Jillet & Jillet (No 2)

[2019] FamCA 242

FAMILY COURT OF AUSTRALIA

JILLET & JILLET (NO. 2) [2019] FamCA 242

FAMILY LAW – COSTS – Where both parties seek orders for costs of primary proceedings –– Where consideration of applicable principles – Consideration of offers of settlement – Where no circumstances justifying departure from general rule – Where applications for costs dismissed.

FAMILY LAW – COSTS – Where application for costs of “slip rule” application – Where “slip rule” application made as a consequence of mathematical error in primary judgment – Where no circumstance justifying departure from general rule – Where application dismissed.

FAMILY LAW – COSTS – SINGLE EXPERT FEES – Where application for order as to payment of Single Expert fees – Where no circumstance justifying departure from obligation for parties to pay equally – Where order for wife to reimburse husband one half of expert fees paid by him.

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) rr 15.47, 19.18

Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Browne & Green (2002) FLC 93–115
Collins & Collins (1985) FLC 91-603
Greedy & Greedy (1982) FLC 91-250
Hawkins & Roe [2012] FamCAFC 77
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
Jillett & Jillett [2018] FamCA 913
Jillett & Jillett [2019] FamCA 48
Luadaka & Luadaka (1998) FLC 92-830
Parke & the Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Pennisi & Pennisi (1997) FLC 92-774
Robinson and Higginbotham (1991) FLC 92-209

APPLICANT: Ms Jillet

RESPONDENT: Mr Jillet

FILE NUMBER: DUC 356 of 2015

DATE DELIVERED: 18 April 2019

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: By way of written submissions last received on 12 March 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wong

SOLICITOR FOR THE APPLICANT: Campbell Paton & Taylor

COUNSEL FOR THE RESPONDENT: Ms Barnett

SOLICITOR FOR THE RESPONDENT: Farrar Gesini Dunn

Orders

1. That the wife pay to the husband or as he may direct in writing $2,200.00 within one month from the date of this order.

2. That otherwise all applications be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jillett & Jillett has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: DUC 356 of 2015

Ms Jillet

Applicant

And

Mr Jillet

Respondent

REASONS FOR JUDGMENT

1. There are two discrete applications for determination arising from final property orders dated 9 November 2018 (as amended under the slip rule).

2. On 9 November 2018 final property orders were made following trial in the following terms:

   (1)That the husband pay to the wife the sum of $658,837.50 within three months from 8 February 2019.

   (2)That a base amount of $140,000.00 is allocated to the wife out of the husband’s interest in the B Super (“the fund”) Member No …41.

   (3)That in accordance with section 90MT(1)(a) of the Family Law Act 1975:

   (a)The wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount referred to in the above; and

   (b)The husband’s entitlement (and the entitlement of such other person to whom splittable payments may be made) to payments out of the husband’s interest in the Fund is correspondingly reduced.

   (4)That the trustee of the B Super shall do all acts and things and sign all such documents as may be necessary to:

   (a)Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement of the wife created by order 2 of these orders; and

   (b)Pay the entitlement whenever the trustee makes a splittable payment out of the husband’s interest in the Fund.

   (5)That Order (2) have effect from the operative time and the operative time is four business days from the date of service of sealed orders on the trustee and the trustee shall be at liberty to apply to the Court in relation to these orders within that four day period.

   (6)That a base amount of $68,000.00 is allocated to the wife out of the husband’s interest in the C Super (“the second fund”) Member No …59-J.

   (7)That in accordance with section 90MT(1)(a) of the Family Law Act 1975:

   (a)The wife is entitled to be paid the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 using the base amount referred to in the above; and

   (b)The husband’s entitlement (and the entitlement of such other person to whom splittable payments may be made) to payments out of the husband’s interest in the Second Fund is correspondingly reduced.

   (8)That the trustee of the C Super shall do all acts and things and sign all such documents as may be necessary to:

   (a)Calculate in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001 the entitlement of the Wife created by order 2 of these orders; and

   (b)Pay the entitlement whenever the trustee makes a splittable payment out of the Husband’s interest in the said fund.

   (9)That Order (6) have effect from the operative time and the operative time is four business days from the date of service of sealed orders on the trustee and the trustee shall be at liberty to apply to the Court in relation to these orders within that four day period.

   (10)That the parties have liberty to apply as to implementation or enforcement of these orders.

3. On 27 November 2018 the wife by way of Application in a Case relevantly sought an order that the husband pay the wife’s costs of and incidental to these proceedings for the period from 25 July 2016 to 9 November 2017 and costs of her “slip rule” application.

