Henty and Henty (No. 2)

[2007] FamCA 698

FAMILY COURT OF AUSTRALIA

HENTY & HENTY (NO. 2) [2007] FamCA 698

FAMILY LAW - COSTS - Offers of settlement

Family Law Act 1975 (Cth) - s 117(1), s 75(2)
Family Law Rules 2004 (Cth) - Division 10.1.2, Rule 10.06

Pennisi v Pennisi (1997) FLC 92-774

APPLICANT: Mr Henty

RESPONDENT: Mrs Henty

FILE NUMBER: SYF 3914 of 2005

DATE DELIVERED: 12 March 2007

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston JR

HEARING DATE: 12 March 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton

SOLICITOR FOR THE APPLICANT: Matthews Dooley Gibson, Solicitors

COUNSEL FOR THE RESPONDENT: Ms Snelling

SOLICITOR FOR THE RESPONDENT: Milne Berry Berger & Freedman, Solicitors

Orders

1. That the wife shall pay to the husband's solicitors within 42 days the sum of $7500 being the Court's assessment of his appropriate costs in these proceedings. 

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3914  of 2005

Mr Henty

Applicant

And

Mrs Henty

Respondent

REASONS FOR JUDGMENT

1. The husband has made an application to the effect that the wife be ordered to pay his costs following communication to the respondent, to whom for convenience, I shall refer to as the wife, of an offer of settlement as required by Division 10.1.2 of the Family Law Rules. These costs proceedings arise out of substantive property proceedings which were determined by me by the making orders on 24 January 2007.

2. The application for costs is really on two bases.  The first basis is that when one distils to the bottom line the value to the wife of property to be enjoyed by her as determined by me and compares that with an offer that was made by the husband in March 2006, approximately eight or nine months prior to the time of hearing, then that offer by the husband was, in broad terms, very similar to the position which I ordered. 

3. According to the affidavit of the solicitor for the husband before me in the costs proceedings, the figures came down to an adjustment in favour of the wife under the Court's determination of $500 822.  That is, that the wife would enjoy property in that amount, compared with the offer by the husband which came on a similar basis, to $493 388.

4. It has to be said that there was another slight difference in this.  That was that the husband's offer was based on a superannuation splitting order being made in favour of the wife of one-third compared with my determination that that splitting order be 25 percent to the wife, so the effect of that is that under my determination she had slightly more cash than superannuation, so to that extent it was slightly less favourable than at first blush it would appear on the basis of the figures to which I have referred.

5. Accordingly, it is argued in favour of the husband that the husband has been put to a very considerable amount of costs in order to achieve that position and that had the wife accepted that offer, when it was made in March, in fact, she would have enjoyed a more favourable position because she would have saved her own legal costs.  But, of course, conversely, the husband has suffered, as I say, because he has had to invest a considerable amount of funds in order to pay his legal costs. 

6. Following the communication by him of that offer, his costs are said to be in the vicinity of $29 000.  It is said on his behalf, that the costs for the hearing are in an amount of approximately $16 000 on a solicitor/client basis. 

7. The second basis for the submission in favour of a costs order being made in favour of the husband is that there was an aspect of the case about which I made certain criticisms of the wife and her mother. 

8. This was a major issue in the case.  It involved the question of how the Court should deal with an amount of almost $100 000 which had been contributed to the funding of the purchase of the land on which the former matrimonial home was constructed. That advancement had been made at the time of the acquisition of the land by the wife's mother.  It was submitted that the husband was not clear about what the case was that the wife and her mother were running in respect of that.  There had been various items of correspondence which, on my reading, were putting different messages to the husband about just what the nature of the wife’s case was in respect of that matter.  It is said that the husband was not at all clear about what the evidence was in respect of that until the time when the wife and her mother were cross-examined.

9. I accept the general thrust of that argument.  I do not need to repeat what I said about the way the evidence came out in respect of that issue other than that I thought there was a slant or a particular presentation of that evidence.  I made a formal finding to the effect that I thought that that particular presentation was as a consequence of some meeting of the minds of the wife and her mother with an overall view of favouring what they perceive to be serving the wife's case. 

10. There has been strong argument about the extent to which some cost has been sustained in respect of that matter.  I addressed some questions about that matter to learned counsel for the husband because I was struggling to understand that there would be much significance in terms of actual time lost to the husband in respect of that matter.

11. It is a difficult matter to quantify.  The finding that I make about it is that it is a relevant matter in the costs proceedings and I make the finding against the wife and take it into account in the overall assessment that I propose to arrive at in the costs proceedings.

12. There has been a very considerable amount of argument this afternoon in relation to this issue of costs.  There has been a very vigorous argument mounted by the wife to the effect that it was difficult for the wife to be able to make a genuine offer in circumstances where it is said that she was not aware of the value of the items of property and particularly financial resources, which were the subject of the proceedings. 

