Bronson and Bronson (No 2)

[2012] FamCA 676

FAMILY COURT OF AUSTRALIA

BRONSON & BRONSON (NO. 2) [2012] FamCA 676

FAMILY LAW – COSTS - Offer of settlement - Where the Husband made an offer of settlement in July 2010 which, if accepted, would have put the Wife in a superior position to that she was in following the making of final Orders after trial – Discretion and the importance of offers in avoiding litigation costs to both parties

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Browne & Green (2002) FLC 93-115
Jensen & Jensen (1982) FLC 91-263
Penfold & Penfold (1980) 144 CLR 311
Robinson & Higginbotham (1991) FLC 92-209

APPLICANT: Mr Bronson

RESPONDENT: Ms Bronson

FILE NUMBER: SYC 7875 of 2009

DATE DELIVERED: 13 August 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 13 August 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Othen

SOLICITOR FOR THE RESPONDENT: Dimocks Family Law

Orders

1. The Respondent pay 80% of the Applicant’s party and party costs from 28 July 2010, with those costs to be agreed or, failing agreement, to be assessed or taxed.

2. Each party shall bear their own costs of and incidental to this application and those costs of the Applicant are excluded from the costs referred to in paragraph 1 of these Orders.

3. For the purpose of paragraph 1 of these Orders, unless otherwise agreed, the Applicant is to provide to the Respondent within twenty-eight (28) days of the date of these Orders an assessment of such costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bronson & Bronson 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 BRISBANE

FILE NUMBER: SYC 7875 of 2009

Mr Bronson

Applicant

And

Ms Bronson

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. On 23 April 2012, I made orders and delivered reasons in the substantive property proceedings between the parties. As set out in paragraph 79 of those reasons, I determined that the total net pool of assets of the parties, which was inclusive of superannuation, was a net $1,815,421.00. I determined that that pool of assets ought be divided in the proportions of 55 per cent / 45 per cent in favour of the Husband for the reasons there set out.

2. In terms of 45 per cent of the pool as found, it can be seen what that meant in real terms at paragraph 161 and following of the reasons. In short, 45 per cent of the pool, excluding the relevant woodlot investments and furniture divided equally between the parties through other Orders, was the amount of $816,939.45.

3. By an Application in a Case filed on 23 May 2012 and supported by an affidavit also filed on that date, the Husband sought an Order that the Wife pay to him the sum of $73,010.38 by way of costs incurred by him in respect of the substantive proceedings since 28 July 2010, together with the costs of this application.

4. At the outset of this hearing, Mr Othen of Counsel for the Husband clarified that in fact the Husband was not persisting in that Order in the sense that it would see the Husband being paid or receiving costs on an indemnity basis, and Mr Othen on behalf of the Husband conceded that there was no basis for there to be an Order for costs on an indemnity basis. Rather, the Husband sought that the costs he receive be on a party and party basis on and from 28 July 2010 by reference to an offer then made as set out in correspondence attached to the Husband’s affidavit.

5. Relevantly, by letter dated 28 July 2010, the Husband’s then-solicitors wrote to the Wife’s then-solicitors (and current solicitors) setting out an offer of settlement expressed to be without prejudice except as to costs. That letter set out what the Husband estimated to be the current pool of assets with ascribed values. The critical term of that offer was set out in paragraph number 2 on the second page of the letter, whereby, after proposing that the property at M Street, Suburb A be sold at an auction, “...for the best price reasonably attainable,” that the net balance would be paid as to either the sum of $1,000,000.00 or 44 per cent, whichever was the higher figure, to the Wife, with the Husband to receive the balance. The terms of the offer otherwise referred to each party paying their own costs and for the proceedings to be discontinued, with there being an agreement for a Binding Financial Agreement extinguishing any spousal maintenance claims and also with a proposal that there be a Succession Act 2006 (NSW) deed of release, presumably a mutual deed, whereby neither party could claim on the estate of the other.

