Dempsy & Dempsy and Ors (Costs)

[2009] FamCA 61

FAMILY COURT OF AUSTRALIA

DEMPSY & DEMPSY AND ORS (COSTS) [2009] FamCA 61

FAMILY LAW – COSTS – PROPERTY – Application for Summary Dismissal – Role of Written Offers to Settle

Family Law Act 1975 (Cth) s 117(2A)

APPLICANT WIFE: Ms Dempsy

RESPONDENT HUSBAND: Mr Dempsy

2^nd & 3^rd RESPONDENTS: Mr Herston
Mrs Herston

FILE NUMBER: LEC 227 of 2007

DATE DELIVERED: 5 February 2009

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Murphy J

WRITTEN SUBMISSIONS RECEIVED:

2^nd & 3^rd Respondents: 11/12/2008

Husband:   16/12/2008

REPRESENTATION

SOLICITOR FOR THE 

APPLICANT WIFE:

Morrison & Sawers

COUNSEL FOR THE 

RESPONDENT HUSBAND:

Mr R Schonell

SOLICITOR FOR THE

RESPONDENT HUSBAND:

Christopher Hughes & Associates

COUNSEL FOR THE

2^ND & 3^RD RESPONDENTS:

Mr N Jackson

SOLICITOR FOR THE

2^ND & 3^RD RESPONDENTS:

Trenches McKenzie Cox

Orders

1. The Second and Third Respondents pay the Husband’s costs of and incidental to the application in a case filed by the Respondents on 1 May 2008 to be agreed or assessed.

2. The Second and Third Respondents pay the Husband’s costs of and incidental to the Application for costs to be agreed or as assessed.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: LEC227 of 2007

MS DEMPSY

Applicant Wife

And

MR DEMPSEY

Respondent Husband

And

MR AND MRS HERSTON

2^nd & 3^rd Respondents (Wife’s Parents)

REASONS FOR JUDGMENT

COSTS

1. On 4 December 2008 I delivered written reasons for judgment in respect of an application by the second and third respondents in s 79 proceedings to summarily dismiss the claim against them.

2. That application was dismissed.

3. At the conclusion of the hearing, the husband made application for costs of and incidental to those interim proceedings.

4. I had indicated at the end of the hearing, which occurred on 28 November 2008, that the substantive application would be dismissed and that I would deliver reasons for judgment subsequently, which, as can be seen, occurred some six days later.

5. Counsel for the respondents indicated at the end of the hearing that he sought to make written submissions with respect to costs because, as he asserted, it was premature to make submissions in respect of that issue prior to written reasons being received and perused.

6. It is, I think, important in the context of the current application to quote in full what was said at the conclusion of those written reasons for judgment on the issue of costs.

“Costs

53.The husband applies for costs. He submits that the second and third respondents are in no more exalted position with respect to costs merely because they are strangers to the marriage.

54.It is submitted that, as pointed out by Kirby J in Lindon, above, it is a serious matter to deprive a person of their right to a trial and the second and third respondents, who have at all times been legally advised, ought be taken to be aware of that. This is not an application, it was submitted, that is ordinarily made.

55.Whilst it was conceded that the affidavit most recently filed by the husband discloses a new cause of action (on behalf of a company for breach of contract) it was submitted that this does not impinge upon the lack of success of the Application in a Case and is, essentially, a matter of re-pleading in respect of which, in the circumstances of this case, it might be expected that leave would be given.

56.It was also submitted, then, that the second and third respondent have been “wholly unsuccessful” within the meaning of s 117(2A).

57.It was also submitted that a series of letters sent recently which became Exhibit H1 in the proceedings constituted a bona fide attempt to resolve the matter between the parties which was rejected by the second and third respondents’.

58.It is appropriate to cite extracts of those letters.

59.On 25 November 2008, the solicitors for the husband faxed to the solicitors for the second and third respondents, a letter which provided as follows:

“Solely for the purpose of saving costs, and without admission as to the merits of your clients’ case, we give notice that we are instructed to consent to paragraph 2 of the orders sought in your application [the security for costs component] which would therefore resolve your clients’ application.

Our counsel, Mr Schonell, as spoken with your counsel, Mr Jackson, today and confirmed the above. Given the terms of your order, we ask you to inform us of your Trust Account details by return, in order for our client to deposit the sum of $11,785 to be held as security for costs.”

