Fleming and Fleming

[2007] FamCA 1297

FAMILY COURT OF AUSTRALIA

FLEMING & FLEMING [2007] FamCA 1297

FAMILY COURT - APPEAL – From decision of Family Court judge – COSTS – Between parties – Trial Judge ordered that the husband pay the wife’s costs of and incidental to the property settlement proceedings on the “standard basis” to be assessed, if not agreed – Trial Judge relied on the terms of an offer to the husband by the wife in 2004, before the commencement of s 79 proceedings – Whether the trial Judge erred in the assessment of value of the offer by taking the value of assets as they stood at the date of trial in 2006 as opposed to as they stood in 2004 – Argued that in considering the husband’s failure to accept the offer the trial Judge should have mentioned the “profile” of the husband, a self-represented litigant with obsessive personality traits and who suffered bipolar disorder, in her reasons for judgment

Family Law Act 1975 (Cth), ss 79; 117(2A)(f)

Harris and Harris (1991) FLC 92-254
Robinson and Higginbotham (1991) FLC 92-209

APPELLANT: MR FLEMING

RESPONDENT: MRS FLEMING

FILE NUMBER: BRF 83 of 2005

APPEAL NUMBER: NA 51 L of 2007

DATE DELIVERED: 6 November 2007

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: BRYANT CJ, WARNICK AND CARMODY JJ

HEARING DATE: 5 November 2007

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 8 February 2007

LOWER COURT MNC: [2007] FamCA 44

REPRESENTATION

COUNSEL FOR THE APPELLANT: Dr Sayers

SOLICITOR FOR THE APPELLANT: N/A

COUNSEL FOR THE RESPONDENT: Mr Hodges

SOLICITOR FOR THE RESPONDENT: James Noble Family Law

Orders

1. That the husband pay the wife’s costs of and incidental to the appeal as agreed and in default of agreement, as assessed.

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 Fleming & Fleming.

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 51 L of 2007

File Number: BRF 83 of 2005

MR FLEMING

Appellant

And

MRS FLEMING

Respondent

REASONS FOR JUDGMENT

1. On 8 February 2007, O’Reilly J made orders altering property interests following the breakdown of marriage of [Mr] and [Mrs] [Fleming].  Her Honour divided a pool of $1,191,518.00 less certain costs arising upon sale of properties, equally between the parties.  Consequently, the wife sought an order that the husband pay her costs on an indemnity basis or alternatively, on the “standard basis”.  On 12 June 2007, her Honour ordered that the husband pay the wife’s costs of and incidental to the property settlement proceedings on “the standard basis” to be assessed if not agreed.

2. Against the costs order the husband appealed.  On 5 November 2007, we dismissed the appeal and these are our reasons for that result.

3. In her reasons for the costs order, O’Reilly J relied on the terms of an offer made by the wife, on or about 9 July 2004 before the commencement of s 79 proceedings.

4. The husband, who was unrepresented before O’Reilly J, as he was up until two working days ago, on this appeal, set out two grounds of appeal in his notice of appeal filed 14 August 2007.  They were:

   1.That Her Honour erred in the exercise of her discretion in Ordering that the husband pay the wife’s costs of the total proceedings in circumstances when the offer made by the wife was not delivered until 9^th July 2004.

   2.That Her Honour erred in the assessment of value of the offer delivered by the wife to the husband on 9^th July 2004 by taking the value for assets as they stood at the date of trial in August 2006 as opposed to the values for those assets as they stood as at July 2004.

5. He has abandoned the first ground.  As can be seen from the second ground, the husband essentially attacked the trial Judge’s assessment of the value of the initial offer.  However, in his summary of argument the husband also attempted to make a miscellany of points, to which we shortly turn.

6. Before us, Dr Sayers of Counsel appeared for the husband.  We permitted him to rely upon a supplementary outline which, according to its terms, did “not seek to add any new grounds of appeal” but which was intended “to provide nuance to the Summary of Argument already filed by the self-represented appellant. …”

7. The argument which Dr Sayers mounted related to the “profile” of the husband before O’Reilly J, said to be that of an unrepresented litigant, who suffered bipolar disorder and exhibited some obsessive traits.  In short, Dr Sayers’ argument was that O’Reilly J should have said something about this in her reasons.

Miscellaneous points in the husband’s summary

1. These points appeared under the headings; “Other disputed items and values, Cultural Issue, Section 79(4)(a)(b) and (c)” and “State of Health”.

