Fleming and Fleming

[2007] FamCA 1284

FAMILY COURT OF AUSTRALIA

FLEMING & FLEMING (NO. 2) [2007] FamCA 1284

FAMILY LAW – PROPERTY – COSTS – Offers to settle – Costs awarded on standard basis

Family Law Act 1975 (Cth) s 117(2A)

Penfold v Penfold (1980) 144 CLR 311
Pennisi and Pennisi (1997) FLC 92-774
Robinson v Higginbotham (1991) FLC 92-209

APPLICANT: Mrs Fleming

RESPONDENT: Mr Fleming

FILE NUMBER: BRF 83 of 2005

DATE DELIVERED: 12 June 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: O'Reilly J

HEARING DATE: 12 June 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodges of Counsel

THE RESPONDENT: Mr Fleming appeared on his own behalf

Orders

1. The husband pay to the wife her costs of and incidental to the s 79 property proceedings between the parties on the standard basis to be assessed if not agreed.

1. The wife’s costs as so assessed or agreed be paid from the husband’s portion of the net proceeds of sale of the parties’ properties at T and B as calculated pursuant to paragraph 7(d) of the s 79 property order before any payment to the husband pursuant to paragraph 7(e) of that order.

1. The husband’s application for costs of and incidental to the s 79 property proceedings between the parties is dismissed.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRF83 of 2005

MRS FLEMING

Applicant

And

MR FLEMING

Respondent

REASONS FOR JUDGMENT

Applications

1. This is an application by the wife for her costs of and incidental to s 79 property proceedings between the husband and the wife which resulted in an order made on 8 February 2007 the effect of which is to divide the property and assets of the parties or either of them equally. 

2. The wife's costs application was made in her amended application for final orders filed on 18 April 2005, par 17.

3. The husband, in his response to an application for final orders filed on 25 February 2005, par 7, also sought a costs order, however he made plain today that this is not now pursued and it will be dismissed.

4. The wife seeks that the husband pay her costs on the indemnity basis, or alternatively the standard basis.

Principles

1. Section 117 of the Family Law Act1975 (Cth) applies. Pursuant to s117(1) and (2) the parties are to bear their own costs unless the Court forms the opinion that there are circumstances to justify a costs order in which case it may make such order as it considers just. Before making a costs order, the Court must identify the circumstance or circumstances on which it relies to justify the order and must have regard to the matters in s117(2A).

2. In Penfold v Penfold (1980) 144 CLR 311 the High Court said at 315:

   It is an accurate description of s.117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount of s.117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.  Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. …

The matters on which the wife's application is based

1. Mr Hodges of Counsel, for the wife, advanced the following matters as relevant to the exercise of the discretion:

   ·s117(2)(f): offers to settle made by the wife

   ·s117(2A)(c): conduct by the husband in the course of the proceedings

   ·s117(2A)(e): the wife's success and the husband's lack of success in the positions they took before and during the trial

   ·s117(2A)(a): the parties' financial circumstances, in particular, the husband’s capacity to pay a costs order.

2. I will deal with each of these matters in turn.

Section 117(2A)(f): offers to settle

1. The wife made four offers to settle, three in form 60 made on or about 9 July 2004, 29 April 2005 and 7 April 2006, and one by letter on 2 June 2006.  Only the second of those offers, namely the second form 60 offer dated 29 April 2005, was filed in the Court, the filing date being the same date. 

2. However, it is not a prerequisite, when considering costs applications, that offers be filed in the Court. Rather, pursuant to s 117(2A)(f), what is relevant is whether either party to the proceedings has made an offer in writing to the other party. Each of the four offers was in writing.

3. None of the offers had a date expressed in the body of the offer as to which the offer would expire, or before which acceptance was to be made, however, it seems to me that there is nothing in the legislation or the Rules to provide that the absence of an acceptance date means that the offer is not an offer and, in particular, there is nothing in Div 10.1.2 of the Family Law Rules 2004 which requires an offer to have an acceptance date.  It seems to me, thus, that the relevant principle is that extracted from the ordinary law of contract so that if the offer does not have a date by which if there is non acceptance it will lapse the offer remains open for acceptance until accepted or withdrawn. 

4. Before considering the terms of the offers it is relevant to state that the size of the pool determined by me at the trial was $1,191,518 less capital gains tax and the realisation costs of selling two properties, one at T in Brisbane and one at B in Sydney, as to which see the s 79 order pars 3-7; and less also the costs of the wife's solicitors to calculate the amount to be paid to each party from the net proceeds of sale of those two properties, as to which see the s79 order pars 1(p), 2(i) and 7(b).