60.The solicitors for the second and third respondents replied the same day, saying relevantly:

“We advise our Trust Account details are as follows:

[details omitted]

We await transfer of the sum of $11,785.”

61.By letter the same day, Minutes of Consent we enclosed with a further letter by facsimile from the solicitors for the husband, and included in it was also the statement “we propose to contact his Honour’s associate at 11.00am daylight saving time tomorrow, to advise that the matter is settled”. The consent orders enclosed provided that the Application in a Case was withdrawn and dismissed and that by way of security of costs, the specified sum was paid, with a default clause in respect of non-payment.

62.By facsimile sent 26 November 2008, the solicitors for the second and third respondents replied:

“I wish to remind you that the application for security of costs was abandoned on the last occasion that the matter was before the court. This is a matter for the court records. We also confirm this by way of the directions that were made by consent on 17 June 2008.

The information we provided to you in our facsimile yesterday was only reflective of our clients’ willingness to receive $11,785, and in no way effects our application in its current form for Summary Dismissal of the husband’s Claim, which will proceed on Friday 28 November 2008.”

63.I invited counsel for the second and third respondents to explain how it was that his instructing solicitors were prepared to accept $11,785 (being the precise sum specified in the application by way of security for costs) on a basis other than that which was contended by the solicitors for the husband. Counsel indicated that “it was a mistake”.

64.I remain mystified about the basis upon which the second and third respondents claim that $11,785 was being offered to them, and even more mysteriously, how such sum purports to be accepted by them in the absence of it satisfying the claim for security for costs. The basis upon which that sum otherwise purports to be accepted by the second and third respondents remains a mystery.

65.In any event, relevant to the present application, is the nature and extent of the correspondence as constituting a bona fide attempt to resolve this action without the necessity for an appearance before this court on the return date of the application.

66.It seems to me clear that there was an offer to settle the application on the basis that the application for summary dismissal, which I have concluded is without merit, be dismissed, and a sum paid in satisfaction of an alternative claim.

67.If, as the second and third respondents’ solicitor suggests, that alternative claim had previously been withdrawn, the net effect is that that part of the offer to settle, which involves the withdrawal and dismissal of the application for summary dismissal was not accepted by the second and third respondents.

68.In response to the application for costs, counsel for the second and third respondents submitted that it was premature for a decision to be made in relation to costs until such time as these reasons for judgment had issued. It was said that it was only when the reasons for judgment issued that a proper assessment could be made as to whether the claim was “wholly unsuccessful”.

69.I confess to being somewhat mystified by this submission. I indicated clearly in the orders that I made and in comments made in respect of the rejection of the application that the second and third respondents’ application had failed. The reason, expressed simply, is clear enough; it cannot be said, in my view, on the pleading and evidence before me either that the husband does not disclose a cause of action or that any is “doomed to fail”.

70.Nevertheless, because counsel contends that making an order without access to the reasons would be a failure of due process, I propose to afford the 2^nd and 3^rd respondents the opportunity to make further written submissions in respect of costs consequent upon the issue of these reasons with an opportunity to the husband to reply.

71.Obviously enough, those written submissions ought address the issue of whether, in turn, any written submissions with respect to costs ought themselves form part of an order for costs.

72.I have therefore ordered that the second and third respondents provide any further written submissions by them on the issue of costs by not later than 4.00pm on a date 7 days from the date upon which these reasons for judgment are delivered. I will order that the husband file any further submissions in relation to costs arising from the written submissions of the second and third respondents, if any, by 4.00pm on a date 7 days thereafter.”

Subsequently, written submissions were received from the respondents.” 

The Respondent’s Arguments

1. The second and third respondents submit that the claim for equitable relief by the applicant husband could not be met because it was “difficult if not impossible” for the respondents to properly meet the claim in constructive trust “when it is not abundantly clear what legal principles of constructive trust is being sought”.

2. It is said that timely compliance by the husband “would have provided adequate and proper time for the second and third respondent[s] to consider such evidence in light of their pending summary dismissal application”.

3. Further, it is asserted by the respondents that the husband’s compliance was significantly late (some eight weeks) leaving them “just seven days” before the application for summary dismissal was heard.  It is said that the lateness of the material was never explained appropriately.

