Browne v Green
[2002] FamCA 791
•17 September 2002
[2002] FamCA 791
FAMILY LAW ACT 1975
IN THE FULL COURT
OF THE FAMILY COURT OF AUSTRALIA Appeal No EA 24 of 2002
AT SYDNEY File No SY 1736 of 1997
BETWEEN:
NEVILLE BROWNE
Appellant Husband
- and -
BELINDA GREEN
Respondent Wife
REASONS FOR JUDGMENT
CORAM: Kay, Coleman & Warnick JJ
DATE OF HEARING: 28 August 2002
DATE OF JUDGMENT: 17 September 2002
APPEARANCES: Mr Lloyd of Counsel, instructed by Aitken McLachlan & Thorpe, 21/1 Castlereagh St, Sydney, appeared on behalf of the Appellant Husband.
Mr Mater of Counsel, instructed by Michael Conley, Level 5, 14 Martin Place, Sydney, appeared on behalf of the Respondent Wife.
BROWNE and GREENE
EA 24 of 2002
Coram: Kay, Coleman & Warnick JJ
Date of hearing: 28 August 2002
Date of judgment: 17 September 2002
COSTS – Discretion – factors to be taken into account – offer of settlement – failure to disclose relevant facts –failure to disclose not causing costs to be thrown away – disparity of financial circumstances – both parties wealthy – husband almost completely successful – whether open to judge to refuse to make costs order in favour of successful party.
PRACTICE and PROCEDURE – Costs application – time for bringing costs application – basis for claiming costs of trial created by successful appeal – whether time runs from trial or from Full Court decree – whether grant of extension of time necessary or appealable- meaning of “relevant decree” – Family Law Rules Order 38 rule 29.
After a three-year marriage the wife brought property proceedings seeking $1 million from the husband, who cross-applied for property settlement of $50,000. Moore J granted the wife $400,000, but the Full Court upheld the husband’s appeal; the result was that no order was made as to property settlement.
The husband then applied for his costs of the property matter. The wife argued that the application was out of time.
Moore J held that the application was not out of time because the “relevant decree” for the purposes of Order 38 rule 29 was the order of the Full Court, not her own order at first instance. Alternatively, if she was wrong about that, it was an appropriate case for the exercise of her discretion to allow the application out of time.
Her Honour decided that there should be no order as to costs, after considering the following matters:
The husband had successfully defended a claim by the wife seeking $1 million by way of alteration of property interests, although he had himself failed on a cross-application seeking $50,000 from the wife.
Had the husband’s offer of settlement been accepted the proceedings would have been avoided.
The husband was in a much stronger financial position than the wife, having net assets of $2.98 million compared with the wife’s $1.29 million.
The husband had failed to disclose to the wife or the court that prior to the delivery of the first judgment by Moore J, but after the evidence had been completed, he had taken preliminary steps towards pursuing a claim against one of his creditors.
Held: in allowing the appeal and ordering that the wife pay 75% of the husband’s costs of the property matter and of the costs application, and 100% of the husband’s costs of the costs appeal
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 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.
Had the failure of the husband to make discovery meant that the parties had wasted money in the proceedings on issues which did not have to be fought, or had the failure to make discovery had the real potential of avoiding the proceedings or somehow minimising the costs involved in the proceedings, then it would have been appropriate to give that failure significant weight. But in these circumstances, where the failure happened after the trial and ultimately had little or no consequence for the outcome of the proceedings, it is difficult to say that it merits the removal of what might have otherwise be seen to be an appropriate costs order in favour of the husband.
APPEAL ALLOWED
COSTS ORDER GRANTED
REPORTABLE
This is an appeal against an order made by Moore J on 15 February 2002 dismissing the appellant husband’s application that the wife pay his costs of and incidental to property proceedings heard by her Honour in 1998. The appellant sought an order that the respondent pay his costs from 12 June 1998 until the time the judgment was delivered in those proceedings.
Background
The trial had taken place between 27 July 1998 and 4 August 1998 and her Honour delivered judgment on 21 September 1998. Her Honour ordered the husband to pay $400,000 to the wife by way of alteration of property interests.
The husband appealed those orders to the Full Court and on 29 October 1999 the Full Court set aside the trial Judge’s orders and ordered that the wife’s claim for alteration of property interests be dismissed.
