BOYLE and BOYLE

[2018] FCWA 189

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: BOYLE and BOYLE [2018] FCWA 189

CORAM: DUNCANSON J

HEARD: WRITTEN SUBMISSIONS

DELIVERED : 27 SEPTEMBER 2018

FILE NO/S: PTW 6951 of 2015

BETWEEN: MS BOYLE

Applicant

AND

MR BOYLE

Respondent

Catchwords:

COSTS - Offers

Legislation:

Family Law Act 1975 (Cth) s 75(2)(o), s 117
Family Law Rules 2004 (Cth) r 19.08(3)

Result:

Reportable

Representation:

Counsel:

Applicant	:	Self-Represented Litigant
Respondent	:	Self-Represented Litigant

Solicitors:

Applicant	:	Self-Represented Litigant
Respondent	:	Self-Represented Litigant

Case(s) referred to in decision(s):

Browne v Green (2002) FLC 93-115

Collins and Collins (1985) FLC 91-603

Fitzgerald v Fish (2005) 33 Fam LR 123

I and I (No 2) (1995) FLC 92-625

Kohan and Kohan (1993) FLC 92-340

Madin v Palis (Costs) (2016) 55 Fam LR 59

Pennisi v Pennisi (1997) FLC 92-774

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES' NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

INTRODUCTION

1This is an application for costs made by the husband, [Mr Boyle] arising from property proceedings between him and the wife, [Ms Boyle].

2On 16 February 2018 I delivered reasons for judgment in the proceedings. I made final orders concerning property and child support on 20 March 2018.

3I further ordered that in the event a party sought costs, that party should file and serve submissions as to costs within 28 days. The responding party was to file submissions as to costs within 28 days of service. I ordered that unless within 14 days a party sought a listing for a hearing as to costs, the application for costs would be determined upon the written submissions and judgment issued from chambers.

The submissions

4The husband filed submissions for costs on 16 April 2018.

5The wife's position is that the husband did not serve his submissions upon her, or her former legal representatives.

6The wife filed responding submissions on 8 June 2018 and, to the extent necessary, sought leave for an extension of time to file her submissions to that date.

7On 31 July 2018 the husband's legal representatives requested leave to file a brief response to the wife's submissions within 14 days.

8On 4 September 2018 the Principal Registrar wrote to the husband's legal representatives informing them that a direction had been made that they file a brief submission in response to the wife's submissions only to respond to matters not previously raised. The submission was to be filed within 14 days, that is by 19 September 2018.

9By letter dated 13 September 2018 the wife objected to the husband filing any further submissions. No further submissions have been filed by or on behalf of the husband.

10I have determined the issue of costs on the basis of the husband's submissions filed 16 April 2018 and the wife's responding submissions filed 8 June 2018.

THE ORDERS SOUGHT

11The husband seeks his costs of and incidental to the proceedings on account of the terms of written offers made by each party to settle the proceedings, and on account of offers he asserts he made to the wife by text message both prior to, and soon after, "the institution by the Wife of her property settlement proceedings". He seeks payment of his costs from the wife in the sum of $236,813.

12The wife seeks that the husband's application for costs be dismissed, and that the husband pay her costs of instructing solicitors to respond to his application, fixed in the sum of $2,000.

BACKGROUND

13At trial the wife proposed that the husband authorise the payment of $640,000 to her from the Westpac term deposit, to be applied by her in payment of her legal costs, with the balance to be placed in an interest bearing account and used towards the purchase of a property in her name. She sought a superannuation splitting order such that she be allocated $75,000 from the husband's interest in the West State Super scheme. She sought an order that the husband transfer his interest in the [Jeep] motor vehicle to her, and the parties otherwise retain the assets and liabilities in their respective names. She also sought a departure from the administrative assessment of child support such that the husband pay periodic child support of $500 per week, together with various expenses by way of non-periodic child support.

14The husband proposed to make a cash payment to the wife of $125,426 from the proceeds of the sale of the [Suburb A property] (held in the Westpac term deposit). He proposed to transfer to her 20% of the securities held in his entities, or alternatively the sale proceeds thereof. He also proposed to pay her the sum of $4,560, being 20% of the value of shares held by him and to transfer to the wife his interest in 20% of the Bartercard trade dollars. He proposed to transfer the Jeep motor vehicle to the wife and the parties otherwise retain the assets and liabilities in their respective names. He sought a superannuation splitting order such that the wife receive $40,496, and he opposed the orders sought by the wife for child support.