4. By reference to the specific provisions of s 117 (2A) of the Act it is argued by the second and third respondents that, because conduct is relevant in considering what order, if any, should be made under subsection (2) of that section, the husband “should not be rewarded by way of a costs order, in circumstances where there is a breach of Court directions, and where such a breach was not a minor or technical breach (of say, being a week or two late in the filing of Court material), but a very significant one”.

5. In the alternative, it is submitted that such a costs order should run only from 21 November 2008, when service of the husband’s affidavit particularising the evidence upon which his claim was based and, in effect, providing further particulars of his claim, was effected.

6. In the alternative, it is argued that the husband’s costs ought to be reserved.  The essence of this argument is that the husband’s case as against the second and third respondents’ still needs to be properly tested at a trial.  Of course, the determination of whether a party’s case ought to be permitted, in the interests of justice, to proceed to a trial is a very different matter than a determination of the merits of that claim at the trial.

7. It is submitted that, in the circumstances of the late delivery of the material as earlier outlined, the second and third respondents “cannot be criticised for attempting to avoid the costs and stress linked with a drawn out final hearing” because it was only when the husband’s case was properly so particularised by the affidavit filed on 28 November 2008 that the second and third respondents had an opportunity to properly assess their position.

8. It is submitted that, ultimately, the Court may find that the husband’s case as against the second and third respondents to be “poor and ultimately unsuccessful”.  It would be unjust, it is submitted, to make a costs order now in respect of such an interlocutory application if that was to be the ultimate result at a trial.

The Applicant’s Arguments

1. Written submissions in response to the submissions by the second and third respondents were filed on behalf of the husband. 

2. Reliance is obviously placed upon those matters submitted by counsel on behalf of the husband at the hearing of the application on 28 November 2008. 

3. It is said to be significant that neither an adjournment was sought of the application to be heard on 28 November 2008 nor were further particulars of the claim sought prior to the hearing of the application.  Counsel for the second and third respondents concedes that his clients’ “could have sought further and better particulars and/or sought an adjournment on 28 November 2008”.

4. It seems to me that the concession is properly made.  That is all the more so because the time frame alluded to by counsel for the husband is in fact somewhat more complex than that which the respondent’s written submissions would indicate.

5. On 17 June 2008 O’Reilly J listed the respondents’ application for mention on 14 October 2008.  It is that order which required the filing of affidavit material in respect of that application by 26 September 2008. 

6. However, what is not mentioned in the written submissions for the respondents that, previously, a statement of claim had been filed and served by the husband.

7. On 19 June 2008 the solicitors for the second and third respondents corresponded with my Associate and sought to have the application listed for hearing on 8 October 2008 or on the first available date.  Correspondence apparently ensued between the respective solicitors and, ultimately, the matter was listed on 28 November 2008. 

8. As the solicitors for the husband point out in their written submission, this was some seven weeks after the mention date originally allocated when the orders were made (14 October 2008).  No fresh direction was made in respect of the date for filing affidavit evidence in relation to the new dates.  The husband asserts that he did not wish to incur the expense of filing affidavit material so far in advance of the hearing, as that would have been a significant unnecessary cost to the husband if settlement of the application was achieved in the intervening period.

9. Intriguingly, in light of the matters raised during argument on 28 November 2008, referred to by me in my Reasons for Judgment, the written submissions on behalf of the second and third respondents make no mention whatsoever of the written offer to settle forwarded by the solicitors for the husband.

10. Similarly, it is argued by the husband that, whilst conceding that an application for adjournment could have been made on 28 November 2008 and/or a request for particulars made in the approximate five month period in which they have had possession of the husband’s statement of claim, the respondents give no reason why that wasn’t done, or could not have been done.

11. It seems to me that this is a point well made.  The principles applicable to applications for summary dismissal or ‘striking out” in this Court are well known.  So, too, Courts of the highest authority have indicated that it is an extremely serious matter in our system of law to deprive a party of a right to litigate a claim at a hearing. The respondents always confronted that difficulty.

12. Whatever might be the second and third respondents’ view of the merits of the husband’s case (about which they might, ultimately, prove to be correct) it is, with respect, not to the point to conflate that issue with the issue confronting the bringing of an application to summarily dismiss.