On 25 November 1999 the husband applied to Moore J seeking the costs of the proceedings before her. He relied not only upon his ultimate success in the proceedings by reason of the Full Court orders, but also upon a written offer of settlement dated 12 June 1998 wherein he offered to pay the wife the sum of $15,000.
In determining to make no order for costs of the proceedings Moore J identified four matters which she said were relevant to be weighed in the balance. They were
· The husband had successfully defended a claim by the wife seeking $1 million by way of alteration of property interests, although he had himself failed on a cross-application seeking $50,000 from the wife.
· Had the husband’s offer of settlement been accepted the proceedings would have been avoided.
· The husband was in a much stronger financial position than the wife, having net assets of $2.98 million compared with the wife’s $1.29 million.
· The husband’s failure to disclose to the wife or the court that prior to the delivery of the first judgment by Moore J
“…the steps he took to work up a claim with his legal advisors against ATG [a creditor to whom he owed approximately $300,000] disputing the liability to repay and claiming damages from them without any disclosure of his activity to the wife or to the court at first instance and the increasingly strong likelihood prior to the delivery of judgment that he would make a substantial claim, particularly in the face of his instructions to move from the realm of advice to having draft Statements of Claim prepared by senior counsel. Added to that, though I consider his conduct prior to delivery of first instance judgment sufficient to come to the same conclusion on discretion factors, there is also his failure to disclose the litigation he launched either to the wife or to the Full Court.”
Her Honour concluded that the latter two matters negated the first two and accordingly declined to make any order for costs.
The appeal
The main thrust of the appeal as argued before us was the appellant’s submission that her Honour had either inappropriately taken into account the non-disclosure issue or alternatively had given it and the financial disparity far too much weight resulting in an outcome that was manifestly unjust. There were many other issues raised in the amended notice of appeal, but having regard to the outcome of the appeal it is unnecessary to deal with them at any length.
The time for bringing the costs application
There was a preliminary point taken on behalf of the respondent that is in our view totally unmeritorious. Section 117(2) of the Family Law Act empowers the court to make a costs order subject inter alia to “the applicable Rules of Court”.
Order 38 rule 29 of the Family Law Rules provides that:
“An application for a costs order may be made
(a) at any stage of proceedings; or
(b) within 28 days after the date on which the relevant decree in the proceedings was made; or
(c) within any further time allowed by the court.”
The husband had submitted to the trial Judge that the “relevant decree” that enlivened the costs application was the decree made by the Full Court which effectively dismissed the wife’s claim. Until that time there would seem to be little sense in the husband applying for a costs order from the orders made by Moore J at trial because he had not been significantly nor entirely successful. Nor could he have relied on any offer of settlement made in writing. It was only once the Full Court set aside Moore J’s orders that the husband could have hoped to succeed in respect of any application for costs of the trial.
In the alternative the husband said that if the “relevant decree” referred to in Order 38 rule 29 was the original decree made by Moore J there were appropriate circumstances for Moore J to allow the costs application to be made out of time.
Moore J concluded that the expression “relevant decree” ought be given a broad meaning sufficient to include a decree made by the Full Court. Her Honour said:
“13.Nonetheless, it has seemed to me that the expression is open to the interpretation that Mr Lloyd contended…it would be impracticable and potentially unjust to read the expression down by confining it to the decree at first instance. I am satisfied, therefore, that the husband does not require an extension of time to bring his application. This means, however, that when costs claims are made in circumstances where there has been considerable delay since the trial, it raises the question as to the time at which the parties’ financial circumstances are to be viewed under paragraph (a) and that is not without its dilemma. I shall return to that later.”
Her Honour then went on to say however that if that interpretation was erroneous this was a case clearly in which it was appropriate to extend time.
Whilst Mr Mater in his written submissions to us persisted with the submission that her Honour ought not have dealt with the costs application coming as it did some 13 months after her Honour’s initial judgment in the matter, nothing was demonstrated to us to indicate that in any way it would be appropriate for us to interfere with the discretion vested in her Honour pursuant to Order 38 rule 29. The submission that her Honour ought not to have entertained the costs application was entirely without merit.
Whilst it is strictly unnecessary for us to determine the issue relating to the proper interpretation of Order 38 rule 29, we see no error in the approach taken by the trial Judge namely that, for the purposes of Order 38 rule 29, when determining an issue of costs of a trial that have not yet been determined and there is a radical alteration in the orders made at trial by reason of the success of an appeal, it can properly be said that the “relevant decree” that enlivens the time within which a costs order should be made is the decree made by the Full Court rather than the decree made at trial.
Issues in a costs application
Before passing to deal with the substantive points raised in this appeal, it is appropriate to make some comment about the manner in which the costs application was conducted before the trial Judge and some of the issues that were raised in the appeal papers herein but which were appropriately not pressed by counsel before us.
The making of a costs order is governed by s 117 of the Family Law Act which provides as follows:
“Costs
(1) Subject to subsection (2) and sections 117AA and 118, 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, subject to subsection (2A)and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) 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, in accordance with section 117C or otherwise, 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.”
Section 117(1) abolishes, for the purposes of Family Law Act proceedings, the general rule that in civil proceedings costs follow the event. Section 117(2) then provides the Court with a general discretion to make costs orders if it is of the opinion that there are circumstances that justify it in so doing. Section 117(2A) sets out the matters that the Court shall have regard to.
The first of the requirements is to have regard to the “financial circumstances” of each of the parties to the proceedings. This is not however a requirement to take into account “the income, property and financial resources of each of the parties” (cf s 75(2)(a)). .
Section 97(3) of the Family Law Act requires that in proceedings under that Act the Court shall proceed without undue formality and shall endeavour to ensure that the proceedings are not protracted. An inquiry under s 117(2A)(a) where the financial circumstances of the parties may be relevant is an inquiry to enable the Court to have some concept of the relative financial positions of the parties. It is not a search for minutiae nor is it to be seen as an appropriate exercise to conduct inconsequential arguments over the value of each party’s assets.
There are clearly cases where a costs order may cause great hardship to one party and little benefit to the other. There are cases where both parties are wealthy, although one is wealthier than the other.
In this case the trial Judge had found, and the Full Court had accepted, that as at the time of the trial the husband had assets to the value of approximately $3 million and the wife had assets to the value of approximately $1 million.
Unless it was asserted at the time of the costs hearing that there had been a radical change in the position of either party, there was in our view no purpose to be served at all in endeavouring to determine whether the wife’s position had marginally improved or the husband’s position had marginally deteriorated. In broad terms, it was a case in which the Court could comfortably say the financial circumstances of the parties were as outlined in the earlier proceedings.
Yet that was not the battleground chosen by the parties before the trial Judge on the costs application. The husband sought to demonstrate that the wife, in an updated statement of financial circumstances prepared for the purposes of the costs application, had understated her income, overstated her expenditure and had undervalued her assets. The extent of each one of those factors, albeit that they all proved to be demonstrated, ultimately could not be seen to have any rational or real bearing on the outcome of these proceedings. Whether the husband had $2 million more than the wife or $1.7 million dollars more than the wife ought to have been of little to no consequence at all and certainly did not justify the course being adopted in the costs proceedings.
The trial Judge said of it:
“33.Whether the formal re-valuation of the wife’s properties was necessary on the costs claim is a topic about which there might be contrary views. Indeed, it may well be thought that, rather than the course the parties took here, costs claims ought to proceed on the basis of the parties’ financial positions at trial, factoring into that the impact of the orders, save in unusual circumstances. As to the specific step taken of updating valuation evidence, it would not be fanciful to envisage a case in which much of the time at trial had been spent agitating disputed values of property and the hearing of the claim for costs had been delayed pending the outcome of an appeal (as here, amongst other factors). Obtaining and presenting in the costs claim fresh valuation evidence, under the canopy of paragraph (a) of sub-s.(2A), has the potential in some cases to spill the costs claim over into areas that occupied much of the time and attention at the hearing in the first place. For my part, in the absence of some unusual circumstance or development going to value in the meantime, I think it unnecessary to take this step. After all, once there is introduced fresh valuation evidence of one piece of property retained by one party in a particular case it might reasonably be asked why at the same time property retained by the other is not also revalued.”
In our view, the process that was undertaken before her Honour in respect of the parties’ financial circumstances is one to be discouraged. What the Court needs to ascertain is a broad overview of the financial circumstances of the parties if it does not already have that broad overview. The costs application is not the time for conducting a wholesale examination into every aspect of the parties’ financial circumstances. There may be cases, of course, in which it is critical to examine a capacity to meet a costs order but this was not such a case. It was sufficient, as we have already indicated that the Court had a broad comparison of the parties’ financial positions available to it.
