G and N (No.2)
[2002] FMCAfam 68
•19 March 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| G & N (No. 2) | [2002] FMCAfam 68 |
| COSTS – Financial circumstances of the parties – whether respondent husband wholly unsuccessful – settlement offers made by the parties – serious health problems suffered by husband. |
Family Law Act 1975 (Cth), s.117, 118
Murray and Murray (1990) FLC ¶92-173
Robinson v Higginbotham (1991) FLC ¶92-209
| Applicant: | VJG |
| Respondent: | PJN |
| File No: | ZC2280 of 2000 |
| Delivered on: | 19 March 2002 |
| Delivered at: | Canberra |
| Hearing Date: | 7 December 2001 |
| Judgment of: | Driver FM |
REPRESENTATION
| Solicitors for the Applicant: | Mr J Nicholl John Nicholl & Co |
| Counsel for the Respondent: | Mr G Brzostowski |
| Solicitors for the Respondent: | Chris Crowley & Associates |
ORDERS
There is no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
ZC2280 of 2000
| VJG |
Applicant
And
| PJN |
Respondent
REASONS FOR JUDGMENT
The applicant wife in this matter seeks an order for costs in her favour in consequence of orders I made in the matter of G & N [2002] FMCAfam 20 on 13 February 2002. The wife was successful in her principal application for a property settlement in her favour. I ordered the respondent husband to pay to the wife the sum of $45,356.
I called for written submissions from both parties on the issue of costs by 27 February 2002 and written submissions were filed on behalf of both parties. The questions I have to resolve are first, whether any costs order should be made and, secondly, if the answer to the first question is yes, what form the costs order should take. The first question must be answered by reference to s.117 of the Family Law Act 1975 (Cth) (“the Family Law Act”). Section 117(1) provides that subject to sub-section (2) and sections 117AA and 118, each party to proceedings under the Family Law Act shall bear his or her own costs. Section 117(2) provides that if the Court is of the opinion that there are circumstances that justify the making of a costs order, such an order may be made subject to subsection (2A) and the rules of court and the Court may make such an order as to costs and security for costs as the Court considers just. Sections 117AA and 118 are not presently relevant.
Section 117(2A) sets out the matters that the Court is required to have regard to in considering whether to make a costs order. The Court is required to have regard to:
a)the financial circumstances of each of the parties to the proceedings;
b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
f)whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
g)such other matters as the court considers relevant.
The other relevant provision of the Family Law Act is section 117C. That section relevantly provides that where a party to proceedings under the Act has made an offer in the form prescribed by the rules of court to the other party to the proceedings to settle the proceedings on terms specified in the offer, the first mentioned party may file, in the Court in which the proceedings are being heard, a copy of the offer. If a party to the proceedings withdraws an offer, a copy of which has been filed as specified, that party is required to file in the Court a notice that the offer has been withdrawn. It is common ground that an offer was made in accordance with s.117C by the applicant wife and subsequently withdrawn, in accordance with that section. The offer was not disclosed to me prior to the application for costs at the conclusion of the proceedings.
I now consider each of the matters set out in s.117(2A).
Financial circumstances of the parties
The husband is 48 years of age and retired. He cannot work due to serious health problems. He lives on an indexed pension of $11,851 per annum. He has applied for a disability pension but apparently has not yet received a decision on that application. Following the property settlement orders I made in this matter the husband has an unencumbered home in Canberra and approximately $16,000 cash as assets. He also has a financial resource in the form of preserved superannuation benefits in the sum of $25,000.
The wife is 59 years old and is not currently working. She has some capacity to work although this is limited by her age and time out of the workforce. She is provided by her first husband with financial benefits in the form of access to a credit card of a value not less than the value of the indexed pension received by the husband. She also receives free accommodation and the use of a car from her first husband. In consequence of the financial settlement orders that I have made the wife has net assets of approximately $110,000 in the form of shares, and cash to be paid by the husband.
Neither of the parties is wealthy but both are in a reasonably comfortable and secure position. The financial position of the husband overall is stronger than that of the wife but the wife has available to her significantly more liquid assets. Most of the financial resources of the husband are tied up in his home.
Legal Aid, conduct and compliance with orders
None of these matters are relevant.
Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The wife submits that the husband has been wholly unsuccessful in the proceedings, given that the wife received a property settlement in her favour. The husband submits that he has not been wholly unsuccessful because the outcome of the proceedings was between that sought by the parties. I prefer the submission of the husband. As is noted by the learned authors of the CCH Australian Family Law and Practice Service at ¶61-180, page 47,222, in most jurisdictions, the general rule is that costs follow the event which means that the party who succeeds is allowed the costs that he or she incurred in bringing his or her just claim or in defending the unjust claim. The rational basis of this is, of course, that if the plaintiff has a valid and sound claim against the defendant for a sum of money, the plaintiff should not have to bear the legal costs of establishing and asserting his or her valid legal claim. On the other hand, the defendant against whom an unmeritorious claim is brought or a claim with no proper legal foundation, which the defendant ultimately succeeds in defeating, should not be penalised by having to pay his or her own costs in respect of that unjust claim.
