to the appeal against the property settlement orders, was to render erroneous the figures on which the trial Judge determined the costs application. The relevant submissions are as follows:

   3.1.The Trial Judge ordered the Wife to pay to the Husband $30,000 in respect of his costs of the proceedings as and from 9 September 2004 (Reasons, para 49).

   3.2.The significance of 9 September 2004 is that it was on that date the Husband filed an offer which provided, that apart from the property the Wife was to retain, she receive an additional $400,000 (Reasons, para 28). This was, of course, greater than the sum of $393,851 the Trial Judge ordered the Husband to pay to the Wife and the Trial Judge understandably placed weight on this in his deliberations (Reasons, para 43).

   3.3.By reason of the Wife’s success in the Substantive Appeal, the sum payable to the Wife increased to $491,185 and therefore the question as to trial costs needs to be reconsidered by Your Honours.

   3.4.There can (I submit) be no justification for any costs order in respect of any part of the trial process now that the Order in favour of the Wife substantially exceeds the Husband’s past offers. In addition, whilst the Wife was unsuccessful in her CGT argument before the Trial Judge, she succeeded on it before Your Honours. In these circumstances, Your Honours will set aside the Orders made by the Trial Judge on 20 March 2006.

7. In seeking to resist the wife’s appeal against the costs order, the solicitors for the husband have submitted (at para 13 of the submissions of 13 March 2007) that:

   … there is no justification for a submission that the order for costs be discharged simply on the basis that the order substituted by this Court was greater than the figure offered by the Husband. Whilst the Trial Judge enunciated and discussed the “more significant factors”, the exercise of the Trial Judge’s discretion provided the Respondent with an order for costs. Nothing that the Appellant has now put to the Court is sufficient for this Court to determine that that discretion was inappropriately exercised (House v R).

8. While it is true that in his judgment of 20 March 2006, Buckley J considered and balanced (at paras 28 to 48) three “more significant factors”, one of those factors was an offer for settlement by the husband filed on 9 September 2004. Although that offer was more favourable to the wife than the trial Judge’s order, it was for an amount considerably less than the sum ultimately awarded to the wife by the Full Court. Thus a significant basis for his Honour’s costs order in favour of the husband has been removed. In other words, subsequent events known to both parties and to this court have rendered erroneous one important basis for his Honour’s costs order (Cf. CDJ v VAJ (No 1) (1998) 197 CLR 172 at 109). In my view this circumstance makes necessary a re-determination by the Full Court of the costs application determined by his Honour.

9. The three orders which the wife seeks that this court should make in the event that we consider that we should re-determine the costs application and interfere with the trial Judge’s costs orders, are as follows and were the subject of the following submissions by her counsel:

   3.5.1“That the Husband pay the Wife’s costs of and incidental to the hearing of the Husband’s Application for costs filed 8 September 2005”

   -    in that Application the Husband sought Costs Orders in respect of five (5) earlier interim hearings (Reasons, para 3) and in respect of each the Husband was unsuccessful (Reasons, para 27)

   -    there are now no grounds to justify any Order for costs in respect of the substantive trial and the Husband’s Application for costs filed 11 April 2006 [sic] has wholly failed and the Wife ought have her costs paid by the Husband

   -    as to the parties’ respective financial positions, the Husband received 55% of the pool; has the benefit of the [former matrimonial home] that he ought reasonably expect to sell (if he desires) to the existing tenant at $2M rather than the $1.65M used for pool value coupled with a significant future earning capacity, if he succeeds in returning to the Solicitors Roll and, if not, a demonstrated capacity in property dealings over recent years that has resulted in substantial capital gain. This is in stark contrast to the Wife’s grossly inferior position with 45% of the asset pool and a very limited future earning capacity.

   3.5.2“That the Husband pay the Wife’s costs of and incidental to this Costs Appeal”

   -    for the reasons set out above, the Husband should also pay the Wife’s costs of this Costs Appeal.

   3.5.3“That otherwise “each party bear their own costs of and incidental to these proceedings” excluding, of course, the costs of the substantive appeal and cross-appeal”

   -    as would be evident from the matters set forth by the Trial Judge in his “Costs” Reasons coupled with the impact of the decision by Your Honours, there is no justification for any Order other than that sought by the Wife.

10. It will be appreciated that I am at this stage only concerned with the orders which should be made on a re-exercise of the discretion in relation to the first instance property settlement and costs proceedings. I will deal later with the costs of the appeal against the costs orders.

