Cardus and Cardus

[2014] FCCA 1983

FEDERAL CIRCUIT COURT OF AUSTRALIA

CARDUS & CARDUS [2014] FCCA 1983

Catchwords:
FAMILY LAW – Costs – sections 117 and 117(2A)(f) of the Family Law Act1975 (Cth) – Calderbank offer – husband seeking wife pay partial costs order – wife seeking husband’s application dismissed – costs order made in favour of husband.

Legislation:

Family Law Act 1975 (Cth), ss.117(1), (2), (2A), (2A)(f), (4), (4A), (5)

Family Law Rules 2004 (Cth), r.17.03
Federal Circuit Court Rules 2001 (Cth), r.21.02, Sch 1

Cardus & Cardus [2014] FCCA 774

Applicant: MR CARDUS

Respondent: MS CARDUS

File Number: MLC 7196 of 2012

Judgment of: Judge Hartnett

Hearing date: 22 August 2014

Delivered at: Melbourne

Delivered on: 29 August 2014

REPRESENTATION

Counsel for the Applicant: Ms Williams

Solicitors for the Applicant: Barbayannis Lawyers

Counsel for the Respondent: Mr Ham

Solicitors for the Respondent: Mills Oakley Lawyers Pty Ltd

ORDERS

1. On or before 3 September 2014, the wife pay to the solicitors for the husband the sum of $14,755 (against which must be set off the payment to the wife for an interest amount as described in the reasons and being marginally more than $120) in respect of payment of the husband’s costs.

2. On or before 3 September 2014 or, at the election of the husband’s solicitors, a time thereafter as notified to the wife in writing, the wife pay to the solicitors for the husband the sum reasonably incurred by them in respect of necessary disbursements other than Counsel’s fees. Such payment to be conditional upon the solicitors for the husband providing the wife with invoices in respect to such amounts. Photocopying expenses at 69 cents per page are allowed and to be paid by the wife for the period from 29 January 2014 to 22 August 2014. Any dispute in respect to this payment shall be listed before me on short notice and costs will follow the event.

3. Otherwise all extant applications are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Cardus & Cardus is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 7196 of 2012

MR CARDUS

Applicant

And

MS CARDUS

Respondent

REASONS FOR JUDGMENT

1. This is a hearing as to costs. As a preliminary issue, the Applicant husband filed an Application in a Case on 2 June 2014 seeking the following orders:-

   “1. That all necessary times be abridged for the matter to be heard urgently.

   2. Pursuant to Section 117(2) of the Family Law Act 1975 (Cth), Barbayannis Lawyers be entitled to retain $45,000 from the settlement monies to be received by the Respondent Wife, in accordance with Final Orders made 15 April 2014, to be invested by Barbayannis Lawyers in an interest bearing controlled monies account for and on behalf of the Respondent Wife, pending the Hearing on the question of costs which is listed in the proceedings on 22 August 2014.

   3. That the Respondent Wife do all such things and sign any necessary documents to authorise Barbayannis Lawyers to invest the sum of $45,000 as referred to above, on trust on behalf of the Wife, in an interest-bearing controlled monies account pending the costs Hearing on 22 August 2014. 

   4. That all the Applicant Husband’s costs of and incidental to this Application be paid by the Wife on an indemnity basis, in accordance with the Scale of Costs and Charges of Barbayannis Lawyers.

   5. Such further or other Orders this Honourable Court deems appropriate.”

2. In support of that Application, an Affidavit was filed on behalf of the husband, sworn by Georgia Barbayannis on 29 May 2014. Subsequently, a further Affidavit was filed, sworn by the husband on 19 August 2014. The husband relies on the evidence as set out in those affidavits in the costs proceedings in relation to which these reasons are published. The wife, in response, and on 19 August 2014 filed an Application in a Case wherein she sought that the husband’s application in respect of costs be dismissed, that the wife’s costs of and incidental to the application be paid by the husband and that the husband pay interest to the wife, pursuant to r.17.03 of the Family Law Rules 2004 (Cth) (‘the Family Law Rules’) on the sum of $45,000 for the period 18 April 2014 to 11 June 2014 and interest on the sum of $15,000 for the period of 11 June 2014 to 22 August 2014. In support of that Application, the wife swore an Affidavit on 18 August 2014. The wife relies on the evidence as contained in that Affidavit.