2. In his summary the husband addressed these matters as if he were appealing the substantive decision.  To the extent that the points made by the husband go to justify his persistence to trial in the face of the initial offer, her Honour was well aware of the husband’s contentions, but did not accept them.  She said:

   33The conduct which Mr Hodges relies on is basically twofold. 

   34The first is that throughout the negotiations instead of acknowledging that the just and equitable position was a 50%/50% division the husband, as shown by the documents referred to in Mr Hodges's written submissions, demonstrated a willingness to settle only on the basis of 60% to himself and 40% to the wife, or at least on the basis of a greater division to himself than to the wife.  See par 2 of Mr Hodges's written submissions.

   …

   36As to the first of these matters, it seems to me that the husband persistently refused to treat with the wife at or near a 50%/50% division because of his insistence that he had made a greater financial contribution during the marriage and was entitled to a s 75(2) adjustment in his favour, neither of which had any legal foundation.

   37The husband countered that there “never was” a 50%/50% offer by the wife capable of acceptance (the first two offers being for more than 50% to her, and the third offer being incapable of acceptance).

   38Mr Hodges said to this however that the real point was that the husband was never willing to settle at or near a 50%/50% division, for example, in relation to the third offer to agree to it in spirit and then “negotiate the bones”, which necessitated a trial largely concerned with the husband’s contribution and s 75(2) claims which he lost.

   39The first of the grounds of conduct relied on I think largely overlaps the s 117(2A)(f) ground, and as such does not discretely enliven s 117(2A)(c).

3. The effect of these paragraphs is that her Honour did not examine the question of conduct vis-a-vis the offer, beyond what her Honour said in paragraph 36 just quoted.

4. Leaving aside what Dr Sayers said about that, the point for the present purpose of dealing with the husband’s argument is that the trial Judge did not accept the wife’s argument that the husband’s conduct in respect of the offer was relevant, as a separate issue, so did not need to examine the husband’s justification for his conduct or say anything about it.

5. Mr [Fleming] also complained that the costs for drawing two of the four offers made by the wife were included in the solicitor’s bill but that counsel for the wife had “withdrawn” the two offers.

6. It is not strictly correct that counsel withdrew the offers.  Counsel merely acknowledged that the offers could not be relied upon for the purposes of s 117(2A)(f).  In any event, this is not a matter upon which her Honour Justice O’Reilly made any ruling, but rather is a matter for the assessment officer.

The assessment of the 9 July 2004 offer

1. The arguments put by the husband related to the comparative amount of his superannuation funds at the time of the offer and at trial and the terms of the offer relating to chattels.

2. The terms of the offer are significant to the manner in which it needed to be assessed.  The offer included proposals that the husband retain two parcels of real estate, his superannuation, chattels in a home unit and other chattels and personalty then in his possession.

3. The wife proposed that she retain two parcels of real estate, a time share and that the husband pay $138,000.00, plus some amounts in the nature of “add-backs” of approximately $10,000.  She also was to retain chattels and personalty in her possession.

4. In relation to offers on these sorts of terms, their “value” will not normally be diminished if property which is to be retained by a party increases in value between the time of offer and trial.  Obviously, had the property been divided in specie at time of offer, each party would have “taken their chances” on subsequent capital appreciation of the assets received.

5. After setting out discussion of “Principles relevant to offers to settle”, O’Reilly J approached the assessment as follows:

   15.… for the purpose of assessment of the offer as at July 2004 the values set out in the table in the covering letter plainly were the values upon which that offer was then predicated.

   16Since then, however, there has been a trial of the matter in which, as is evident by my judgment, all or most of the values attributed to the items in the Schedule were agreed, and to the extent they were not agreed, are set out in my determination. …Significantly, the real property values in the covering letter and as agreed at trial were the same. (emphasis added)

   …

   17Using the values referred to in the Schedule of the reasons for judgment, it appears to me that the worth of the offer to the parties on that basis was as follows:

6. Her Honour then set out a table of the assets covered by the offer, and continued:

   18It seems to me that the items of the wife to which I have referred amounting to $23,337 were contemplated by clause 4(a) of the offer which was a “catch all” provision, similar to the items of the husband to which I have referred falling into that category.

   19On that analysis, it seems to me that the wife’s first offer had the effect of the wife having $5,578 more value than she received at the trial and the husband $6,653 less value than he received at the trial on the figures ultimately proved or determined at the trial, or, in percentage terms, as I calculate them, wife 50.49% and husband 49.51% (rounded, wife 50.5% and husband 49.5%)

   20It seems to me that this amount of difference, having regard to the history of the matter and the time at which the wife’s offer was made, indeed it being a pre-action offer, the proceedings having been commenced subsequently on 20 August 2004, is de minimus and that all in all it would have been reasonable for the husband to accept that offer.  In particular, by clause 4(a), the offer dealt with all of the property and assets of the parties.  The husband challenges that conclusion by submitting that the offer failed to include express reference to some particular property and asset items.  However, that submission in my view overlooks clause 4(a) which, as I have said, was a “catch all” provision.  Moreover, largely the parties had similar knowledge of their financial circumstances while the offer was live.