11. As earlier indicated, it was submitted on behalf of the husband that there would be no justification for this court to interfere with the trial Judge’s costs orders, and thus no submissions were made as to what orders the husband would seek in the event that we were to re-exercise the discretion. However, it can be assumed that in that event, the husband would submit that the circumstances would continue to justify the making of the costs orders in his favour.

12. Given the ultimate outcome of the property settlement proceedings following the Full Court orders of 19 January 2007 and having regard to the matters set out in s 117(2A) of the Family Law Act 1975 canvassed in the trial Judge’s judgment of 20 March 2006, I do not consider that the circumstances justify the making of any order for costs in relation to the property settlement proceedings at first instance. Accordingly the trial Judge’s order in favour of the husband in relation to the costs of the property settlement proceedings should be discharged.

13. If the order for costs in relation to the property settlement proceedings at first instance is to be discharged for the reasons I have given, it must follow that the order made by the trial Judge in the husband’s favour in relation to the costs of the application for costs (filed 8 September 2005) now determined to be unsuccessful, must also be discharged. However I see no justification for an order now being made that the husband should pay the wife’s costs of that application.

The costs of the costs appeal

1. As to the second of the three orders sought by the wife in paragraph 3.5 of her written submissions, being an order for costs in her favour in relation to her appeal against the costs orders of 20 March 2006, I consider that there are no circumstances existing which would justify the making of such an order. (Cf the observations of the Full Court in C & C [2006] FamCA 300 and TWN & PAQ [2006] FamCA 430).

Proposed orders

1. For the reasons I have given, I agree with the orders proposed by Coleman and May JJ.

COLEMAN & MAY JJ

Background

1. On 5 August 2005 Buckley J delivered reasons for judgment and made orders in relation to applications for property settlement between the husband and wife. The wife appealed and the husband cross-appealed those orders (“the Substantive Appeal”).

2. On 20 March 2006 the judge gave reasons and made orders in relation to a costs application of the husband related to those property proceedings. On 11 April 2006 the wife filed a Notice of Appeal against the costs orders made by Buckley J on 20 March 2006 (“the Costs Appeal”).

3. This Full Court delivered reasons and made orders on 19 January 2007 in relation to the appeal of the wife and the appeal of the husband against the substantive orders. The appeal of the wife was allowed in part, the cross-appeal of the husband was dismissed. It was also ordered that each party be at liberty to file and serve submissions in relation to the costs of the appeal and costs of the cross-appeal and also in relation to the appeal against the trial judge’s costs order.

4. The matters for our consideration urged by the wife fall into three categories. First, in relation to the appeal against the costs order made by the trial Judge referred to as “the costs appeal”. Second, in relation to the costs of the wife’s appeal against the substantive orders it is asked that the husband pay her costs of the appeal or alternatively that a costs certificate be issued, and thirdly, in relation to the costs of the husband’s cross-appeal, it is also asked that the husband pay the wife’s costs of responding to the cross-appeal.

5. In relation to the first matter, being the appeal against the costs of the trial, it is asked that the husband pay the wife’s costs of and incidental to the hearing of the husband’s application for costs before the trial judge and that the husband pay the wife’s costs of and incidental to the appeal in relation to the costs orders made on 20 March but otherwise that each party pay their own costs.

The Costs Appeal

1. In relation to the appeal against the costs orders made by Buckley J the three main grounds contained in the Notice of Appeal were arranged under the following headings:

   “WRITTEN OFFERS TO SETTLE

   2.That having detailed the various Offers to Settle made by the parties, the Trial Judge erred in that he:

   2.1Failed to make findings about the merits of each party’s offer;

   2.2Failed to make findings about the Wife’s decision not to accept the Husband’s offer;

   2.3Failed to state whether the Wife’s failure to accept the Husband’s Offer to Settle was a reason for making the Order for Costs.

   WHETHER THE WIFE WAS WHOLLY UNSUCCESSFUL

   3.That having considered the submissions of Senior Counsel for the Wife regarding the complexity of the issues at trial and the difficulty of assessing the Wife’s prospects of success, the Trial Judge erred, save and except for a limited consideration of the Husband’s Offers to Settle, in failing to give adequate reasons for concluding that the Wife was “wholly unsuccessful” in the proceedings.

   4.That the Trial Judge erred in finding that the Wife was “wholly unsuccessful” in circumstances where the Orders sought by the Husband required payment to the Wife of $80,000.00 and the Order made by his Honour required payment of $393,851.15.

