Johnston & Johnston
[2004] FamCA 556
•21 June 2004
[2004] FamCA 556
FAMILY LAW ACT 1975
IN THE FULL COURT
OF FAMILY COURT OF AUSTRALIA Appeal No. NA 59 of 2003
AT BRISBANE File No. PAF 3733 of 2002
BETWEEN:
MURRAY HUGH JOHNSTON Appellant Husband
and
HELENE DAWN JOHNSTON Respondent Wife
REASONS FOR JUDGMENT OF THE FULL COURT
Coram: Ellis, Finn and Guest JJ
Date of Hearing: 9 March 2004
Date of Judgment: 21 June 2004
Appearances:
Mr T North SC (instructed by E Philips & Company,
Solicitors 149 Pacific Highway, Hornsby NSW 2077)
appeared on behalf of the Appellant husbandMr T Kirk, SC (instructed by Berck & Associates,
Solicitors, Quay Central, 95 North Quay, Brisbane
QLD 4000) appeared on behalf of the Respondent
wife
JOHNSTON & JOHNSTON
NA 59 of 2003
PAF 3733 of 2002
Coram: Ellis, Finn & Guest JJ
Date of Hearing: 9th Day of March 2004
Date of Judgment: 21st Day of June 2004
Catchwords: FAMILY LAW- APPEALS – Costs – Appeal by the husband against an order that he pay the wife’s costs of and incidental to contested property settlement proceedings – discretionary decision - whether the trial judge erred in her interpretation of various offers of settlement exchanged between the parties prior to the trial – whether the term “monetary value” introduced by the wife in her response to the husband’s offer was ambiguous or unclear – in the context of the various offers of settlement, the term “monetary value” was ambiguous – the terms of offers of settlement should be framed clearly and with precision.
Appeal allowed
Discretion re-exercised
Harris v Harris (1987) FLC 91-822
INTRODUCTION
This is an appeal by MURRAY HUGH JOHNSTON (“the husband”) against an order made by Moore J on 17 October 2003 which required the husband to pay to HELENE DAWN JOHNSTON (“the wife”) her costs (as and from 20 February 2003) of and incidental to contested property settlement proceedings between the parties. The proceedings were heard by her Honour on 4, 5, and 6 August 2003.
THE PROPERTY SETTLEMENT DECISION AND ORDERS
Before turning to her Honour’s reasons for making the costs order in favour of the wife, it will be of assistance to shortly consider, by way of background, certain aspects of her Honour’s reasons delivered 14 August 2003. At trial, her Honour was charged with the task of determining competing claims by the parties for settlement of property and a claim by the wife for spousal maintenance.
The parties were married for some 20 years and had one child who was over 18 years of age at the time of the hearing. They had modest assets at the time of marriage and as a result of their long union, her Honour found that the parties’ assets, liabilities and resources as at the date of the hearing were as follows:
A.Assets/liabilities including notional
Adjustments $1,214,321
B.Superannuation (to be subject to
Splitting Order) $609,969
C.Other assets/resources $735,121
Item C appearing in the preceeding paragraph attracted substantial argument in the costs determination before her Honour, and which were detailed as follows:
“Woolworths Options (vested - unsold) 403,235
Less notional tax (197,645)
205,590
Woolworths Options (exercisable after July 2003) 905,762
Less notional tax (443,231)
462,531
Retention bonus 130,000
Less notional tax (63,000)
67,000
Total in “C”735,121”
Having evaluated the contributions by the parties as being equal, her Honour made an adjustment in favour of the wife of 12.5% pursuant to the provisions of s 75(2) of the Family Law Act (1975) (Cth), giving her an overall entitlement to the net value of the parties’ assets and resources of 62.5%. Following detailed orders being made by her Honour, she then heard and determined an application by each of the parties for costs.
COSTS JUDGMENT OF THE TRIAL JUDGE
Her Honour recited the fact that the wife sought orders for costs relating to an adjournment application on 28 and 29 July 2003 and costs of and incidental to the proceedings from 20 February 2003. On the other hand, the husband sought orders for costs related to an adjournment application on 22 April 2003 and a further application on 10 July 2003. He sought that the wife’s application for costs from 20 February 2003 be dismissed. Her Honour dealt with all applications made by each of the parties, but it is only her order that the husband pay the wife’s costs as and from 20 February 2003 that is the subject of the appeal.