History

1. The husband commenced proceedings for property and parenting orders in April 2013.  That application was amended by the husband by Amended Initiating Application filed 30 January 2014.  The wife’s application as contained in her response document was as set out in an Amended Response filed by her on 11 February 2014.  The matter proceeded to a hearing on 26 and 27 February 2014.  Following the closing of the Applicant husband’s case, the parties agreed to consent orders resolving the parenting dispute between them and without the need to cross‑examine the regulation 7 family consultant, Ms B.  The property issues between the parties remained outstanding to be determined judicially and judgment in respect of that matter was delivered on 15 April 2014.  At the time of delivery of judgment, sensibly and by agreement the remaining proceeds of sale of the former matrimonial home of the parties situated at (omitted), in the State of Victoria were held on trust and invested in an interest bearing controlled monies account for and on behalf of both the husband and wife. This investment of the proceeds of sale did not mature until on or about 6 May 2014. 

2. At order 6 of the final Orders made by me on 15 April 2014, an order was made that:-

   “There is liberty to the parties to apply with respect to the question of costs.”

3. One week thereafter, the husband’s solicitors wrote to the Court copying in the wife and requesting that the matter be listed for a hearing as to the question of costs.  The matter was duly listed but not until 22 August 2014.  In the interim, Orders were made by Judge Curtain and on 10 June 2014 such that the directions hearing of 11 June 2014 be vacated and, by consent:-

   “1. That the proceedings remain listed for a Hearing as to costs on 22 August 2014 at 10:00 a.m.

   2. Pursuant to Section 117(2) of the Family Law Act 1975 (Cth), Barbayannis Lawyers be entitled to retain $15,000 from the settlement monies due to the Respondent Wife, in accordance with Final Orders made 15 April 2014, to be invested by Barbayannis Lawyers in an interest bearing controlled monies account for and on behalf of the Respondent Wife, pending the Hearing on the question of costs on 22 August 2014, with the remainder of the funds due to the Respondent Wife be distributed.

   3. That the Respondent Wife do all such things and sign any necessary document to authorise Barbayannis Lawyers to invest the sum of $15,000 as referred to herein, on trust on behalf of the Respondent Wife, in an interest bearing controlled monies account pending the costs Hearing on 22 August 2014.

   4. That each party bear their own costs of the Application filed by the Applicant Husband on 2 June 2014. 

   5. That the Applicant Husband’s Application in a Case filed 2 June 2014 be otherwise adjourned to the Hearing on 22 August 2014.”

4. What had occurred following the making of the final Orders on 15 April 2014 and the maturation of the investment of the proceeds of sale on 6 May 2014, was a distribution to each of the parties in accordance with the final Orders made 15 April 2014, less an amount of $45,000 to the wife.

5. Barbayannis Lawyers (acting on behalf of the husband) wrote to the wife, who was acting as a litigant in person, on 14, 20, 27 and 28 May 2014 on the issue of security for costs pending the costs hearing.  It was proposed that Barbayannis Lawyers retain $45,000 from the wife’s settlement to be invested on her behalf in an interest bearing controlled monies account pending the hearing as to the question of costs on 22 August 2014.  The wife refused to consent to Barbayannis Lawyers holding back any monies pending the hearing as to the question of costs on 22 August 2014.  The husband then made his Application, filed 2 June 2014, seeking orders as described in paragraph 1 herein.  That matter was resolved by consent in the manner described in paragraph 5 herein.

6. The basis of the application for costs, such that the wife pay to the husband a sum by way of the payment of his costs, which is an exception to the usual order whereby each party to proceedings under the Act bear his or her own costs, is that which is contained in s.117(2A)(f) of the Act, which it is argued on behalf of the husband is applicable and which, as a consequence, displaces the primary position as set out in s.117(1) of the Act. If the Court is of opinion that there are circumstances that justify it in doing so and, subject to ss.117(2A), (4), (4A) and (5) of the Act and the applicable rules of court, the Court may make such order as to costs and security for costs whether by way of interlocutory order or otherwise as the Court considers just.

