FARRELL & FARRELL

[2011] FamCA 168

FAMILY COURT OF AUSTRALIA

FARRELL & FARRELL [2011] FamCA 168

FAMILY LAW - COSTS – Discretion – Offer of settlement – Application for injunction wholly unsuccessful - Factors to be taken into account pursuant to s 117 of the Family Law Act 1975 (Cth)

Browne & Green (2002) FLC 93-115

Family Law Act 1975 (Cth)

APPLICANT: Mr Farrell

RESPONDENT: Ms Farrell

FILE NUMBER: SYC 1996 of 2010

DATE DELIVERED: 11 March 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ainslie-Wallace J

HEARING DATE: 26 October and 22 December 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

SOLICITOR FOR THE RESPONDENT: Watts McCray

Orders

1. The wife is to pay the husband’s costs of the hearings on 26 October 2010 and 22 December 2010 within 28 days of the resolution of the property proceedings between the parties (either by settlement or final order) in an amount to be agreed or assessed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1996 of 2010

Mr Farrell

Applicant

And

Ms Farrell

Respondent

REASONS FOR JUDGMENT

Background

1. On 26 October 2010 I heard an application by Ms Farrell (the wife) in which she sought an injunction restraining Mr Farrell (the husband) through his company, C Pty Ltd, from selling a property at W.  I refused that application.

2. The husband now seeks an order that the wife pay the costs of the unsuccessful application.

3. I propose to repeat in these reasons particular paragraphs of my reasons delivered on 29 October 2010 in relation to the wife’s application in order to give context to this application and my decision on the question of costs.

Procedural history

1. In early April 2010 the husband applied for both interim and final orders in relation to financial and property matters and in relation to the children of the marriage.  The wife filed a response to the parenting applications but not the property and financial orders sought by the husband.

2. On 21 April 2010 the wife applied for interim orders for maintenance for her support and for an order that she receive money by way of interim property orders to assist her in paying her legal expenses. 

3. On 4 May 2010 the wife was ordered to file a response to the husband’s application for property orders and an affidavit of her financial circumstances.  She did not file documents in compliance with the order.

4. On 2 September 2010 the husband, through his solicitor, informed the wife’s solicitor that he intended to sell a property at W.  On 6 September 2010 the wife’s solicitor sought the husband’s undertakings that he not sell the property.  He declined to give those undertakings. The wife’s solicitor responded requesting the husband keep the wife informed about the progress of the sale, the sale price and other matters.

5. The W property was purchased through C Pty Ltd, a company associated with the husband.  There was no apparent dispute that the parties used that property as a beach house during the marriage.

6. Despite the exchange between solicitors in September 2010, the wife proceeded (in October 2010) to lodge two caveats against the title of the W property and paid a locksmith to change the locks.

7. On 11 October 2010, the wife filed an application seeking orders in relation to the financial and property matters with the husband.  At the same time she filed an Application in a Case seeking orders restraining the husband from selling a property at M, the property at W and disposing of race horses or other, specified assets without her written consent.  She also sought the delivery to her of listed personal items and identified assets by way of interim property settlement and orders for certain payments to be made to or on her behalf.  The Application in a Case also sought orders that she be permitted to reside in the property at W for specified days each week. 

8. The application also sought that the matter be listed at short notice and it was listed in a duty list on 26 October 2010. When the matter was called on, counsel for the wife said that the husband’s financial documents had been received on 22 October 2010, were complex and, as a result, the wife needed more time to consider the husband’s financial position.  Consequently the only issue agitated before me was the wife’s application for an order restraining the husband from selling the property at W.  The balance of the interim application was stood over to be considered on another occasion.

9. I declined to make the injunction.

Costs Argument

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) is the basis for a consideration of this issue. Section 117(1) provides that, subject to other provisions, each party to proceedings under the Act shall bear his or her own costs. A court may, however, make an order for costs if it is of the opinion that there are circumstances justifying it doing so. In considering whether to make an order for costs, the court must consider the matters referred to in s 117(2A). I will consider such of those subsections as are relevant to this issue.

