Gaspaldi & Gaspaldi (Costs)
[2009] FamCAFC 148
•19 August 2009
FAMILY COURT OF AUSTRALIA
| GASPALDI & GASPALDI (COSTS) | [2009] FamCAFC 148 |
| FAMILY LAW - COSTS – Where there had been a significant change in the husband’s financial position since trial – Costs determined by reference to husband’s current financial position FAMILY LAW - COSTS – Offers of settlement – Relevance of offers of settlement made prior to trial to the costs of the appeal – Offers not relevant in circumstances of this case FAMILY LAW - COSTS – Where the appeal by the husband was allowed on points of law – Where the Full Court reached the same result as the trial Judge in re-exercising the discretion – Where the husband was ordered to make a greater payment to the wife to rectify arithmetical errors in the judgment – Federal Proceedings (Costs) Act 1981 – Meaning of “succeeds” – Costs certificate ordered |
| Family Law Act 1975 (Cth) Federal Proceedings (Costs) Act 1981 (Cth) |
| Dickson and Dickson (No 2) (1999) FLC 92-857 P and P [2002] FamCA 1006 Pedersen and Pedersen [2004] FCWA 59 Pennisi and Pennisi (1997) FLC 92-774 W and W [2000] FamCA 535 |
| APPELLANT: | Mr Gaspaldi |
| RESPONDENT: | Mrs Gaspaldi |
| FILE NUMBER: | CAF | 80 | of | 2004 |
| APPEAL NUMBER: | EA | 134 | of | 2006 |
| DATE DELIVERED: | 19 August 2009 |
| PLACE DELIVERED: | Perth |
| JUDGMENT OF: | Bryant CJ, Thackray and Le Poer Trench JJ |
| HEARING DATE: | Written submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 29 November 2006 |
| LOWER COURT MNC: | [2006] FamCA 1274 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | Self Represented Litigant |
| SOLICITOR FOR THE RESPONDENT: | Consensus Family Lawyers |
Orders
That the application for costs in relation to appeal EA134 of 2006 is dismissed.
That the Court grants to the appellant husband a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in relation to the appeal.
That the respondent wife have 21 days from today’s date within which to make an application for the grant of a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981.
IT IS NOTED that publication of this judgment under the pseudonym Gaspaldi & Gaspaldi (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 134 of 2006
File Number: CAF 80 of 2004
| Mr Gaspaldi |
Appellant
And
| Mrs Gaspaldi |
Respondent
REASONS FOR JUDGMENT
On 4 September 2008 this Full Court made orders allowing the husband’s appeal against property settlement orders made by Faulks DCJ in November 2006, following a trial in June 2005. In these reasons that appeal (EA 134/2006) will be referred to as “the substantive appeal”.
After the substantive appeal was instituted, Faulks DCJ determined an application for costs of the first instance proceedings. In March 2007 he made an order for the husband to pay the wife’s costs as from 1 July 2004. The husband also appealed against that order. We will refer to that appeal (EA 47/2007) as “the costs appeal”.
The substantive appeal was argued in October 2007. We did not hear argument in relation to the costs appeal. Instead, we made directions for the filing of submissions in relation to that appeal and the costs of the substantive appeal.
In April 2008, while our judgment in relation to the substantive appeal was reserved, the husband filed an application to re-open the appeal and for leave to adduce further evidence. Directions were made for the filing of submissions concerning the application and these were completed in August 2008.
We delivered judgment in relation to the substantive appeal on 4 September 2008. At the same time we dealt with the application for leave to re-open and to adduce further evidence. The outcomes were as follows:
· the application to re-open was granted;
· the application to adduce further evidence was refused;
· the substantive appeal was allowed;
· the trial Judge’s discretion was re-exercised;
· on the re‑exercise we came to the same result as the trial Judge concerning the percentage division of the property;
· we nevertheless ordered the husband to pay the wife an additional $12,209 to rectify conceded mathematical errors made by the trial Judge.
In concluding our reasons we made the following remarks concerning the submissions in relation to the remaining costs issues:
There was also an appeal against a costs order made by his Honour. We have previously made orders providing for the filing of written submissions concerning that appeal and the question of costs of this appeal. In the event costs are sought in relation to the application [for leave to re-open/adduce further evidence], submissions in support of that application may be made at the same time.