7. The awarding of costs is a discretionary matter for the Court and, in the exercise of that discretion, the Court is required to have regard to, when considering what order, if any, should be made under s.117(2) of the Act, the matters that are set out in s.117(2A) of the Act. Relevantly, s.117(2A)(f) of the Act is as follows:-

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

   …

   (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;”

8. There is no argument between the parties that a letter dated 24 January 2014 was sent to the solicitors acting for the wife by Barbayannis Lawyers, the solicitors acting for the husband, marked without prejudice save as to costs which contained an offer to settle the financial aspects of the proceedings in accordance with the Calderbank principles.  The husband’s offer was stated to remain open for a period of 14 days from 24 January 2014.  The offer was clear on its face and made an offer of settlement to the wife whereby she would receive 45 per cent of the proceeds of sale of the former matrimonial home and that each party otherwise would keep the assets and liabilities in their respective possession, custody or control.  The final Orders made by the Court on 15 April 2014 provided for the wife to receive 40 per cent of the proceeds of sale of the former matrimonial home, and that each party otherwise keep the assets and liabilities in their respective possession, custody or control.

9. On the evidence that the wife ceased to engage solicitors to act on her behalf on 23 January 2014. The correspondence of 24 January 2014 to the wife’s then former lawyers, Pearce Webster Dugdales Lawyers, was however conveyed to the wife.  In fact, on 24 January 2014, the wife’s former lawyers received two letters from the husband’s lawyers, one being an offer of settlement in relation to property and one being an offer of settlement in relation to parenting orders in respect of the parties’ son, X.  The wife, when acting for herself, forwarded an email to the husband’s lawyers, dated 29 January 2014, wherein, amongst other things, she referred to the offer of settlement made by the husband with respect to property and rejected same.  It is quite clear, in the email of 29 January 2014 directly from the wife to the husband’s lawyers, that she was aware of the proposal made in the letter of 24 January 2014 and without further query or discussion rejected it.  The wife argued in these proceedings that the two pieces of correspondence dated 24 January 2014 were forwarded to her at a time when Barbayannis Lawyers knew that she no longer had a solicitor acting for her.  Her claim seemed to be one that she was prejudiced because she did not have the benefit of legal advice.  She nevertheless had an opportunity to seek out legal advice if she chose to, but she did not.  The trial did not proceed until 14 February 2014 and the wife had sufficient time to seek out alternate legal advice in respect of the offers, had she chosen to do so.  She determined, however, to act for herself in this litigation from 23 January 2014 onward and, as counsel for the husband submitted in these proceedings, is bound by that decision which she made.  The Calderbank letter of offer itself was clear on its face and was not attended by any complexity that was beyond the grasp of the wife.

10. The husband contends in the proceedings that when the Court has regard to s.117(2)(a)(f) of the Act, it should make an order – and should consider it just to so make an order, that the wife pay the husband’s costs from the date of the expiration of the offer onward. It is said that the husband’s offer was a reasonable offer in circumstances where the wife had sufficient knowledge to give it proper consideration. Further, the basis upon which the husband was prepared to settle the property aspect of the case was not conditional upon any offer made in relation to the parenting proceedings. The two letters sent on 24 January 2014 to the wife’s earlier solicitor were independent of each other, and the husband argues that the wife should contribute to his costs of the proceedings thereafter incurred as a result of her failure to accept that offer. I agree.

11. The wife argued that the proceedings involved parenting orders also and that they were of prime importance to her.  Further, that much of the material prepared for trial, and the trial itself, was occupied with a determination of the final parenting orders with respect to the parties’ son, X.  That is not entirely an accurate summation.

