Firmer and Britton

[2012] FamCA 576

FAMILY COURT OF AUSTRALIA

FIRMER & BRITTON [2012] FamCA 576

FAMILY LAW -COSTS - Offer of settlement - Where the Wife made an initial offer of settlement that was substantially less than her entitlement under the final Orders - Where the Husband had not made any offers to the Wife greater than her final entitlement

Family Law Act 1975 (Cth)

Browne & Green (2002) FLC 93-115
Munday & Bowman (1997) FLC 92-784
Murray (1990) FLC 92-173
Penfold & Penfold (1980) 144 CLR 311
Pennisi & Pennisi (1997) FLC 92-774
Robinson & Higginbotham (1991) FLC 92-209
Steel (1992) FLC 92-306

APPLICANT: Mr Firmer

RESPONDENT: Ms Britton

FILE NUMBER: TVC 588 of 2007

DATE DELIVERED: 23 July 2012

PLACE DELIVERED: Townsville

PLACE HEARD: Townsville

JUDGMENT OF: Kent J

HEARING DATE: 23 July 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Honchin

SOLICITOR FOR THE APPLICANT: Stevenson & McNamara

COUNSEL FOR THE RESPONDENT: Ms McDiarmid

SOLICITOR FOR THE RESPONDENT: The Brad Robins Legal Centre

Orders

1. The Respondent Husband pay to the Applicant Wife her costs of and incidental to the proceedings on a party and party basis, such costs to be agreed, or failing agreement, to be assessed or taxed.

2. The parties shall each bear their own costs respectively of and incidental to the current application.

Notation

These Orders exclude those costs which have already been dealt with by way of previous Orders of the Court, including any Orders in favour of either party and including the Orders in respect of the contravention proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Firmer & Britton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT TOWNSVILLE

FILE NUMBER: TVC 588 of 2007

Mr Firmer

Applicant

And

Ms Britton

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. The substantive proceedings between the parties were financial. The Applicant Wife sought Orders for property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). His Honour Justice Monteith heard and determined those proceedings over a five day period commencing 19 September 2011, and delivered reasons and made Orders on 12 October 2011.

2. Relevantly, as set out in paragraph 65 of the reasons for judgment, his Honour determined a net pool of assets and resources, including financial resources, of $4,068,140.31. As per paragraph 65, which sets out what his Honour has termed the “balance sheet”, the vast majority of those assets were held by the Husband.

3. The balance sheet referred to included what has been termed a “notional add-back” of a property in the sum of $2,100,000.00, being a property at H, which the Husband had, at some point, transferred into a superannuation fund in the name of the Husband’s parents. The Husband acknowledged at the outset of the trial so far as the Court was concerned, that there was no longer any issue that that was a property to be added back, and sometime shortly before the trial, that position had been reached to the knowledge of the Wife.

4. However, it is to be noted that for the period up until that point, thus for a substantial period of the proceedings, the Husband had maintained a case, it seems, that that property did not form part of the relevant pool of assets.

5. In the event, his Honour determined that the Wife was entitled to a contribution-based entitlement of 1.5 per cent and that an adjustment for s 75(2) factors of a further 1.5 percent in the Wife’s favour ought be made. On that basis, his Honour made an Order that the Husband pay to the Wife the sum of $122,044.00 within 28 days of the Orders.

6. The Initiating Application of the Wife leading to that conclusion was filed by the Wife on 5 August 2008.

7. By her Application in a Case filed on 10 November 2011, the Wife now seeks Orders for costs of the substantive proceedings to be paid by the Respondent Husband to her. She seeks that the Respondent pay her costs of the substantive proceedings on a party and party basis until 12 September 2011, and that thereafter the Husband pay her costs of the proceedings on an indemnity basis. She further seeks that her costs of the application before me be paid by the Husband on an indemnity basis.

8. Section 117(2) of the Act relevantly provides that in proceedings under the Act, if the Court is satisfied that there are circumstances that justify it in doing so, the Court may, subject to s 117(2A) of the Act, make such Order as to costs as the Court thinks just.