In October 2008 the husband filed a Notice of Discontinuance of the costs appeal. We do not intend to consider the submissions filed in relation to the costs of the costs appeal as no formal application for costs of that appeal has been made. This was drawn to the attention of the wife’s solicitors by letter from the Regional Appeal Registrar dated 10 December 2008.
On 25 November 2008 the Regional Appeal Registrar made directions by consent extending the time for filing of submissions regarding the costs of the substantive appeal. The directions were in the following terms:
1.The appellant file and serve submissions regarding costs in the appeal EA 134 of 2006 within two weeks of today’s date.
2.The respondent file and serve submissions in relation to the costs of the appeal EA 134 of 2006 within two weeks of today’s date.
3.The respondent be granted a further period of 14 days from receipt of the appellant’s submissions referred to in 1. above to file and serve submissions in response to the appellant’s submissions.
The husband’s submissions were filed on 21 November 2008 and the wife’s submissions were filed on 9 December 2008. In February 2009 the husband’s solicitors filed a Notice of Ceasing to Act. On 18 March 2009 the husband purported to file further submissions. The wife’s solicitors objected to the late filing. No application has been made for an extension of time. As the submissions were filed out of time we will not take them into account.
The wife’s submissions
Although the husband’s submissions were filed first, it is the wife who is seeking costs and we will first refer to her submissions.
The wife submits that having regard to the matters in s 117(2A) of the Family Law Act 1975 (Cth) the husband should pay the costs of the substantive appeal, including the application to re-open and to introduce further evidence. The wife’s submissions can be summarised as follows:
· s 117(2A)(a) – the financial circumstances of the parties: The outcome of the substantive proceedings was that the husband received property to the value of $930,342 and the wife received only $398,718. It was therefore submitted that the husband was in “a far superior financial position” and had “ample capacity” to meet the proposed order for costs.
· s 117(2A)(c) – conduct of the parties in relation to the proceedings: It was submitted that the appeal had become protracted as a result of the husband having applied to re-open and introduce further evidence. It was conceded that the husband had been successful in obtaining leave to re-open; however, as the application to introduce further evidence was dismissed the re-opening was “futile”.
· s 117(2A)(e) – whether any party has been wholly unsuccessful: It was submitted that although the appeal had been allowed this was “not determinative of success” and that the ultimate outcome was that the husband in fact had been ordered to pay the wife an additional $12,209. The husband was therefore worse off notwithstanding the appeal had been allowed. It was submitted that “on any realistic view of the outcome the husband has been wholly unsuccessful in the proceedings”.
· s 117(2A)(f) – offers to settle the proceedings: Reference was made to a variety of offers made prior to the trial at first instance. The first of these was one made on 1 July 2004 pursuant to which the wife offered to settle for precisely the same sum as the trial Judge ordered. The other offers were for amounts significantly less than what the wife ultimately received. Relying on Dickson and Dickson (No. 2) (1999) FLC 92‑857, it was submitted that these earlier offers were relevant to the costs of appeal. The wife also relied upon an offer to settle the appeal, which was made by letter dated 13 February 2007. The letter advised that the wife would accept $335,000 in lieu of the $350,000 that had been ordered.
The husband’s submissions
The husband submitted there were no “justifying circumstances” to make it appropriate for him to pay the costs of the appeal. It was submitted that the only relevant factors were those contained in s 117(2A)(e) and s 117(2A)(g).
· s 117(2A)(e) – whether any party has been wholly unsuccessful: It was submitted that neither party had been wholly unsuccessful. The husband had been successful to the extent that the Full Court had found substance in six different grounds of appeal and had allowed the appeal. It was conceded the wife had not been wholly unsuccessful in that, upon the re‑exercise of the discretion, the Full Court had arrived at the same result as the trial Judge (save for correcting the conceded arithmetical errors).
· s 117(2A)(g) – other relevant matters: It was submitted that it was a relevant consideration that the application to adduce further evidence related to a deterioration of more than $500,000 in the husband’s net worth since the trial. The submissions drew attention to observations made by the Full Court when considering the application to adduce further evidence. The submissions recorded that the Full Court had:
21.1accepted that the magnitude of the change in the husband’s financial position, was a highly significant matter in determining the application, “particularly in circumstances where it is conceded that the variation would make a material difference to the ultimate outcome if the evidence were to be admitted. (paragraph 114)”;
21.2stated that “the third and highly significant factor is the inevitability of a rehearing in the event that we were to allow the introduction of the further evidence … In the event that the matter was remitted for re-hearing, there is likelihood that the parties would remain involved in litigation for an extended period of time and at considerable expense”.
