Elgabri and Elgabri (No. 2)

[2009] FamCA 673

FAMILY COURT OF AUSTRALIA

ELGABRI & ELGABRI (NO. 2) [2009] FamCA 673

FAMILY LAW – COSTS – Application for Costs of trial refused: Court not satisfied that circumstances justified such order

Family Law Act 1975 (Cth) s 117

APPLICANT: Ms Elgabri

RESPONDENT: Mr Elgabri

FILE NUMBER: PAC 46 of 2007

DATE DELIVERED: 30 July 2009

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: COLEMAN J

HEARING DATE: 16 & 17 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Merkel

SOLICITOR FOR THE APPLICANT: Griffin Lawyers

COUNSEL FOR THE RESPONDENT: Mr Givney

SOLICITOR FOR THE RESPONDENT: Watts McCray Lawyers

Orders

1. That there be no order for costs.

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

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 46 of 2007

MS ELGABRI

Applicant

And

MR ELGABRI

Respondent

REASONS FOR JUDGMENT (COSTS)

1. Subsequent to the delivery of the Court’s judgment in the substantive proceedings between the parties on 26 March 2009, and pursuant to Order 11 of the orders then made, the wife sought an order that the husband pay her costs of and incidental to the proceedings. The husband resisted the wife’s application and sought that there be no order for costs.

2. The wife’s application for costs was articulated in written submissions provided by her learned Counsel on 21 April 2009. In his written submissions of 10 June 2009, learned Counsel for the husband articulated the basis of the husband’s resistance to the wife’s application. As is apparent from the submissions of Counsel for the parties, the statutory principles governing the wife’s application are not in doubt or in dispute. The manner in which the Court’s discretion with respect to costs is exercisable pursuant to the relevant statutory provisions is also not in doubt or in dispute.

3. The wife’s application for costs, as her learned Counsel’s submissions reveal, is significantly reliant upon the making of an offer of settlement or “compromise”. It was submitted in that regard that the wife had, in May 2007, made an offer to compromise the proceedings “which was very close to the orders ultimately made”.

4. The second basis upon which it was asserted that the discretion to make an order for costs should be enlivened was that “the husband by the manner of management of the superannuation fund put the wife to the expense of obtaining orders for an expert report and to pay for that report”.

5. The third aspect of the proceedings upon which the wife relied was submitted to be that “There is evidence that the husband supported his mother in a course of intervention which put the wife to considerable expense and which the husband’s mother abandoned at the last minute”.

6. On behalf of the husband it was submitted that the assertion that the offer of compromise closely approximated the orders ultimately made was “misconceived”, as the offer of settlement made on behalf of the wife was “substantially different to the ultimate orders made by the Court”.

7. It was submitted with respect to the obtaining of expert evidence as to the value of the superannuation fund that, in reliance upon a letter written by the husband’s solicitors to the wife’s solicitors on 15 January 2008 offering to agree that the value of the superannuation fund was $168 748.12, in circumstances where the Court found the value to be $168 770, the husband “should not contribute to the wife’s adversarial expert”.

8. So far as the third matter relied upon by the wife is concerned, it was submitted that “the husband’s mother was separately represented and there is no evidence to support a “conspiracy”. Further the husband was not cross-examined with respect to collusion between he and his mother”.

9. The offer of settlement upon which the wife relied was submitted by her Counsel to have provided:

   (1)The husband transfer his interest in the [M] property, the matrimonial home, to the wife.

   (2)Each party keep all property currently in their possession except the husband give the wife her engagement ring.

   (3)Each party keep all motor vehicles registered in his or her own name.

   (4)Each party keep his or her interests in the [Elgabri] superannuation fund after the entitlements have been correctly adjusted. The wife to transfer her superannuation entitlements to a fund of her choice.

   (5)The husband to pay the wife $25,000.

   (6)The husband’s mother to file a notice of discontinuance in the proceedings. [Wife’s Counsel’s Submissions, page 2].

10. The current application has been contested on the basis that the foregoing analysis of the offer is accurate.

11. Counsel for the husband submitted that the Court’s order was that the wife pay the husband $43 556 “which would mean there is a differential of $68,000.00”, that being an outcome “substantially different” to the offer of settlement made by the wife.