Having dealt with the legal principles associated with the application and the submissions of each of the parties, her Honour considered, relevantly for our purpose, offers of settlement which had passed between the parties, as follows:-
“13.That brings me to offers of settlement. In his submissions on behalf of Mr Johnston Mr Hamwood contended the claim for costs based on Mrs Johnston’s offer of 20 February is without merit and ought to be dismissed. That position derives from the terms of the correspondence exchanged between the parties’ solicitors in February and so that requires some scrutiny.
14.In her letter of 18 February Mrs Johnston proposed accepting 60% of Mr Johnston’s Woolworths options and shares; in his letter of 20 February in reply he countered with a proposition (see 1 (a) and (b)) that ‘the husband pay to the wife a sum equal to 60% of the current net value of his Woolworth’s options [and shares] less any capital gains tax and transfer charges.’; and in her reply of the same date the wife responded under the relevant headings ‘the wife receive by way of a cash payment, 60% of the monetary value of the options [and shares] as at the date of the making of final consent orders in relation to property settlement.’
15.Mr Hamwood’s point about this is that by using the expression underlined Mrs Johnston did not pick up he husband’s proposal to pay her 60% of the ‘current net value less any capital gains tax.’ In other words, her reply did not contemplate the deduction of the tax payable. This, it was said, stands in significant contrast to the manner she expressed herself when accepting his counter offer in relation to the employment contract; that is, ‘a sum equal to 60% of the net value of the employment contract payment less any income tax payable by the husband…’. The adding back of the tax on the options and shares would have required payment to her of a sum far in excess of what she became entitled to by proceeding to judgment. Furthermore, in her reply she maintained her insistence on a proportion of his long service leave and annual leave and this would have brought the payment required to over $2 million, still much greater than her judgment entitlement.
16.Yet the merit lies more with the submissions in reply made on her behalf by Mr Kirk. I do not think the words used in her reply of 20 February, when viewed in context, could reasonably be construed as suggesting the husband wear the tax obligations related to the options and shares. I accept the proposition that the report of her own expert, Mr Jansen, set out the impact of taxation and it was plain the husband would be liable to pay it. That was evidence the wife did not seek to gainsay at any time, then or later. I do not accept therefore that what was being conveyed in this exchange was a proposition, contrary to the way the husband expressed it in his letter of 20 February, that she receive 60% of the gross value of the options and shares and leave him with the consequent tax debt.
17.That said, so far as property was concerned her offer was pitched at 60% rather than the 62.5% received on judgment but there were nonetheless some differences. This included her claim for a 60% share of his long service leave, holiday pay and his 2002 bonus. Mr Kirk calculated their worth at around $52,000; however, that is more than compensated for by the 2 ½ % differential she received on judgment. I accept that analysis. So far as spousal maintenance is concerned, it was recognised she received less than she offered to settle for; that is, her offer proposed an entitlement to $785 per week to the end of the year, the husband countered with $750 until the orders were made, yet the judgment provided for payment of $350 per week to be reviewable in January 2004.
18.Despite these differences, it was submitted that when viewed overall Mrs Johnston received close to her offer to settle in late February 2003. This calls into consideration, as Mr Kirk submitted, the observations of the Full Court in Pennisi (1997) FLC 92-774 at 84,547. Dealing with a submission based on Robinson v Higginbotham (1991) FLC 92-209 as authority for the proposition that the fact that an offer just exceeds the award is no bar to an award for costs, their Honours went on to add:
‘Equally, however, it is only one of the factors to be considered under s 117(2A) and it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offerer – Harris and Harris (1991) FLC 92-254.
We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.’
