Herman and Nubis

[2009] FamCA 601

FAMILY COURT OF AUSTRALIA

HERMAN & NUBIS [2009] FamCA 601

FAMILY LAW – COSTS – Offer of settlement – whether offers of settlement represented a justifying circumstance to consider an order of costs – whether reasonable to accept offer of compromise without agreed balance sheet or schedule of net property – exercise of discretion – weight to be given to relevant matters

Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(2A)

Penfold v Penfold (1980) FLC 90-800
Higginbotham & Robinson (1990-1991) 14 FamLR 557
Pennisi & Pennisi (1997-1998) 22 FamLR 249-250

APPLICANT: Mr Herman

RESPONDENT: Ms Nubis

FILE NUMBER: NCC 2514 of 2007

DATE DELIVERED: 9 July 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rose J

HEARING DATE: 9 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: R Peattie

SOLICITOR FOR THE APPLICANT: Joan Pierpoint & Associates

COUNSEL FOR THE RESPONDENT: W Tregilgas

SOLICITOR FOR THE RESPONDENT: Merrick Spicer & Associates

Orders

1. That the husband’s Application in a Case filed 2 December 2008 is dismissed.

2. That the oral application of the wife for an order for costs against the husband is dismissed.

NOTATION:

A.The parties reached agreement today in relation to implementation of the Slip Rule and a minute of proposed consent orders has been prepared by counsel for the wife and is annexed hereto.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER:  NCC 2514 of 2007

MR HERMAN

Applicant

And

MS NUBIS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The husband by his Application in a Case filed 2 December 2008 seeks an order for costs on an indemnity basis against the wife (“the application”).

2. The wife seeks an order that the husband’s application be dismissed with costs. The order so sought is set-forth in the written submissions lodged on behalf of the wife on 6 March 2009.

3. I acceded to the request made by the legal representatives of the parties that written submissions be lodged and served on their behalf in relation to the issue of costs to be supplemented by brief oral submissions.  Unfortunately, a later hearing was vacated due to illness of Counsel for the wife.

4. Oral submissions were made today.  There has been some delay in fixing the necessary Court event due to the request made on behalf of at least one party that oral submissions be made by counsel who was unavailable for my earlier proposed recorded telephone link for that purpose.

5. On 7 November 2008, I delivered judgment and made orders for property settlement (“the orders”) following a trial which occupied the previous three days.

Relevant legal principles

1. The general principle in relation to costs in this jurisdiction is that each party bears his or her own costs as provided in s 117(1).

2. However, the Court has a wide discretionary power to make an order for costs should it be of the “opinion that there are circumstances that justify it in doing so” as provided in s.117(2).[1]  Relevant matters which may be required to take into account are set forth in s 117(2A).  These principles and statutory interpretation are the subject of the leading judgment on costs provided by the High Court in Penfold v Penfold.[2]  Offers of settlement which may have been made by one or both parties may attract significant weight depending upon the circumstances of the case as well as the terms of such offers.[3]

   [1] Penfold v Penfold (1980) FLC 90-800.

   [2] Ibid.

   [3] Higginbotham & Robinson (1990-1991) 14 FamLR 557; Pennisi & Pennisi (1997-1998) 22 FamLR 249-250.

Whether there is a justifying circumstance

1. I accept the evidence of various offers for settlement that were made by each of the parties set-forth in the affidavit of the husband’s solicitor, J M Pierpoint affirmed 1 December 2008 and make findings accordingly.  Such offers were detailed and at all relevant times the parties were legally represented.

2. I have concluded that the offers for settlement made by each of the parties to which I have referred represented justifying circumstances for consideration by me of the exercise of the discretionary power to make an order for costs, subject to my findings in relation to relevant matters pursuant to s 117(2A) and the weight to be given to such matters.  I have taken into account the potential weight which may be given to one or more such offers of settlement in accordance with the principles enunciated in the Full Court judgments to which I have referred.