Principles relevant to offers to settle

1. In Robinson v Higginbotham (1991) FLC 92-209 at 78,417 Nygh J said:

   …[P]aragraph (f) does not have any particular priority, but its importance must surely be weighed in the light of all of the circumstances of the case. …

   [W]hen one looks at paragraph (f) 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. …

2. However, in Pennisi and Pennisi (1997) FLC 92-774 at 84,547 the Full Court referred to a submission by a party based upon Robinson and Higginbotham as authority for the proposition that the fact that an offer just exceeds the award is no bar to an award for costs.  In respect of that submission the Full Court said (also at 84,547):

   … Equally, however, it is only one of the factors to be considered under s 117(2A) and it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror – Harris and Harris (1991) FLC 92-254.

   We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.

   … 

   The plain words of the paragraph do not limit a Court’s attention to offers which are greater than the amount awarded.  Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case.  Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.

   We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs.  This principle must not, however, be rigidly applied.  Offers must be seen in the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live.  In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer.  There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination.  These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.

   [bold emphasis added]

Wife's first offer

1. The wife's first offer made on or about 9 July 2004 and sent to the husband under cover of a letter of that date was personally received by the husband on or before 22 July 2004 which is the date of his letter of response to that offer.  The terms of the offer do not attribute values to the property which it is offered the husband retain and the property which it is offered the wife retain.  However, 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. 

2. Since 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 as set out in my determination.  See the Schedule of assets at pages 7-8 of the reasons for judgment, and as to matters which I was required to determine, pars 11-32 at pages 2-6 of the reasons for judgment.   Significantly, the real property values in the covering letter and as agreed at trial were the same.

3. Using 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:

Husband

Wife

$310,000 – S property

$210,000 – B property

$230,000 – T property

$220,000 – C property

$50,064 - husband's superannuation

$10,000 - time share

$19,648 - husband's superannuation

$138,000 - cash

$20,342 - MLC policy

$578,000

$4000 - car

Plus by reference to the Schedule in the reasons for judgment

$?- Sri Lanka account

·    Bank accounts - $1738

$10,000 - husband's furniture and chattels

·    Superannuation - $6061

$783 - shares

·    Add-back - $10,338

$105 - shares

·    Furniture and chattels - $1200

$? - QFF points

$644,942

·    Car - $3000

·    Jewellery - $1,000

Plus add back superannuation $70,000 and add back shares $10,207 as set out in the reasons for judgment

(Sub total $23,337)

= $725,149

= $601,337

Plus items included for the husband by clause 4(a) of the offer being a “catch all” provision

·    Bank accounts - $1657

·    Jewellery - $300

(Sub total $1,957)

= $727,106

Less $138,000 cash the husband to pay to the wife

= $589,106

1. It 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. 

2. On 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%).

3. It 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.

4. I 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.

5. I 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.

6. I 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 L Fund, 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 that was a component of item 16 being add backs against the husband amounting to $100,549 comprising the MLC endowment then valued at $20,342, an add back from the husband's superannuation $70,000 and an add back from the sale of shares $10,207. 

7. There 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.

8. The 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 L 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.

9. I 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.

Wife’s second offer

1. Mr Hodges conceded that he did not rely discretely upon the second form 60 offer, that is, the filed offer, as a ground for the award of costs. Indeed, in my view, that concession was proper, as on the figures which I have calculated (which in the circumstances it is not necessary to set out), that offer would have seen the wife have about 54% of the pool and the husband about 46% of the pool. Indeed the husband says that that offer represented 56.56% wife and 43.44% husband. However, as I have said, the wife does not rely on it discretely as a relevant offer to settle and I need not further consider it in the s 117(2A)(f) context. However, I will refer to it in a different context below.

Wife’s third offer

1. The third offer was in terms that there be full and final settlement at 50%/50% overall, with a covering letter as to certain outstanding matters in relation to a spousal maintenance consent order made on 27 February 2004.

2. However, in my view, this offer is not one that was reasonably capable of acceptance without further negotiation as to which party would have which property and assets, and it was reasonable thus for the husband not to accept it. 

3. As I understand Mr Hodges's submissions, he concedes that point in the s 117(2A)(f) context but relies on the offer in a different context to which I will refer below.