   FINANCIAL RESOURCES OF THE PARTIES       

   5.That when considering the relative financial positions of the parties, the Trial Judge erred in that he:

   5.1Considered only the legal costs and outlays incurred by the parties;

   5.2Failed to consider the Wife’s financial position and ability to pay in circumstances where the Husband retained all the income-producing assets pursuant to the Order of [5] August 2005; and

   5.3Failed to consider the economic consequences of the Orders made by his Honour on [5] August 2005.”

1. The orders made by Buckley J on 20 March 2006 were:

   1.That the Wife pay the Husband’s costs of and incidental to these proceedings fixed in the sum of $30,000.00 within a period of 30 days of the date of this Order.

   2.That the Wife pay the Husband’s costs of and incidental to this application to be taxed on a party and party basis or as agreed between the parties.

Judgment of the Trial Judge – Costs Order

1. As the learned judge recorded (para 1), the husband asked in his application filed 8 September 2005 that the wife pay his costs of the trial together with the reserved costs of various applications prior to the trial. These included a hearing before Barry J on 5 May 2004, a hearing before O’Reilly J on 16 August 2004, an adjourned hearing on 1 June 2004, a hearing on 26 August 2004 and an order that the wife pay the husband’s costs pursuant to an order made on 21 October 2004. This order rather curiously provided that “such costs to form part of any property settlement Order as between the Applicant and the Respondent”. The husband also asked for the costs of his application for costs.

2. In relation to the costs of the property proceedings it was asked that the wife pay the costs from 9 September 2004 being the date of an Offer to Settle.

3. The wife asked for an order that the husband pay her costs in relation to the costs application and that they otherwise bear their own costs of the proceedings. The judge set out the details of each of the orders referred to. As he recorded:

   “4.…The effect of my Orders required the husband to pay the wife the sum of $393,851.15 within 60 days, which provided her with a total entitlement of $952,851.15. This was significantly less than the entitlement originally sought by the wife, which, according to her calculations amounted to $1,611,653.40.”

4. It was estimated that the husband’s costs from 9 September 2004 were $30,000. This was on the basis of a costs agreement between the solicitor and the husband. An estimate was also provided of the husband’s costs on a party and party basis from 9 September until 8 August 2005, a total of $12,222.56, and an estimate of costs on an indemnity basis from 9 September 2004 until 8 August 2005 of $16,864.56.

5. After referring to the provisions of section 117 of the Family Law Act 1975 (Cth) and I & I (No 2) (1995) FLC 92-625 at 82-277, the trial judge identified what he regarded as “The more significant factors, in the particular circumstances of this case, are those set out in subparas (2A)(a), (e) and (f).”.

6. His Honour dealt separately with the orders made prior to trial, the offer to settle in writing and the other matters affecting his decision in relation to the order for costs of the trial. It is appropriate that we deal with them in the same way.

7. After describing the orders made prior to trial the trial judge found that he was not satisfied that there were circumstances justifying making orders for costs.

8. His Honour then dealt with the issue of the costs of the trial. Correctly, we think, he identified the major matters to be considered commencing with the offer to settle.

9. The husband filed an offer to settle on 9 September 2004. As his Honour said:

   “28.…The offer, in essence, provided for the Wife to receive the items contained in para 208 of my Reasons, save for the furniture and effects in the Wife’s possession, in addition to a

   “payment to the Wife from the Husband in the amount of $400,000.00, paid as follows:-

   (i)$200,000.00 within 30 days of the making of these orders;

   (ii)$200,000.00 within 12 months from the date of the making of these orders, including interest at the rate of 5% thereon from the date of the making of the orders until payment is made of the $200,000.00””

10. It can immediately be seen that the husband was offering to pay the sum of $400,000.00 whereas the order of the trial Judge was $393,851.00. The other difference is that the offer was that the sum of $200,000.00 be paid within 30 days and the balance of $200,000.00 within 12 months together with interest of 5 percent.

11. His Honour also noted that the husband had previously filed offers on 8 June 2004 and 4 March 2004 which were similar in terms to that of 9 September 2004 except that the June offer provided for a cash payment of $360,000.00 in two instalments $200,000.00 within 30 days and the balance within 12 months. The March offer provided for a payment of $300,000.00 within three days.

12. The wife filed an offer to settle on 23 December 2003. The terms were as follows:

    “That an accounting be undertaken of the assets, liabilites, superannuation and financial resources of the parties and that such property be divided in the proportion of 50% to the Wife and 50% to the Husband.”