12. As the submissions of Counsel for the wife confirm, the issue is potentially complicated by the Court’s orders with respect to the parties’ superannuation fund. The Court’s orders provided that the husband transfer the equity of the parties in the M property to the wife, as the wife’s offer of settlement sought.

13. The Court’s order with respect to personalty (Order 10) approximates closely the order proposed by the wife in her offer of settlement. The absence of any order with respect to motor vehicles was also consistent with the wife’s offer of settlement. The orders made by the Court with respect to the superannuation interests of the parties was consistent with the wife’s offer of settlement.

14. The wife’s offer of settlement provided that the husband pay to the wife the sum of $25 000. The Court’s order provided that the wife pay to the husband $43 556. On its face, the wife’s offer of settlement was approximately $68 000 less favourable to the husband than was the determination of the proceedings by the Court.

15. Counsel for the wife however submitted by reference to the Court’s orders with respect to the superannuation interests of the parties that the outcome of the proceedings was in reality more favourable to the wife.

16. It was submitted on behalf of the wife that:

    The judgement [sic] recognized that superannuation standards requiring that the superannuation funds be kept separate from other funds and properly accounted for had not been adhered to by the husband. It was conceded by the husband in cross examination that he had not acceded to the wife ‘When the audit of the superannuation fund has been completed it is to be expected, having regard to strong evidence that income had not been allocated to the fund that there is additional income to be identified and returned to the fund of which the wife will receive 60% of that income pursuant to the Court’s orders. Under the orders the wife receives the house on payment of the amount of $43,556 to the husband. She receives the amount currently held on her account in superannuation. The husband’s mother discontinued her action on the morning of the hearing. If the amount found to be due to her as income exceeds $23,535.10 she will have been awarded a greater sum in real terms than she was prepared to settle for in May 2007. (Calculated as follows: $45,020.90 interim payment to Wife deduct payment to Husband for house of $43,556 = $1464.90. Offer to settle in May 2007 was $25,000 cash and deduct $1464.90 from that figure = $23,535.10) However even if she receives less the orders are so close to the basis on which she offered to settle that the husband’s choice to defend the proceedings to final hearing rather than make a reasonable counter offer justifies an order that he pay some part of the wife’s costs.

17. With respect to the ingenuity of the submissions of Counsel for the wife in relation to this topic, to the extent that the wife may receive further monies pursuant to Orders 7 & 8 of 26 March 2009, that was not something sought by the wife and appears to fall most appropriately within the ambit of the fourth paragraph of the offer of settlement. To the extent that the submission refers to the interim payment to the wife pursuant to Court orders of $45 020.90, the wife’s offer of compromise, clearly envisaged that the wife would retain those funds, notwithstanding which she sought that the husband pay to her a further $25 000.

18. The Court’s orders were predicated on the parties having retained what they had previously received, pursuant to court orders or otherwise, with respect to their cash funds at the date of separation. Having taken those matters into account in the way revealed by the Court’s judgment, the Court ultimately concluded that, rather than the husband paying to the wife $25 000, the wife should pay to the husband $43 000 on the basis that the wife retain the various interests referred to in her offer of settlement.

19. With respect to Counsel for the wife, the Court cannot accept that, on any of the bases advanced on her behalf, the wife’s offer of settlement was sufficiently close to the ultimately outcome of the proceedings as to provide a basis for making an order for costs.

20. With respect to Counsel for the wife, the failure to make a counter offer would not of itself in this case advance the wife’s claim for costs. By failing to make an offer of compromise, the husband placed himself in the position of having no counter to the offer of settlement made by the wife. The Court does not perceive that a party can be punished for failing to make an offer, the issue being whether, in all the circumstances, the making of an offer of settlement by the other party should advance a claim for costs. In the circumstances of this case, the Court does not consider that the wife’s offer of settlement should enliven the discretion to make a costs order in her favour.