19.After further discussion about paragraph (f) their Honours went on to emphasise the importance of seeing offers in the context of the particular case:
‘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. This principle must not, however, be rigidly applied. 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 this case considerations of context have no impact; that is to say, Mr Johnston could certainly not be said to have any impaired knowledge or less information available about their finances and nor could it be said that the financial arrangements of the parties were in any way complex. True it is that valuing the options was not a commonplace strand to property cases and that required expert assistance from Mr Jansen. But he was engaged by the wife, he reported around the time of the offer, and Mr Johnston at no stage took the step of presenting any evidence related to their value. This last point, in fact, is another strand to Mr Kirk’s submission in support of Mrs Johnston’s costs claim; namely, she alone provided evidence of value of the options and the tax payable thereon, as she did on the value of his superannuation, and she was the one who is left with the consequent expense. The submissions on her behalf otherwise relied upon the better future financial position of the husband, despite the division of their property in the proportions noted, by reason of his salary package.
21.In my assessment, these factors combine to constitute justifying circumstances warranting a costs order in Mrs Johnston’s favour. What she proposed was reasonable, it was approximate to what she received on judgment, and later expense could have been avoided had it been accepted.”
Thereafter, her Honour made the order against part of which the husband has appealed.
GROUNDS OF APPEAL
The grounds of appeal relied upon by the husband are as follows:
“1.That her Honour’s discretionary decision miscarried in that:
1.1her Honour mistook the facts in her construction of the written offers passing between the parties’ solicitors; and,
1.2her Honour failed to take into account that the result at trial, as compared to the offers, incorporated a significant benefit to the appellant in the form of dealing with the respondent’s entitlement in relation to share options in specie rather than requiring the payment of a sum certain by him;
1.3her Honour failed to take into account that the relevant offer was open for a very short period of time, during which the value of the appellant’s options was not agreed;
1.4her Honour mistook the facts in implicitly finding that the valuation of Mr Jansen was available for the appellant to consider during any period that the respondent’s offer was available for acceptance; and
1.5the result was manifestly unjust.”
APPLICABLE PRINCIPLES
10. The Appeal is against a discretionary order. The principles which govern such an appeal are not in doubt, were not the subject of submissions before us, and do not require repeating in the context of this case; see House v The King (1936) 55 CLR 499, Gronow v Gronow (1979) 144 CLR 513, Norbis v Norbis (1993) 161 CLR 513 and McAlpine v McAlpine (1993) FLC 92-411.
SUBMISSIONS OF COUNSEL
Mr North SC, who appeared for the husband, referred to the letters of offer from the wife’s solicitors to the husband’s solicitors dated 18 February 2003 (“Letter 1”) (AB93), from the husband’s solicitors to the wife’s solicitors dated 20 February 2003 (“Letter 2”) (AB95) and from the wife’s solicitors to the husband (“Letter 3”) (AB99). The submission was substantially in the same form as that argued before her Honour and dealt with in her judgment delivered 17 October 2003.
It was submitted that Letter 1 referred to a discussion having taken place directly between the parties and that an agreement had been reached whereby the wife would receive (inter alia) 60% of the husband’s Woolworths options and shares. The letter, in its concluding remarks, requested a reply to the “offer” by 4.30pm that day.
It was pointed out by Mr North that the husband’s solicitor in Letter 2 acknowledged that the husband and the wife “… agreed to a 60% - 40% split of the parties’ nett property” in favour of the wife and in relation to the two relevant items, proposed that they were instructed “… to make the following counter-proposal”.
“1. (a) That the Husband pay to the Wife a sum equal to 60% of
the current nett value of his Woolworths options, less any capital gains tax and transfer charges.
(b)That the Husband pay to the Wife 60% of the nett value of all his shareholding in Woolworths shares being the current value less any Capital gains Tax.
…”
The submission went on to emphasise that in Letter 2 the husband addressed issues of certain taxation liabilities associated with the wife’s offer. The letter closed by requesting an “… urgent response to” the offer by 4pm the following day.
In Letter 3, the wife’s solicitors responded in relation to the options and shares in the following terms:
“1. HUSBAND’S WOOLWORTHS OPTIONS
The wife received by way of cash payment, 60% of the monetary value of the options as at the date of the making of final consent orders in relation to property settlement.
2.HUSBAND’S WOOLWORTHS SHARES
The wife received by way of cash payment, 60% of the monetary value of the shares as at the date of making of final consent order in relation to property settlement.