2. There was no dispute that the husband has a considerable financial capacity, nor did it seem to be in dispute that, but for a small amount of money able to be earned by the wife, she is at present, wholly dependent on the husband for financial support.   It was argued that, before the financial matters between the husband and wife are finalised, she had no capacity to pay costs but could do so when the financial matters are adjusted.  However, it was argued that the terms of subsection 2A require the Court to consider the relative strengths of the financial positions of the parties (s 117(2A)(a)).  It is to be observed that the wife has received $250,000.00 from the sale of the property at W and, according to the submission of the husband’s solicitor, an earlier amount of $75,000.00.  Although there is a disparity in the parties’ financial strengths, that disparity will be addressed to a degree once the property proceedings are finalised and would not, of itself, prevent the making of an order for costs should it otherwise be appropriate.

3. The solicitor for the husband argued that the wife’s conduct in lodging two caveats on the property at W, against the background of the exchange of correspondence between solicitors in September 2010, and her failure to file documents in relation to the property orders, were matters which should be taken into account in considering the application for costs.  I am unpersuaded that these two matters would, absent other considerations, give rise to an order for costs in this case.

4. It was also argued that the wife had been wholly unsuccessful in her application on 26 October 2010 and had rejected an offer of compromise, both of which should be reflected in an order for costs.

5. Section 117(2A)(f) requires the Court to give consideration to whether a party has made a written offer to the other party to settle the proceedings.

6. On 19 October 2010 a letter of compromise was sent to the wife’s solicitor which referred to the wife’s application for interim orders listed before the Court on 26 October 2010.  The offer was expressed to be “…an attempt to resolve the interim proceedings”. The effect of the offer was:

   a)that the wife would do all things necessary to remove the caveat lodged against the title of the property at W at her cost;

   b)the husband would pay to the wife $250,000.00 from the net proceeds of sale of the property at W by way of interim property order;

   c)the wife’s interim application filed on 11 October 2010 be dismissed, and

   d)each party pay his or her own costs in relation to that interim application.

7. The offer was open to be accepted until 12.00pm on 21 October 2010 which was the date on which the husband had to file his affidavits in response to the wife’s interim application.  The wife did not accept that offer.

8. It was argued for the husband that the offer of compromise was one that the wife ought to have accepted and, her failure to do so should result in a costs order.

9. For the wife it was argued that the letter of 19 October 2010 was not relevant to the costs issue because the offer was expressed to address the whole of the wife’s interim application, not just the injunction that was pressed on 26 October 2010.  It was thus argued that it was not unreasonable to refuse the offer because, while it was directed at the injunction, the effect of acceptance was to dismiss all of her interim application.

10. It was said that consideration should be given to the circumstances in which the matter came to be heard.  As I have indicated, the wife only proceeded with the injunction having said that more time was required to consider the husband’s financial documents. 

11. Considerable significance has been given to the making of offers of compromise in this context.  In Browne v Green (2002) FLC 93-115 at paragraph 57 the Court said:

    The insertion of s117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.

12. There is some force in the wife’s argument that her refusal to accept the offer was reasonable, given it would have resulted in the dismissal of the whole of her interim application. However, in the result, it is not necessary to give a close examination to this because I have come to the view that the wife should bear the husband’s costs, but not because she refused to accept the offer of compromise of 19 October 2010.

13. On 26 October 2010, the wife chose to press only part of her application, that relating to the proposed sale of the property at W. My reasons for refusing that application are set out in my reasons for judgment, particularly at paragraphs 25 to 32. I considered the application to be wholly without merit. The wife was unsuccessful and in the circumstances of the matter, the usual principle enunciated in s 117(1) should cede. The fact that she was wholly unsuccessful (s 117(2A)(e)) does not rely on the nature and effect of the letter of offer but rather is reflective of the fact that she pressed (and lost) the application on 26 October 2010.

14. Accordingly, I will order that the wife pay the husband’s costs of the hearings on 26 October and 22 December 2010.  I will not order that the wife pay the husband’s costs of the whole of the interim proceedings in circumstances where only the injunction was pressed and the balance of the application was stood over to be considered on another occasion.  I will order that payment of the costs be deferred pending determination of the property suit between the parties.

I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 11 March 2011.

Legal Associate:       

Date:    11 March 2011