9. In Penfold & Penfold (1980) 144 CLR 311 (“Penfold”), the High Court held that s 117(1) is not paramount to s 117(2) and that as s 117(1) is expressed to be subject to s 117(2), the former must yield whenever a judge determines in a particular case that there are circumstances that justify it in making an Order.[1]

   [1] See also Mallett & Mallett (1984) 156 CLR 605 (Wilson J).

10. It is clear from the decision of the High Court in Penfold, and indeed in other decisions of this Court, including of the Full Court, that s 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an Order.

11. In this case, there are several principal contentions agitated by the Wife as amounting to justifying circumstances. First, the Wife refers to offers made by her to resolve the proceedings, and in particular, reference is made to an offer made by the Wife prior to the formal commencement of the proceedings on 11 July 2008 and repeated on 17 July 2008, which offers are in the same terms, albeit addressed to different solicitors on behalf of the Respondent Husband. Reference has also been made by the Wife in particular to an offer made by the Wife in September 2011, identifying the reason for which indemnity costs are sought from that date.

12. The Wife further refers to the feature that there was significant non-disclosure by the Husband in the course of the proceedings, leading to contravention proceedings which were separately determined by his Honour, Justice Monteith. His Honour found the contravention made out, and made a number of Orders in relation to disclosure, but relevantly for present purposes, ordered in respect of those proceedings that the Husband pay the Wife’s costs on an indemnity basis. His Honour observed with respect to those contravention proceedings that the contravention proceedings and, in effect, the Husband’s non-disclosure, had the effect of delaying the proceedings by something in the order of ten months or a year.

13. It should be noted that for the purpose of justifying circumstances, it is not necessary that a party establish what might be termed extraordinary or exceptional circumstances. There merely needs to be the existence of circumstances which justify an order in favour of the party seeking an Order for costs.

14. The evidence before me establishes that on 11 July 2008, and again on 17 July 2008, prior to the institution of the formal proceedings, the Wife, by her solicitors, wrote to the Husband, by his solicitors, in terms including the following:

    Our client proposes a settlement by way of one payment to her in the amount of $55,000. Although the marriage was of short duration, it is the belief that this is a fair and equitable, if not reserved amount.

15. Relevantly, the response to that proposal contained in a letter from the Husband’s solicitors dated 24 July 2008, whilst it addressed a number of other matters, concluded with the following paragraphs:

    Our client instructs that he has been more than generous towards your client during his involvement with her and that he will not be making any proposal for any property settlement.

    Our client has further instructed us to advise you that he will defend any claim for property settlement that your client might elect to commence against him, to the end.

    Our client will also be seeking indemnity costs against your client in respect to her frivolous and/or vexatious claim and/or for her abuse of process. Our client has instructed us not to enter into any further correspondence with you, and that we are not to accept service of proceedings should your client elect to proceed. Accordingly, if your client chooses to proceed with her claim, then you will have to effect personal service upon our client.

    We reserve the right to tender this correspondence to any Court in support of our client’s claim for Indemnity Costs.

16. I am comfortably satisfied on that exchange of correspondence, that the Wife had little option but to commence the formal proceedings which she commenced soon after on 5 August 2008.

17. In terms of the considerations under s 117(2) of the Act, offers of settlement assume particular resonance in many cases as a consideration the Court takes into account.

18. In Robinson & Higginbotham (1991) FLC 92-209 at p 78,417, Nygh J observed in relation to the relevant consideration:

    It is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. …

19. In the circumstances of this case, at all material times, including to the current point, the Husband has been and is in a vastly superior financial position to that of the Wife. Moreover, having regard to the actual sum ordered to be paid as and by way of property settlement, namely the sum of $122,044.00, it is tolerably clear that costs loom large in terms of a just and equitable outcome in terms of what the Wife actually receives, having had to meet her own costs. Whilst I do not reach firm conclusions on the amount of the relevant costs, it is clear on the material before me that if there were no Order as to costs, most of the sum ordered to be paid by way of settlement of property to the Wife would be subsumed in the costs she has had to meet in advancing the claim.

20. Similar emphasis upon offers to settle are made in other decisions of this Court, including the Full Court, such as Browne & Green (2002) FLC 93-115, Murray & Murray (1990) FLC 92-173, Steel & Steel (1992) FLC 92-306 and Pennisi & Pennisi (1997) FLC 92-774.