   21I appreciate that, in the context of the wife’s first offer, the values attributed in the covering letter were in some respects different from those agreed or determined at the trial.  However, the analysis above serves at least to show that, at the trial, having regard to the constituent components of the offer, the wife did not fare significantly less well than the offer nor the husband significantly better.  As was observed in Pennisi (above) just because an offer is slightly less than the amount ordered by the Court does not mean it is not a factor to be taken into account in determining whether costs should be awarded, the amount of difference in essence being a matter affecting weight to be given to the offer, with effect that the closer the offer is to the award, the more weight it should be given.

7. As to his superannuation interests, the husband referred to the offer on 9 July 2004 which placed the value of those interests at $108,679.00.  Further, the husband had drawn down $10,000.00 in September 2003.  He argues that both parties were aware of that so that the superannuation benefits at the date of the offer stood at $118,679.00.  This amount he says is approximately $21,000.00 less than the value to which the superannuation entitlements grew by the time of the 2006 judgment, when entitlements with the benefit of add-backs amounted to $139,712.00.  The husband argues that it was an error for O’Reilly J to conclude that it was reasonable for the husband to accept the wife’s offer because, if he had done so, he stood to receive approximately $21,000.00 less than the wife.

8. This argument is flawed.  One cannot calculate how the parties would have stood in July 2004 by reference to a figure for superannuation in 2006.  Had the matter been settled on the terms of the July 2004 offer, the husband would have been at liberty to maintain the superannuation fund and contribute to it.  In any event, O’Reilly J was aware of the issue.  Her Honour said:

   23I have mentioned that the above analysis is based upon the values as agreed at trial or determined by me.  I have looked at the variations between the attributed values in the covering letter 9 July 2004 and the judgment, which show a difference of about $30,000.  However, it must be borne in mind that attributed values some few years before a trial may well be different by the actual date of trial.  In this regard I am satisfied that the variations in that time span do not have the effect that it was not reasonable for the husband to accept the offer at the time it was made.  For example, the husband's superannuation with LUCRF, according to the covering letter, was said to be $15,370, however, for the purpose of the trial, that particular item of superannuation had increased to $19,648, possibly by updated valuation, possibly by effluxion of time.  Another example is the MLC endowment insurance referred to in the letter as $14,495, whereas by the date of the trial … the MLC endowment then valued at $20,342, … .  (emphasis added)

   24There are numerous other examples of those sorts of comparisons that can be made, however, at a given point in time it is not surprising that those sorts of items may have slight changes in actual or expressed values between the date of an offer and the date of a trial.  These minor variations, in my view, do not put the case into the category described by the Full Court in Pennisi in the passage set out above where the contents of the offer were in themselves the subject of disputed value and legitimate subject matter for determination.  Rather, it seems to me that these slight variations were caused by information held at the date of the offer compared with updated information held at the date of the trial.

9. As to the issue of chattels, the husband said:

   11.Further, at the time that the wife put the offer to the husband, 9 July 2004, the wife was asserting that the value of the motor vehicle in the husband’s possession at that time, a 1995 Holden Commodore Sedan […], was in her estimation worth $17,000 (se item 5, under assets schedule, in the letter dated 9 July 2004, page 23 in Volume 1 of the Appeal Book), whilst she attributed a valuation of only $3000 to her 1993 Ford Falcon Sedan […] (see item 4, page 24 in Volume 1 of the Appeal book).  The wife also asserted that the value of the ‘furniture & effects’ remaining in the former matrimonial home was $15,000 (see item 8, page 24).  Therefore, according to the wife, the total value of both, the motor vehicle and the ‘furniture & effects’ in the husband’s possession, as at 9 July 2004, amounted to $32,000.

   12.Although neither party, as at the date of the wife’s offer, 9 July 2004, put forward any valuation evidence to conclude the issue in relation to the values attributed by the wife to the motor vehicle and the ‘furniture & effects’ in the husband’s possession, the husband was never in agreement, at any time, with the high values the wife had attributed to the two items.

10. The husband submitted that, at trial, the wife conceded that the husband’s car was worth $4,000.00 and furniture and effects $10,000.00, thus the total of those items was $14,000.00 not $32,000.00 as referred to in the offer.

