BOSWORTH & FIRKINS

[2013] FamCA 7

FAMILY COURT OF AUSTRALIA

BOSWORTH & FIRKINS [2013] FamCA 7

FAMILY LAW - COSTS – Where substantive proceedings in the Family Court were brought under the Domestic Relationships Act 1994 (ACT) – Whether the laws of the Australian Capital Territory or the Family Law Act 1975 (Cth) apply – cross-vested jurisdiction – where the Court exercised jurisdiction of the Supreme Court of the ACT

FAMILY LAW - COSTS – Offer of settlement – whether a Calderbank offer was sufficient to justify a departure from the ordinary rule that costs follow the event – where the substantive proceedings involved complex matters in need of judicial determination – no order as to costs.

Court Procedures Rules 2006 (ACT), r 1721
Family Law Act 1975 (Cth), s 117
Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), ss 9, 11
Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT), s 12

Ferris v Winslade [1998] ACTSC 38
Kilby v O’Brien [2006] ACTSC 90
Rural and General Insurance Broking Pty Ltd v APRA (2009) 231 FLR 199
Quirk v Bawden (1992) 111 FLR 115

APPLICANT: Ms Firkins

RESPONDENT: Mr Bosworth

FILE NUMBER: CAC 1468 of 2009

DATE DELIVERED: 18 January 2013

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: Submissions received by the applicant on 22 October 2012 and 9 November 2012; submissions received by the respondent on 5 November 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not applicable

SOLICITOR FOR THE APPLICANT: Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT: Not applicable

SOLICITOR FOR THE RESPONDENT: Phelps Reid

Orders

1. There be no order as to costs. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bosworth & Firkins has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: CAC 1468 of 2009

Ms Firkins

Applicant

And

Mr Bosworth

Respondent

REASONS FOR JUDGMENT IN RELATION TO COSTS

Introduction  

1. On 19 October 2012 I made final orders and delivered reasons for judgment in relation to the division of property of the parties pursuant to the Domestic Relationships Act 1994 (ACT). The substantive final orders I made were as follows.

   (1)The respondent, [Ms Firkins], pay to the applicant, [Mr Bosworth], the sum of $106,240 within 60 days of the date of these Orders.

   (2)Otherwise, each party is the sole owner of any property currently in their name or possession and each party is solely liable for any liability currently in his or her name, or secured over any item of property currently in his or her possession.

2. In the substantive proceedings, Mr Bosworth was the applicant and Ms Firkins was the respondent. However, in relation to this application for a costs order, Ms Firkins is now the applicant and Mr Bosworth is the respondent. For ease of reference, I will refer to each party by their name.  

3. On 22 October 2012 Ms Firkins’ submissions as to costs were filed and on 5 November 2012 Mr Bosworth filed his submissions regarding costs. Ms Firkins filed submissions in reply on 9 November 2012.

Orders sought

1. Ms Firkins “makes an application that the [Mr Bosworth] pay the costs of the Supreme Court proceedings [from] the 19^th of March 2012 and all costs of and incidental to the Family Court proceedings.”[1]

   [1] Submissions for Ms Firkins, filed on 22 October 2012, [8].

2. Mr Bosworth seeks an order that each party pay their own costs in relation to both the Family Court proceedings and the Supreme Court proceedings.[2]

   [2] Submissions for Mr Bosworth, [1] and [9].

Preliminary issue – which legislation applies?

1. Ms Firkins’ submissions contend that, in determining the issue of costs, the relevant legislation or rules to be applied are those of the Supreme Court in the Australian Capital Territory. Mr Bosworth submits that the cost provisions of the Family Law Act 1975 (Cth) apply.

2. The proceedings which ultimately came before this Court were brought under the Domestic Relationships Act, not the Family Law Act, and were transferred to this Court by the Master of the Supreme Court of the ACT in March 2012 under the Jurisdiction of Courts (Cross-vesting) Act 1993 (ACT) (“the ACT Cross-vesting Act”) and Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (“the Commonwealth Cross-vesting Act”). Therefore, in determining the substantive property proceedings, this Court was exercising the jurisdiction conferred on it by the Commonwealth and ACT Cross-vesting Acts[3], that is, the jurisdiction of the Supreme Court under the Domestic Relationships Act.

   [3] Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 9(3).

3. Section 11 of the Commonwealth Cross-vesting Act states:[4]

   (1)Where it appears to a court that the court will, or will be likely to, in determining a matter for determination in a proceeding, be exercising jurisdiction conferred by this Act or by a law of a State relating to cross-vesting of jurisdiction:

   (a)subject to paragraphs (b) and (c), the court shall, in determining the matter, apply the law in force in the State or Territory in which the court is sitting (including choice of law rules);

   …

   [4] Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 11(1)(a).

4. Subparagraphs (b) and (c) are not relevant and the reference to the State or Territory in which the Court is sitting is a reference to the State or Territory in which any matter for determination in the proceedings was first commenced in or transferred to that court.[5]

   [5] Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), s 11(2).

5. In determining the substantive proceedings, the Family Court was exercising jurisdiction of the Supreme Court which was conferred on it by the cross-vesting legislation. Pursuant to s 11(1)(a) of the Commonwealth Cross-vesting Act, the Family Court applied the law in force in the ACT, that is, the Domestic Relationships Act.  