15I found that the total value of the parties' property amounted to $1,249,150. I did not include the parties' outstanding legal costs and I declined to add back post-separation payments paid to or on behalf of the wife and children.

16In my reasons I determined that the overall distribution of property should be 42.5% to the wife and 57.5% to the husband.

17Taking into account assets and liabilities to be retained by each of the parties I ordered that the husband pay to the wife the sum of $503,000 from the Westpac term deposit. I further ordered that the husband transfer his interest in the Jeep motor vehicle to the wife.

18I declined to make the order for periodic child support sought by the wife, but made the orders for non-periodic child support sought by her.

THE LAW

19Section 117(1) of the Family Law Act 1975 (Cth) ("the Act") provides that, subject to s 117(2), each party to proceedings shall bear his or her own costs. Section 117(2) provides that if the Court is of the opinion there are circumstances that justify it in doing so, the Court may, subject to s 117(2A), make such orders as to costs as it considers just. Section 117(2A) provides as follows:

In considering what order (if any) should be made under subsection (2), the court shall have regard to:

(a)the financial circumstances of each of the parties to the proceedings;

(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

(g)such other matters as the court considers relevant.

20The Full Court of the Family Court of Australia in Collins and Collins (1985) FLC 91-603 described the discretion conferred by s 117 as being a "broad" one, and noted that the s 117(2A) factors are not to be read in a restrictive way. The Full Court said in I and I (No 2) (1995) FLC 92-625 at 82,277, the relevant matters in s 117(2A) "must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs". The Full Court in Fitzgerald v Fish (2005) 33 Fam LR 123 also made clear that any one of the factors referred to in s 117(2A) may be the sole foundation for an order for costs.

21It is necessary for me to take into account all of the relevant matters in s 117(2A) and balance them to determine whether the overall circumstances justify making an order as to costs.

INDEMNITY COSTS

22The amount of $236,812 sought by the husband is the actual costs incurred by the husband to various legal practitioners from 30 November 2015 being the date upon which the wife filed her initiating application to 20 March 2018 being the date of orders. It appears the husband seeks payment of his costs on an indemnity basis from the wife.

23The usual rule is that costs are awarded on a party/party basis. Indemnity costs orders are "a very great departure from the normal standard" (Kohan and Kohan (1993) FLC 92-340).

24The Full Court has observed with respect to applications for indemnity costs that they should only be made and will only be ordered "in the most extreme cases" (Madin v Palis (Costs) (2016) 55 Fam LR 59).

25Pursuant to r 19.08(3) of the Family Law Rules 2004 (Cth) ("the Rules") a party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

26The husband has not informed the Court if he is bound by one or more costs agreements in relation to the costs sought by him and if so, the terms of those agreements. The wife submits his application should be dismissed.

27Compliance with r 19.08(3) ensures the Court is informed of the extent to which costs on an indemnity basis exceed those on a party/party basis. In the absence of compliance by the husband, I do not intend to consider costs on an indemnity basis.

(a) the financial circumstances of each of the parties to the proceedings

28The wife submits she does not have capacity to meet a costs order, as she has used her property settlement funds to purchase a car and a property which is subject to a loan. She further submits that she works part time earning a modest income and does not have savings, while the husband is in a comparatively secure financial position and is earning a significant income.

29The parties' financial circumstances are as set out in my reasons. Both parties are in a position to meet a costs order should one be made, although in the case of the wife, not without difficulty.

(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party

30Neither party was in receipt of assistance by way of Legal Aid.

(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters

31This concerns the conduct of the parties as litigants in these proceedings.

32The wife submits that the husband's conduct was not beyond reproach in the proceedings and is a factor for consideration. She submits this is demonstrated by the husband filing numerous protracted affidavits, his failure to disclose critical documents until late in the proceedings, his litigious approach to the proceedings and lack of proportionality to the issues in dispute, and his "wholly unsuccessful arguments on major issues at trial such as add backs of legal fees of $482,391".