…”
In contrast to the way the wife responded to the issue of the Woolworths shares and options, it was submitted on behalf of the husband that in other paragraphs of Letter 3, the wife expressed unequivocal acceptance or agreement to various offers proposed by the husband or agreement subject to certain conditions. Given the fact that the hearing was set down for 26 February 2003, the wife’s solicitor requested “… a reply to the above offer” by 10am the following day. No response followed, and the negotiations thus ended.
It was further submitted by Mr. North that her Honour fell into error in determining that Letter 3 “… when viewed in context” could not “reasonably be construed as suggesting the husband wear the tax obligations” (par 16) related to the Woolworths shares and options. He also submitted that a reasonable construction of the three letters demonstrated that:
if the wife had intended to accept the husband’s proposal then her choice of words in paragraphs 1 and 2 (earlier referred to) in Letter 3 were unfortunate, ambiguous and unclear;
the reference to the “monetary value” in Letter 3 was not a reference to a nett or after tax value;
in Letter 3 the solicitors for the wife neither acknowledged nor accepted the contention made in letter 2, namely, that the agreement between the parties was for a 60/40 per cent division of the parties’ nett property. The wife’s contention of the agreement in Letter 1 made no reference to “nett property”. In contrast, the mode of expression used by the wife in paragraph 3 of Letter 3 dealing with paragraph 1(c) of Letter 2 [the husband’s employment contract] was unequivocal in her acceptance of the proposal put forward by the husband;
the trial Judge’s reference to the report of Mr Jansen [an expert witness engaged by the wife to assess the gross and nett value, inter alia, of the husband’s Woolworths shares and options] was erroneous in that in paragraph 16 of her reasons, she proceeded on the assumption that the report was available to the husband and his solicitors at least at the relevant time in relation to the three letters. There was no evidence that this was the case, as Mr. Jansen’s report was signed off on 24 February 2003 and was annexed to his affidavit filed on 3 March 2003. Mr North further submitted that her Honour’s use of the words in par 16 “… when viewed in context” plainly meant in the “context” of Mr Jansen’s report, a report which was not available at the time of the three letters;
Mr Jansen’s report referred to both pre and post tax nett value, both of which may fairly be regarded as “monetary value”; and
paragraphs 1 and 2 of Letter 3 were ambiguous, in that they failed to clearly address the issue of taxation and its impact upon the wife’s response to the husband’s offer.
Mr North submitted that her Honour did not recognise the ambiguity. He submitted that the intention of the wife was not communicated to the husband, or alternatively, was expressed in ambiguous terms. In support of that submission he referred us to Harris v Harris (1987) FLC 91-822 at 76,187, wherein the Full Court recorded that:-
“… the offer [of settlement]should be expressed in terms which are objectively capable of being clearly understood”.
As an aid to the construction of an offer in such circumstances, Mr North relied upon ordinary contractual principles, namely, that in order to create a contract, it was essential that the intention of each of the parties “… has been communicated to and understood by the other”. See Paal Wilson & Co A/s and Partenreederei Hannah Blumenthal (1983) AC 854, per Lord Diplock at p 915. See also Codelfa Construction Proprietary Limited and State Railway Authority of New South Wales (1982) 149 CLR 337 esp per Mason J at 352.
In essence, Mr North submitted that the wife relied upon events and a state of mind which had not been communicated to the husband, and which placed upon him an unjust burden to make the assumption that by “monetary value”, the wife intended the payment of 60 per cent of the husband’s Woolworths shares and options to be the current nett value less any capital gains tax and transfer charges.
In response to Mr North’s submission that the offer expressed in Letter 3 by the wife’s solicitor indicated that she intended the husband bear the tax obligations in respect of the Woolworths shares and options, Mr Kirk SC, who appeared on behalf of the respondent, relied upon the plain wording of Letter 2 in which the husband’s solicitors referred to the discussions between the parties the previous evening whereby the husband “… eventually agreed to a 60%-40% split of the parties’ nett property” in favour of the wife.
Mr Kirk submitted that the wife’s solicitors in Letter 3 did “… not take issue” with the agreement reached between the parties or that the terms proposed by the wife were otherwise than as stated.