4. In his Response to the wife’s Application in a Case the husband sought orders that the wife pay the sum of $2,200.00 for her share of the single expert report prepared by Ms Z as to the potential CGT liability that may arise in the event that certain properties of the husband were sold to meet the wife’s property entitlement and an order that the wife pay the husband’s costs of the property proceedings.

5. In support of the orders sought by her, the wife relied upon the affidavit of her solicitor Ms Pigot filed 27 November 2018 and written submissions dated 11 March 2019.

6. The husband, for his part, relied upon his affidavit filed 7 December 2018 and written submissions dated 21 February 2019.

Single Expert’s Costs

1. On 2 November 2017 an order was made by consent appointing Ms Z pursuant to Rule 15.45 as a single expert to prepare a report as to estimated Capital Gains Tax (“CGT”) implications involved in the potential sale of various of the husband’s rural holdings that might be required to meet any property entitlement of the wife.

2. The order provided that the husband was to initially pay the single expert fees with the ultimate liability between the parties for such fees to be determined at final hearing.  The prospect of the husband being required to meet a final property payment to the wife was clearly contemplated in the reasons for judgment: Jillett & Jillett [2018] FamCA 913. The single expert’s fees were in the sum of $4,400.00 and have been paid for by the husband.

3. Otherwise, the circumstances of this matter are not indicative of there being any departure from the provisions of Rule 15.47 that provides that the parties are equally liable to pay a single expert witnesses reasonable fees and expenses incurred in preparing a report.

4. Accordingly, there will be an order that the wife pay to the husband the sum of $2,200.00 being one half of the single expert’s fees. 

Costs

1. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that each party to the proceedings shall bear his or her own costs.

2. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2), which provides that if the Court is of the opinion that there are circumstances that justify it in doing so, the Court may, subject to further subsections thereof and the applicable Rules of the Court, make such order as to costs as the Court considers just.

3. Although s 117(2) requires a finding of justifiable circumstances as an essential preliminary to making an order for costs, there is no additional or special onus on an applicant who seeks an order for costs: Penfold v Penfold (1980) 144 CLR 311.

4. The matters relevant to determining what order, if any, should be made for costs are set out in subsection (2A) of that section. They are as follows:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party has legal aid and the terms of any grant of aid;

   (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 answers, 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 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.

5. In Collins & Collins (1985) FLC 91-603 (at 79,877), the Full Court described the discretion conferred by s 117 as being a “broad” one and held that the factors set out in s 117(2A) are not to be read in a restrictive way.

6. The Full Court in Hawkins & Roe [2012] FamCAFC 77 said:

   17.With respect to the application of the section, in Penfold v Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:

   1.Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".

   2.Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v Kent). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   (footnotes omitted)

   18.The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:

   … A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

7. In Greedy & Greedy (1982) FLC 91-250 and Luadaka & Luadaka (1998) FLC 92-830, the Full Court made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters.

8. The provision relating to the calculation of costs is set out in r 19.18(1) of the Family Law Rules 2004 (Cth) (“the Rules”) which states:

   Method of calculation of costs

   (1)The court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (e.g. lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

9. It was said in Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162 that the purpose of the rule enabling an order for costs in a specific amount, without formal assessment or taxation is, commonly with other courts, to “avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation”.

10. In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.

11. Murphy J observed in Parke & the Estate of the Late A Parke (2016) FLC 93-748 at [130]:

    If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court”… The process does not “by its very nature … envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”…

12. Neither party in this matter is in receipt of a grant of legal aid.

13. Otherwise, the financial circumstances of each of the parties to the proceedings as a consequence of final property orders are not indicative of any inability to meet an order for costs.

14. Neither party contends that the conduct of the other party to the proceedings is a relevant consideration.

15. Neither party contends that the proceedings were necessitated by the failure of a party to comply with previous court orders and neither party contends that the other party has been wholly unsuccessful.

16. The wife contends that she has made an offer of settlement in relation to the proceedings that would justify a departure from the general rule that there be an order for the husband to pay her costs of the primary proceedings. 

17. The public policy reason behind the encouragement of the making of offers of settlement during proceedings is that it is beneficial to both of the parties, the Court and the public at large if people are able to resolve their disputes themselves without the need for litigation.

