Chester and Chester (No. 2)

[2008] FamCA 480

FAMILY COURT OF AUSTRALIA

CHESTER & CHESTER (NO. 2) [2008] FamCA 480

FAMILY LAW – COSTS – Offer of settlement

Family Law Act 1975 (Cth) s117

Penfold v Penfold (1980) 144 CLR 311
Robinson v Higginbotham (1991) FLC 92-209
Pennis v Pennisi (1997) FLC 92-774

APPLICANT: Mr Chester

RESPONDENT: Mrs Chester

FILE NUMBER: SYF 4710 of 2004

DATE DELIVERED: 17 June 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Rose

HEARING DATE: 17 June 2008

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Hamish Cumming, Solicitors

RESPONDENT IN PERSON:

Orders

1. That the husband’s Application in a Case filed 9 May 2008 is dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF4710 of 2004

MR CHESTER

Applicant

And

MRS CHESTER

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. In this matter the husband seeks an order for costs in relation to property settlement proceedings that were determined by me on 11 April 2008.

2. The application that he relies upon is that filed on 9 May 2008.  In support of his application the husband has filed an affidavit sworn on 10  May 2008.

3. The wife, who is unrepresented, seeks an order that the husband's costs application be dismissed.

4. The wife has filed a response which does not have a filing date but was signed on 13 June 2008.  In support of her response the wife relies on her affidavit sworn on 12 June 2008.

5. I have read the court documents relied upon by each of the parties together with the helpful summaries of argument that were provided by the husband's solicitor and former counsel for the wife.

RELEVANT LEGAL PRINCIPLES

1. As has been established by the High Court in Penfold v Penfold[1] (1980) 144 CLR 311 the general rule so far as costs are concerned in this jurisdiction is that each party bears his or her own costs pursuant to s117(1) of the Family Law Act 1975 (Cth) (‘the Act’). However, as their Honours emphasised, that subsection is subservient to the discretionary power set out in of s117(2) whereby a Court may make an order as it considers just, should there be circumstances that justify it in doing so. In Penfold[2] the High Court stated that it does not require a special circumstance and that the finding of such a circumstance is a preliminary to the consideration of the matters set out in s117(2A).

   [1] Penfold v Penfold (1980) 144 CLR 311

   [2] op cit

CALDERBANK OFFERS

1. In this matter it is clear from the written outline of submissions and implicit in the oral submissions made by the husband's solicitor that the circumstance relied upon is represented by a succession of offers for settlement that had been made by the husband, as detailed in his Affidavit of 10 May 2008.  Those offers of settlement were made in writing the first three of the offers (to which I will refer as the “Calderbank offers”).

2. The last offer was one filed in Court in accordance with the Act. As the Full Court held in Robinson v Higginbotham[3], Calderbank offers are relevant for the purpose of considering whether the discretion to make an order for costs should be exercised.

   [3] Robinson v Higginbotham (1991) FLC 92-209

3. The offers made by the husband may be summarised as follows.

4. On 23 July 2004 an offer was made that the wife receive 60% of the value of the former matrimonial home less specified liabilities together with 50% of the parties jointly held time share, 50% of a Ford Fairmont motor vehicle and retain her superannuation entitlements.  Various amounts were put forward in that written offer to illustrate the effect of the offer.  It is not clear on the evidence before me whether those amounts were accepted as being approximately correct by the wife.

5. On 9 November 2004 an offer was made that the wife would receive $310,000 for the timeshare interest and her superannuation.

6. On 17 December 2004 an offer was made that the wife receive 75% implicitly of the house and certain other matters were detailed in that offer.

7. The three offers to which I have referred were all rejected.

8. On 3 March 2006 an offer for settlement was filed pursuant to the Act. That offer provided for the wife to receive 75% of the value of the house less debts of $70,000 as well as certain items of personality and the time share interest that the parties held.

9. The parties subsequently had a conciliation conference.

10. On the affidavits before me it seemed that agreement had been reached, both in relation to parenting proceedings and property settlement proceedings.

11. Unfortunately, any such agreement was not implemented due to a dispute as to the terms of draft minutes of orders which had been exchanged between solicitors for the parties as well as further information that was sought on behalf of the wife.  Consequently, the matter then proceeded to trial.