It was further submitted by Mr Kirk that the husband’s complaints about the choice of words, namely the term “monetary value” applied in Letter 3, as her Honour stated in par 16 of her judgment, “when viewed in context” amounted to nought. In the course of his oral submissions, and in response to the submissions of Mr North, Mr Kirk submitted that the phrase “… when viewed in context” adopted by her Honour was not in the “context” of Mr Jansen’s report but was rather, in the context of the folllowing:-
the agreement reached between the parties on 17 February 2003 and set out in Letter 1;
that the husband was clearly capable of understanding the nature of the offer;
the report of Mr Jansen itself; and
what Mr Kirk described as the absurd proposition advanced by the husband, when analysed in real terms, that the wife was seeking 60% of the gross value of the relevant shares and options.
Mr Kirk conceded that the Jansen report was in the course of preparation at the time of the offers. In his written submissions, he recorded:
“3.2.2…
(c)(iii) That Mr Jansen had been instructed to calculate the tax
liabilities in the content (sic) of his valuation is clearly demonstrated by what he did … including that it is likely that upon sale of the shares and exercise of the options ‘the husband will be able to pay tax at the top marginal rate of 48.5%’. What that submission was intended to convey was that it is inconceivable that the Wife having so instructed Mr Jansen would be intending the reference to ‘nett property’ ignore tax liabilities or that the Husband should bear all of the tax liabilities;
(iv)It was in this context that the Trial Judge ‘accepted the proposition’ put in my submission. The Trial Judge did not proceed on the assumption that the husband had this report nor did I submit this was so.”
Mr Kirk further submitted that the proposition put on behalf of the wife that her Honour was in error because the phrase “monetary value” could have been either the pre or post tax value of Mr Jansen’s calculations concerning the Woolworths shares and options was without merit. He submitted that the methodology applied by Mr Jansen was similar to that in every case where taxation was a consideration and was a necessary aspect of such an exercise.
Mr Kirk submitted that the expression used in paragraphs 1 and 2 of Letter 3, namely, that the wife “… receive 60% of the monetary value of the [options and shares] at the date of the making of the final consent orders in relation to property settlement”, merely anticipated that an adjustment to the value of the share and option prices between the offer (Letter 3) and the date of the final orders may be needed, given that those securities were subject to fluctuation in price movements on the Australian Stock Exchange. He submitted that the husband’s argument that the reference to, “at the date of final orders”, should be construed to exclude any future tax liability ignored what Mr Jansen was instructed to assess.
In response to Mr North’s submission that the wife’s offer was ambiguous and unclear, Mr Kirk submitted that her Honour had no doubt that the wife intended to convey, by her offer in Letter 3, that the incidence of taxation was to be brought to account. He pointed out that were the wife to receive 60% of the gross value of the Woolworths shares and options, she would be entitled to receive a sum far in excess of their nett realisable value which, he submitted, would have been an absurd result.
Mr Kirk relied upon what he described as the “basic tenet” of their agreement which was acknowledged by the husband in Letter 2 to split the “nett property” between the parties in the ratio asserted in that letter.
Mr Kirk further submitted that her Honour was in the best position to determine whether the offers were “… objectively capable of being understood” (see Harris v Harris (supra) at p 76,187), and argued that they were neither unclear nor ambiguous. He submitted that the observation of the Full Court in Harris v Harris (supra) that there was no obligation on the offeree to seek to clarify the terms of an offer that was “ambiguous or unclear”, was adumbrated some 17 years ago and was far too broad for application in 2004. He drew the Court’s attention to the policy objectives of the legislation (Murray v Murray (1990) FLC 92-173 at p 78,178) and that offers ought be seen in the context of each case, and principles ought not be rigidly applied (Pennisi v Pennisi (1997) FLC 92-774 at p 84,547). He went on to submit that it was more appropriate in 2004 to apply tthe formulation of the trial Judge in Harris v Harris (supra) at p 76,187.
In the course of his oral submissions, Mr Kirk urged that we should add to the qualification expressed in Harris v Harris (supra) an additional qualification, namely, that where an offer is unclear the recipient has an obligation to seek clarification of the ambiguity.