12. Neither party was in receipt of Legal Aid and the husband throughout remained represented whilst the wife commenced to be a litigant in person from 24 January 2014. The husband incurred significant legal costs. The wife incurred none. Following the rejection of the offer contained in letter of 24 January 2014 by the wife on 29 January 2014, significant work was then undertaken by the lawyers acting on behalf of the husband in relation to property matters.  Specifically, and as put by Counsel for the husband, an Amended Initiating Application was filed on 30 January 2014, a trial Affidavit was sworn on 31 January 2014, paragraphs 45 to 86 which contained pages 10 to 17 related to financial matters, and annexures 7 to 18 of the trial Affidavit also pertained exclusively to financial matters.  The husband filed a Financial Statement which was sworn on 30 January 2014 and, further, an Affidavit from one Mr J on 12 February 2014, with the husband thereafter issuing a Subpoena to Mr J on 17 February 2014 to give evidence in the proceedings.  Further, there was filed on behalf of the husband a Case Outline of which pages 7 to 12 dealt with the financial aspects of the proceedings.  The wife also prepared substantial documentation in relation to the financial aspects of the proceedings including an Amended Response filed by her on 11 February 2014, her trial Affidavit filed 11 February 2014 paragraphs 37 to 51 (and extensive annexures) which related to financial matters, and her Financial Statement sworn on 11 February 2014.  The wife also filed a Case Outline.  All of that documentation was required to be examined by the lawyers for the husband and instructions taken with respect thereto. 

13. In addition to all of the court documentation, there was obviously the usual correspondence and emails, telephone calls and other work undertaken prior to the trial of the matter.  During the course of the trial, which proceeded for two days, the parenting issues settled during the morning of the second day and the property proceedings continued to judicial determination.  There was considerable cross-examination of the wife in relation to property matters and, overnight and between the two days of the hearing, counsel for the husband’s instructor prepared a very comprehensive aide-memoire which recorded all of the deposits and/or all of the disposition of the husband’s inheritance. It was a summary of the discoverable documents which had been provided for inspection by the wife at her request and for inspection by her previous solicitors.  Neither the wife nor her previous solicitors availed themselves of the opportunity to inspect all of the husband’s discoverable documents, a fact which was referred to in my judgment. The wife put the husband to considerable expense in respect of the production of discoverable documents and the collation of same, without ever inspecting them.  The wife also delayed the hearing of the matter in her challenge to the husband about his disposition of his inheritance funds, without first inspecting the documents which supported his evidence in that regard. 

14. In respect of the matters in paragraph 15 above, I refer to paragraph 10 of the Reasons for Judgment delivered on 15 April 2014.  It is as follows:-

    “The wife and her lawyers (on the record at the time) had available to them discovery and inspection of all bank statements of the Business Cheque Account (bsb (omitted), account number (omitted)) all original receipts, and all cheque butts for the business, ‘(omitted)’. The wife had further an authority from the husband to enable her to contact directly the accountant for the business. This person was the mutual accountant for the parties. The husband also arranged and paid for four boxes of original documents relating to the business to be delivered to his lawyers, and available for the wife or her lawyers to inspect for many months. The wife and her lawyers failed to carry out such inspection of the documents. The wife nevertheless continued to claim that the husband had hidden funds from her and had not applied the business sale profits and a part-of his inheritance, to the payment out of debts. She produced no evidence to support such a claim.”[1]

    [1] Cardus & Cardus [2014] FCCA 774

15. The boxes of documents of the husband were also available for inspection by the wife during the currency of the trial but she continued to decline any form of inspection.  The preparation of the financial aspect of the trial was a costly one for the husband.

16. In respect of the evidence prepared by the husband for trial, he put before the Court what he thought appropriate for his case in relation to the financial aspects of it.  The Court did not find Mr J’s evidence very helpful and, in the exercise of my discretion, I do not conclude that the expenses associated with any part of Mr J’s evidence should be included to be paid by the wife to the husband. I have taken that into account in my calculations as set out in paragraph 26 hereafter.

17. The monies that were invested (as earlier referred to) on behalf of the parties were invested to maximise a return to them until 6 May 2014.  Thereafter, monies in the sum of $45,000 were withheld from the wife by the lawyers for the husband as they attempted a dialogue with the wife as to the payment of the husband’s costs and an amount by way of security for costs.  That negotiation was not successful and required the husband to make an application to be heard urgently to obtain an order of the Court to withhold a payment out to the wife. This issue was then resolved by consent between the parties and the amount of interest which was payable to the wife on the difference between $45,000, which was withheld on 6 May 2014 and $15,000 which remained withheld by consent by orders of the Court on 10 June 2014, was in the sum of approximately $120 as put by Counsel for the husband.  The wife, herself, made no assessment and put no amount before the Court in respect of that calculation. Nor did her counsel.