Wife’s fourth offer

1. The fourth offer strictly was not an offer at all but a letter dated 2 June 2006 which cautioned that if the third offer lapsed then a further offer would then be made at the lapse time, which was said to be two weeks from the date of the letter, which offer would be on the same basis as the third offer but with an additional provision that the husband pay the wife's costs.  This was thus a foreshadowed (proposed future) offer, and not an actual offer. 

1. Again, however, in its terms it was not reasonably capable of acceptance, for the same reasons as the third offer was not.

Section 117(2A)(c): husband's conduct

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

2. The 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.

3. The second, as set out in pars 11 and 12 of Mr Hodges's submissions, is that the husband's conduct during the trial including obsessive and repeated questioning resulted in lengthening it, according to Mr Hodges’s submissions, by two days so that it took in effect four days instead of two.

4. As 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.

5. The 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).

6. Mr 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.

7. The 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).

8. As to the second, at the trial the husband demonstrated a somewhat obsessive personality unwilling to accept any view other than his own.  However, I do not find that as a litigant in person he deliberately set out to make matters more difficult or repetitive or longer, but rather that that was an aspect of what I have loosely described as his personality. 

9. There is also the circumstance that, despite the fact that much of what the husband put up at the trial failed, and in many respects was unarguable, nonetheless in my estimation it appears he genuinely may have believed in his own cause and thus put up the matters for argument which he did.  It seems to me therefore that his conduct at the trial relied upon by Mr Hodges is not within the range of conduct which discretely would enliven the discretion to award costs on that ground alone.

Section 117(2A)(e): the husband’s lack of success

1. Section 117(2A)(e) deals with the circumstance where a party to proceedings has been “wholly unsuccessful”.

2. Although the husband was “wholly unsuccessful” in relation to the contribution and s 75(2) issues he raised, it seems to me that the provision does not apply because the s 79 order made an award to each party.

Section 117(2A)(a): the parties' financial circumstances in particular the husband's capacity to pay a costs order

1. The pool divided was $1,191,518 so that each party will receive $595,759 less an equal amount relevant to the capital gains tax, costs of sale and administration costs as set out in par 7 of the s 79 order.

2. The husband argued (pars 22 to 23 of his written submissions) that according to the property and assets awarded to him at the trial if he is required to pay costs to the wife, whether on the indemnity or the standard basis, that will use up all or most of his cash resources.  He pointed to the circumstance that he is retired and has obligations to support not only himself but his new wife and, he says, her children. These matters were fully canvassed at the trial and in the reasons for judgment.

3. According to the value of the property and assets which each party was awarded at trial the husband, by par 1 of the s 79 order, was awarded $498,181 in value, and thus is due to receive from the net proceeds of sale of the T and B properties $97,578 less his equal share of the capital gains tax and other costs to which I have referred; and by par 2 of the order the wife will receive property and assets of the value of $253,337 so that she is due to receive from the net proceeds of sale $342,422 less her equal share of the capital gains tax and costs to which I have referred.  Those amounts, it will be noted, come to $440,000, which was the value in the Schedule put on those properties, namely $230,000 T property and $210,000 B property.

4. I am told from the Bar table however that it is common ground that the T property in fact has sold for $285,000 with settlement due on 25 June 2007 and that in relation to the B property whilst there is no contract as yet the best offer to date is $172,000. Thus, the T property, it seems, has fetched about $55,000 more than the agreed valuation at the trial, but the B property may well yield about $40,000 less than the agreed valuation. 

5. However, even on those figures it seems to me that the husband will have sufficient to pay a costs award on the standard basis but perhaps not the indemnity basis according to the figures in the affidavit of James Thomas Noble estimating standard costs at about $70,000 and indemnity costs at about $115,000, without the husband being required to sell his property at S, which is the former matrimonial home, unencumbered, which he received in the property division at the value of $310,000. This is the home in which the husband resides with his current wife and her children.

6. Section 117(2A)(a) requires that I consider the financial circumstances of each of the parties to the proceedings. I note the financial circumstances of the wife are that she, like the husband, received an equal division of the property pool.

Justifying circumstance

1. Having considered all of the matters which I am required to consider it seems to me that there is a justifying circumstance for the husband to pay the wife's costs on the standard but not the indemnity basis, namely, the husband's failure to accept the first offer which, as I have explained above, and will not set out again, was a reasonable offer which reasonably ought to have been accepted and which would have avoided the legal proceedings altogether, combined with his history subsequently of refusing to settle on the equal or near equal basis, insisting up until and throughout the trial that he be entitled to a division of 60% in his favour or at least a greater percentage to himself than the wife.  Although the husband genuinely may have believed that he was entitled to a higher amount, his belief had no legal basis and is therefore not one which ought to have caused the wife to accrue the level of legal fees which thus she was caused to accrue and it would be unfair thus if this legal costs burden fell onto her rather than him. 

