Carchar & Hbenum (No 2)

[2011] FamCA 683

FAMILY COURT OF AUSTRALIA

CARCHAR & HBENUM (NO 2) [2011] FamCA 683

FAMILY LAW – COSTS – Offer of settlement

Family Law Act 1975 (Cth)

APPLICANT: Ms Carchar by her case guardian Mr KH

RESPONDENT: Mr Hbenum by his case guardian Mr BE

FILE NUMBER: DGC 280 of 2010

DATE DELIVERED: 29 July 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By way of written submissions

SUBMSISIONS RECEIVED FROM:

SOLICITOR FOR THE APPLICANT: Willerbys

SOLICITOR FOR THE RESPONDENT: John Snodgrass & Associates

Orders

1. That in default of agreement by 4:00pm on 5 August 2011 as to the quantum of costs payable by the respondent to the applicant, the respondent pay costs as assessed pursuant to the schedule to the Family Law Rules in respect of:

   (a)       The period from the appointment of the case guardian for the   husband until and including the day of final hearing;

   (b)       The costs incurred in respect of the submission for costs.

IT IS CERTIFIED

1. That in the circumstances it was appropriate for the estate of the wife to be represented at trial by counsel and for an instructor to attend on that day.

IT IS NOTED that publication of this judgment under the pseudonym Carchar & Hbenum (No 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 280 of 2010

Ms Carchar by her case guardian Mr KH

Applicant

And

Mr Hbenum by his case guardian Mr BE

Respondent

REASONS FOR JUDGMENT

1. On 27 June 2011, I made orders giving effect to the enforcement of orders of the court made on 7 November 1991. Under those orders, the wife who had an entitlement to a cash payment was successful in gaining her entitlement together with simple interest.

2. In the orders, I provided for the parties to make written applications for costs.

3. The applicant filed a written submission claiming costs on 1 July 2011 and on 8 July 2011, the respondent replied. I have had regard to both of those documents.

4. For the reasons that follow, it is appropriate to make an order for costs although not in the sum sought by the applicant.

5. The applicant argued that the enforcement application was necessitated by the failure of the respondent to comply with the 1991 orders. Whilst that is true, the applicant waited many years and ultimately undertook the process through a case guardian and finally upon her death, by her estate. The basis of her delay was said to be fear of the husband and I accepted that was so. However, the delay is only one factor to take into account in this case.

6. The applicant submitted that in April 2010, a written offer to settle was made. As was pointed out by the respondent however, that was received by the husband who did not have the benefit of legal representation at that time and who had mental health issues. The extent of those health issues is unclear, particularly having regard to the fact that in 2009, the husband was able to at least give instruction directly or indirectly to lawyers to obtain the title of the property that was the subject of the 1991 orders into his name.

7. I accept that the problems of the husband may have accounted for the fact that he did not respond to the offer in writing. It is important however to look at that offer. Whichever way it is read, the offer if accepted, would have entitled the husband to remain living in the home for the rest of his life. The condition attached to the offer was that upon his death, the house be sold and the proceeds be divided equally.

8. The respondent pointed to the fact that when one considered the value of the property, the applicant was unsuccessful in achieving the outcome which formed the basis of her offer. That conclusion could be drawn from the comparison of the quantum she received under the orders that I made compared with fifty percent of the value of the home. I reject that comparison as having much weight. First, the value is the current day value whereas the offer referred to the death of the husband and I have no detail about his longevity of life.

9. Secondly, the unashamed basis of the offer was that the husband did not need to alter his way of life and the wife was prepared to allow him to not have to go through the process of selling the property and relocating. The orders I have made may have that effect. In my view, the offer was a very sensible one.

10. It was suggested by the respondent that the law is clear that the offer must be precise and be able to be understood by the recipient of it. Whilst it might be accepted that the husband did not have the capacity to understand what was being put to him, there could be no doubt that by December 2010, the case guardian knew exactly what the position was. In my view, the offer does not have to be precise in terms that would be necessary for a civil case and an offer of settlement is only one aspect of the matters that the court is required to consider when contemplating departing from the principle to which I shall refer below.

11. Even if the husband was unable to understand what was  being put to him, having regard to the letter written by Lantern Lawyers in 2009 asserting that the wife no longer had any interest by virtue of having abandoned her entitlement, the husband’s position of silence in respect of the wife’s offer was clear. The husband was on notice by the offer in December 2010 at which stage his case guardian was significantly involved with him. The letter of offer was repeated and a warning was made that if the litigation continued, costs would be sought. The applicant asserted in the submission and it was not denied by the respondent, no response was received to that offer.

12. The applicant submitted that the death of the wife activated the estate to claim in a probate application that the husband owed her a significant sum of money. The sum was much greater than that which I had ultimately agreed was her entitlement. In my view, it was open to the applicant to argue that she was entitled to compound interest despite the fact the I found the order did not provide for it. In those circumstances, it was reasonable for the applicant to file the probate application as was submitted.