21. So far as the obtaining of independent evidence with respect to the parties’ superannuation fund was concerned, it was submitted on behalf of the wife that:

    …the costs of obtaining expert valuation of the superannuation interest should not be borne solely by the wife. The valuation was clearly necessary and of assistance to the Court. It was obtained as a result of Court order on the wife’s initiative. She asked that the Court exercise its discretion at minimum to relieve her of some or all of the costs of obtaining the report and of the report itself. Copies of invoices from [F Company], dated 24 June 2008 and 18 March 2009 are annexed. Ms [B’s] fees in total were $7,299.82. [Wife’s Counsel’s submissions, page 3].

22. Counsel for the husband submitted that, had the wife accepted the invitation conveyed on 15 January 2008 to value the superannuation interest at $168 748.12, a figure closely approximating the value determined by the Court, there would have been no necessity for there to have been any expert’s report with respect to that topic.

23. With respect to Counsel for the husband, that submission overlooks the Court’s findings with respect to the husband’s management of the superannuation fund. On the other hand, the Court’s conclusions with respect to the husband’s management of the superannuation fund ultimately turned more on the husband’s own evidence rather than on the evidence of Ms B.

24. Without being unfairly critical of Ms B, as the Court’s Reasons for Judgment (commencing at par 84) confirm, notwithstanding that the husband elected not to adduce any expert opinion evidence in opposition to that of Ms B, as a result of skilful cross-examination of Ms B by learned Counsel for the husband, the figure suggested on 15 January 2008 was substantially the figure which the Court accepted. Had the Court accepted Ms B’s expert opinion evidence in relation to the value of the plates, the wife’s request that the husband contribute half of Ms B’s costs would have been irresistible.

25. Objectively, as learned Counsel for the husband fairly acknowledged at the commencement of the trial, having elected not to adduce any expert opinion evidence in his own case, the husband was necessarily reliant upon the ability of his learned Counsel to undermine Ms B’s expert opinion evidence through cross-examination. As the Court’s judgment confirms, in this endeavour, learned Counsel for the husband was spectacularly successful. The Court accordingly does not consider that the expert opinion evidence issue should enliven the discretion to award costs. Nothing relating to the husband’s conduct, or his evidence at trial changes that conclusion.

26. So far as the involvement of the husband’s mother in the proceedings is concerned, whilst the Court accepts that the intervention by the husband’s mother probably did “put the wife to considerable cost and expense” in the ways asserted, the Court is not persuaded that such expense should be visited upon the husband.

27. Objectively, and without being critical, for hindsight is a wonderful thing, the time to have either sought an order for costs against the husband’s mother, or to preserve the opportunity to do so, was at the commencement of the trial when, without objection, the husband’s mother was granted leave to withdraw from the proceedings. Those circumstances would not of themselves preclude an order being made against the husband with respect to the costs incurred by the wife in defending the application made by the husband’s mother but, as learned Counsel for the husband correctly submitted, the Court has been referred to no evidence which establishes conduct on the part of the husband, whether conspiratorial, collusive or otherwise, which would provide an evidentiary foundation for such an order.

28. None of the bases upon which the wife suggests that the discretion to award costs should be enlivened having been established, the Court is not of the opinion that the circumstances of the case justify an order for costs. Objectively, the wife’s offer of settlement was significantly more generous to her than was the decision of the Court, even accepting that the wife may, as would the husband, receive significant further monies pursuant to Orders 7 and 8.

29. So far as the expert opinion evidence relied upon by the wife is concerned, the husband indicated a willingness to accept a valuation which, perhaps fortuitously, was almost precisely what the Court ultimately concluded in that regard. Also perhaps fortuitously, the husband elected not to adduce expert opinion evidence in relation to the topic, thereby taking the risk, which ultimately did not materialise, that his learned Counsel would be unable to undermine the expert opinion evidence relied upon in the wife’s case.

30. Absent an evidentiary basis for doing so, visiting the alleged sins of the husband’s mother upon the husband would not in the Court’s view be a proper exercise of the discretion conferred by section 117 of the Family Law Act 1975 (Cth). There will accordingly be no order for costs.

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

Associate: 

Date:  30 July 2009