It was further submitted that had the Full Court admitted the further evidence “the husband would have had strong grounds to press a claim for costs on the basis that the wife was wholly unsuccessful in the appeal”. It was said that having regard to the reasons enunciated by the Full Court it would be inequitable for an order for costs to be made in favour of the wife. It was therefore submitted that each party should bear their own costs of the appeal.
The husband’s submissions concluded with a formal application for a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth). No submissions were made specifically in relation to that application.
Discussion
The starting point under s 117(1) is that “each party to proceedings under [the] Act shall bear his or her own costs”. However, the Court may make an order for costs if it is of the opinion that the circumstances justify it in so doing, having regard to the matters in s 117(2A).
The financial circumstances of the parties
The wife did not seek to address the husband’s submissions concerning the dramatic deterioration in his financial circumstances after the trial. Whilst we refused the husband’s application for leave to adduce evidence concerning this deterioration for the purposes of the substantive appeal, it does not follow we should ignore the change in position when determining costs. Leave is not required to allow a party to inform the Full Court of their current financial circumstances for purposes of costs disputes.
We do not consider it appropriate to proceed with our determination of the application for costs by reference to the “far superior position” of the husband following the proceedings below, when the evidence establishes a dramatic decline in his position. There is no basis upon which we could now conclude that the husband is in a significantly better financial position than the wife.
Conduct of the parties
In our view there is nothing in the “conduct” of the husband in relation to the appeal which would warrant an order for costs. We have accepted there was a dramatic decline in his financial circumstances following the trial, which continued following the hearing of the appeal. This change in circumstances was of such magnitude that we consider the husband had some justification for seeking to bring the matter to the attention of the Full Court, particularly in circumstances where some months had elapsed from the hearing of the appeal.
It is true that the making of the application to re-open and adduce further evidence delayed the delivery of judgment in the appeal. However, the husband was successful in obtaining leave to re‑open. Although he was ultimately unsuccessful in persuading us to allow the further evidence, his application was not without merit.
Whether either party was wholly unsuccessful
The fact that the husband was required to pay more to the wife than the trial Judge ordered is in itself not a material factor. The husband accepted that arithmetical errors had been made which favoured him. This was not an issue of contention on the hearing of the appeal.
We accept that the husband was ultimately wholly unsuccessful in the sense that he did not achieve any reduction in the payment to the wife, which was clearly the purpose of the appeal. However, he was successful in persuading us that the trial Judge had made a series of errors. It is true that on a re‑exercise of the discretion the Full Court arrived at the same result as the trial Judge. However, as in all discretionary matters, there was a range of potential results available to the Full Court. Having established error, the husband secured an opportunity for a more favourable exercise of the wide discretion open to the Court.
Offers of settlement
In considering the offers of settlement, the first question is whether it is appropriate in principle to take into account offers made prior to the trial.
This issue was discussed in Dickson and Dickson (No. 2) (supra). There were differences of opinion amongst the members of the Full Court in that matter concerning the relevance of such offers in determining the costs of an appeal.
Kay J said at 86,134:
Whilst the meaning of “the proceedings” in s 117(2)(f)[sic] is capable of being read down to mean “the appeal”, it is equally capable of being more generously interpreted to include the whole of the proceedings for alteration of property interests. In any event, even if a narrow interpretation was adopted, there is ample scope within s 117(2)(g)[sic] for this Court to take into consideration the offer made at trial, which if accepted would have made this appeal unnecessary.
Warnick J (at 86,135) did not agree that the words “the proceedings” in s 117(2A) were “capable of being interpreted to include proceedings outside the appeal proceedings” but agreed that the pre-trial offer made by the wife was a relevant matter which could be taken into account pursuant to s 117(2A)(g).
Lindenmayer J (at 86,134) disagreed with both Kay and Warnick JJ and took the view that for an offer of settlement to be relevant to the issue of the costs of an appeal it would need to be an offer to settle the appeal proceedings and that “as a matter of justice and fairness between the parties” it would be inappropriate to consider an offer made in the proceedings at first instance.
