Dieter & Dieter

FAMILY COURT OF AUSTRALIA

DIETER & DIETER

[2007] FamCA 608

FAMILY LAW – APPEAL – COSTS – Procedural Fairness – Submissions sought by the trial Judge prior to publication of her Honour’s Reasons for Judgment on the substantive application

FAMILY LAW – APPEAL – COSTS – Relevance of an Offer to Settle in relation to parenting issues

FAMILY LAW – APPEAL – COSTS – Re-exercise of Discretion

Family Law Act 1975 (Cth) – ss 117(2A), 117C
Family Law Rules 2004 (Cth) – Division 10.1

Penfold v Penfold (1980) 144 CLR 311; (1980) FLC 90-800
Harris & Harris (1991) FLC 92-254
Pennisi (1997) FLC 92-774

APPELLANT:

Mr Dieter

RESPONDENT:

Ms Dieter

INTERVENOR:

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER:

3065

2003

APPEAL NUMBER:

2006

DATE DELIVERED:

22 June 2007

PLACE DELIVERED:

Perth

JUDGMENT OF:

Bryant CJ, Kay and Thackray JJ

HEARING DATE:

19 June 2007

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT JUDGMENT DATE:

23 November 2006

LOWER COURT MNC:

[2006] FCWA 45

REPRESENTATION

COUNSEL FOR THE APPELLANT:

In person

SOLICITOR FOR THE APPELLANT:

In person

COUNSEL FOR THE RESPONDENT:

Ms Thomas

SOLICITOR FOR THE RESPONDENT:

Paterson and Dowding

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Dieter and Dieter.

Orders

IT IS ORDERED:

That the husband’s application in a case filed 5 June 2007 seeking leave to adduce further evidence on the appeal is dismissed.
That the appeal be allowed.
That the orders made by the Honourable Justice Penny on 23 November 2006 be set aside.
That the husband pay towards the wife’s costs of the proceedings the sum of $3,210 being:
(a)the sum of $2,000 in relation to the wife’s Form 60 offer made on 21 September 2004 relating to settlement of property;
(b)the sum of $660 being the costs of the valuer;
(c)the cost of the translation fees in the sum of $550.
That each of the parties meet one half of [the single expert’s] fees for attending at the hearing.
That the Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.

FAMILY COURT OF AUSTRALIA
AT PERTH

Appeal Number: WA 24 of 2006
File Number: PT 3065 of 2003

MR DIETER

Appellant

And

MS DIETER

Respondent

REASONS FOR JUDGMENT

Introduction

This is an appeal against an order made by Penny J on 23 November 2006, requiring the husband to pay the wife’s costs in relation to property and parenting proceedings.
We set out in full the order of the trial Judge:
The matter came on for hearing as a special appointment for orders to be made in relation to costs.
IT IS ORDERED THAT pursuant to the Reasons for Judgment published 9 May 2006:
(a)      In relation to the property settlement proceedings the Applicant,          Mr Dieter, pay:
(i)       the costs of the Respondent, Ms Dieter, from the            time she filed her Form 60 offer on 21 September 2004;     and
(ii)      the sum of $660, being the costs of the valuer;
such costs to be taxed, if not agreed.
(b)      In relation to the children’s issues, the Applicant is to pay:
(i)       the costs of the Respondent from the date of publication of       [the single expert’s] report;
(ii)the costs incurred for [the single expert] to attend court; and
(iii)     the cost of the translation fees;
such costs to be taxed, if not agreed.

The chronology that led to the making of these orders on 23 November 2006 is also relevant and important:
a)The applications by the parties for property and parenting orders were heard before Justice Penny on 7, 8 and 11 October 2004 and judgment was then reserved.
b)On 4 March 2005, orders were made by Penny J both in relation to parenting orders and the parties’ property application.
c)Her Honour did not provide reasons for judgment at that time.
d)Orders 9, 10 and 11 of her orders made on 4 March provided as follows:
9.        If the respondent wishes to make an application for costs, she is   to file and serve written submissions within 14 days.
10.      The husband have a further 14 days in which to file and serve   submissions in response.
11.      Upon receipt of written submissions, costs will be reserved.
e)The wife filed and served submissions in support of an application of the husband to pay her costs, which she sought to be fixed in the sum of $8,000. Her submissions were dated 17 March 2005.
f)The husband filed his submissions in reply to the wife’s application for costs, opposing any order, on 1 July 2005.
g)On 9 May 2006, Penny J handed down her reasons for judgment in relation to the substantive applications in respect of which orders had been made on 4 March 2005 and her reasons for judgment in relation to the wife’s application for costs.
h)Although in her reasons for judgment, Penny J concluded that the husband should pay the wife’s costs and set out the orders she proposed to make, she did not formally make those orders until 23 November 2006. We understand that her Honour had overlooked making the costs order at the time she delivered her reasons and this matter had only been drawn to her attention after the husband instituted his appeal.