In family law proceedings it is frequently thought that the claims and counterclaims made by the parties are not so much asserting matters of right, but are making different contentions as to which way a difficult situation should be resolved and as to the way in which the matrimonial ties should be untwined. In my view, it is only where the Court comes to the conclusion that an applicant really was entitled all along to the orders sought and that a defence has been substantially without merit that the Court should conclude that an applicant was wholly successful and, by extension, that the respondent was wholly unsuccessful. In this matter, at trial the wife sought orders that the husband pay to her the sum of $100,000 within 30 days. Conversely, the husband sought orders that he pay the wife the sum of $25,000 within 90 days. The order I made was that the husband pay the wife the sum of $45,356 within 60 days. In the light of the competing orders sought at trial and the order actually made I am not prepared to conclude that the applicant wife was wholly successful in the proceedings or that the respondent husband was wholly unsuccessful.
Whether either party to the proceedings has, in accordance with s.117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer
On 30 April 2001, following a conciliation conference, the wife filed a form 60 offer of settlement in which she offered to settle all matters on the basis of a $30,000 payment to her and that each party keep what they hold. On 30 May 2001 the wife withdrew the offer of settlement by presenting a notice of withdrawal of offer in accordance with s.117C(2). The withdrawal of offer was filed on 31 May 2001.
It appears that at the time of the conciliation conference and when the offer of settlement was made the parties were relying upon an estimate made by the husband of the value of the home in the vicinity of $170,000. However, the husband’s solicitors obtained an appraisal of the home and forwarded a copy of that appraisal to the wife’s solicitors on 22 March 2001. The offer of settlement was withdrawn following confirmation received by the wife's solicitors that the value of the property was in the range of $240,000 to $250,000. The offer was open for a period of approximately one month.
Clearly, the wife has done better than what she would have achieved if her offer of settlement had been accepted. In this context, the offer is an important consideration. Section 117(2A)(f) does not have any particular priority but its importance must be weighed in the light of all the circumstances of the case. The purpose of this provision is to ensure that offers of settlement, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided and the workload of the Court is lightened: Robinson v Higginbotham (1991) FLC ¶92-209.
I am required to consider the settlement offer notwithstanding that it was withdrawn: Murray and Murray (1990) FLC ¶92-173. In considering the weight to be given to an offer that has been made and withdrawn, the Court should have regard to the period of time for which the offer was open and, depending on the nature or complexity of the proceedings, the length of time that would have been required to give proper consideration to the offer. In this case the offer was open from 30 April 2001 although the offer was not served until 1 May 2001. The offer was in fact received by the husband’s solicitors on 2 May 2001. The offer was withdrawn on 30 May 2001 when the wife apparently concluded that the valuation of the house property meant that the offer was generous to the husband. She was ultimately proved correct in that assessment.
In my view, it was not unreasonable for the husband to decline to accept the offer made when a critical issue (namely the valuation of the house property) was in the course of being resolved. It was not until 30 May 2001 that the wife’s valuation of the home was disclosed to the husband’s solicitors, by which time the offer had been withdrawn. The husband would have needed some further time to consider his position, in the light of the higher valuation obtained by the wife. On the other hand, on 3 December 2001 the solicitors for the husband wrote to the solicitors for the wife making an offer outside the terms of s.117C of the Family Law Act. In that letter the husband offered to settle by payment of $25,000 within 30 days. That was in fact the order sought by the husband at trial. I conclude, therefore, that the husband would probably not have accepted the settlement offer made by the wife even if the valuation of the house property had been firmly established when the settlement offer was made. Nevertheless, it is relevant that, albeit at a late stage, the husband was prepared to make a settlement offer quite close to the settlement offer previously made by the wife.
Any other matters the Court considers relevant
An important and relevant consideration in this case is that the husband is a very sick man. He is effectively an invalid. His life expectancy is uncertain. He will need ongoing medical attention that will impose a financial burden on him. I was concerned in my principal judgment in this matter not to make orders that required the husband to dispose of or encumber his home or to dissipate all of his cash financial resources. I considered it imperative that the husband be left with the security of an unencumbered home and modest cash resources that would allow him to meet the inevitable expenses of dealing with his serious health problems. I should not make any costs order in this matter which would undermine the basis upon which I made the principal orders in the matter.
In all the circumstances I have decided that I should not make any order as to costs in this matter. The financial circumstances of the parties, in consequence of the property settlement I have ordered, while different in fact, are not greatly different in substance, bearing in mind that the husband’s assets largely comprise his home and the wife enjoys the benefit of having a home provided to her by her first husband at no cost. The orders made by me in the proceedings were somewhat closer to those sought by the husband than those sought by the wife at trial. The settlement offer made by the wife was only open for a limited time and was open at a time when a critical issue, the valuation of the husband’s house property, was still being resolved. The husband himself indicated a willingness to settle on terms that were not unreasonable. The husband is a seriously ill man. The husband should not be required to further dissipate his modest liquid assets to meet a costs order.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 19 March 2002
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