CONCLUSION
After a careful consideration of the three letters passing between the solicitors, when viewed both cumulatively and in context, we are satisfied that the wife’s offer in Letter 3 dealing specifically with the husband’s Woolworths shares and options in the manner that she did is both ambiguous and unclear. The term “monetary value” of the shares and options was introduced by her for the first time in Letter 3, in circumstances where there was an express acceptance, or alternatively a conditional acceptance of a number of other matters, being the subject of the husband’s offer in Letter 2. The term “monetary value” is equally applicable to “pre tax”, as it is to “post tax” value.
The counter offer made by the husband in Letter 2 [60% of the current nett value of the Woolworths shares and options less any capital gains tax and transfer charges], on the other hand, is both clear and unambiguous. That offer was capable of acceptance by the wife. The new phrase, namely, “monetary value” introduces a lack of clarity and gives rise to the ambiguity, of which Mr North complains.
We accept the submission of Mr North that the “… subjective intention of the wife” (upon which Mr Kirk relies) was not communicated to the husband, and the communication in Letter 3, such as it was, was in ambiguous and unclear terms. Given the strict and limited time frame imposed upon the husband to accept or alternatively to reject the offer, it was not unreasonable for him to act as he did.
Notwithstanding the submission of Mr Kirk, we respectfully agree with the following observation of the Full Court in Harris v Harris (supra) at 76,187, namely:-
“During the course of his judgment Kay J. said (see (1986) FLC 91-763 at p. 75,575):
‘… and the fact that such terms are not necessarily capable of immediate and clear understanding by persons outside the arena of the battle, ought not to inhibit the Court in properly considering the offers made on questions of costs. To the extent that such offer may be ambiguous or unclear to the recipient of the offer, there is, in my view, an obligation on the respondent in the appropriate case to seek to clarify the ambiguity rather than to sit back and simply ignore the offer on the basis of such imprecision or ambiguity’.
We find ourselves unable to agree with the views expressed by his Honour in the latter part of that passage. We agree with his Honour that an offer filed under sec. 117C should be expressed ‘with precision’. We do not consider that in ordinary circumstances this would be achieved by the use by a party of esoteric language which that party believes the other party would understand. The offer should be expressed in terms which are objectively capable of being clearly understood. Otherwise difficulties are likely to arise upon a purported acceptance by the other party of that offer or upon the assessment by the Court of that offer on the issue of costs. This view is in conformity with the approach adopted in relation to the procedure surrounding payments into Court in other jurisdictions, in respect of which it has been held that the prescribed form should be strictly adhered to: see Cumper v Pothecary (1941) 2 K.B. 58.
However, our major disagreement with his Honour is that in our view where the offer contained in a notice filed under sec. 117C is ambiguous or unclear there is no obligation on the offeree to seek to clarify the terms of that notice, at least in the sense that the offeree may be disadvantaged on the issue of costs as a consequence of failing to do so. The only qualification we would make to that is that where the suggested ambiguity or lack of clarity related only to an obvious typographical error or other similar misdescription, the offeree, in choosing to ignore the obvious intent of the offer, may do so at some possible risk on the broad issue of costs under sec. 117.
The procedure provided in sec. 117C is an important reform in financial matters under the Family Law Act and it is intended to assist in the early settlement of such proceedings. However, if that procedure is to be effective it is essential that the offer put forward by a party under that section be expressed carefully and with precision so that it is readily capable of acceptance or rejection by the other party.”
The terms of any offer of compromise must be stated clearly, precisely and with reasonable certainty. Any such offer ought be explicit. See for example Duncan & WellerPty Ltd v Mendelson & Ors (1989) VR 386. Common sense and/or the interests of justice dictate(s) that any serious offer to adjust financial differences should be framed in plain English terms that are easy to perceive or understand, leaving no doubt as to the terms of that offer. We are of the opinion that having regard to the introduction of the phrase “monetary value” in Letter 3, and to the terms of both letters 1 and 2, one is left in doubt as to what the wife had in mind in relation to the Woolworths shares and options. Its use gives rise to a clear ambiguity, that is, an interpretation capable of having more than one meaning. This is made more readily apparent when one considers the other paragraphs of Letter 3 that unequivocally expressed agreement to various of the issues raised for consideration.