21. I have already briefly referred to the disparity in financial circumstances between the parties, and in my view, relevant to this case, that disparity has two relevant effects. First, the disparity in and of itself, where the Husband is in a vastly superior financial position to that of the Wife and secondly, where having regard to that disparity, the end result or end consequence of each party in circumstances where the financially stronger party has much more ability to meet his costs of the proceedings, versus the position of the Wife in receiving a cash payment as relatively modest as $122,044.00, having regard to the costs she has to go to in order to achieve that result.

22. It is certainly true on the topic of offers of settlement, that after that initial offer, the Wife has made other and different offers of settlement. The schedule of those offers is helpfully set out in the written submission filed on behalf of the Husband. It was further contended on her behalf that the offer she made on 11 September 2011, referable to the sum of $150,000.00, was effectively in the same terms as the initial offer that I have referred to once costs are allowed for. I am not satisfied that I can readily adopt that assertion, as it seems to me that one would need to know with better particularity what were the assessable costs on a party and party basis as and when that later offer was made.

23. However, I also do not accept the contention on behalf of the Husband that the fact that the Wife made (much later) different or further offers after the initial offer means that the result is that only whilst the initial offer was extant should any Order for costs be made. It is clear that since the judgment of Nygh J referred to, this Court has continued to emphasise the importance of parties resolving matters where possible and participating in a variety of means to do so. The Court has limited resources and parties need to be mindful that there is always the prospect, if justifying circumstances exist, that they litigate at their peril in terms of the potential for an Order for costs after an offer.

24. The discretion under s 117(2) of the Act must have regard to the feature that the primary position expressed in s 117(1) is that each party should bear his or her own costs, but it is a broad discretion, and it is not one which is to be read in a restrictive way.[2]

    [2] See Collins (1985) FLC 91-603.

25. The Wife contended on this application that there ought be an Order for indemnity costs, at least in respect of the period referred to, and in particular the trial stage of the proceedings. It seems to me that it is well-settled by authority that the Court should not lightly depart from the ordinary rules relating to costs between party and party, and that as distinct from an Order for party and party costs, something truly exceptional must be shown for an Order to be made on an indemnity basis. That is true both of this jurisdiction and of other jurisdictions.

26. In this jurisdiction, a relevant authority to that effect is Munday & Bowman (1997) FLC 92-784.[3]

    [3] See also, Colgate-Palmolive Co v Cousins Pty Ltd (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Ltd v InternationalProduce Merchants Pty Ltd (1988) 81 ALR 397; Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd [1991] FCA 187 (3 May 1991).

27. I am not satisfied in this case that there is justification for an Order for indemnity costs. However, I am satisfied that there are justifying circumstances for an Order for costs on a party and party basis in favour of the Wife. I am satisfied that, apart from the initial offer, it is relevant as a justifying circumstance that the conduct of the Husband included his failure to make true and full disclosure, and it has been repeatedly observed in this jurisdiction that that duty is an absolute one. Whilst that issue has been dealt with so far as his Honour Justice Monteith making Orders in respect of the contravention proceedings is concerned, including an Order for indemnity costs, it remains relevant that the effect of the Husband’s non-disclosure significantly delayed the conclusion of these proceedings, and that is relevant in the sense of conduct within the meaning of s 117(2A) of the Act.

28. In terms of success in the proceedings, it is also clear on the exchange of correspondence referred to, the Wife’s initial position was that she was entitled to something, whereas the Husband’s primary and initial position was that the Wife was not so entitled, that is that she was not entitled to anything at all. As at the trial, paragraph 1 of the reasons of his Honour Justice Monteith set out that the Wife then sought 5 per cent to 8 per cent of the then-existing pool, but as his Honour noted, the Husband then maintained the position that it would not be just and equitable to make any adjustment of the property pool under s 79 of the Act in the Wife’s favour at all.

29. Most significantly in terms of justifying circumstances and the issue of discretion, is the offer to which I have referred prior to any proceedings.

30. I do not make an Order in favour of the Wife in relation to her current application on the basis that her primary position was that the costs of the trial should be met on an indemnity basis and I have declined that application. It seems to me that on the current application, each party ought bear their own costs.

31. For these reasons, I make the Orders as set out at the commencement of these reasons.

I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 23 July 2012.

Associate: 

Date:  25 July 2012