12. As I pointed out to the husband's solicitor, with the benefit of hindsight it may have been far preferable for the parties to reach a compromise on the remaining issues that they had following the conciliation conference given the legal costs that were incurred in the subsequent trial. In addition to pragmatic considerations as against whatever remained in terms of disputed financial and parenting matters.  However, whilst hindsight is a wonderful thing experience has shown over many years, not only in this jurisdiction but in other jurisdictions, that when parties become so enmeshed in litigation with concentration on particular issues it is difficult for them and or at times unfortunately their advisors, not that I am suggesting that happened in this case, to stand back and look at the full picture to consider whether their focus on particular matters really justifies the financial and emotional cost of a lengthy trial.

13. The Full Court held in Robinson[4] that whilst the Act does not provide for any priority to be given to offers for settlement, nonetheless they represent an important consideration so far as a costs application is concerned. In that regard in the judgment of Nygh J, his Honour stated at 78 417:

    It is quite clear that the purpose of that provision, that is paragraph (f) of s 117(2)A, is to ensure that offers to settle, if made seriously, are considered seriously to ensure that the cost of litigation is avoided and the workload of this Court is lightened.

    [4] op cit

14. In subsequent Full Court judgment in Pennisi v Pennisi[5] the Court emphasised, amongst other things, that whilst offers for settlement may well attract considerable weight, the approach in terms of an application for costs must be such that offers are seen in the context of the case and the offerer has knowledge of the parties’ financial circumstances.  There was some dispute in this case regarding the husband's financial circumstances and in particular his capacity to earn income.

    [5]Pennisi v Pennisi (1997) FLC 92-774

CONCLUSION

1. I have concluded that the offers for settlement, and in particular that made on 17 December 2004 and subsequently again on 3 March 2006 must attract considerable weight and represent a circumstance which leads me to consider other relevant matters under s117(2A) of the Act.

2. In that regard, whilst I do not have an affidavit of the husband setting out his current financial circumstances, I do have one from the wife. It is obvious from her affidavit that her financial circumstances are modest indeed. There is no suggestion that either party is in receipt of Legal Aid. The matters of interlocutory consideration do not arise, nor does paragraph (d) of s117(2A).

3. Offers of settlement have been made on a number of occasions by the husband, to which I have referred.  There was also a conciliation conference which appeared to suggest that the parties had reached agreement in relation to all outstanding issues.  Unfortunately, as I have already found, and which is obvious, that contended agreement did not lead to ultimate terms of settlement signed by the parties.

4. There were a number of discreet issues in the property proceedings which I had to determine.  The majority of those issues were decided in favour of the husband.

5. A further matter which I must consider is the wife's capacity from a practical viewpoint to comply with an order for costs as sought by the husband or which may represent an order other than a negligible amount in his favour.  It is obvious from her affidavit, a copy of which was only received by the husband's solicitor yesterday afternoon and in respect of which he only had an opportunity to obtain instructions from this morning, that an order for costs representing any amount of significance is highly unlikely to be able to be enforced.

6. That is due to the fact that the wife's evidence is that she has expended $80,000 in payment of legal costs, and $15,000 in part repayment of an existing loan to her mother, which I found to be a liability as referred to in the Judgment given on 11 April 2008.

7. On the face of it, as was conceded, $80,000 for legal costs in the circumstances of this trial does not appear to be unreasonable.  I have no evidence before me to suggest that the wife has fabricated or exaggerated her evidence about payment of legal costs or indeed the payment to her mother.

8. I have concluded that the application for costs will be dismissed.  My reasons for doing so are as follows.  I have attached considerable weight to the offers for settlement made by the husband in accordance with the authority to which I have referred and, in particular, the offers made by him on 17 December 2004 and 3 March 2006.  In normal circumstances the weight I might have attached to those offers would be such that they would result in an order as sought by him or reflecting a substantial proportion of the costs that he has incurred in the property settlement proceedings.

9. However, I have attached a greater weight to the wife's current financial position as set out in her affidavit of 12 June 2008.  It is trite that the Court should be reluctant to make an order which is unlikely to be enforced.  On the evidence before me that is the position so far as the wife is concerned.

10. I have also taken into account the matters which led me to make an adjustment in her favour, having regard to s75(2) matters as set forth in the Judgment. However the principal reason for refusing the husband's application is that any order for costs representing any amount of significance is likely to be of academic benefit only as far as he is concerned and the prospects of enforcement in the wife's current financial circumstances, as set out in her affidavit of 12 June 2008, realistically are non-existent.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Legal Associate: 

Date:  26 June 2008