2. In these circumstances it is not necessary to consider the other grounds raised by Mr Hodges other than, as I have said, I am satisfied the husband has the capacity to pay a costs order on the standard basis.

Whether a costs order in all of the circumstances would be a just result

1. For the reasons stated I am satisfied that a costs order on the standard basis would be a just result between the parties.

Rejection of claim for indemnity costs

1. It remains for me to outline brief reasons for my rejection of the wife’s claim for indemnity costs.  In short the husband was a litigant in person.  It appears he genuinely may have believed that he ought to have been awarded more although that belief had no legal substance.  I would refer also to the husband's written submissions at par 12:

   I did not seek the benefit of legal representation throughout the conducting of my case as there were no children of the marriage and I did at all times in this case tell the truth and considered that as long as I did this, justice would be served for both myself and the wife.  Further, on reading the relevant property settlement sections in s 79 and s 75(2) of Family Law Act, I believed many of the provisions in those sections appeared to have direct application to my case at least on my reading of them and supported a conclusion that the assets the wife and I possessed ought to be provided in proportions which favoured me.

2. I am conscious of the circumstance that an imprudent refusal of an offer to settle in some circumstances appropriately may trigger an award for indemnity costs; and that a lengthened trial, perhaps taking longer than it ought to have by the circumstance of the husband's self representation and other characteristics to which I have referred, sometimes appropriately may trigger an award for indemnity costs.  However, it is appropriate in this particular case that I take into account that it appears that the husband genuinely may have believed that he had a claim to more than a 50% division although, as I have said, that belief had no legal basis.

Assessment of costs

1. The wife seeks through her Counsel and by reference to Mr Noble's affidavit, annexure I, which is an assessment by Hartwell's Cost Consultants, that I now fix the wife's standard costs in the amount of $69,919.23.

2. However, I am not persuaded that I should assume the assessing role for the following reasons.

3. First, as the husband observed, the wife's solicitor's charges commenced on 3 March 2003 and thus may include certain pre-action matters not properly the subject of costs to be paid by an opposing party ordered to pay litigation costs, for example, advice on prospects, or other preliminary things.

4. Secondly, in these proceedings there was a consent spousal maintenance order made on 27 February 2004 which was quite extensive in its content and ramification and it may be that Mr Hartwell's assessment includes work done for that which, plainly enough, is not part of the order which I am prepared to make relating to the cost of the s 79 property proceedings. 

5. Thirdly, the husband's submissions at par 16 point out relevantly that amongst the bills appear to be some charges for such things as the creation and registration of a mortgage over her interest in property to secure payment of costs and other matters which ought not come home to the husband.

6. Fourthly, it seems to me that generally whilst it may be appropriate for judges, to save parties' costs, to make summary assessments of costs in relation to some interim or interlocutory applications, costs of a trial by nature are large and ought to go through the proper assessment process so that there be an assessment order issued by a Registrar.  That is not to say that in some respects Mr Hartwell's assessment may not be of assistance to the Registrar.  On that occasion, however, the husband will be able to attend to dispute particular items as perhaps not relating to the s 79 proceedings. 

Source of funds to satisfy costs order

1. Mr Hodges's written submissions par 19 sought also that the wife's costs, if ordered, be paid from the husband's entitlement to his share of the net proceeds of the T and B properties, and if insufficient and not otherwise paid within 30 days there be default orders for the sale of the S property.

2. It seems to me to be appropriate, to ensure an end to the parties' financial relationship, that I order that the wife's costs as assessed pursuant to a costs order or agreed be paid from the husband's portion of the net proceeds of sale of those two properties, and I will order that.  However, it seems to me that there may be likely to be sufficient for that so I will not make a default order.  If there is insufficient then the default procedure of the Court can be initiated. 

   Anything further, Mr Hodges?

MR HODGES:  No, your Honour.

HER HONOUR:  Yes.  Mr [Fleming]?

MR [FLEMING]:  Your Honour, as I relied mainly on the documents the wife gave me and our culture, I humbly submit, your Honour, that if your Honour is now ordering costs against me, that out of those costs, because I had no other reason to come to Court to confess this situation if the wife hadn't given me those documents, so I believe your Honour may I humbly submit that I pay half of what the wife's costs are, your Honour.