The substantive judgment

Her Honour recorded at the commencement of the reasons for judgment that the parties had been unable to agree on issues relating to the parent with whom their two children should reside and how their assets should be divided. She records that the husband’s case was that the youngest child, Michael, who was five at the time of trial, should reside week about with each parent and the older child Jessica, who was seven at the time of trial, should reside five nights per fortnight with him and otherwise reside with the wife. The wife’s case was that the children should both reside with her and have contact with the husband five nights per fortnight.
In relation to property settlement, Penny J noted that the husband submitted that the “modest asset pool of the parties” should be divided 60% to the wife and 40% to the husband. The wife sought orders that she receive 80% of the assets and the husband 20%.
Her Honour noted the level of animosity between the parties and in paragraph 11 said:
It is in the context of this very poor relationship between the parties that the husband seeks orders that the residence of Michael be shared equally between them, and Jessica spend five days per fortnight with him.
In considering any wishes expressed by the children, her Honour referred to the report of the single expert who interviewed both children in relation to a number of issues. The single expert had indicated that Jessica:
[S]truggled with the current situation of moving between the houses and her changing role between the parents. She stated she would like to have a less structured format and wanted to go on overnight contact when it suited her. She enjoyed contact with the husband, but stated that she wished to continue to reside with the mother.
As to the relationship between the children of the parties, her Honour noted that on the evidence, particularly that of [the single expert], both children had a good relationship with their parents. In relation to the children, her Honour noted:
· “Jessica has had difficulties resolving the conflict in loyalty she has between the husband and wife, but wishes to have a good relationship with the husband”; and
· “Michael has a very good relationship with the husband, enjoying his company. He travelled overseas with the husband at a young age and is closely bonded to him”.
Her Honour also found the children to have a close relationship with the wife.
In relation to the husband’s proposal for a week-about arrangement, her Honour concluded at paragraph 28:
It is impossible to see how a week about arrangement would be appropriate in the circumstances where there is little or no communication between the households and when the husband’s and [the husband’s new partner’s] opinion of the wife is so poor.
Her Honour noted at paragraph 29:
The only issue in dispute between the parties is whether Michael should reside with the husband five days per fortnight, as he does at the present time, or seven days at a time. There is no practical difficulty or expense of the arrangement proposed by the husband.
Her Honour found at paragraph 30 that each of the parties had the capacity to provide for the physical needs of the children and their intellectual needs. She noted that the husband was very reluctant to accept that the wife has the capacity to care for the children but her Honour was satisfied that she was capable of caring for them, although she expressed some reservations about the wife’s capacity to provide for the children’s emotional needs.
On the other hand, she found that the husband’s ability to care for the children was compromised by his attitude and reaction to the wife.
Her Honour found at paragraph 34 that both the husband and the wife were [born overseas] and both children had been brought up and exposed to their cultural background by both parties.
Her Honour found that the wife had a responsible attitude to parenthood whilst the husband’s attitude had been coloured by his opinion of the wife and her actions from time to time.
The trial Judge concluded that:
While the issue of whether the husband should have contact for an extra two nights per fortnight to Michael may seem to be insignificant, this is not the case. I am satisfied that Michael would be happy whether he spent five nights a fortnight or seven nights a fortnight with the husband. I am satisfied that the husband has the ability to care for him seven nights per fortnight, as he proposes. I do, however, have serious reservations about the parties’ ability to communicate with each other to the extent which would be required if there was a shared parenting regime in relation to Michael. I also have very serious concerns about the husband and [the husband’s new partner’s] attitude to the wife. … There is likely to be conflict between them all if the residence of Michael was shared.
Her Honour found in addition it was not appropriate for Michael to be treated differently to Jessica and concluded that the contact orders should continue; that is that the children should spend five nights per fortnight with the husband.
In relation to the property, her Honour noted there was little dispute at trial as to the assets and liabilities of the parties, noting that the most significant asset was the former matrimonial home. The wife filed an affidavit of a valuer which stated the value as $270,000. At trial, the husband made an oral application for the home to be re-valued, which was unsuccessful. He cross-examined the valuer in relation to the valuation but was unsuccessful in gaining any concessions.
Her Honour found that the net assets of the parties have a value of $236,286. They comprised:
·Former matrimonial home;
·Furniture and contents;
·Managed funds;
·Shares;
·Wife’s superannuation; and
·Husband’s superannuation.

She added back the proceeds of a vehicle received by the husband and some other modest funds to each of the husband and the wife. The only liability her Honour was required to take into account was the mortgage on the former matrimonial home.
In her Papers for the Judge, the wife sought, inter alia, a transfer to her of the former matrimonial home and a payment to the husband of $15,000. The husband contended that up until the date of hearing the Court should find that the parties contributed equally to the properties but thereafter, due to the wife’s care of the children, she should have an extra 5% and, if the status quo remained in relation to the parenting orders, the wife should have a further 5% to bring her up to 60% in total. We were not provided with a complete copy of the wife’s Papers for the Judge and the portion of the Papers we did receive did not record the percentages that the wife asserted should be the subject of a finding.
The orders sought by the husband, as found in his trial affidavit, provided inter alia, for a transfer of his interest in the former matrimonial home to the wife and a cash payment of $55,000 to him. The difference in amounts was occasioned by the slightly different assets her Honour found to comprise the pool and values attributed to other assets in the asset pool.
The findings by her Honour were that the wife’s contributions, taking into account financial and non-financial contributions and contributions to the family, were greater than the husband’s and there should be an apportionment of the assets 55% to the wife and 45% to the husband. We observe that this was also the husband’s position in relation to contributions and to that extent he was successful in relation to this issue, which took up most of the time that was devoted to property at the hearing. We also observe, however, that the majority of the time at the hearing was taken up with parenting issues.
As far as section 75(2) factors were concerned, her Honour thought that there should be an apportionment of the assets of a further 7.5% to the wife, whilst the husband had sought that the wife receive an adjustment of 5%. This resulted in the wife receiving 62.5% of the assets as opposed to the husband’s proposal that she receive 60%.

The costs judgment

Her Honour determined that the husband should pay the wife’s costs. She did so on the basis that one party had been “wholly unsuccessful”.
Her Honour noted the parties’ positions at the commencement of the proceedings and further noted that in 2004 [the single expert] was appointed … and published his report in May 2004. His opinion was that the children should have contact with the husband for five nights per fortnight, that is from Friday afternoon to Monday morning each alternate weekend and one day each week. Her Honour then noted:
The wife’s position at trial, and in a Form 60 Offer to Settle filed by her, was in the same terms as that suggested by [the single expert]. The husband did not agree with [the single expert’s] recommendation and pursued the matter to trial. The orders I made were as suggested by [the single expert] and as proposed by the wife.
During the course of the proceedings I warned the husband on a number of occasions that his cross-examination was, at times, irrelevant and prolix, and that costs may well become an issue if his application did not succeed.
Her Honour also noted that the husband’s position in relation to children’s issues was that Michael should spend week-about with him and Jessica should spend five nights a fortnight with him. Her Honour noted that “no other offers were put forward by him”. Her Honour further noted that [the single expert] was required by the husband to be cross-examined and that she had made orders in terms of his recommendations. She concluded that, in relation to children’s issues, the husband should have accepted the wife’s offer contained in her Form 60 filed on 21 February 2004 (the parties agreed that this was an error and the wife’s offer was dated 21 September 2004). She found:
The husband was warned during the trial on numerous occasions that he ran the risks of a costs order being made against him. He decided to proceed in the full knowledge of that fact. In my view, he should pay the wife’s costs incurred from after the publication of [the single expert’s] report in relation to children’s issues, to be taxed, if not agreed. He should pay the disbursements incurred for [the single expert] to attend to be cross-examined and for the translation fees.

(our emphasis)

The translation fees were occasioned by the husband insisting that an approved translator provide a translation of emails and the effect of this was that the original translations were found to be correct.
In relation to property, the wife’s Form 60 filed on 21 September 2004 offered the husband a cash adjustment of $20,000. The order made by Penny J involved a cash adjustment of $23,440 in favour of the husband. She noted that the only offer made by the husband was in his affidavit for trial in which he sought a cash adjustment of $55,000. Her Honour said:
Although the offer made by the wife was almost $3,500 less than the order made by me, it was much closer than the $55,000 cash adjustment sought by the husband. The husband made no realistic offer to settle, whereas the wife did. The husband should pay the wife’s costs, to be taxed if not agreed, in relation to property issues from the time her Form 60 offer was filed on 21 September 2004. Included in those costs should be the costs of the valuer fixed at $660.

Relevant law

Section 117 of the Act relevantly provides:
Section 117 Costs
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(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; and
(g)such other matters as the court considers relevant.

The power to make an order in relation to costs involves a wide exercise of discretion: Penfold v Penfold (1980) 144 CLR 311; (1980) FLC 90-800.

Grounds of appeal

The appellant’s grounds of appeal as set out in his amended notice of appeal filed on 22 March 2007 are:
1. Judge failed to take into consideration all the relevant factors under s.117(2A).
2. Judge failed to make proper assessment of s.117(2A) factors that she took into consideration.
3.   Judge did not determine all the relevant facts of the case.
4.   Judge did not afford procedural fairness to the appellant by not scheduling a hearing on the cost issue and by not allowing the appellant to submit updated financial information immediately prior to cost order being made on 23/11/06.
5.   Judge drew wrong inferences from the facts she determined and made findings not supported by evidence.
6.   Judge showed bias towards the appellant which affected the exercise of her discretion resulting in making a cost order to the appellant’s detriment.
7.   Decision is unjust, unfair and unreasonable because of the improper exercise of the judicial discretion.

Discussion

We intend to deal with Ground 4 first, as a finding that the appellant had not been afforded procedural fairness would lead to a conclusion that the appeal should be allowed.

Procedural fairness

We conclude that the appellant was not accorded procedural fairness, as he had the expectation that a hearing on the costs issue would be permitted and the opportunity to make further submissions would be afforded to him. We come to this conclusion for the following reasons:
a)The procedure adopted by her Honour was an unusual one. It is usual for reasons for judgment on the substantive issues to be published before the costs issue is determined, and in particular before the parties are required to file submissions in relation to costs. While some of the matters in s 117(2A) such as offers of settlement, may be able to be the subject of submissions, there may be other matters that would not be apparent to the parties until the reasons for judgment were handed down. The fact the reasons for judgment on the substantive issues were not made available until the decision about costs was made adds weight to the husband’s submission that it was reasonable for him to expect there would be a further hearing.
b)When the wife’s submissions were filed, the solicitors for the wife sent a letter to the husband dated 9 May 2005 in which they said, inter alia, “we advise that we have yet to be notified of the listing date in relation to the said submissions”. They also enclosed a copy of a letter written to the Principal Registrar of the Court on 18 March 2005 upon the filing of those submissions, in which they said “we otherwise look forward to hearing from you as to when the matter is to be listed in relation to the costs issue”. Although counsel for the wife submitted to us that what was intended to be conveyed in both of those letters was that they were expecting a date for the delivery of judgment, in our view, it is far from clear in either of the letters that this was intended. In any event, the words used could not reasonably be said to be unambiguous and we accept that the husband could, by reason of what was said in both letters, have believed that the listing date referred to was an opportunity for the parties to make submissions before the delivery of judgment. This is particularly so in circumstances in which the reasons for judgment in the substantive matter had not been delivered.
c)Counsel for the wife conceded during the trial that there is no common practice amongst Judges in the Family Court of Western Australia as to whether an order for the filing of written submissions, as ordered by her Honour, would lead to a further opportunity to make submissions, or simply the handing down of reasons. Both practices apparently occur and that was properly conceded by counsel for the wife.
d)The husband’s letter of 1 July 2005 accompanying his written submission said, inter alia, “in anticipation of your advice as to when the matter is to be listed in relation to the costs issue”. This is consistent with his submission to us that he expected that there would be a further hearing at which time he would have the opportunity to put before her Honour additional matters on which he wished to rely.
e)At the conclusion of her costs submissions the wife said (at para 17):
[T]hese submissions have been prepared in the absence of the reasons for decision. The wife seeks leave to submit further submissions following receipt of the reasons for decision, should that be necessary.

The husband whilst holding a law degree is not a practising solicitor, and represented himself both before us and at trial.
Given
·    the uncertainty in the process and practice of Judges of the Family Court of Western Australia in relation to costs submissions;
·    the uncertainty created by statements by the wife’s solicitors in their costs submissions, and their correspondence; and
·    the fact the parties were not afforded a further opportunity to make submissions on costs issues after publication of the reasons on the substantive issues,
we are of the view that the husband was denied procedural fairness and this ground must therefore succeed.

Parenting issues

We have also concluded that there is merit in part of Ground 5, which states:
5. Judge drew wrong inferences from the facts she determined and made findings not supported by evidence.
In ordering the husband to pay the wife’s costs from after the publication of [the single expert’s] report in relation to children’s issues, to be taxed if not agreed, her Honour said:
In my opinion, the husband should have accepted the wife’s offer contained in her Form 60 filed on 21 February 2004 in relation to children’s issues. The orders proposed by her were consistent with the Single Expert’s recommendation made in May 2004 and were the orders made by me after trial.
The fact is, as we have already pointed out, the Form 60 was filed on 21 September 2004 and not February 2004, as her Honour stated. This confusion alone may have led her Honour into error. The order made on 23 November 2004 required that, in relation to the children’s issues, the husband was to pay, inter alia:
[T]he costs of the Respondent from the date of publication of [the single expert’s] report.
[The single expert’s] report was published in May 2004. Her Honour’s conclusion links the wife’s offer contained in her Form 60, filed on 21 September 2004, to the single expert’s recommendation and the orders finally made by her. This appears to be the basis upon which her Honour ordered the husband to pay the costs of the wife from May 2004. We accept however as the husband submitted that there were errors of fact in this approach.
The relevance of the report to the costs order was the conclusion of [the single expert]:
The recommendation is that contact be every second weekend with Mr Dieter from 4.30 Friday afternoon or earlier as is convenient for him to collect them from childcare now that he has moved to a 9-5 job with some degree of flexibility of hours, through to Monday taking the children to school.
…
Taking this all into account, it is recommended that in the week following the contact weekend with the father the children stay overnight on a Thursday night and then in the next week, the week before the children have the weekend with their father, they stay overnight on the Tuesday night.
The orders provided for holiday contact and special occasions but these are not the subject of any dispute.
In a minute of proposed orders dated 17 May 2004, and following the release of [the single expert’s] report, the wife proposed that pending disposal of proceedings, previous orders be discharged and the husband have contact with the children, inter alia:
(1) During each school term commencing Friday 21 May:
(a)each alternate weekend from Friday 5.00 pm to Monday 8.45 am;
(b)from Thursday 5.00 pm to Friday 8.45 am in the week following contact weekends; and
(c)from Tuesday 5.00 pm to Wednesday 8.45 pm in the other week.
In other words, five nights a fortnight. She also sought that the husband have first week of each term of school holidays and three weeks in the Christmas holidays.
On 17 May 2004 orders were made on an interim basis substantially in those terms save that the overnight period was fixed as every Wednesday night from 5.00 pm to the commencement of school on Thursday.
However, it appears that not long after the orders were made, facts occurred which caused the wife to review her position in relation to contact. In her second trial affidavit filed on 30 June 2004 at paragraph 132 she proposed that the husband have contact with the children during school terms each alternate weekend from 5.00 pm Friday until 8.45 am Monday. The holiday contact was to be the second half of the April school holidays, the first half of July and October holidays, and the second half of the Christmas holidays.
Thus, the wife’s new proposal, in broad terms was that during term time, the husband have three nights with the children rather than five, five nights being the recommendation of [the single expert]. This was the wife’s position from the time of filing her affidavit on 30 June 2004 until she filed her Form 60 offer on 21 September 2004, when she offered a continuation of the interim orders of five nights per fortnight.
In the Papers for the Judge at trial, the wife proposed orders consistent with the interim orders then in place, namely five nights per fortnight and one half of the school holidays.
The husband had been consistent in seeking a shared arrangement of seven nights per fortnight for Michael and five nights per fortnight for Jessica.
Whilst the trial Judge was correct in saying that the wife’s position at trial and in the Form 60 Offer to settle filed by her was in the same terms as suggested by [the single expert], there is not in our view any basis to order the husband to pay the wife’s costs from the filing of the single expert’s report and to link the husband’s failure to agree with [the single expert’s] recommendations as a basis for ordering costs. We come to this conclusion for several reasons:
a)The wife appears to have accepted [the single expert’s] recommendation for a short period but thereafter rejected it and then conducted herself on the basis that, up until the filing of her offer on 21 September, she was seeking to limit the husband’s contact with the children to three nights a fortnight during term time. Indeed, apart from the offer, it was not until just prior to the commencement of the trial when the Papers for the Judge were filed that the wife formally changed her position to five nights.
b)The recommendations by [the single expert] were not definitive of the outcome of the hearing. They were recommendations only and in relation to one of the children at least the husband accepted those recommendations. It was only in relation to Michael that the husband differed. [The single expert’s] conclusions about Michael’s relationship with the husband, some of which we have mentioned, indicated a very strong relationship between them and Michael’s view was that he would be content with either seven nights or five.
c)We doubt that it could be asserted that the husband was being unreasonable in the orders he sought at trial. True it was that he was not ultimately successful on this issue, but the issues between the parties were limited (the dispute was about five nights or seven nights for one child) and the findings of her Honour were that both parents were capable and appropriate parents having a strong relationship with each of the children, and they with them, and finding no disqualifying factors which might have suggested that the husband was being unreasonable in pursuing his application. In other words, despite the recommendations of the expert, given his other conclusions about the parties’ capacity as parents and the children’s relationship with them, and her Honour’s findings to that effect, this is not a case in which we can conclude it could be said there was no prospect that the husband would succeed in his claims at trial. The ultimate decision as to what is in the best interests of the children must be made by the trial judge, having regard to the various considerations that the Family Law Act 1975 (Cth) requires be taken into account in determining what is in a child’s best interests. We do not think, despite [the single expert’s] recommended regime, the comments in his report about the children and the parents would inevitably lead a court to make such an order after a full hearing.
(d)We note that her Honour opines that the husband should have accepted the wife’s offer contained in her Form 60 application filed on 21 September 2004. We note in passing, that the Form 60 filed by the wife states the offer is made under Division 10.1.2 of the Family Law Rules 2004, which is only applicable to property cases. That of itself would not invalidate the offer as section 117(2A)(f) simply requires that the offer be in writing. In this case, although her Honour purports to rely on the offer to settle, in the end we conclude that the basis of her decision was what she found to be the position of the wife since the publication of the report of [the single expert] (erroneously as we have indicated), rather than the offer to settle itself.

Given the errors which we have found occurred, and particularly our conclusion that there was a lack of procedural fairness to the husband, the appeal must succeed and we do not find it necessary to deal with the remaining grounds of appeal.

Discretion re-exercised

Both parties agreed that in the event the appeal was successful, the Full Court should re-exercise the discretion of the trial Judge in relation to the issue of costs.
Section 117(2A) sets out the matters the Court is required to take into account when considering what order, if any, should be made in relation to costs:

a) the financial circumstances of each of the parties

The husband filed an application to adduce further evidence which contained information about his current financial circumstances. As we discern it, the basis for the application was two-fold. The first purpose was to indicate that this was material he wished to put before her Honour at the hearing which he assumed would take place prior to her making a determination about costs. The second was to introduce this evidence in the event the appeal would be allowed and the Court was going to re-exercise the discretion of the trial Judge.
The husband conceded that the material in his affidavit could readily be summarised by him and we permitted him to indicate to us from the bar table a summary of his financial position. The same opportunity was afforded the wife. In those circumstances it was unnecessary to admit the evidence the husband sought to adduce and we propose to dismiss his application filed 5 June 2007 to adduce further evidence.
It is apparent from the reasons for judgment that the parties have modest means. Her Honour found their net assets to have a value of $236,286. The largest asset is the former matrimonial home valued at $270,000, with a mortgage of $154,894.
At the time of trial the trial Judge found the husband was employed permanently with the Australian Government, earning approximately $47,000 per annum. His income has increased since the hearing, but as a result of recent changes in his employment there would be a reduction in his salary of about $20,000 per annum. He said he is now earning $58,000 per annum. He conceded the reduction would also cause his child support liability to be commensurately reduced.
Following the hearing, the husband and his partner purchased a property in which his equity is $80,000. He has savings of about $2,000, and has a small line of credit and minor expenses relating to his car. Apart from child support, the husband conceded that he has no other legal obligations to support any other person.
The wife has retained the former matrimonial home, which has a mortgage. The husband claims that the equity in her property is much greater than the equity he has in his home. The wife is on contract and is earning about $74,000 per annum. The wife was diagnosed with [an illness] in 2001 and is apparently still in remission.
As both parties share the care of the children, albeit not exactly equally, both have obligations to contribute to their support.
It is apparent that both parties have properties of modest value with mortgages and after child support is paid, a not dissimilar income. Neither has any other significant asset.

b) Assistance from legal aid

Neither party is in assistance by way of legal aid.

c) Conduct of the parties to the proceedings

Although the husband sought to argue that the conduct of the proceedings prior to trial were of some relevance, this was not a matter that was apparently raised by the husband when addressing conduct issues at some length in his written costs submissions. To the extent that there were interim and interlocutory applications before the Court leading up to the final hearing, it is apparent that each of the parties had the opportunity to seek any costs orders they thought appropriate consequent upon the result of those applications. We do not consider there is any matter leading up to the hearing now relevant to this decision.

d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

The proceedings were not necessitated by a failure of either party to comply with previous orders.

e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings

In relation to the parenting proceedings, notwithstanding that the husband was not successful in obtaining the order for Michael that he sought; we do not consider that is a basis for finding that the husband has been wholly unsuccessful. In relation to parenting cases, while acknowledging the wide discretion of the trial Judge, we think this is a factor that should be cautiously applied. As we have already indicated, factors such as the recommendations of an expert, which her Honour apparently took into account in this case, are no more than recommendations. It is ultimately for the Court to decide what is in the best interests of a child and whilst there may be cases in which a parent’s position in pursuing an application to judgment is demonstrably unreasonable and demonstrably lacking in merit, in our view this is not such a case.
There was no dispute, in the end, about the contact the husband should have with Jessica although until the commencement of trial the wife’s position in her affidavits was that the husband should have only three nights per fortnight. The husband at all times sought seven nights in relation to Michael. In our view, his reasons for doing so were not unreasonable and supportable on the expert’s report, even though his proposals did not correspond entirely with those of [the single expert]. Her Honour found relationships to be good between parents and children and both parents appropriate carers. In our view there was nothing in the failure of the husband to obtain the precise orders he sought in relation to Michael that would entitle the wife to costs on the basis he had been wholly unsuccessful in relation to the orders sought for that child.

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

As previously set out, the wife made an offer to settle on 21 September 2004, which would have settled both the property and the parenting issues. For the reasons that we have indicated in paragraphs 64 and 65, we do not consider that it would be an appropriate exercise of the Court’s discretion in this case to require the husband to pay costs on the basis of an offer to settle the children’s matters which was made close to the hearing and was, as it transpired, the position that the wife adopted at the commencement of the hearing.
Nor do we consider that the husband should have to pay the whole of the disbursements incurred for [the single expert] to attend to be cross-examined, as sought. It is apparent from the file that the cross-examination lasted for about half an hour and in our view in that time relevant matters could be explored. The fact that there is a single expert does not prevent a party from cross-examining the expert. The purpose may be to clarify matters, elicit opinions on matters that may have emerged during the course of the hearing and were not apparent to the expert at the time the report was prepared, or to challenge the opinion of an expert with a view to having the expert reconsider or ameliorate their recommendation. There is no indication in the judgment that the questions of [the single expert] were inappropriate and neither party put any transcript before us that would enable us to examine what was said. In the end all that is apparent from the judgment is that the husband was unsuccessful in having [the single expert] change his recommendations, which ultimately accorded with the orders made by the trial Judge. In the circumstances we do not consider that this is a basis, without more, for requiring the husband to pay [the single expert’s] costs. In the circumstances however as he is entitled to have his costs paid, in our view his costs should be met equally by the parties.