6. Logically, it would follow that in determining an application for costs, which is “a matter for determination in a proceeding”, in relation to proceedings determined as a result of cross-vested jurisdiction, this Court should also exercise the law in force in the ACT –  not the Family Law Act.

7. In further enforcement of this point, s 117 of the Family Law Act states:[6]

   (1)… each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may … make such order as to costs … as the court considers just.

   [emphasis added]

   [6] Family Law Act 1975 (Cth), s 117(1) and (2).

8. Section 117 of the Family Law Act applies only in relation to proceedings brought under that Act. It does not apply to proceedings brought under the Domestic Relationships Act, even though such proceedings were determined by the Family Court.

9. I am satisfied that it is the law of the ACT which should apply in determining this application for costs, and not the Family Law Act.

Relevant law in relation to costs

1. There is no specific provision in the Domestic Relationships Act about the awarding of costs in proceedings.

2. Rule 1721 of the Court Procedures Rules 2006 states “The costs of a proceeding or of an application in a proceeding are in the discretion of the court.”

3. In Ferris v Winslade his Honour Cooper J said the following in relation to costs in proceedings under the Domestic Relationships Act:[7]

   [7] Ferris v Winslade [1998] ACTSC 38, [6]-[10] and [22].

   [6]There is nothing in the Act which deals with costs in proceedings initiated for relief under it. Nor do the Rules make any specific provision for costs in proceedings under the Act …

   [7]The primary purpose of an award of costs is not to punish an unsuccessful party; it is to indemnify the successful party in respect of the costs of bringing or defending the litigation …

   [8]The discretion to award costs is unfettered, save that it must be exercised judicially and not capriciously or arbitrarily ….

   [9]…

   [10]Ordinarily, in civil proceedings, costs follow the event and a successful litigant receives his or her costs, absent special circumstances justifying some other order …

   …

   [22]In my view there is nothing in the decisions of the Supreme Court of New South Wales which would cause this Court to abandon the ordinary situation in civil litigation that costs follow the event, unless there are special circumstances which would suggest otherwise. The existence of a “Calderbank” offer is a matter which falls within the proviso, along with a raft of other circumstances, eg the conduct of a party prior to and during the trial …

   [emphasis added]

4. The principle that costs should follow the event except where special circumstances apply, for example where a Calderbank offer was made, is supported by Penfold J in Rural and General Insurance Broking Pty Ltd v APRA:[8] “A Calderbank offer is an offer of settlement that in certain circumstances may justify a departure from the usual approach that costs follow the event (if the offer is rejected and the matter proceeds to a determination).”

   [8] Rural and General Insurance Broking Pty Ltd v APRA (2009) 231 FLR 199, [137].

5. In Quirk v Bawden Higgins J, as his Honour then was, commented on the approach of the Supreme Court in costs proceedings:[9]

   … this court should apply an appropriate costs sanction where a party has declined to accept or to make, as the case may be, a reasonable offer of settlement. It may, in some cases, be sufficient to deprive an otherwise successful party of all or part of the costs that would otherwise follow the event. In other cases, it may be appropriate to award some or all of the costs of an action on a more favourable than usual basis to a party who has been put to the expense of continuing litigation that ought reasonably to have been earlier settled.

   [9] Quirk v Bawden (1992) 111 FLR 115, 120.

6. The position in civil matters in the Supreme Court that costs would ordinarily follow the event is not a position which is comfortably accommodated when, as in this matter, there are multiple issues, some of which were resolved in favour of Mr Bosworth and some in favour of Ms Firkins. I note that in Kilby v O’Brien Connolly J said:[10]

   It seems to me that, while costs are of course always discretionary, the normal rule that ‘costs follow the event’ must be treated with caution in the context of an application for a property adjustment under the Domestic Relationships Act.

   [10] Kilby v O’Brien [2006] ACTSC 90, [2].

7. Ms Firkins seeks that Mr Bosworth pay part of her costs in the Supreme Court proceedings. Section 12 of the ACT Cross-vesting Act states that:

   If a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal if those costs have not already been dealt with by another court.

8. When the matter was transferred from the Supreme Court, the Supreme Court did not make an order about costs. The Family Court therefore has jurisdiction to make an order about the costs of the Supreme Court proceedings as well as the Family Court proceedings.

Discussion

1. In the substantive proceedings, Mr Bosworth sought that the property of the parties be divided between them equally. Ms Firkins sought that each party should keep the assets in his or her own name. I found that the parties’ property should be divided as to 40 per cent to Mr Bosworth and 60 per cent to Ms Firkins. Mr Bosworth already had in his possession the Suburb O property and a motor vehicle. A cash payment of $106,240 from Ms Firkins to Mr Bosworth was necessary in order for Mr Bosworth to receive 40 per cent of the property. I made final orders that Ms Firkins should pay to Mr Bosworth the sum of $106,240.

2. In light of the fact that Mr Bosworth’s application was for 50 per cent of the parties’ property and, at the end of the hearing, he received 40 per cent of the property, I consider that Mr Bosworth was reasonably successful in the proceedings.