In considering this appeal, we are mindful that orders for costs are considered to be particularly immune from attack (Browne v Green (2002) FLC 93-115 at 89,162), and are “peculiarly a matter which are within the discretion of the trial Judge” and that it is only in the “rarest of cases” that this court interferes with such an order. See Harris v Harris (1991) (supra).
In our view, the trial Judge erred in implicitly finding that the contents of the report of Mr Jansen was available to the husband to consider at the date of the receipt by him of Letter 3. In addition, as the offer of the wife in Letter 3 relating to the shares and options was not clear and unambiguous, the trial Judge erred in attaching weight to that offer, with the result that the order for costs was manifestly unjust to the husband. We would accordingly allow the appeal.
RE-EXERCISE OF DISCRETION
Mr North submitted that, if the appeal was allowed, this Court should re-exercise the discretion. We did not understand Mr Kirk to submit to the contrary.
In the event that we re-exercise the discretion, Mr North indicated that the husband did not desire to adduce further evidence pursuant to the principles enunciated by the High Court in Allesch v Maunz (2000) 203 CLR 172. Mr Kirk indicated, however, that in the event that the appeal was allowed, he would wish to adduce further evidence on behalf of the wife pursuant to those principles, being evidence from a stockbroker that put options were available to the husband to effectively eliminate the risk which he identified in his submissions. The evidence he identified is not, in our view, evidence that would enable us to re-exercise the discretion by reference to the circumstances as they exist at the date of the hearing of the appeal, nor did senior counsel explain how that evidence was relevant to the re-exercise of the discretion.
We are thus of the view that it is appropriate for us to re-exercise the discretion, and to re-exercise that discretion on the basis of the evidence which was before the trial Judge.
Mr North submitted that upon analysis, her Honour’s order was more favourable to the husband than his offer made in Letter 2 as he there assumed the risks associated with the volatility of the share market. He submitted that notwithstanding Mr Jansen may have applied a credible valuation formula, the value that was “predicted” by him simply may not be there at the time when the options were exercised. By paying the wife cash, the husband thus took the risk and would thereby adopt the role of insurer of the ultimate price to be achieved on the options. It was in those circumstances that he submitted it would not be appropriate for there to be any order for costs in the wife’s favour. In the course of his submissions, Mr Kirk argued that both the husband and the wife benefited from the in specie orders made by her Honour to the extent that any unfairness to either of them was eliminated.
In coming to our conclusion, we have had regard to the overall submissions made on behalf of the parties, and, as best we can, to the financial circumstances of the parties, their conduct in relation to the proceedings, the order of the trial Judge of 14 August 2003, and the terms of the three offers of settlement to which we have referred. In our judgment, the circumstances do not justify the making of an order for costs of an incidental to the proceedings, save for those parts of the order against which there is no appeal.
COSTS OF THE APPEAL
At the conclusion of the hearing of the appeal, we heard submissions as to the costs of the appeal. On behalf of the husband, Mr North submitted that if the appeal was allowed, the wife should be ordered to pay his costs of and incidental to the appeal. In the event that the appeal was allowed, Mr Kirk submitted that she ought not be required to meet the husband’s costs of and incidental to the appeal. He further submitted that in the event that the appeal succeeded on a question of law, the Court should grant to the wife a costs certificate pursuant to the provisions of s.6 of the Federal Proceedings (Costs) Act 1981 (Cth).
In coming to our conclusion in relation to the costs of the appeal, we have had regard to the respective submissions of counsel and, as best we can, to the financial circumstances of the parties, their conduct in relation to the appeal, and the order which we propose making. We note that neither counsel asserted that either party was in receipt of a grant of legal aid. In our view, the circumstances do not justify the making of an order for costs of and incidental to the appeal, nor do we consider that the circumstances justify the granting of a costs certificate to the wife.
ORDER
We therefore order:
1.That the appeal be allowed.
2.That the order made on 17 October 2003 be set aside and in lieu thereof it be ordered:
“1.That there be no order as to the costs of and incidental to the proceedings.”
3.That there be no order as to costs of and incidental to the appeal.
I certify that the preceding 51 numbered
paragraphs are a true copy of the
reasons for judgment delivered
by this Honourable Full Court.
C. Pitcher
Associate
5
0