6. Relevantly, the Husband calculated, or at least his solicitors calculated as expressed in the letter, that the offer represented 35 per cent of the net assets available.

7. Whilst reference has been made to further offers made by the Husband, particularly in relation to a reference in the further letter of 23 August 2011 to a division and what that would represent, namely a 45 per cent / 55 per cent split of the assets there identified, and a further letter of 22 September 2011, I find that the only relevant offer, for the purpose of this application, is the offer referred to of 28 July 2010. Plainly enough, the offer of a sum certain, namely $1,000,000.00, if accepted by the Wife, would have been more favourable to her, or at least not less favourable to her, than what the Wife was to receive pursuant to the Orders ultimately made in the proceedings, including spousal maintenance.

8. It is settled that s 117 of the Family Law Act 1975 (Cth) (“the Act”) provides the Court with a wide discretion with respect to the making of an Order for costs. Whilst s 117(1) sets out what may be termed the usual rule for each party to pay their own costs, in Penfold & Penfold (1980) 144 CLR 311, the High Court made it clear that the structure of the legislation is such that, if there exists justifying circumstances within the meaning of s 117(2), there is no necessity to find exceptional or extraordinary circumstances for the making of a costs Order in this context.

9. To similar effect in Jensen & Jensen (1982) FLC 91-263, his Honour Justice Nygh held that, “It is not necessary that there be established special circumstances before an Order can be made.” There are numerous other authorities of this Court, both at trial level and from the Full Court, to that effect.

10. In terms of the circumstances to be considered under s 117(2) of the Act, the first such consideration is the financial circumstances of each of the parties to the proceedings. The reasons for judgment set out the parties’ then-relevant financial circumstances, and more particularly, by reference to those reasons, it can be seen what the outcome is for each of them in terms of their financial circumstances having regard to the property each is to receive. The Husband does not supplement his present application with any further evidence as to financial circumstances, and it is reasonable, therefore, to infer upon his account that his financial circumstances are as set out or as found as per the reasons for judgment in the substantive proceedings.

11. For her part, the Wife has filed an affidavit setting out what she says are her current financial circumstances and I refer to her affidavit filed on 9 August 2012. In particular, from paragraph 9 and following of that affidavit, the Wife sets out her expenditure of funds she has received, together with what she says are her continuing additional expenses each week. It is to be noted that under the terms of the Order, the spousal maintenance payment that was ordered to be paid expires on the occasion of the Husband’s seventy-second birthday in December of this year, so it is said that the Wife will not have income on and from that date.

12. However, as can be seen from the reasons, there was not a substantial pool of assets, and in the result, that pool was divided 55 per cent / 45 per cent in favour of the Husband. Whilst I have found in the substantive proceedings that he was likely to continue to earn income until his retirement at age 72, like the Wife, he will be in circumstances where he must rely on capital and investments for his continuing support, albeit that he has repartnered, whilst the Wife has not.

13. Neither party in this case was in receipt of assistance by way of Legal Aid, and in terms of s 117(2)(c), essentially the conduct relied upon by the Wife in resistance to an Order is the Husband’s conduct in pursuing, in the substantive proceedings, the contention that the Wife was employable and capable of earning income, and the Wife points to the Husband’s failure on that issue as a relevant feature so far as conduct is concerned.

14. There is no suggestion that the proceedings were necessitated by a failure of either party to comply with previous Orders, and in terms of s 117(2)(e), there has been a mixture of success in the proceedings so far as discrete issues advanced in the substantive proceedings are concerned.

15. Most relevantly to the present application is s 117(2)(f), in relation to offers made in writing to settle the proceedings. It is clear on the authorities of this Court that an offer of settlement has generally been regarded as highly relevant to an issue of costs. For example, in Robinson & Higginbotham (1991) FLC 92-209 at 78,417, his Honour Justice Nygh said in relation to sub-paragraph (f):

    It is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. …

16. The Full Court of this Court has likewise emphasised the importance of offers. For example, in Browne & Green (2002) FLC 93-115, the Full Court said at paragraph 57:

    We think that whilst s 117(2)(a) 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 117(2)(c) 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 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.

