Garner and Garner (No 2)

[2010] FamCA 1057

FAMILY COURT OF AUSTRALIA

GARNER & GARNER (NO. 2) [2010] FamCA 1057

FAMILY LAW – COSTS – the general principle – weight to be attached to offers of settlement – other relevant orders

Family Law Act 1975 (Cth) ss 117(2) and (2A)

Penfold & Penfold (1980) FLC 90-800
Robinson & Higginbotham (1991) FLC 92-209
Pennisi & Pennisi (1997) FLC 92-774

APPLICANT: Mr Garner

RESPONDENT: Ms Garner

FILE NUMBER: SYC 4681 of 2007

DATE DELIVERED: 17 November 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rose J

HEARING DATE: 17 November 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: D Dura

SOLICITOR FOR THE APPLICANT: Pritchard Law Group

COUNSEL FOR THE RESPONDENT: R Schonell SC

SOLICITOR FOR THE RESPONDENT: Warren McKeon Dickson

Orders

1. That the husband’s Application in a Case filed 28 April 2010 is dismissed.

2. That the wife’s oral application for an order for costs is dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER:  SYC4681 of 2007

MR GARNER

Applicant

And

MS GARNER

Respondent

REASONS FOR JUDGMENT

Introduction

1. On 30 March 2010 orders were made and judgment delivered by me in proceedings between the parties in which each of them had sought parenting orders and orders by way of property settlement.

2. In relation to the parenting proceedings, the parties had reached agreement and orders were made by consent in relation to all but one issue.

3. That remaining issue for determination, as set out in the Reasons for Judgment, related to whether or not the three children of the parties spent one or two overnight periods with the husband during the alternate week referred to in previous parenting orders made by consent.

4. So far as the property settlement proceedings were concerned, I concluded that orders would be made for the wife to receive the equivalent of 70% of the parties’ net property and that 70% represented just and equitable orders having regard to the assessment of contributions of the parties as being equal, together with a further 20% adjustment in favour of the wife, having regard to the weight given by me to relevant matters pursuant to the provisions of s 75(2) of the Act.

5. In reaching that conclusion, I had regard to a number of findings of fact made by me as set forth in the Reasons for Judgment including but not limited to the disparity in the overall financial position of the parties whereby the husband’s financial circumstances were “vastly superior to those of the wife”.

6. That involved taking into account superannuation entitlements which had been otherwise excluded in terms of the precise property settlement orders that were made.

7. With regard to the property settlement orders, paragraphs 131 to 133 represent identification of, and the manner of, application of the 70% of the net property of the parties whereby an order was to be made for the sale of the former matrimonial home with the wife to receive 71.85% of the net value thereof which in money terms represented at the time $387,116.00.

8. As was emphasised during the course of submissions made by counsel, that had to be seen in the context of paragraph 135 of the Reasons for Judgment whereby reasons were given for a proposed order requiring the parties to join in the sale of the former matrimonial home, and a percentage represented by 71.85% of the net proceeds to be paid to the wife.  Consequently, rather than a lump sum without a sale, it was important to ensure that neither party was “disadvantaged by movements in the marketplace in that the previously agreed current market value may no longer be the value today”.

9. The wife subsequently filed a Notice of Appeal on 28 April 2010 in respect of the property settlement orders.  The appeal was subsequently abandoned.

10. The husband sought an order for costs in relation to that appeal as reflected in his application filed 7 October 2010.  That application is not before me because, as counsel readily acknowledged, that is an application which can only be determined by the Full Court.

The husband’s costs application

1. The husband filed an Application in a Case on 28 April 2010 in which he sought an order that the wife pay his costs of and incidental to the proceedings determined by me.  The application is opposed.  The wife seeks an order that the application be dismissed.

2. The crux of the submissions, very helpfully made by counsel for the parties, is the issue of the weight to be given to offers and counter-offers made by the parties prior to the commencement of the substantive trial.  In addition, there are other matters referred to in the submissions, including the disparity between the financial circumstances of the parties; the question of the ongoing marketing of the former matrimonial home for sale;  and other matters to which I shall refer.

3. However, the offers and counter-offers were very much at the forefront of the submissions made by counsel.

4. I will now provide a brief summary of the offers that each party made as set forth in the evidence before me, reflected in the Affidavit of the husband sworn 28 April 2010 and to a lesser degree, the Affidavit of the wife sworn 2 November 2010.

5. On 12 March 2008 the wife made an offer for settlement, whereby the husband would pay her $425,000.00 within 60 days of the orders being made and the wife would then transfer to him, her interest in the former matrimonial home.  No time limit for that offer was expressed.  The offer for settlement was limited to the property settlement proceedings.  As has been referred to in the wife’s Affidavit sworn 2 November 2010, an issue which the wife was then agitating was that parenting orders should be made whereby the three children of the marriage might primarily live with her on the basis of her relocating from the former matrimonial home to another area in Australia.

6. On 18 June 2008 the husband rejected the wife’s offer made 12 March 2008 in that he provided an offer for settlement of the property settlement proceedings in the alternative, that the husband pay the wife $400,000.00 within eight weeks or that he pay her $420,000.00 within four months with the time to run from the date of the consent orders.  No time limit was expressed for that offer.

7. On 9 July 2008 the wife rejected the husband’s offer.  The wife, through her solicitors, stated that she desired to settle the matter which encompassed both the property settlement and parenting issues, not on a “piecemeal” basis.

8. The husband was invited to submit an offer.  Ultimately, on 10 July 2010 the husband did furnish an offer which encompassed the parenting and property settlement proceedings.  The terms of that offer required him to pay the wife $425,000.00 within eight weeks.  The husband set out in considerable detail his proposal in relation to parenting issues, which on a perusal amounted to each party having approximately equal time with the care of their three children.

9. That offer was expressed to remain open until 5.00pm, 14 July 2008.  Consequently, the wife had two working days to respond.

10. The so-called relocation issue still remained a matter for determination unless otherwise agreed between the parties, as it was not abandoned until 23 April 2009 (the wife’s position in this regard was made clear by her Affidavit sworn 2 November 2010).

11. Therefore, it is apparent when one compares the husband’s last all-encompassing written offer for settlement with the wife’s written offer made 12 March 2008, that the parties in fact had agreed on quantum and payment within a similar time, in that the wife had expressed a period of 60 days, whereas the husband had referred to eight weeks.  However, there was no agreement in relation to parenting issues.  Subject to a change of approach on a very substantive basis by one party or the other, there was no reasonable likelihood at that time that parenting issues would be resolved.  The wife maintained her position whereby the three children should live with her on a relocated basis, whereas the husband’s offer made 10 July 2008 amounted to changes of periods of time of the care of the three children between the parties on a basis that approximated equal time.

12. As a result, I accept the submission made by senior counsel for the wife that the husband’s composite offer was destined to be rejected at that stage, notwithstanding that the wife had sought a composite offer, albeit not the offer that was ultimately made.

13. I have concluded that there is a circumstance that justifies consideration of the application for an order for costs as sought by the husband.

14. As the High Court has emphasised in what is still the leading case in relation to costs in this jurisdiction, namely the judgment given in Penfold& Penfold[1], the general principle in relation to costs is that each party bears his or her own costs subject to a circumstance being established whereby a discretion may be exercised resulting in an order for costs being made.

    [1] Penfold & Penfold (1980) FLC 90-800

15. The circumstance which I have concluded justifies consideration of an order for costs are the offers for settlement which each party has made.

16. As has been made clear by the Full Court in a number of judgments, in particular Robinson & Higginbotham[2] and subsequently Pennisi & Pennisi[3], an offer for settlement whilst not attracting greater priority than other relevant factors pursuant to s 117(2A) nonetheless may in a given case attract more weight than other relevant factors.

    [2] Robinson & Higginbotham (1991) FLC 92-209

    [3] Pennisi & Pennisi (1997) FLC 92-774

17. As the Full Court stated in Pennisi:

    “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.”

18. However, this principle must not be rigidly applied.  Offers must be seen in the context of the case and the extent of the offer as knowledge of the parties’ financial circumstances while the offer is live.

19. In addition, the judgment in the Full Court in Pennisi also held that particular features made in that judgment including:

    “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.”

20. In having decided the threshold position in favour of the husband’s application, I now proceed to consider relevant matters pursuant to s 117(2A).  Those relevant matters are those raised exclusively in the course of submissions made by counsel.  The financial circumstances of the parties, found by me, are that the husband’s financial position is vastly superior to that of the wife.  That positions remains today, notwithstanding improvement in the wife’s financial position in terms of her income as set forth in her Affidavit sworn 2 November 2010.  I should add that no updating evidence of the husband’s financial circumstances was adduced before me.

21. The parties settled all of the substantive parenting issues, with the exception of the period of time that the three children might spend in the care of the husband during what is referred to as the “off week” in school term.  However, that was not an issue which ultimately figured prominently so far as the evidence was concerned, which required my review and findings as set forth in the Reasons for Judgment delivered 30 March 2010.

22. With regard to the property settlement issues, the wife went to trial, or during the course of the trial, seeking just and equitable orders, representing 90% of the net property of the parties which included superannuation.  It is clear from the orders that were made and the reasons for judgment that the wife’s approach was not accepted and, indeed, represented an approach to orders which might be made which could not be sustained.

23. The orders sought by the husband were certainly reasonable having regard to the findings ultimately made which came much closer to the final result.

24. As previously mentioned, at the forefront of this application are the offers for settlement that each party made.  I have referred to the relevant principles in that regard.  Therefore, I attach weight to the offers that were made by each of the parties.

25. For example, should the husband have accepted the wife’s offer made 12 March 2008 which was made shortly after the parties engaged in a conciliation conference then even though the amount he may have had to pay may exceed the ultimate result in terms of a sale of the former matrimonial home, nonetheless from a commercially pragmatic viewpoint, may still have left him in a better financial position than incurring what must have been substantial costs for the trial as well as subsequent applications for re-opening of the wife’s case.

26. On the other hand, had the wife accepted the husband’s alternative offers in relation to property settlement as reflected in his written offers dated 18 June 2008, then more favourable financial consequences were likely to have flowed to her, as opposed to the costs which she ultimately did incur for the substantive trial, quite apart from the emotional investment that that trial must have represented.

27. Hindsight is a wonderful teacher and no doubt parties in this litigation, as well as in other litigation, may reflect upon the lost opportunity to have taken a different course.  However, each party was entitled to proceed to a hearing, bearing in mind the possibility of an order for costs being made against him or her as the case may be.

28. The offer for settlement made on 10 July 2008, whilst being a composite offer which included property proceedings and parenting proceedings as requested by the wife, nonetheless the terms of that offer so far as parenting issues were concerned meant that it had no reasonable prospect of being accepted unless either the wife abandoned her proposal that the children relocate with her to another area, or the husband for his part acquiesced in that approach being taken.  It is clear from that last composite offer that he was not acceding to relocation.  There is nothing in the correspondence before me, or in any other evidence, to suggest that the wife would have considered no longer pursuing the issue of relocation at that time.

29. As previously referred to, the wife’s position was not withdrawn until some nine months later, namely on 23 April 2009, as referred to in her Affidavit sworn 2 November 2010.

Conclusion

1. I have concluded that the application of the husband for an order for costs will be dismissed.

2. My reasons for doing so are as follows.

3. Each of the parties has put forward cogent submissions in support of the position that they have taken so far as this application is concerned.  There is much merit in the submissions and the material which underpins them so far as each party is concerned.

4. However, on a closer analysis of the competing offers for settlement, it seemed that each party missed an opportunity to settle the property settlement proceedings at least on a basis which would have been favourable to them taking into account not only the orders that were ultimately made on 30 March 2010, but the substantial legal costs that each party undoubtedly incurred for the purpose of the proceedings being continued including preparation and conduct of the subsequent trial.

5. The evidence of the wife is that her total costs which included solicitor/client costs amounted to about $139,000.00.  I do not have an amount of the husband’s costs.  However, there is reason for me to conclude that his costs, as incurred by him for the same purposes was likely to have been of a similar amount.

6. From a commercial and pragmatic viewpoint, it would obviously have been in favour of each of the parties had one or the other accepted either of the two offers made on 12 March 2008 or 18 June 2008, or even continued negotiations to split the composite offer made by the husband on 10 July 2008, given that the amount he put forward in relation to property settlement was identical to that sought by the wife some four months previously, and the time period for payment was also similar.

7. As a result, I do not attach more weight to one party’s offer or offers compared to that made by the other, with the exception that I recognise the husband’s composite offer as was invited by the wife, included parenting issues which, on the face of it, he must have known were not acceptable to the wife.  Nonetheless, that should not have prevented the wife from responding by returning to the previous position that the parties had taken of at least settling the property settlement matter given the issues that were ultimately ventilated during the hearing, the evidence that was required and the time taken to deal with them, all of which came at significant financial cost to each of the parties.

8. In addition, I have given much weight to the still vastly superior financial position that the husband enjoys over the wife.  In that regard, the reasons which underpin that conclusion as set forth in the judgment given on 30 March 2010 still apply today, notwithstanding the improvement in the wife’s income.

9. I have also taken into account that the parenting issues between the parties were resolved with the exception of the one issue earlier identified in the Reasons for Judgment dated 30 March 2010 and reiterated in this Judgment.

The wife’s oral application for costs

1. An oral application is made on behalf of the wife that the husband pay her costs of and incidental to his application for costs earlier determined by me.

2. No submissions were made in support of that application.

3. The general principle in this jurisdiction is that each party bears his or her own costs subject to the provisions of ss 117(2) and (2A).

4. No submissions were made to me in support of the proposition that the threshold issue should be resolved in favour of the wife, namely that there is a circumstance which justifies consideration of the exercise of discretion to make an order as sought by her.

5. Accordingly, I apply the general principle and dismiss the application.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose delivered on 17 November 2010.

Associate: 

Date:  25 November 2010