Relevant matters pursuant to section 117(2A)

1. Although the submissions on behalf of the parties made reference to their respective financial circumstances this was not a matter in respect of which it was submitted that particular weight should be attributed.

2. Neither of the parties has been or is in receipt of legal aid.

3. There was no issue in relation to the conduct of the parties so far as interlocutory matters were concerned.  However, I accept the submissions made on behalf of the wife that there were a number of relatively brief adjournments provided by me during the course of the trial to enable the solicitor for the husband to inspect documents or otherwise to obtain instructions.  In addition, her cross-examination was prolonged from time to time due to the need as she apparently saw it to obtain instructions.

4. The following written offers of settlement were made by each of the parties:

   a)The husband’s offer of settlement dated 17 March 2008 which if accepted would have resulted in the husband receiving approximately $12,817.00 less than the net value of the property which he received pursuant to the orders for property settlement.  The offer was open for 28 days.

   b)The husband made a further offer of settlement dated 24 September 2008 which if accepted would have had the effect of the husband receiving $27,683.00 more than he was awarded.  The offer was open until the end of October 2008.  An alternative proposal within the same offer of settlement would have resulted in the husband receiving a marginally greater figure than that to which I have referred.

5. The husband’s outline of case document sought 44% of the net property of the parties, being about one percent less than the effect of the orders ultimately made.

6. The outline of case document on behalf of the wife represented a 27% overall result in favour of the husband being significantly less than the effect of the orders which were made.

7. The wife’s Amended Response filed in August 2008 also had the effect of the husband receiving significantly less than the effect of the orders which were made.

8. The analysis of the offers of settlement and the other court documents to which I have referred reflected outcomes on a retrospective basis.  The reason is that the balance sheet or schedule of the net property of the parties being Exhibit 1 was only agreed to on the first day of the trial.  Indeed, there is no evidence before me that both or either of the parties relied upon the same figures as ultimately reflected in Exhibit 1 at the time when all or any of the offers of settlement were made.  Consequently, there is an element of hindsight relied upon in the submissions made on behalf of the husband.

Conclusion

1. I have determined to dismiss the application for the following reasons.

2. Whilst I have given considerable weight to the husband’s offers of settlement and the case outline document filed on his behalf which certainly warranted serious consideration by the wife and those advising her against the alternative of the litigation being prolonged with increased legal costs, I accept the submissions made on behalf of the wife that it was not reasonable to take that approach given that the parties at each of those relevant times did not have an agreed balance sheet or agreed schedule of net property. 

3. The monetary consequences of each of those offers and the case outline document relied upon by the husband’s legal representatives is a retrospective approach based upon Exhibit 1 in the substantive proceedings.  There is a lack of evidence before me as to the value of the net property of the parties at the time each of the relevant offers of settlement were made and the case outline document furnished.

4. As has been emphasised in the Full Court judgments to which I have referred, the circumstances of the case must be taken into account.  Those circumstances included but are not limited to the material factual disagreements between the parties regarding their net property at the commencement of cohabitation; the loans allegedly made by the wife to the husband; the payments made in satisfaction of those loans; the mortgage indebtedness of the husband representing security for the indebtedness of his daughter and the contributions of each of the parties to the maintenance and improvement of real estate.  As is apparent from the judgment in the substantive proceedings, those were issues of some complexity which required findings of fact at the trial, quite apart from the weight to be given to the contributions of each of the parties and certain matters of controversy pursuant to s 75(2).

5. The wife seeks an order for costs against the husband in relation to the application.  I have determined to dismiss that application.  I have concluded that the application had merit and issues of substance in relation to costs were raised on behalf of the husband in support of the application.

6. Consequently, the general principle will apply, namely, that each party will bear his or her own costs.

7. Counsel for the wife informed me today that the implementation of the slip rule is conceded.  A minute of consent orders will be forwarded by email by counsel for the wife to my associate by 5.00pm on 13 July 2009.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Hon. Justice Rose

Associate: 

Date:  13 July 2009