18. The Court finds that an amount of $120 should be taken into account, although the Court notes that the husband did not pursue a costs application against the wife in the June 2014 hearing. The monies to be paid by the wife to the husband in partial payment of his costs shall have deducted that sum.  Further, the interest earned on the sum of $15,000 invested by agreement and order of the Court on 10 June 2014, should be calculated by the parties and is an amount payable to the wife, again, to be offset against the monies owed by the wife to the husband in respect of the orders the Court makes on this application.

1. It is unfortunate that the parties could not resolve the issue of costs and were required to incur further costs on the hearing of this application.  The wife’s seeking of an order that the husband pay her costs of the application is without foundation and misguided.  These proceedings are very squarely brought on the basis of the Calderbank letter of offer made by the husband to the wife as described above, and as clearly provided for in the legislation.

2. The Court has regard to the financial circumstances of each of the parties to the proceeding and notes that the final Orders provided for each of them to receive a not inconsiderable lump sum.  Such payment together with the wife’s long-term employment at the (omitted) Medical Centre as a (occupation omitted) satisfy the Court that the wife has the capacity to meet any order of the Court in respect to the payment of the husband’s costs.

3. The husband, in his Affidavit sworn 19 August 2014, deposes to currently being unemployed with a health condition, making it unlikely that he would be able to re-enter the workforce in any meaningful way in the future.  He did however on the hearing of this application, give evidence that he had worked in a relative’s (business omitted) for some three weeks but without pay. His claim that he is unable to be presently employed is thus compromised by the volunteer work that he has recently performed. He makes no payment of child support for X.

4. Counsel for the husband made submissions in relation to the quantum of costs and noted that her instructor had forwarded to the wife’s practitioners detailed schedules of costs.  Counsel submitted that the costs incurred pursuant to the costs agreement between the husband and his lawyer from 24 January 2014, being the date of the letter to 30 April 2014 was $33,531.92 to which should be added a further sum of $7,478 in respect of the costs hearing.  Such further sum excluded the costs directly referable to the security for costs application, as the orders provided by the consent of the parties that no costs in relation to that application were to be paid.  Thus the husband, in round figures, sought an amount of $41,000 that the wife pay to him in respect of the costs incurred by him for the property proceedings.  The wife argued that she should make no payment of costs but that if any payment was to be made then the Court should look to the scale of costs as set out in the Federal Circuit Court Rules 2001 (Cth) (‘the Rules’) and make some assessment in line with Schedule 1 of the Rules.

5. I propose in the exercise of my discretion to fix a costs quantum by reference generally to the Rules, Schedule 1 Costs and set the amount of costs as provided for in r.21.02 of the Rules. Such costs are to be paid by the wife on or before 3 September 2014, and in the event payment is not made by that date, taking into account the offsetting interest payments payable to the wife, the interest on any outstanding amount payable by her shall be payable in accordance with r.21.08 of the Rules.

6. The calculation of costs shall be:-

   a)Item 7 of Schedule 1 of the Rules: $5,270 less an amount for the parenting part of the proceedings for which I allow a sum of $1,500 only, given the volume of material necessarily provided by the husband in respect of the property proceedings, the discovery in particular. I exclude any sum in respect of Mr J’s evidence;

   b)Item 13 of Schedule 1 of the Rules: $1,994 plus an advocacy loading of $997 ($2,991) for one day of hearing; and

   c)an amount for instructing solicitor of $1,994 and a further sum of $1,000 in respect of the wife’s conduct which caused unnecessary legal expenditure with regards to the question of discovery; and

   d)a further sum for any necessary disbursements reasonably incurred,

   an invoice of which shall be provided to the wife.

7. To the above amount is added the costs of the proceeding of 22 August 2014 in relation to which I shall allow a sum of $5,000. Thus, the costs payable by the wife are $14,755, together with disbursements.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Associate: 

Date:  29 August 2014