33At [17] of my reasons I found as follows:

The husband was fully prepared and presented his case with meticulous detail. His evidence as to the financial detail was reliable. He cross‑examined the wife extensively regarding her expenditure. I accept this was something he considered was necessary to establish his case and the issues which he addressed at some length were of considerable importance to him. The period of time post-separation has been costly to both parties and the husband was genuinely saddened by what he saw as the unnecessary depletion of the parties' assets.

34I am not persuaded that the conduct of the husband is a circumstance justifying an order for costs. The husband does not address the wife's conduct in his submissions.

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

35Not applicable.

(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings

36An aspect of the wife's case in which she was unsuccessful concerned her application for periodic child support. She was not however wholly unsuccessful with respect to child support, as she succeeded in her application for non-periodic child support.

37An aspect of the proceedings in respect of which the husband was unsuccessful was his application to add back post-separation payments paid to or on behalf of the wife and children as notional assets in the balance sheet. These amounts totalled $482,391.

38The wife submits that the husband's fixation on the add backs resulted in a significant amount of lengthy correspondence passing between the parties, interim applications, time spent during trial, and an inability to effectively negotiate with the husband. She further submits that the husband's insistence upon add backs ultimately led the parties to trial where the husband was wholly unsuccessful in his argument.

39I did not add back those amounts totalling $482,391. I found that funds were expended on the provision of housing for the wife and children at a time when the husband was earning significant amounts, and the wife was not in employment and was financially dependent upon him. I was not persuaded that these funds ought to be added back, nor that they should be taken into account under s 75(2)(o) of the Act.

40Other funds included those characterised as maintenance, or those paid by way of legal costs. In my discretion I declined to add them back. I took them into account when considering the husband's contributions post-separation and the reasonableness or otherwise of the wife's expenditure was taken into account when considering s 75(2)(o).

41Although the husband was unsuccessful in this respect, his position was not without merit and required careful consideration by the Court.

(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

42In Browne v Green (2002) FLC 93-115 at [57], the Full Court emphasised the importance of offers. The Full Court said:

We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.

43The husband refers to written offers made by each party to settle the proceedings. He submits his first offer to settle, if accepted, would have resulted in the wife receiving some $16,000 more in cash than was ultimately ordered. In contrast, he submits the wife's three offers to settle all proposed that he pay her "patently more" than was ordered.

44On 25 November 2016 the parties signed a minute of consent orders, pursuant to which they agreed the husband would transfer to the wife $550,000 cash, $30,000 of Bartercard credit, the Jeep motor vehicle and 40% of the husband's interest in the Mercer Super Trust or cash of the same value. The husband submits that the wife resiled from the agreement, which was more favourable to her than the final property orders, as it provided approximately $45,000 more in cash and it would have saved significant court legal costs.

45Of the $550,000 cash payment, $100,000 was to be characterised as spousal maintenance; the wife submits that the cash component of the November 2016 minute was therefore $450,000 and not $550,000. The minute contained conditions that made the terms of the offer unacceptable to the wife, including: disregarding amounts owed by way of child support which the husband was ultimately ordered to pay; an offer to pay child support of $400 per week when the wife received $500 per week based on an assessment; ignoring legal fees of over $68,000 owed by the wife, and requiring monies paid by the husband to be treated as an advance against the wife's ultimate entitlements.

46The wife submits that irrespective of these factors, the offer should be disregarded in any event because the wife did not have sufficient disclosure from the husband to properly consider his offer, which information was only available when he filed his trial affidavit in May 2017.

47The husband submits a further written offer dated 6 February 2017 would have been more favourable to the wife than the final orders. This offer increased the cash payment to be received by the wife under the November 2016 minute from $550,000 to $560,000, reduced the Bartercard credit from $30,000 to $20,000, substituted the 40% superannuation split with a payment of $6,000 to the wife, and contained a proposal for the construction of a residence for the wife.