The course of raising unnecessary issues spilt over into this appeal. The amended notice of appeal contained 10 grounds and 17 sub grounds. The summary of argument ran into 10 pages and the supplementary submission ran to a further 70 pages. There may be cases that demand that sort of attention to detail. This was not one of them. The observation of Lord Nichols of Birkenhead in White v. White [2000] UKHL 54; [2000] 3 WLR 1571 that courts have properly refused to countenance parties incurring costs disproportionate to the assistance the expenditure would give in enabling the Court to carry out its statutory obligations seems most apposite.
Once having determined, as the Court ultimately did in this case, that the husband was considerably wealthier than the wife but that she herself was a person who had assets that exceeded $1 million, the weight to be given to that finding was a matter that had to be viewed in light of the other circumstances of the case.
In some cases the financial disparity between the parties has been critical in the determination of the exercise of the costs discretion. In other cases it has been said to be of little relevance. Thus in JEL & DDF (No 2) (2001) FLC 93-083; 28 Fam LR 119 although the husband had $30 million more than the wife by way of assets, the fact that the wife had $11 million of her own was seen as sufficient to justify a costs order even though there was a huge disparity in favour of the husband. Earlier in Mallet (1984) 156 CLR 605; FLC 91-507; 9 Fam LR 449, even though the husband was more successful than the wife in the proceedings, the financial disparity between the parties (the wife received $260,000 and the husband about $420,000) led the trial Judge to make an order for part of the wife’s costs against the husband, which order the Full Court and the High Court considered was a proper exercise of discretion.
In Kelly (No 2) (1981) FLC 91-108; 7 Fam LR 762 before final orders the husband had assets of over $1 million and the wife had approximately $35,000. She received an order in her favour of $350,000 plus some costs. The Full Court said at FLC 76,810; Fam LR 777:
“In the present case, there is a great disparity in the financial circumstances of the parties. The husband's assets and financial resources which he controls by far outweigh those of the wife. She is not receiving legal aid. These circumstances might well have justified an order for costs in the wife's favour whatever the conduct of the husband in the proceedings.”
In Stein (2000) FLC 93-004; 25 Fam LR 727, the husband successfully appealed against the extent of a spousal maintenance order but was required to pay the respondent’s costs due to a “huge” disparity of financial resources.
The issue of the husband’s conduct in the proceedings.
The parties had commenced to live together in November 1993, separating in January 1997. There was a cohabitation period of just over three years. There were no children born of the marriage.
At the time of the marriage the husband had assets of approximately $7 million and the wife assets of approximately $900,000. By the time of the trial the husband’s assets had dwindled and diminished to be less than $3 million whilst the wife’s had increased slightly. Much of the trial focussed on whether the husband had been wasteful in some investments that led to the diminution of his assets. The wife did not succeed on that issue before the trial Judge or the Full Court.
As part of his diminished assets the husband included a debt of $300,000 to a company ATG. He had entered into a venture known as the Hayle System Project which involved remote monitoring of personal exercise. The project was a financial disaster for the husband.
Shortly after the trial judgment had been delivered in September 1998, the husband commenced proceedings in the Federal Court against the ATG seeking damages of several million dollars. Ultimately in November 2000 the Federal Court delivered judgment awarding the husband some damages. The net result of the Federal Court proceedings was to improve the husband’s position (after payment of the costs of the proceedings unrecovered) by about $438,000.
After being fully appraised of all of the details of the Federal Court proceedings, the wife commenced a s 79A application on 22 December 1999. That proceeding was subsequently abandoned on the basis that each party bear their own costs.
In February 1998 the husband had begun consultations with his solicitors over the ATG debt. He prepared a 22-page statement for his solicitors. That statement had been discovered to the wife prior to the trial taking place in July 1998. Two days after the trial concluded the husband reactivated the ATG matter with his solicitors.
In August 1998 there were meetings and discussions between the husband and his solicitors concerning those proceedings and counsel was retained to provide advice. On 21 September 1998 Moore J delivered judgment and on 21 October 1998 the husband gave his solicitors instructions to proceed in the Federal Court proceedings.
Her Honour said:
“52.A central feature of the submissions for the wife on this factor was related to the husband’s conduct concerning the claim filed in the Federal Court; more particularly, (i) his failure to disclose either to the wife or to this court his actions in working up that claim prior to the delivery of judgment at first instance and (ii) his failure to disclose either to the wife or to the Full Court the fact of the filing of the action after he did so on 29 October 1998.”