13. The only other negotiations mentioned by the trial judge were a letter sent by the husband’s solicitor on 30 January 2005 setting out a number of possible scenarios and inviting a response from the wife. The wife’s solicitors forwarded a response on 18 January 2005. In addition to the assets about which there was no dispute it sought a cash payment of $911,139.00.

14. Under the heading of “Whether any party has been wholly unsuccessful” his Honour referred to the submissions of Mr Kirk SC, counsel for the wife. This included that although the wife had been unsuccessful, in respect of three critical issues, each of those issues involved a level of complexity which made the task of assessing the wife’s prospects of success difficult.

15. Under the heading “The financial circumstances of each of the parties” his Honour referred to a decision in Marinko and Marinko (1983) FLC 91-307 particularly at p. 78,099 and Browne and Green (2002) FLC 93-115 particularly at p. 89,157 and at p. 89,158. His Honour then said:

    “38.The issue of particular significance in respect of the parties’ current financial circumstances is the quantum which each of them expended on legal costs and outlays.”

16. Buckley J then referred to the costs and outlays incurred by the wife in total in excess of $204,000.00. The affidavit from the husband’s solicitor referred to the costs to which reference has already been made. At paragraph 41 of the judgment his Honour said the following:

    “41.In summary, the wife incurred costs and outlays totalling $204,500.00 and the husband $118,189.74.”

17. His Honour ultimately found:

    “49.I am satisfied that there are circumstances which justify my making an order that the wife pay the husband’s costs of and incidental to these proceedings from 9 September 2004 fixed in the sum of $30,000.00.”

    50.Further, I propose to Order that the wife pay the husband’s costs of and incidental to this application to be taxed on a party and party basis or as agreed between the parties.”

18. In coming to this conclusion, his Honour examined, at the urging of counsel for the wife, the considerable difference in the amount of counsel’s fees for each of the parties. The sum expended on counsel’s fees for the wife was $57,500.00 whereas for the husband $26,235.00. As his Honour said, it was not possible for him to make any findings in respect of that issue and only referred to the difference as “puzzling”. In relation to quantum the only finding made by the trial Judge was at paragraph 47 where he said:

    “47.I have also had regard to the fact that the actual quantum of the Order for costs which the husband seeks is relatively modest.”

Submissions on behalf of the Wife

(a) The costs appeal

1. It will be recalled that the amount offered by the husband was the sum of $400,000.00 but that the amount ordered by the trial Judge was $393,851.00. By reason of the wife’s success in the substantive appeal the sum now payable to her increased to $491,185.00. It is submitted that it is necessary for us to reconsider the question as to whether the wife should pay any part of the costs of the trial especially considering the emphasis given to the offer. Further, it is submitted that whilst the wife was unsuccessful in her argument about capital gains tax before the trial Judge she succeeded on that argument before the Full Court. It was asked therefore, that the orders in relation to costs be set aside.

2. It is submitted also that the husband should pay the wife’s costs of and incidental to the hearing of the husband’s application for costs. That application asked for costs orders in respect of the five earlier interim hearings. In respect of each of those applications for costs the husband was unsuccessful. It was submitted that as there are no grounds to justify any order for costs in respect of the substantive trial against the wife she ought to have her costs of the husband’s application paid by the husband. In this respect emphasis was placed on the parties’ respective financial positions which were summarised in the written submissions (page 3) as follows:

   “…the Husband received 55% of the pool; has the benefit of the [former matrimonial home] that he ought reasonably expect to sell (if he desires) to the existing tenant a $2M rather the $1.65M used for pool value coupled with a significant future earning capacity, if he succeeds in returning to the Solicitors Roll and, if not, a demonstrated capacity in property dealings over recent years that has resulted in substantial capital gain. This is in stark contrast to the Wife’s grossly inferior position with 45% of the asset pool and a very limited future earning capacity.”

(b) The costs of the substantive appeal and the cross-appeal

1. Financial disparity was also part of the submission on behalf of the wife, as to why the husband should pay the costs of the cross-appeal. Further, it was submitted that, other than that, each party should bear his or her own costs.

2. It was submitted that the wife was successful in her appeal and the husband unsuccessful in his cross-appeal. Again having regard to his superior financial position it is submitted that the wife is entitled to an order for the costs of the appeal and resisting the husband’s cross-appeal. In the alternative it is asked that a certificate under the Federal Proceedings Costs Act 1981 (Cth) should be ordered. The question of law to which we were directed was the error in the application by the trial Judge of the principles referred to in Rosati & Rosati (1998) FLC 92-804 in relation to capital gains tax.