18. As was observed by Nygh J in  Robinson and Higginbotham (1991) FLC 92-209 at 78,417, in relation to offers:

    … it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. …

19. In Pennisi & Pennisi (1997) FLC 92-774, referring to s117(2A)(f), the Full Court, said at 84,547:

    … Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties' financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of 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 Browne & Green (2002) FLC 93–115 the Full Court commented at 89,163:

    … The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. …

21. On 25 July 2016 the wife by letter made an offer to the husband to settle property proceedings on the basis that the husband pay to the wife the sum of $500,000.00 within three months from the date of orders and that otherwise each party retain assets remaining in their sole name without further adjustment. The correspondence was marked “Without prejudice save as to the issue of costs”.

22. Subsequently, by reason of final judgment and orders, the wife was entitled to receive the sum of $658,837.50 within three months from the date of orders.

23. The wife seeks an order that the husband pay her costs of the proceedings as and from the date of her written offer of settlement until final hearing.  The wife seeks this order notwithstanding that the offer of settlement was withdrawn on 15 November 2017 but by that date had been open for acceptance for some 16 months.

24. The wife contends that the existence of the offer is a justifying circumstance enlivening the Court’s jurisdiction to depart from the general position as to costs in circumstances where the parties should be encouraged to take an early, holistic and realistic approach to the resolution of litigation and where such an approach is in the public interest and is to be encouraged.  It is further contended that such an approach requires the parties to stand back from the positions taken at a particular point in time, realise the proceedings are expensive and to frame their offers of settlement in such a way as to encourage resolution. 

25. In response the husband contends that the financial circumstances of the parties at the time of the offer and during the course of its currency were somewhat unclear, particularly where the parties were at odds to a degree in relation to the valuation of the husband’s rural entities and where the extent of the totality of the wife’s inheritance was unknown.

26. These circumstances are illustrated by the disparity in valuations of those entities in mid-2016, at about the time of the offer, and as updated by the single expert valuer immediately prior to trial which resulted in the valuation of the husband’s rural interests increasing by $1.795 million. 

27. Otherwise, the husband contends that there was significant issue as to the value of the wife’s inheritance until later December 2016 at which time her inheritance was confirmed at $1.543 million as opposed to previous representations that it was in the order of about $800,000.00.

1. As was said in Pennisi & Pennisi (1997) FLC 92-774 “Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live”.

2. In circumstances where the ultimate monetary payment to the wife was founded to a great extent on the significant revaluation of the husband’s rural interests immediately preceding trial the significance of the wife’s offer of settlement falls away.  There is no justifying circumstance for a departure from the general rule as to costs.  The wife’s application for costs of the primary proceedings will be dismissed.

3. The husband makes application for an order that the wife pay his costs of the primary proceedings.  On 28 June 2016 the husband made an offer of settlement requiring a payment by him to the wife of $200,000.00 with the parties, otherwise, retaining assets to which they were otherwise entitled.  The wife by letter dated 29 June 2016 rejected the husband’s offer of settlement.

4. At the time of the husband’s offer there was significant uncertainty as to the value of the wife’s inheritance where probate was not granted until 18 October 2016 and as referred to above issue as to the value of the husband’s rural landholding interests.

5. Again circumstances are such that they do not justify a departure from the general rule as to costs and the husband’s application for costs will be dismissed.

The slip rule application

1. The wife’s slip rule application was determined by reasons for judgment delivered 8 February 2019: Jillett & Jillett [2019] FamCA 48.

2. The slip rule application was necessitated by a mathematical error contained in the primary reasons for judgment. 

3. The husband opposed the application primarily on the basis that the adjustment to the primary payment payable to the wife was such that it should necessitate the Court further considering findings as to overall contribution as a consequence of the increase in value of one of the husband’s rural land holdings.

4. As said in the reasons for judgment (supra) at [26]:

   [26]There was a mathematical error in the cash adjustment payable by the husband to the wife (excluding the adjustment made by way of superannuation splitting order).  Rectifying that error is not a matter of controversy: Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206 at 210. Issues raised by the husband that may assert that the Court fell into error as to contributions and other matters are matters properly for appellate assessment if enlivened.

5. The slip rule application was occasioned by the Court’s own error and it was open to the husband to consider whether he should consent to the application or make submissions as to whether it was properly a matter for the application of the “slip rule”.

6. Again neither party was in receipt of a grant of legal aid. The financial circumstances of the parties are set out in detail in the primary reasons for judgment as to property adjustment.

7. Whilst the application for slip rule was successful it is not considered that in the circumstances that success is a justifying circumstance warranting a departure from the general rule as to costs.  The wife’s application for costs of the slip rule application will be dismissed.

8. Orders will be made accordingly.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 18 April 2019.

Associate: 

Date:  18 April 2019