In the absence of any argument on the point, we consider we are bound by the views expressed by Kay and Warnick JJ and we will therefore proceed on the basis that it is possible that the offers made prior to trial can be relevant to the determination of the costs of the appeal. (See, however, W and W [2000] FamCA 535 at [36] where another Full Court (Lindenmayer, Holden and O’Ryan JJ) appeared to have reservations concerning the principle that a pre-trial offer is relevant to costs of an appeal.)
In the context of the present proceedings we do not consider that the pre-trial offers support the wife’s application for costs of the appeal. Those offers were no doubt taken into account by the trial Judge in determining that the husband should pay some of the wife’s costs of the substantive proceedings. However, we do not have the benefit of any submissions about the context in which those offers were made – for example the value of the asset pool and the circumstances of the parties at the time the offers were made. These are always important matters when determining the extent to which offers should impact on costs disputes: Pennisi and Pennisi (1997) FLC 92-774 at 84,547.
Nor do we consider that the wife’s offer to settle the appeal supports an order for costs. Although no mention was made of this fact in the body of the wife’s submissions, reference to the letter of offer, which was attached to the submissions, indicates that at the time the offer was made to accept a lesser sum than had been ordered, the wife mistakenly believed that the arithmetical errors had favoured her. The offer involved the wife receiving precisely what the trial Judge had ordered, less the amount of the arithmetical errors. The wife did not repeat the offers of settlement which she had made in the proceedings below which would have resulted in her receiving a settlement less than what she had received at trial.
The outcome – no order for costs
Taking all of these matters into account we are not persuaded that it would be appropriate to order the husband to pay any of the costs of the appeal nor the costs of the application to re‑open and to adduce further evidence. Each party should bear their own costs.
Costs Certificate
We turn now to the husband’s application for a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth). Section 9 of that Act relevantly provides:
(1)Subject to this Act, and in particular without limiting section 6, where:
(a) a Federal appeal … succeeds on a question of law; and
(b)in accordance with section 117 of the Family Law Act 1975, each party to the appeal bears his or her own costs;
the court that heard the appeal may, on the application of the appellant to the appeal, grant to the appellant a costs certificate in respect of the appeal.
(2)The certificate that may be granted under subsection (1) by a court to an appellant to a Federal appeal is a certificate stating that, in the opinion of the court, it would be appropriate for the Attorney‑General to authorize a payment under this Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
The substantive appeal was allowed. It was allowed principally because of errors of law. To that extent there can be no doubt that the appeal “succeeded” on a question of law. However, the actual outcome for the husband was no better than what he achieved at trial (indeed, it was worse, because of the arithmetical errors).
We do not have the benefit of any submissions as to the application of s 9 of the legislation in these somewhat unusual circumstances. We nevertheless consider it would be useful to consider by way of analogy the position that commonly occurs in appeals where the appellant is successful in establishing an error of law but the outcome is an order allowing the appeal and directing a new trial.
In those cases there is never any issue that the appeal has “succeeded” and costs certificates are commonly granted, both for the appeal and the re-hearing. At that stage it is not known whether the appellant will achieve an outcome at the re-hearing any more favourable than they obtained on the first occasion. In fact, in some cases, the “successful” appellant achieves a less favourable result on the re-hearing. For an example see P and P [2002] FamCA 1006 and Pedersen and Pedersen [2004] FCWA 59.
Why then should an appellant who has established an error of law and is successful in persuading the Full Court to re-exercise the discretion be in any worse position when seeking a costs certificate – regardless of the outcome of the re-exercise? What the appellant has successfully achieved is to gain what they were denied at first instance – namely, the exercise of judicial discretion based upon the application of correct legal principle. In the process they have secured the opportunity to obtain a more favourable exercise of discretion.
In these unusual circumstances we consider this is an appropriate case for a costs certificate to be granted. However, the legislation provides that a costs certificate can only be granted on application being made by a party. The husband has applied for a costs certificate but the wife has not.
We intend to grant the husband a certificate as requested and we foreshadow that in the event that a written application is made by the wife within 21 days of delivery of these reasons we would also give favourable consideration to the issue of a costs certificate in her favour.
I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 19 August 2009
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