Mr Mater asserted before the trial Judge, and her Honour accepted, that the failure of the husband to notify the wife of his intentions viz a viz the Federal Court proceedings was conduct that the trial Judge could take into account in determining who ought to bear the costs of the trial before her. She said:
“53.Mr Mater submitted that Mr Browne’s conduct could fall to be considered either under paragraphs (c) or (g) of sub-s.(2A). I agree. Both factors are available if the case can be made out. In as much as it might be thought that construction of paragraph (c) [‘the conduct of the parties……in relation to the proceedings…’] imposes limits restricting the consideration of conduct to the time prior to the conclusion of the proceedings at first instance, paragraph (g) is available to consider conduct in relation to the proceedings without that time restriction. In other words, I take the view that Mr Browne’s conduct in the course of agitating his appeal can be taken into account under paragraph (g). It is not conduct that is related to some extraneous or dissociated activity. It is his conduct in the same suit or proceedings, albeit at appellate level.
54.Even if I am wrong about conduct at appellate level in the same proceedings being available for consideration under paragraph (g), I think it sufficient to rest the discretion I have exercised here, and shall later record, on paragraph (c) and therefore only on conduct up to the delivery of judgment at first instance.”
Her Honour then made reference to the decisions of Black and Kellner (1992) FLC 92-287; 15 Fam LR 343, Weir and Weir (1993) FLC 92-338; 16 Fam LR 154, Vernon v Bosley (No 2) [1997] 1 All ER 614; (1998) 1 FLR 304, and Livesey v Jenkins [1985] AC 424; [1985] 1 All ER 106; [1985] Fam Law R 813, , which were all cases providing authority for the proposition that it is fundamental in family law proceedings for each party to make a full and frank disclosure of all material facts to the other party and the court.
Even though counsel for the respondent wife had “acknowledged that at the end of the day Mr Brown was not greatly advantaged by the outcome of the Federal Court proceedings”, nonetheless it was submitted to her Honour that his failure to make disclosure about those proceedings should somehow have impacted upon the costs orders that might be made against the wife in the six day trial that had gained the wife no part of her $1 million claim for property settlement although it had enabled her to successfully ward off the counter claim for $50,000 brought by the husband.
Her Honour found:
“71.In my judgment his duty to disclose his activities prior to the delivery of first instance judgment arose at the latest from the point at which he instructed his legal representatives - to whom he had provided considerable information in the form of a lengthy statement as well as a body of documents and from whom he had obtained considered advice – to draw a Statement of Claim. That was done on 15 September. …
72.…Contrary to these submissions on Mr Browne’s behalf, I have concluded that he did have a duty to disclose his actions against ATG to the wife, both prior to the delivery of judgment at first instance and prior to the delivery of judgment on the appeal and I think he was wrong not to have done so.
…
74.… I consider it to be beyond question that he was obliged and ought to have brought the fact of the Federal Court litigation to the attention of the wife through her advisers and the Full Court and that obligation continued until judgment on his appeal was determined.”
As to the effect of failing to make the disclosure, her Honour accepted (emphasis added):
“77.… had the wife, informed of the activity, applied for an adjournment to await the outcome of Mr Browne’s deliberations and, in the result, the outcome of the litigation in the Federal Court… I could not say what the result of any adjournment application would have been. It is also the case…that the ultimate outcome of the Federal Court litigation brought no substantial advantage to Mr Browne. It is the case furthermore that in the context of the financial circumstances here receipt of the sum of $78,000 could be viewed that way. Certainly Mr Mater did not cavil with that assessment. … had the wife made an application for adjournment and had it been granted …the result would have been a delay for no material advantage to his net assets and further costs may well have been incurred as a consequence. It is hindsight that allows that to be said. Even so, in my opinion these arguments make no allowance for the context in which these points are now being raised.”
Her Honour then described the effect of the failure as follows (emphasis added):
“80.Mr Browne’s failure to disclose his activity prior to the delivery of judgment at first instance left the wife and the court with the understanding that he had an undisputed obligation to repay $300,000 to ATG and the liability to that extent was taken into account in determining the value of his net assets. That he was ‘seriously considering’ pursuing a claim to be relieved of that obligation to repay his creditor, along with substantial damages for their actions/representations, was a material fact at that point. No one could have predicted the outcome at the time, as Mr Lloyd accurately pointed out at one stage. But the claim he was working up was a substantial one and, as later events revealed, he ended up pledging a lot of money to the pursuit of it. That he actually did pursue it prior to the time his appeal was argued in the Full Court and that he pursued it actively during the time judgment there was reserved, was also a material fact.