13. That is an interesting submission in circumstances where the wife put on an offer in late 2005, subsequently received an offer by the husband and then failed to revise her offer in light of a considerable amount of material which came to her after the filing of the original offer. 

14. The very considerable amount of letters and other documents tendered and information which came across the Bar table demonstrates that, whereas the parties were not certain what the value of the former matrimonial home was until the single expert Mr C, made his valuation available on or about 12 April 2006 as from that time, there could be no uncertainty in respect of that item. 

15. The value of the husband's superannuation was uncertain, at least to the wife, and probably also to the husband, at least in terms of its detail and accuracy, until 18 May 2006.  There was another issue which really did not assume any great significance in the proceedings.  That was United Kingdom superannuation that the husband had, which was attributed to some employment that he had prior to the time that the parties were married, or perhaps, even up to the early part of their marriage.  As it turned out, that became a relevant subsection 75(2) matter.  But I accept that there was correspondence between the parties in respect of that issue, until it was clarified in June 2006.  Many months prior to that time the husband had been confidently asserting that that financial resource had a value of approximately AUD38 000.  The wife's solicitor quite properly was asking questions in respect of that.  Both parties had agreed not long after the husband's offer was communicated to the wife, that whatever its value it was no more significant than as a financial resource to the husband.  That is not to trivialise or understate the significance of this matter in terms of negotiations as they were going on. 

16. The difficulty I have with the wife's case, and I have listened very carefully to it, is that whichever way one looks at this, one cannot escape the fact that the husband made a very serious offer and an offer that was fairly close to the mark, well prior to the time of the trial.  It has been argued, as I have said, vigorously on behalf of the wife that she did not really know what to offer because she did not really know what she was dealing with in terms of the assets and, particularly, the financial resources.  But it seems to me that that is untenable as from June 2006 when the wife simply could not argue that she did not know what the pool of the property and the financial resources was.

17. It seems to me that, with respect to the Judges who made these Rules the policy behind the Rule contained at Rule 10.06, was to impose on all parties to property proceedings, a very serious obligation to think very seriously about the case that they were presenting to the other side, and come up with what is described in the Rules as a genuine offer to settle. 

18. I am left in the position that each of the parties considered very seriously that requirement and each of them put on what they regarded as a genuine offer.  I cannot see that there is any room for argument by the wife, that somehow she put her offer on and that is really where she thought things stayed.  In my view, her own submission is against that unless she made a pretty accurate guess at what the value of the former matrimonial home, superannuation, and the financial resource in terms of the husband's United Kingdom superannuation fund were valued at or had a value of.  I cannot see another interpretation really in circumstances where, in the light of the serious requirement in Rule 10.06, the wife did not revise her offer. 

19. There was another argument to the effect that the wife could not accept the husband's offer in circumstances where it did not make any provision for the wife to be able to pay him something for his interest in the former matrimonial home.  Again, it seems to me that that just rings hollow in circumstances where, at all times, it was available for the wife to revise her offer and simply put on a different offer which would have included some payment in favour of the husband for his interest in the home, which is the position that ultimately, the Court ordered.  It seems to me that if trial Judges and other judicial officers are to place some real meaning on Rule 10.06, then the position in respect of offers has to be considered very seriously. 

20. Whether the Court should depart from the usual position, which is under s 117(1) of the Act that each party to the proceedings shall pay their own costs, only becomes an issue because the husband put on his offer and such offer is fairly close to the position which the Court ultimately arrived at. 

21. I was referred by learned counsel for the husband to the decision of this Court in the case of Pennisi v Pennisi (1997) FLC 92-774. In that case the Full Court of this Court said as follows at page 84,547:

    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.

22. This reinforces for me the need to look very carefully at these matters. 

23. In my view, in circumstances where the husband’s offer was pretty close to the mark and the wife’s offer was a long way away from the mark, that is, on a somewhat general calculation the wife was in excess of 12 percent away from the position which I determined was appropriate as against the husband's offer which was very close to the mark some order in respect of costs is appropriate.

24. I also take into account, as was submitted on behalf of the wife, the fact that the wife has a much poorer income earning capacity than the husband.  But caution needs to be taken in respect of this submission because, in fact, that matter has been taken into account pursuant to s 75(2).  I accept that if a costs order is made, it will worsen the wife's overall financial circumstances. 

25. I also accept the submission in terms of the husband’s conduct to the effect that he did not always attend on occasions when he should have attended.  I also take into account the earlier matter in respect of the evidence about the wife's mother's contribution.  It is said that the husband's costs for the hearing on a solicitor/client basis were $16 000.  I do not have any more detailed breakdown than that.  But on the basis of the approach that I propose to take, it is unnecessary for me to have that. 

26. In my view, in all the circumstances, this is a matter where it is appropriate for the Court to make an order in respect of costs.  I assess the amount as being $7500. 

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judicial Registrar W P Johnston.

Associate:     ____________________

Date:              11 July 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as HENTY & HENTY