MR HODGES:  I object, your Honour.  You've heard all the submissions.

HER HONOUR:  Mr Hodges.  Yes, Mr [Fleming].  Mr [Fleming], the thing is that you have already made a submission that I ought not make a costs order because of that consideration and I have rejected it. You have, however, reminded me that I omitted to include in my reasons for judgment that I have considered that submission and do not regard it as one which persuades me that I ought not exercise the discretion to award costs.  

1. I will now, before going further, add this paragraph to the reasons for judgment, and I reserve the right to insert it at an appropriate place.  Mr Fleming submitted, both in his written submissions and from the Bar table, that the only reason he came to Court in the contested trial against the wife, claiming more than 50% of the assets, was his reliance on annexures C, D and E to his affidavit filed on 7 October 2005 wherein, as he set out in his handwritten letter dated 22 July 2004 to Mr Noble, the wife's solicitor, in response to the first offer, if the wife had not represented that in effect she disowned certain proceeds of sale of properties earlier bought and sold by the parties throughout the course of their relationship, then he, in effect, would have agreed to a 50%/50% division but that he relied on the wife in her representation to him that she did not seek a division of those proceeds in his seeking more than a 50% division.

2. For my part, I am unable to accept that submission by the husband for several reasons. 

3. First, principally at the trial he argued for a greater contribution assessment in his favour because he analysed down to the last cent virtually that during the whole of the period of their cohabitation and marriage, of all of the income earned jointly, he earned 66% of it and she earned 33% of it, which submission I rejected at the trial as necessarily resulting in a greater contribution assessment in his favour; and secondly, on the basis that he had greater skill during the marriage, in particular a real estate and investment skill, so that he should have what is called a special skill contribution which I similarly rejected at the trial.

4. He also argued under s 75(2) that he ought to have an adjustment in his favour having regard to the circumstance that he has an obligation to maintain his new wife and her children and other matters set out and fully dealt with in the reasons for judgment, all of which I also rejected. 

5. Therefore, it seems to me that these were the real reasons the husband refused to settle on the 50%/50% basis, in part which is borne out by par 12 of his written submissions, set out above.  Whilst it is true that in his response dated 22 July 2004, to which I have referred, he made a counter offer to the first offer splitting the amount of the proceeds referred to above (the properties earlier bought and sold) which was, on his estimate $194,000, so that instead of paying $138,000 to the wife he would pay $41,000, that counter offer is not one which has any further effect in the proceedings.

6. The husband also submitted that the first “genuine” 50%/50% offer, that is “exactly 50%/50%” as opposed to “more or less 50%/50%” was made on or after 6 March 2006 when the trial was first listed for hearing and did not get on, so that costs, if awarded, should be limited to costs incurred after 6 March 2006.  However, as I have explained, the basis on which I am awarding the costs is the husband's unreasonable failure to accept the first offer, which was made on 9 July 2004, combined with his history subsequently of refusing to settle at or near the equal basis.  In my view there is thus no basis to so limit the time period for which costs should be awarded.

7. After I concluded giving the reasons for judgment the husband has again raised the question of his reliance on the wife's representation, to which I have referred, seeking thus that he pay only half of the assessed costs to the wife rather than all of them, however, as I have already heard full argument and given my reasons for judgment I will not now entertain that application.

   Anything further, Mr [Fleming]?

MR [FLEMING]:  Your Honour, may I humbly submit that if I was relying on my contributions towards the marriage I would have stated that in my letter of 22 July, but as your Honour would please note I only talk about the documents the wife gave me and that is the only reason I appeared in Court.  If I was saying about my contributions I would have stated that as well, your Honour, and please believe me, those are my only reasons for coming to Court in our culture because in Sri Lanka when we- - -

HER HONOUR:  Mr [Fleming], you're being repetitive and you're raising a matter on which I've already ruled, which is not permissible. However, what you have just said has prompted me to wish to add a further observation to the reasons for judgment which, again, I will reserve the right to add in at the appropriate place.

1. Despite the letter of 22 July 2004 setting out the wife's representation as the only reason for the husband not accepting the offer and thus proceeding to trial and thus causing the wife to incur costs, that does not alter the fact that nonetheless the result at trial was in fact a 50/50 award and the counter offer made by the husband in that letter was not reflected in the ultimate judgment.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O'Reilly

Associate: 

Date: