Bullivant and Holt
[2016] FamCA 9
•20 January 2016
FAMILY COURT OF AUSTRALIA
| BULLIVANT & HOLT | [2016] FamCA 9 |
| FAMILY LAW – COSTS – Discretion – Where the matter was cross vested to the Family Court of Australia and the matter was heard under the Domestic Relationships Act 1994 (ACT). |
| Domestic Relationships Act 1994 (ACT) Court Procedure Rules 2006 (ACT) |
Phosphate Resources Ltd v Minister for the Environment Heritage and the Arts (no 3) [2008] FCA 1899
Calderbank v Calderbank [1975] 3 All ER 333
| APPLICANT: | Ms Bullivant |
| RESPONDENT: | Mr Holt |
| FILE NUMBER: | CAC | 57 | of | 2011 |
| DATE DELIVERED: | 20 January 2016 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Faulks DCJ |
| DATE OF LAST SUBMISSIONS: | 27 June 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Millar |
| SOLICITOR FOR THE APPLICANT: | Farrar Gesini Dunn |
| COUNSEL FOR THE RESPONDENT: | Mr Lethbridge |
| SOLICITOR FOR THE RESPONDENT: | Elringtons (until 30 March 2012) Kamy Saeedi Lawyers (from 30 March 2012) |
Orders
That the respondent pay 60% of the applicant’s costs of and incidental to the proceedings on a party / party basis as agreed or assessed.
Such sum will be paid by the respondent to the applicant within thirty (30) days of agreement or the issuing of the assessment.
The matter is otherwise removed from the pending cases list.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bullivant & Holt 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 CANBERRA |
FILE NUMBER: CAC 57 of 2011
| Ms Bullivant |
Applicant
And
| Mr Holt |
Respondent
REASONS FOR JUDGMENT
These Reasons for Judgment relate to an application for costs made by the applicant on 29 March 2012. In that application she sought that the respondent pay her costs of and incidental to the proceedings on an indemnity basis. In an affidavit filed by her solicitor on 9 May 2012, these costs were quantified as being $200,763.91.
The respondent filed an application in a case on 30 March 2012 seeking that the applicant pay his costs of and incidental to the proceedings.
The costs issue is complicated by the fact that the proceedings in this matter were heard pursuant to the Domestic Relationships Act 1994 (ACT) (the “DRA”), the matter having been cross-vested to the Family Court of Australia from the Supreme Court of the ACT. Accordingly, a preliminary issue in this matter is what law regarding costs applies in this instance.
The Relevant Law
The DRA contains no specific provisions or powers in relation to costs. The power in relation to matters heard in the Supreme Court of the ACT is found in the Court Procedure Rules 2006 (ACT). Rule 1721(1) states:
The costs of a proceeding or of an application in a proceeding are in the discretion of the court.
The common law regarding costs in civil matters is that costs follow the event. In Phosphate Resources Ltd v Minister for the Environment Heritage and the Arts (no 3)[1] Buchanan J outlines the following:
[1] Phosphate Resources Ltd v Minister for the Environment Heritage and the Arts (no 3) [2008] FCA 1899.
The general principles which govern the exercise of the discretion referred to in s 43(2) are well established. In Ruddock v Vadarlis (No 2) (2001) 115 FCR 229 (‘Vadarlis’) Black CJ and French J stated (at [11]-[12]):
11 Within the general discretion of the courts to award costs it is accepted by decisions in both Australian and English jurisdictions that:
• Ordinarily costs follow the event and a successful litigant receives costs in the absence of special circumstances justifying some other order.
• Where a litigant has succeeded only upon a portion of the claim, the circumstances may make it reasonable that the litigant bear the expense of litigating that portion upon which he or she has failed.
• A successful party who has failed on certain issues may not only be deprived of the costs of those issues but may be ordered as well to pay the other parties' costs of them. In this sense "issue" does not mean a precise issue in the technical pleading sense but any disputed question of fact or law.
See Hughes v Western Australian Cricket Association (Inc) & Ors (1986) ATPR 40-748 (at 48,136); approved by the Full Court in Queensland Wire Industries Pty Ltd v Broken Hill Co Ltd (1987) 117 FCR 211 (at 222). 12 The award of costs to a successful party is principally by way of perceived restorative justice. The general rule assumes that where an applicant succeeds it will have incurred costs because the respondent's conduct made it necessary for the applicant to bring the proceedings. If the applicant fails, the respondent will have incurred costs defending an action which ought not to have been brought against it.
The essential principle underlying the matter appears to be that it is just that a litigant who had to seek the assistance of a court to redress a wrong should be entitled to seek by way of compensation the expenses he or she incurred in the process.
This is fairly easy to implement in matters involving limited issues but it is far more complicated in matters involving multiple issues – such as is the case in most matters in family law or under the DRA.
Even if the starting point in this matter is that costs follow the event, (a proposition prima facie favouring the applicant), there remains the question of the extent to which the applicant has been “successful” and what the impact should be, if any, of any Calderbank[2]-type offers made in the course of the proceedings.
[2] Calderbank v Calderbank [1975] 3 All ER 333
The Success of the Applicant
There were two key “issues” litigated: (1) whether a domestic relationship existed between the parties and (2) what would be an appropriate adjustment of property interests in the circumstances.
The applicant was in a position where, to receive any kind of property settlement, she needed the Court to find that she and the respondent had been in a domestic relationship, as this is defined under the DRA. This was a threshold issue in the matter and it was ultimately found, by me on 16 March 2012, that the parties were in a domestic relationship. On this issue it can be said that the applicant was successful.
I also made orders about property on that date, ordering that:
1. The parties shall forthwith do all acts and things and sign all necessary documents to cause:
(a) $72,193 of the proceeds of sale of the property known as [B Street, Suburb P] in the Australian Capital Territory, held in trust by KJB Law, to be paid forthwith to [Ms Bullivant], born … 1969 ("the applicant"); and
(b) To pay 37 per cent of any interest accumulated in respect of the said account over and above the figure of $72,193 to the applicant and to pay the balance to the respondent.
2. Within 42 days, [Mr Holt], born … 1970 ("the respondent") shall pay to the applicant the sum of $74,608.
The effect of the above orders, leaving aside the calculation of any interest component, was that the respondent was entitled to a sum of $146,801. This was less than the $853,300 plus the proceeds of the sale of the P property which the applicant sought as per her Minute of Orders sought filed 3 May 2011.
Leaving aside the success or otherwise of each of the parties in relation to the sub-issues under the two major headings above, there is no doubt that in this matter the applicant would not have been able to receive anything (other than potentially her nominated half share of the P property) unless she proceeded to law.
During the course of the proceedings the respondent amended his application to seek that the applicant’s legal entitlement to the P property should be altered in his favour. At that point the applicant lost any opportunity she may have to walk away from the proceedings retaining her own legal entitlement and nothing else. To do so would have simply invited a judgment against her on the respondent’s response / application of the respondent.
This was also a matter in which both the preliminary issue about whether or not there was a domestic relationship and the division of property were dealt with in the one hearing. Accordingly it was difficult for the applicant to make an informed decision (and it was also, of course, difficult for the respondent to make an informed decision) about the division of property until after the trial had commenced. In other words, without knowing whether or not a domestic relationship would be found to have existed both parties were entitled to perhaps keep their powder dry as to what they would seek pending the resolution of that first issue.
The monetary result that the applicant achieved, if her claim for costs is to be believed, would mean that she effectively gets less than it has cost her to take these proceedings.
The authorities referred to above are not binding on me, but are of assistance in determining the principle which might apply in this matter. Leaving aside the matters of the Calderbank offers to which I will turn in a moment, in my opinion the appropriate principle is that she should be entitled to receive her costs as to the determination of the issue of whether or not there was a domestic relationship. In relation to that the applicant was successful.
There is nothing however in this litigation that would prompt me to accept that she should receive indemnity costs. There is nothing in this matter which is out of the ordinary. It is true that the situation was complicated but that would be a reason why she might not get indemnity costs rather than a reason why she should get indemnity costs.
However in relation to quantum, saving the Calderbank offers (to which I shall return) the applicant fell far short of her target. She was seeking (as of 3 May 2011) some $853,300. She was by my order awarded some $146,801. The respondent’s position in essence was that the applicant should only receive one half of the equity in the P property or about $36,000.
In my opinion, on those facts, neither party would be entitled to any order for costs in relation to the “quantum” part of the proceedings or the preparation for it.
Calderbank Offers
The concept of Calderbank offers was a matter of common sense and convenience to avoid the previous practice of paying money into court. When money was paid into court there was a precise sum and it was easy to ascertain what it was that the respondent was suggesting would finalise proceedings. In this case the first Calderbank offer was made by the applicant.
On 7 January 2010 the applicant, through her legal representatives, made an offer of settlement to the respondent. The substance of that offer was that he pay her $175,000 plus one half of the proceeds of the P property (which was valued at $36,096). This would mean that she received a total of $211,096. This offer was withdrawn on 22 March 2010.
In essence, as was suggested by counsel for the respondent, the applicant failed to meet the criteria to rely upon what was describes as a Calderbank offer. She did not receive more than she had indicated she was prepared to receive. Moreover, the amount that she did receive as a result of my judgment was considerably less ($64,295) than the offer would have given her. Her Calderbank offer does not cause me to change my position in relation to costs.
However, there was a further offer tactically if not cynically made by the respondent during the course of the proceedings that if the applicant was prepared to value his business at the figure she did then he would transfer that to her at that figure.
When the matter was before me I formed the clear conclusion that the value that the applicant had obtained did not in any way demonstrate in a realistic way the value of the business. This is reflected in the nature of the respondent’s offer which, as I indicated above, was tactical. Given that in the end I did not find that the value of the business was as the applicant suggested for the purposes of my calculations it would be inappropriate to make an order in relation to costs based on a figure that bore no relevance in the end to reality. Accordingly the respondent’s Calderbank offer so constituted is not relevant to my determination in these proceedings as well.
However, the respondent also made an offer (on 29 April 2011) that the applicant have all of the proceeds of the P property. Such an offer failed to nominate the determined outcome by about the same margin as the applicant’s had.
In my opinion none of the offers made (at least to the extent they have been disclosed) justifies an order for costs in favour of either party.
It would be difficult to precisely separate the costs relating to one issue from the other. I propose therefore, to avoid embroiling the parties in further costs, to determine that the issue about the domestic relationship occupied 60 per cent of the proceedings and preparation and the determination of quantum 40 per cent. Hence the applicant should be entitled to 60 per cent of her costs of the proceedings on a party / party basis.
Those costs should be either agreed or assessed by a Registrar of this Court on a party and party basis. Such sum should be paid within thirty days after agreement or assessment.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks delivered on 20 January 2016.
Associate:
Date: 20 January 2016
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