48The wife submits the husband oversimplifies the February 2017 offer by focussing solely on the cash component without regard to the overall effect of the settlement to be received by her. She submits he ignored the conditions he placed on the offer including that the wife accept $162 per week child support for one year, and that she receive her property settlement entitlements in instalments. The offer provided for the construction of a new dwelling for the wife on land to be purchased and developed by the husband. It contained conditions requiring the wife to purchase the rear block and borrowing construction finance of $150,000. The conditions with respect to payment of child support and the purchase of property were unacceptable to the wife and she says she did not have sufficient disclosure from the husband at the time.

49The husband made a further offer to the wife dated 25 July 2017. The husband's offer states that it "is necessarily lower than previous offers due to the depletion of the asset pool by way of post separation payment to your client and legal fees incurred since the time of his most recent offer". The terms of the offer were that he provide the wife a cash payment of $300,000, superannuation in the amount of $100,000 inclusive of her own superannuation, $40,680 Bartercard credits, the Jeep motor vehicle, and that she retain her jewellery and household contents. The husband agreed to various payments by way of non‑periodic child support.

50The wife submits this offer was made after the husband had disclosed critical documents, and is the only offer the Court should consider. The wife refers to the husband's unsuccessful argument in respect of add backs. She submits the offer was less favourable to her than was ordered, equating to $80,934 less than she received at trial. Its composition was also less favourable in that she would receive less cash and more Bartercard credits. The child support payments offered were also less favourable than she received at trial.

51The wife does not rely on offers of settlement made by her. The husband refers to her offers dated 6 September 2016, 31 March 2017 and 27 July 2017, which he variously describes as excessively unreasonable, and exceeding the value of property settlement orders made at trial. He submits her constant demand that she receive at least $640,000 in cash is "bewildering".

52The parties do not agree as to whether child support proposals were separate and distinct from property settlement proposals. The husband says they were not describing them as independent issues capable of being resolved independently.

53The wife submits property settlement and child support were part of a package deal.

54I consider it more likely than not that they could not be treated as separate issues. The wife's proposal dated 6 September 2016 clearly included child support issues and the minute dated 25 November 2016 recited that the husband had agreed to pay child support. Similarly the husband's offer dated 6 February 2017 refers to child support to be paid by the husband as does the minute of final orders sought by the wife filed 30 March 2017 and the husband's offer dated 25 July 2017.

55In Pennisi v Pennisi (1997) FLC 92-774 the Full Court stated at 84,547 that:

... it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror ...

We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.

…

The plain words [of s 117(2A)(f)] do not limit a Court's attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.

We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties' financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.

56I have carefully considered the terms of the offers. In the complex circumstances of this case and having regard to the extent of the wife's knowledge of those circumstances, I am not persuaded the wife failed to accept a reasonable offer.

57This is not a circumstance justifying an order for costs.

(g) such other matters as the court considers relevant

58The husband submits that the Court ought to take account of offers he made to the wife by text message. He says prior to and soon after the institution of proceedings he sought to settle proceedings by offering to divide the parties' assets equally. He says the wife did not accept these offers or make counter offers in response.

59The husband annexes to his submissions transcripts of "text messages to settle" sent on 27 November 2015 and on 7 December 2015, together with a bank statement, which he submits demonstrates the balance owing on the home loan being $32,559 and also GESB superannuation statements. The husband submits that if accepted, the offer would have provided the wife some $51,000 more in cash and $65,567 more in superannuation than was ultimately ordered.

60In a message dated 26 November 2015 which the husband described as an offer to explain to the wife the parties' assets and liabilities, he stated:

… What is wrong with you??? I have always promised to give you half the proceeds of the house and I am still paying all your bills (except mobile phone). Why are you wasting all this money on lawyers – The bills from the lawyers will start to come in thick and fast … You are denying that money to our kids!! You need to discontinue the legal action – the outcome will be exactly the same!!!

61The extracts of text messages annexed to the husband's submissions are not shown in their context.

62The wife submits that the 2015 text messages were so vague and imprecise in their terms that they cannot be construed as having any meaning and constitute negotiations, rather than offers. I accept her submission in that respect.

CONCLUSION AS TO COSTS

63Taking all of the above matters into account and balancing them, I am not satisfied that there are circumstances which justify the making of an order for costs in favour of either party. In my view each party should bear his or her own costs.

THE ORDERS

1There be no order for costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

RM
ASSOCIATE

27 SEPTEMBER 2018