81.In a consideration of his claim that the wife pay his costs, it is conduct that is not to his credit and relevant. It is not to the point in a consideration of his claim for costs that it remained to his discredit but became irrelevant, with the benefit of the decision of the Federal Court at hand along with the costs estimates, in the decision to abandon the S.79A claim. In other words, at issue here is not the materiality of the outcome with the benefit of hindsight quite some time down the track but his failure to disclose his activity at all to anyone to whom he had given, and continued to give, the impression that the liability was undisputed.”
When finally deciding the outcome of the costs proceedings, her Honour said, after dealing with the wife’s lack of success and the husband’s written offer:
“95.Yet balanced against the cumulative weight of these factors there are others that favour the wife. The first is the husband’s stronger asset position. The disparity, as discussed earlier, cannot be said to be insignificant when his net assets exceed hers by some $1.7 million. The second is the husband’s conduct in the steps he took to work up a claim with his legal advisers against ATG disputing the liability to repay and claiming damages from them without any disclosure of his activity to the wife or to the Court at first instance and the increasingly strong likelihood prior to the delivery of judgment that he would make a substantial claim, particularly in the face of his instructions to move from the realm of advice to having draft Statements of Claim prepared by senior counsel. Added to that, though I consider his conduct prior to delivery of first instance judgment sufficient to come to the same conclusion on discretion factors, there is also his failure to disclose the litigation he launched either to the wife or to the Full Court.
96.In my assessment the weight of the balance tips against the husband being awarded costs. In other words I can find no justifying circumstances in the end result sufficient to favour the husband with an order for costs, taking the view as I do that his stronger asset position and matters of conduct outweigh the credit he would otherwise have been given for the offer he made and the concession made about his success.”
Discussion
This is a discretionary area of the law and the basis upon which an appellate court can interfere with a discretion is well known. Unless there has been
an error in approach or principle,
the failure to take into account relevant circumstances,
the taking into account of irrelevant circumstances,
the making of findings of fact unsupported by the evidence,
the challenge must be that the orders fell outside a reasonable exercise of discretion, that is, that the orders were “unreasonable or plainly unjust”.
In its widest formulation the discretion and its immunity from challenge was described by Brennan J in Norbis v Norbis (1986) 161 CLR 513; FLC 91-712; 10 Fam LR 819 at CLR 540. His Honour said as follows:
“… Unless the primary judge reveals an error in his reasoning, the Full Court can intervene only if the order made is not just and equitable. How does the Full Court arrive at that conclusion? In Bellenden (formerly Satterthwaite) v Satterthwaite (1948) 1 All E.R. 343 at p. 345 Asquith L.J. stated the rationale of an appellate court’s approach:
‘…It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.’
The ‘generous ambit within which reasonable disagreement is possible’ is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.”
Costs orders are thought to be particularly immune from attack. Thus in Mallet (1984) 156 CLR 605; (1984) FLC 91-507; 9 Fam LR 449 Wilson J said that the trial Judge’s order for costs based on his reasoning that:
“’However, I do feel the wife is in a much less powerful position financially than the husband.
...It might be said by the husband that the order I am going to make is plainly unreasonable, but I consider, particularly as a result of the difference in the net financial position, that he should pay some amount of costs towards the wife's costs, and I propose to fix the figure at $30,000.’
…
…was plainly within the range of a sound discretionary judgment and the reasoning of the learned Judge shows a proper understanding of sec. 117 of the Act.”
Indeed in Harris v Harris (1991) FLC 92-254;15 Fam LR 26 Ellis, Strauss and Lindenmayer JJ went so far as to say (perhaps stating the position at its highest):
“Orders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full Court should interfere with a costs order.”
But that immunity is not complete. Although in Nemeth v Nemeth (1987) FLC 91-844 Evatt C.J., Smithers and Baker JJ said at 76,385:
“The failure of a party to be completely open and forthcoming as to his or her financial position, should always place that party at risk in relation to an order for costs.”
the weight to be given to a failure to make discovery will in each case need to be assessed in the light of the nexus, if any, between the failure and the costs incurred, the substance of the non-disclosure, and of course the other relevant factors in the case.