13. Offers to settle are, in my view, an important consideration when deciding the issue of costs. Upon the apparent inability of a matter to resolve by agreement, litigants in the Family Court have, by reason of general provisions of s 117, but one effective tool at their disposal in seeking to attempt to bring about an end to litigation.

14. It will be obvious from the comments made in my Reasons for Judgment dated 4 December 2008 that I find the circumstances in and about the offer to settle and payment of $11,785 to the solicitors for the second and third respondents, troubling. 

15. I reiterate the comments made by me there.  I said at paragraph 18 of the reasons that I then “remained mystified” about the basis upon which the second and third respondents’ claim that the sum being offered to them purported to have been accepted.  The written submissions by counsel for the applicant husband shed no further light on that issue.

16. I said at paragraph 46 of my reasons, given 04 December 2008, that it seemed clear to me that there was a written offer to settle the application on the basis that the application for summary dismissal be dismissed and a sum paid in satisfaction of an alternative claim. That offer to settle was rejected.

17. Importantly, as it seems to me, in the approximate five months since the pleading of the claim against the second and third respondents was received, it is not suggested by the second and third respondents that they ever, at any time, made a written offer to settle.  Certainly no such offer has been put forward in respect of the instant application for costs.

18. The offer to settle made by the husband would have seen the second and third respondents receiving in excess of $11,000 in respect of security for their costs with the application for summary dismissal being dismissed.  As a result of my decision the application was dismissed but no application for security for costs was pursued, and, thus, no payment ordered.  The second and third respondents can be seen as being $11,000 worse off than what they would have been had they accepted the offer. The offer can be seen as a reasonable one.

19. The second and third respondents were put to the cost of proceeding with a hearing in circumstances where that hearing ultimately determined that their application was wholly unsuccessful. 

20. In terms of s 117 (2A) of the Act I consider:

a.No submissions have been directed to me in respect of the financial circumstances of each of the parties to the proceedings.  In particular, I have no evidence as to any significant financial detriment caused to the second and third respondents by a costs order.

b.Neither party is in receipt of legal aid.

c.I am not convinced that the conduct of the father in filing material late is, in the context of the broader circumstances pertaining to this matter, such as to disentitle him from an order for costs in respect of the application.  As sub-paragraph (c) of s 117 (2A) makes clear, conduct is to be looked at broadly in and about the conduct of the proceedings, including in relation to pleadings, particulars, and the like.  I have already alluded to the fact that, as conceded by the second and third respondents, they could have sought particulars of a pleading previously ordered and received by them a considerable time prior to the hearing of this application.  No explanation is given as to why they did not.

d.Proceedings were not necessitated by the failure of a party to comply with a previous order of the court.

e.As made clear in my Reasons for Judgment the second and third respondents have been wholly unsuccessful in respect of their application.  In my opinion the application did not enjoy good prospects of success from its inception.

f.I have already discussed the terms of the only written offer to settle of which I have been made aware.  I have also commented on the fact that I have not been made aware of any offer to settle made by the second and third respondents at any time prior to the hearing – including after the husband’s affidavit was delivered.  Similarly, however, the husband made no offer to settle of which I have been made aware, at any time prior to 25 November 2008.

1. In my view the facts and the circumstances in this case justify the exercise of my discretion to make a costs order in favour of the husband as against the second and third respondents in respect of the application.

2. The husband’s late compliance with the Court directions and the making of an offer only on 25 November 2008, some three days prior to the hearing, persuade me to make an order that the second and third respondents pay the husband’s costs from the time and date of the faxed offer to settle forwarded by the solicitors on 25 November 2008.

3. I should say for the sake of completeness that I reject the application made in the alternative by the second and third respondents that costs should be reserved to the trial judge.

4. It seems to me that such an application conflates the merits of an application of the type brought by them with the ultimate merits of the husband’s application at a trial. If, as they assert, the husband’s case is non existent or poor, then, an appropriate application can be brought an appropriate time.

5. It seems to me that it is no answer to say to an application that fails (and which, in my view, did not enjoy reasonable prospects at the outset) that, ultimately – in respect of a cause of action with entirely different criteria – the claim against them may not succeed.

6. Of course, it need hardly be said, that offers to settle are available to both parties in the substantive proceedings also.

7. I order accordingly.

I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy.

Associate:  L. McMurray

Date:  5 February 2009