Property issues

The relevant part of the wife’s Form 60 offer filed on 21 September 2004 was that she offered to pay the husband the sum of $20,000 in addition to him transferring his interest in the former matrimonial home. Her Honour made order that he transfer his interest in the home and the wife pay to the husband a cash adjustment of $23,440. The husband had sought a cash adjustment of $55,000. Her Honour found that although the wife’s offer was almost $3500 less than the order made, it much closer than the cash adjustment sought by the husband. Her Honour found that the husband had made no realistic offer to settle whereas the wife did.
The fact that a party recovers that which he or she seeks by way of a property settlement in an application or in any other document such as an offer does not mean that an order for costs should be made: Harris & Harris (1991) FLC 92‑254. Nor is a trial judge precluded from making an order for costs simply because an offer has been made but does not exactly match the final order made. Costs are ultimately within the exercise of the discretion of the Court. The closer the offer is to the award when the offer is under the award of the Court, the more weight that should be given to this factor in considering the question of costs. This principle however should not be rigidly applied. Offers must be seen in the context of the case and the extent of the offer is knowledge of the parties’ financial circumstances while the offer is alive: Pennisi (1997) FLC 92-774.
Taken alone, and without context, the fact that the wife’s offer of a cash adjustment was so much closer to the order made by her Honour than that of the husband might suggest that her offer provided a basis for making an order for costs as of the date of the offer. The husband submits that there is context that needs to be considered.
First, there is the fact that the result arrived at in percentage terms was much closer to his position than that of the wife. The wife received 62.5% of the net assets whereas he was proposing 60%. The wife was seeking 80%. Secondly, the majority of the time spent on property issues (which was reasonably limited in any event) was spent on the issue of contribution rather than on the asset pool or the section 75(2) factors. Thirdly, the husband submits that the asset pool, which the wife assumed when she made her offer, increased at trial because:
· the husband’s updated superannuation statement tendered on the first day of trial increased the asset pool by about $20,000; and
· the trial Judge did not include the value of the Laser sedan in the wife’s possession (worth $6,450) which was written off by insurance after the separation and the money used by the wife; but on the other hand included the old Laser hatch motor vehicle which had been in the husband’s possession but which he had sold after separation.
The husband submitted that these factors, which changed the value of the asset pool, were what resulted in him receiving a much smaller amount as a cash adjustment than that which he proposed. He also submitted that he had thought that superannuation entitlements could be assessed differently to the rest of the assets and that he would be successful in obtaining an order to have the former matrimonial home revalued in the rapidly escalating [Western Australian] property market.
However, the wife did not set out in the context of her offer to settle what assumptions she made about the asset pool. She simply offered a sum which was very close to that which was found by the trial Judge to be the amount payable and had the husband accepted it both the husband and wife, but more particularly the wife as she was represented, would have saved some of the costs of the proceedings. This of course would not have had any effect on the parenting proceedings but would have meant that the property issues would not have to be litigated.
The wife made an offer to pay the husband a sum and as it transpired when the matter proceeded to trial the husband was more successful than she was on the arguments about percentage, but significantly less successful on the arguments about the asset pool. The wife’s offer was not withdrawn during the course of proceedings and we think in the circumstances it is appropriate to have regard to the wife’s offer and to require the husband to meet a portion of her costs as a consequence of her offer to settle. However, it is apparent that most of the case was taken up with issues relating to parenting orders and that the property issues involved a less significant part of the time at trial.
The wife in her submissions in relation to costs sought that costs be fixed in the sum of $8,000. We do not wish the parties to be put to the further expense, given the modest assets, of having costs assessed. Accordingly, in the exercise of our discretion and taking into account the amount sought by the wife for costs in total, we consider the husband should pay the wife’s costs fixed in the sum of $2,000. We also consider, as did her Honour, that the husband should pay the disbursements incurred for the translation fees of $550 which was an unnecessary expense occasioned by the husband.
The other order sought by the wife is payment of the valuer’s costs in the sum of $660. The wife submits that in the absence of agreement about valuation she was required to instruct a valuer and obtain a valuation. The husband did not accept the wife’s valuer’s evidence and believed that the value of the property had increased. He made application to the trial Judge to have the home revalued. That application was refused by her Honour, who considered that at that late stage it was not appropriate to either adjourn the trial or present the other party with evidence obtained at such a late stage. The husband chose to cross-examine the valuer and put to him that the property had increased in value. The valuer indicated that he could not agree without inspecting the property and looking at sales evidence again. In the absence of any evidence filed before trial indicating that the value of the former matrimonial home was anything other than $270,000, her Honour accepted the evidence of the wife’s valuer.
The husband has not appealed that finding, nor her Honour’s failure to allow him to call further evidence of value. As a result of the husband’s cross-examination, the wife incurred costs of $660. In the circumstances, we determine that the wife was therefore put to unnecessary expense and that the husband should meet these costs associated in the sum of $660.
For these reasons, we make orders as set out above.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court:

Associate:

Date: 22 June 2007

[2007] FamCA 608

22 June 2007

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Appeal

Costs

Procedural Fairness

Natural Justice