In this case, the vast bulk of the costs were expended before any suggestion of any conduct on behalf of the husband that could be seen to be referrable to the costs of the proceedings. The substance of the non-disclosure after hearing but before judgment at first instance was the rather indefinite prospect of litigation. The trial had taken place before the husband decided to issue the Federal Court proceedings. Ultimately the outcome of the Federal Court proceedings could be seen to have no reasonable bearing on the proceedings between the husband and the wife. Instead of having come out of the marriage $4 million poorer, he would have come out only $3½ million poorer. It is not possible rationally to suggest that the diminution in his loss would have led to any other result than that reached by the first Full Court in these proceedings, namely that the wife’s claim for alteration of property interests was without merit.
So, why then should a post hearing but pre-judgment failure to make disclosure of a prospect of litigation coupled with a financial disparity between the parties in circumstances where the applicant was herself worth in excess of $1 million be of such weight that it can be equal to the total failure of the proceedings on behalf of the wife seen in light of an open offer to settle the matter made in writing? Notwithstanding the arguments of the respondent that it was within the range of discretion, we think that such an outcome is untenable.
Had the failure of the husband to make discovery meant that the parties had wasted money in the proceedings on issues which did not have to be fought, or had the failure to make discovery had the real potential of avoiding the proceedings or somehow minimising the costs involved in the proceedings, then it would have been appropriate to give it significant weight. But in these circumstances, where the failure to make the disclosure happened after the trial and ultimately had little or no consequence for the outcome of the proceedings, it is difficult to say that it merits the removal of what might have otherwise be seen to be an appropriate costs order in favour of the husband.
We conclude in the circumstances that far too much weight and attention was given to this issue and too little attention was given to the issue that a wife of not insubstantial means brought a wholly unsuccessful application against a husband of greater means and persisted with that application in face of what turned out to be a more than reasonable offer to settle the matter.
We would agree with the observations of Nygh J in Robinson and Higginbotham (1991) FLC 92-209; 14 Fam LR 559 at FLC 78,417; Fam LR 561:
“…I accept counsel for the husband’s submission that paragraph (f) does not have any particular priority, but its importance must surely be weighed in the light of all the circumstances of the case.
…
Similarly, when one looks at 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...”
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.
Conclusion
The extent to which that order would otherwise be ameliorated by the disparity of the financial position of the parties and the post hearing conduct of the husband are matters upon which minds might differ but ultimately we do not believe it could be said that in the circumstances of this case it would be appropriate that the wife escape any costs obligations.
Both counsel requested that if we were to interfere with the judgment we should substitute our own discretion. Neither wished to lead any further evidence relating to the exercise of that discretion.
In our view, it is appropriate in this case that a costs order be made in respect of the trial costs. Bearing in mind the disparity in the parties’ financial position, and to a very minor degree only the husband’s non-disclosure, however, we are of the view that the wife ought to pay 75% of the husband’s costs of the proceedings before the trial Judge from a date one week after the making of the open offer, namely from 19 June 2002. We include an extra period to allow the wife reasonable time to have given consideration to the offer.
We have also been asked to determine whether the costs should include the costs of the costs application itself. The husband claims to have spent $30,000 on that application alone. We would like to express the view that such a claim seems to be excessive and disproportionate in the circumstances. The issue to be determined on the costs question was of a very narrow compass. It ought to have included a short appearance and to the extent that there were some points relating to the issues of non-disclosure then perhaps they needed to be supported by a short affidavit with relevant documents. At best the matter should have taken no more than half a day.
In the circumstances, whilst the costs to be paid are to be as agreed or taxed, in so far as they include the costs of the costs application to the trial Judge itself, the amount attributable to the appearance before the trial Judge on the costs application and the preparation of the costs application ought be fixed by us in the sum of $2,500, of which 75% will be payable by the wife pursuant to the terms of these orders.
Costs of the appeal.
Each counsel conceded that there were circumstances that would make it appropriate that costs follow the event in this appeal.
Orders
The appeal be allowed.
The wife pay 75% of the husband’s costs of and incidental to the proceedings before Justice Moore incurred on or after 19 June 1998. The quantum of costs is to be as agreed or taxed on a party/party basis. The amount allowed to the husband for the costs application itself is fixed at $2500 of which 75 percent is payable by the wife.
The wife pay the husband’s costs of and incidental to the appeal as agreed or as taxed on a party/party basis in default of agreement.
I certify that the 63 preceding
paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.
Elizabeth Hore
Associate
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