11. The response by counsel for the wife in his written submissions, which is borne out by material in the appeal book, was:

    6.6.17 The appellant then raised the difference in value of furniture & chattels and his car but there is no substance to this point since at 9/7/04 the $15,000 for furniture & chattels was the figure for both parties and the appellant acknowledged his car had a value of $11,550 in his response letter dated 22/7/04.  (points 11-15, AB33).

12. As to these and like matters, O’Reilly J said:

    22I note that the Schedule in the reasons for judgment, item 12, includes a joint bank account in the names of the husband and the wife in the amount of $1,075 not included expressly in the offer.  However, read sensibly, the terms of the “catch all” provision were sufficiently wide for that bank account to have been split equally, the provision expressly stating that bank accounts are “deemed to be in the possession of the person whose name appears on the bank records”.  So, in my view, there is nothing in that point.

    …

    25The husband, in his written submissions, contends at par 3 that according to what he says was the “wife's version” of the assets, the offer provided for a division of 50.62% for the wife and 49.38% for the husband, but that “when all of the assets to be retained by the wife are included”, the division, on his figures, amounted to 51.8% wife and 48.2% husband.  The husband then sets out his calculations to arrive at this view.  However, there are at least two flaws in the husband's table.  The first is, as I have already demonstrated in the calculations I have set out above, that several of the items not expressly included in the offer nonetheless were included in the “catch all” provision which, as I have mentioned, amounted to $23,337.  The second flaw is that the husband has been selective in his comparative material.  For example, he has used the “wife’s version” of his LUCRF superannuation at the lower value of $15,370 (found at trial to be $19,648), yet for his motor vehicle not the “wife’s version” of $17,000, but the trial value of $4,000.  These are two examples only.  To suit his own purposes, he has not compared “like with like”, thus arriving at the erroneously based comparison of the wife’s offer as allegedly representing $42,149 more to her than to him, which comparison I do not accept, for the reasons stated.

    26I would observe also, that even if the husband's analysis may on a different view be regarded as a proper analysis, the variation nonetheless is very close, 51.8% wife, 48.2% husband.  However, as I have said, on the analysis which I prefer, the wife's offer amounted to about $5,578 more value to her and $6,653 less value to the husband than the amounts they received as the result of the trial, which, in all of the circumstances, is not an amount of significance in the context in which the offer was made, especially as there will always be slight valuation differences of the type exemplified in this case with the passage of two years between the date of an offer and the date of a trial. A.

13. In Robinson and Higginbotham (1991) FLC 92-209, Nygh J with whom the other members of the Full Court agreed, said:

    …this Court should be very reluctant indeed to interfere with the exercise of discretion in respect of costs.  Indeed, it may be fair to say that generally speaking this Court has been more reluctant to interfere in such determinations than it has even in respect of the exercise of discretion pursuant to section 79. …

1. In Harris and Harris (1991) FLC 92-254 the Full Court said:

   We do not wish to be taken as endorsing the view that where a party recovers that which he or she seeks by way of property settlement in an application or in any other documents such as, for instance, the minutes in question here, an order for costs should follow as a matter of course.  However, we are also of opinion that in the circumstances of this case the trial judge was within the limits of the proper exercise of his discretion.  Cf Robinson and Higginbotham (1991) FLC ¶92-209. Orders for costs are peculiarly a matter which are within the discretion of the trial judge and it is only in the rarest of cases that the Full court should interfere with a costs order.

2. In our view, O’Reilly J’s treatment of the offer of 9 July 2004 was well open to her.

The argument in the supplementary outline

1. Dr Sayers argued that, within the process of assessment of the value of the wife’s offer, O’Reilly J had a discretion to address the husband’s “profile” or circumstances as earlier outlined and that it was open to her to place some weight upon them, in deciding whether or not to make a costs order at all, and if making an order, its terms.  Her Honour failed to discuss the factor at all.

2. We doubt this argument fits within the ground of appeal, but deal with it nonetheless.

3. We reject the argument because Dr Sayers was unable to point to any evidence that the husband’s circumstances were in anyway relevant to his capacity to address the wife’s offer and no suggestion to that effect was put to her Honour.  Thus, O’Reilly J did not need to say anything of an argument that she might, at most, possibly have inferred, particularly since the evidence did not support it.

Costs

1. We are mindful of the financial circumstances of each party following upon O’Reilly J’s property settlement orders.  In our view the appeal had no substantial merit and the husband should pay the wife’s costs of the appeal.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate: 

Date:  6 November 2007