3. As cited above, costs ordinarily follow the event in these circumstances unless there are special circumstances, such as the existence of a Calderbank offer, which would suggest otherwise.

4. On 19 March 2012 Ms Firkins made an offer of settlement to pay Mr Bosworth $110,000. This offer falls within the description of a Calderbank offer and was equivalent to a payment in Court. 

5. Ms Firkins argues that she has made a reasonable offer to settle the matter which Mr Bosworth did not accept, and this constitutes special circumstances justifying an order that Mr Bosworth pay her costs in Supreme Court proceedings from 19 March 2012 and that Mr Bosworth pay all costs of and incidental to proceedings in the Family Court.

6. Mr Bosworth concedes the offer of settlement on 19 March 2012 was very close to the final orders made.[11]  However, he argues that the March 2012 offer was not capable of proper assessment as there was no agreement at the time when the offer was made as to the value of Ms Firkins’ property in Suburb M. Mr Bosworth submits that the value of the Suburb M property was not agreed upon until the second day of the hearing, and so it was not until that day that the offer of settlement could be properly considered.[12]

   [11] Submissions for Mr Bosworth, [8].

   [12] Submissions for Mr Bosworth, [6] and [7].

7. It is asserted by Ms Firkins that, at the time the March 2012 offer was made, she relied upon the value of the Suburb M property as $625,000.[13] Ms Firkins had proposed, under cover of letter dated 22 February 2012, that the Suburb M property be attributed the value of $625,000.[14] Hence the March 2012 offer of $110,000 as a proportion of an asset pool where the Suburb M property was $625,000 was greater than the final outcome where Mr Bosworth received $106,240 in an asset pool where the Suburb M property was valued at $680,000.

   [13] Submissions for Ms Firkins, filed on 9 November 2012, [7].

   [14] Submissions for Ms Firkins, filed on 9 November 2012, [7].

8. There is some force to the argument that unless a litigant is capable of evaluating the effect of an offer, the significance of the offer is diminished.  However, in this matter, as the solicitors for Ms Firkins submit, financial statements had been filed as early as June 2010 and the parties had been communicating about the proposed value of the Suburb M property since at least February 2012. In light of this, Mr Bosworth would have been able to consider, in approximate terms, the significance of Ms Firkins’ offer of 19 March 2012.

9. Furthermore, the public principle that it is advantageous to prevent people from spending money on legal costs and occupying court time in pursuing legal matters is, to some extent, more robust then enabling everyone to ascertain in absolutely precise terms the ultimate effect of an offer for settlement. If the applicant had accepted the offer of settlement when it was made, he would have been approximately as well off as he was as a result of the hearing and, furthermore, the cost of further proceedings and the time associated therewith would have been avoided.  

10. However, such a simplistic approach fails to take account of other factors which are relevant in determining whether an order for costs should be made in this matter. This was a matter with a number of complexities that required determination. The parties were in dispute about when their domestic relationship ended and the evidence of each party relating to this issue was vastly different. There was a dispute about when the domestic relationship ended and this affected the question of whether leave should be granted for Mr Bosworth to bring his application out of time. There were issues about whether various amounts of money should be added-back and whether other amounts should be considered as post-separation contributions. The issue of Mr Bosworth’s contributions during the relationship was also heavily in dispute. In my view, the positions of the parties on these issues were so disparate (save for the issue of leave) that this was a matter which needed to be judicially determined.

11. I do not consider that the conduct of the parties during the proceedings has any bearing on the question of costs.

12. Mr Bosworth submits that Ms Firkins was unreasonable in not agreeing to have the proceedings heard and determined under the Family Law Act by consent. I understand this to mean that Ms Firkins was unreasonable in not agreeing to “opt in” to have the matter determined under the de facto provisions of the Family Law Act. I do not regard that as a course of conduct which would justify the making of a costs order in favour of either party. Parties are not required to opt in to the Family Law Act and are entitled to bring their proceedings under the Domestic Relationships Act if their relationship ended prior to 1 March 2009, as the relationship did in this matter.

13. Mr Bosworth also submits that Ms Firkins “pursued issues at the hearing previously uncanvassed”. Mr Bosworth’s submissions do not elaborate as to what those issues were. However, I assume it is the discussion about jurisdiction which occupied some time at the beginning of the hearing. The question of jurisdiction arose out of some confusion about what Mr Bosworth asserted the end of the domestic relationship to be, whether it was before or after 1 March 2009.  That question would affect the issue of whether the proceedings should have been determined under the Family Law Act. This is a question which is part of the nature of proceedings brought under the Domestic Relationships Act and I do not regard counsel’s conduct in relation to this issue during the substantive proceedings as significant to the question of costs.

14. In summary, although the offer made by Ms Firkins was close to the ultimate result achieved by Mr Bosworth, this was a matter which involved issues in need of litigation and judicial determination. For the reasons above, I am satisfied that each party should bear his or her own costs of the proceedings.

15. The matter is removed from the pending cases list. 

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks delivered on 18 January 2013.

Legal Associate:   

Date:  18 January 2013