17. As to that last matter mentioned, that is, adequate knowledge of the parties at the time the offer is made, a question arises in this case on the basis that, at the time of the offer, both parties proceeded on an understanding that the relevant property at M Street, Suburb A had a value in the order of $2,800,000.00. About twelve months later, it was sold for $1,600,000.00. There is no evidence one way or the other as to whether $2,800,000.00 was reasonably seen as the value of the property at M Street, Suburb A as at the time of the offer. I was informed from the bar table by Mr Othen of Counsel for the Husband, and there was no demurrer to this on the part of the Wife, that the parties seem to have proceeded at the time on the basis of an historical valuation obtained in about 2004, with presumably some percentage addition to that for the time elapsed in the period between then and when the offer was made.  It seems, on balance, it was unlikely that the property was worth as much as $2,800,000.00 as at the time the offer was made, but be that as it may, the Husband made a firm offer of settlement on the date referred to which was an offer of a sum certain for the Wife to receive $1,000,000.00. It was open for the Wife, and the Wife ought to have given that offer serious consideration in circumstances where the offer remained open until the Wife chose to make a counter-offer about a month later.

18. Whilst the offer in those circumstances was generous to the Wife, if in truth the property was not worth anything like the sum suggested, likewise, it was for the Wife to carefully consider the certainty of a sum of $1,000,000.00 fixed offered to her, that being probably greater than the 44 per cent of the net proceeds of sale that was alternatively offered. I am therefore of the view that it was an offer that, if accepted, would have been much more favourable to the Wife than what she ultimately received in the property proceedings. Whilst the offer did not include a component for spousal maintenance, it can be readily understood by reference to the relevant figures that acceptance of a lump sum of $1,000,000.00 when the offer was made, from the subsequent sale of the property, was far more favourable to the Wife than the property Orders she received, albeit that those Orders included a provision for spousal maintenance for a period. Moreover, the Wife would have saved herself legal costs and obviously the costs of both parties would have been avoided.

19. The only matter that would suggest it would not be justifiable for the Husband to receive the whole of his costs was the position he took in relation to the Wife’s claim for spousal maintenance. As is reflected in the reasons for judgment, the matter came to trial at a point when the Wife had not worked since about 1989. It was clear that, as found in the substantive proceedings, the parties had acquiesced in a position that saw the Wife not working essentially for their 18 year period of cohabitation and obviously over the period following cohabitation, the Wife was not in employment. The Husband nonetheless persisted in his claim that the Wife was employable, even against that background and notwithstanding the medical evidence that was forthcoming following his failure to dispute the fact that the Wife was employable.

20. Whilst it may have been reasonable for the Husband to test the Wife’s case on this aspect, the report of Dr EE was available to the Husband prior to the trial, and in the result, the Husband did not require Dr EE for cross-examination to test the medical opinions there expressed to the effect that the Wife was unemployable. Nevertheless, his Counsel persisted in a case that the Wife was in some way employable.

21. In terms of the trial itself, and having regard to the need to obtain the expert report, it seems to me that, doing the best I can, I should allow so far as costs are concerned, on a party and party basis, no more than 80 per cent of the Husband’s party and party costs, having regard to the issue just referred to.

22. The costs of this application ought not be allowed on the basis that the Husband initially sought an Order for indemnity costs and the Husband, so far as the Court is concerned, only at the hearing modified the application to be for an Order for party and party costs. There was no relevant compliance with the rules with respect to the indemnity costs application sought be the Husband in circumstances where he did not, as required by the Family Law Rules 2004 (Cth) (“the Rules”), set out the terms of any costs agreement with his then-lawyers as is required under the Rules. In any event, in circumstances where he initially proceeded on the basis that indemnity costs would be sought, I decline to include his costs of the current application with respect to the costs Order I have made.

23. For those reasons, I make the Orders set out at the commencement of these reasons.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 13 August 2012.

Associate: 

Date:  16 August 2012