13. However I do not accept that it was necessary for the proceedings in this case because by virtue of the jurisdiction of this court, the order was extant and enforceable by the wife’s estate.

14. The respondent submitted that the applicant was not wholly successful because she had claimed in the alternative sixty percent of the value of the property or, much more than the value of the property itself based on a compound interest argument. The former argument was never going to succeed and I made that clear in the judgment when I indicated that I did not have power to alter the substantive rights of the parties on the basis that the s 79 jurisdiction had been exhausted. The alternate argument however was a matter that was open but again I rejected it.

15. The respondent’s argument was that the case guardian had a responsibility to await determination by the court because he would have otherwise been open to allegations of negligence and a breach of fiduciary duty. The case guardian was appointed because the husband was not in a position to conduct the litigation. As such, being objective, the case guardian was required to conduct the litigation in the shoes of the husband and make decisions that he would have otherwise made. Negligence and fiduciary duty were not the issue in this case. The reality was that the case guardian made an objective decision that there was no basis for the court to enforce its orders.

16. The respondent also argued that the circumstances of the case were complex but the reality was that it was an argument about the exercise of discretion.

17. The case guardian standing in the shoes of the husband chose to reject the wife’s entitlement as well as urge the court not to enforce its own orders. In that sense, the case guardian was not successful.

18. The applicant set out a table of costs for six particular periods or issues and characterised those costs separately claiming them on a “party-party” basis. I am not at all clear based on the annexure to the submission whether the costs claimed are drawn from the schedule to the Family Law Rules. The table suggests that the costs were incurred on a time recorded basis and I am not in a position to discern whether the costs are comparable. If they are in fact claimed on a “solicitor-client” basis which is the usual claim where time recording is applied, rather than a “party-party” basis, the claim is in reality an indemnity costs claim.

19. The respondent opposed those costs maintaining that they did not refer to any particular methodology or scale and with that submission I agree.

20. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) requires that each party shall bear their own costs in proceedings in the court unless there are circumstances justifying a departure from that principle. If the circumstances appear to justify a departure, the court must take into account the matters set out in s 117(2A) of the Act.

21. In this case, there are circumstances justifying a departure from the principle. This litigation arose out of a court order which the husband had defied and which the wife on my finding had been unable to enforce because of fear of the husband. To refuse to allow costs in those circumstances after making an order that she was entitled would be unfair and unreasonable. However, the court is obliged to take into account a number of matters in the Act. The first relates to the financial circumstances of the parties. In this case, although the husband has limited resources and the wife is deceased, it is clear that the husband will have cash arising out of the sale of the home. How much different that will make his lifestyle in the future is unknown, but I do take into account that the wife offered that he be able to remain living in his home until his death.

22. It has not been suggested that any party in this case is eligible for legal aid and on the basis of that, I conclude that each party has some resources.

23. One of the other matters that the court is required to take into account is whether or not there has been compliance with orders including interlocutory orders.  In this case, the husband did not comply with the order and made his position abundantly clear as I found on the evidence.

24. I would not find in this case that the husband has been wholly unsuccessful but that is only one of the considerations. He has certainly been largely unsuccessful particularly having regard to the written offer to which I have earlier referred.

25. The other matter that requires consideration is anything that may be relevant such that a just and equitable outcome can be achieved. For the husbands position to have been maintained that the wife had abandoned her claim ignored the reality of the fact that the problem had not gone away and I accepted the evidence of the applicant that the fear by the wife of the husband had not abated.

26. Accordingly, this is a case in which an order for costs should be made.

27. As I have already pointed out, it is difficult to make a precise order for costs having regard to the information provided. However, on the basis of the findings I have made and the submissions read, it is not appropriate that there be costs for categories 1, 2, or 6 in the table set out in paragraph 8 of the applicant’s submissions. There is justification for costs in relation to items 4 and 5 in that table.

28. In respect of item 3, I accept that the husband did not possibly have the capacity to understand the offer that was put in April 2010, but the case guardian became a part of the proceedings in June 2010. On that basis, he should have had the opportunity to contemplate a pragmatic position and resolve the matter from that time onwards. Accordingly, I would say that there are costs for which the wife is entitled from the day of the appointment of the case guardian in June 2010.

29. Accordingly, I shall make orders.

30. Finally, the applicant also sought the unpaid costs orders from 1992 totalling $3456.42.

31. Those are both judgments of the court and it is not appropriate for me to make further orders in respect of them. Should the applicant wish to enforce those orders, it occurs to me that they are in fact judgments and may very well attract interest. It would behove the lawyers in the matter to resolve the issue of the payment of those costs because there are potentially costs and arguments associated with the enforcement of those matters.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 29 July 2011.

Associate: 

Date:  2 August 2011