Submissions on behalf of the husband

1. These submissions were in two parts, first to respond to the costs appeal of the wife in relation to the order of Buckley J and the second part of the submissions are in response to the application for costs of the substantive appeal.

(a) The costs appeal

1. In relation to the costs appeal (the order of the trial Judge that the wife pay part of the husband’s costs and the costs of the application) an interesting argument is raised by the husband in submissions on his behalf in response. It was submitted that it cannot be demonstrated, based on the facts relied upon by the trial judge, that the Judge’s discretion miscarried in the traditional sense of House v The King (1936) 55 CLR 499 at 504-505 where it was said at 504-505:

   “It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.”

2. It is submitted that there is no justification for a submission that the order for costs be discharged simply because the order substituted by this Court was greater than the figure offered by the husband.

(b) The costs of the substantive appeal and cross-appeal

1. Attention was drawn in the submissions to the fact that the appellant asked for an increase in the substantive appeal to $444,330.00 from the sum ordered to be paid to her by the trial Judge whereas the husband sought to decrease the sum by some $105,872.00. It is conceded that the wife was successful in the appeal to the extent of obtaining an increase in the sum of $97,334.00 and that the husband was unsuccessful in his cross-appeal. Further, as submitted it is correct that the appeal centred on three major aspects of the judgment:

   (a)The value attributed to [the former matrimonial home];

   (b)The allowance made for potential capital gains tax payable by the husband on the [former matrimonial home] and at [the Sunshine Coast property]; and

   (c)      The assessment of the contributions of the parties’.

2. As correctly stated in the submissions on behalf of the husband, the judgment of the Full Court determined that the provision of the sum for potential capital gains liability in relation to [the former matrimonial home] was inappropriate as the husband’s evidence was that he did not currently intend to sell the property. This also involved a consideration of whether the real value of the property was that based on the valuation or an offer made to purchase the property which was not accepted by the husband. The Full Court also considered whether the sum allowed for capital gains tax was correct.

3. It is submitted, correctly in our view, that the issues determined by the Full Court in allowing the appeal were questions of law. This we think is especially so since the Court rejected the appellant’s submissions in relation to what value should be placed on the property but accepted the submission that the potential capital gains liability was an inappropriate deduction. The result was that the asset pool was increased by the sum of $216,298.00.

4. We note that the wife failed in the argument that the capital gains liability on the [Sunshine Coast property] was inappropriate and that the division in relation to contribution was wrong.

Conclusions

1. In our view, if the main reason justifying the costs order no longer exists such an order cannot stand and we must re-exercise the discretion. In this case, taking into account the financial circumstances of the parties including their respective positions and the outcome of the substantive property appeal, there should be no order as to costs of the property trial. This would include a decision that each party pay their own costs in relation to the hearing of the husband’s application for costs and the earlier reserved costs applications.

2. In our view as the matter upon which the wife succeeded in the appeal in relation to the property orders is a question of law as identified by both counsel, the proper order is that each party receive a costs certificate pursuant to the Federal Proceedings Costs Act1981 (Cth).

3. Finally, in relation to the wife’s costs of the “costs appeal”, although it can be said that the husband was aware of the orders made by the Full Court in the substantive appeal but resisted the appeal against the orders for costs the circumstances were such that the costs order was originally imposed largely because of offers to settle, properly made by the husband.

4. In our view there should be no order as to costs in relation to the “costs appeals”. In C & C [2006] FamCA 300 and TWN & PAQ [2006] FamCA 430 this Court considered applications for costs of the costs appeal. In C & C (supra) it was observed that:

   “59.Finally, the wife seeks that the husband pay her costs in relation to his appeal against the costs order made by Steele J which we have earlier determined in this judgment is to be dismissed.

   60.The Full Court of this Court often determines appeals against a costs order made in relation to property settlement proceedings on the basis of written submissions filed after the determination of an appeal against the property settlement order.  It has not to date been the usual practice of the Full Court, so far as we are aware, to make an order in respect of the costs of the preparation of such submissions (be they from an ultimately successful appellant or respondent).  In our view, such an approach on the part of the Full Court can be seen to reflect the general rule in the Court that each party should pay his or her own costs.  Accordingly, we do not propose to make an order in relation to the husband’s appeal against the trial Judge’s costs order.”

5. In relation to the other applications for costs there are no features of them which would cause us to depart from the general rule contained in s 117(1).

I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court 

Associate:     

Date:              27 July 2007