Joiner and Dane (No.2)
[2018] FCCA 1827
•6 July 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| JOINER & DANE (No.2) | [2018] FCCA 1827 |
| Catchwords: FAMILY LAW – Costs – s.117 of the Family Law Act 1975 (Cth) – two alleged offers – first ‘offer’ not an offer – husband had not provided sufficient discovery – uncertain terms – second ‘offer’ was an offer – not a Calderbank offer – wife’s conduct unreasonable – issue of reserved costs – costs payable by both parties – Court’s exercise of discretion. |
| Legislation: Family Law Act 1975, ss.79, 117 Federal Circuit Court Rules 2001 (Cth) r.13.03B, Sch 1 |
| Cases: Calderbank v Calderbank [1976] FAM 93 |
| Applicant: | MR JOINER |
| Respondent: | MS DANE |
| File Number: | MLC 5611 of 2014 |
| Judgment of: | Judge Hartnett |
| Hearing date: | 2 March 2018 |
| Delivered at: | Melbourne |
| Delivered on: | 6 July 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Williams |
| Solicitors for the Applicant: | Pearsons Lawyers |
| Counsel for the Respondent: | Mr Testart |
| Solicitors for the Respondent: | Scammell Black Mileo |
ORDERS
The Applicant husband pay the Respondent wife the sum of $9,529.
The Respondent wife pay the Applicant husband the sum of $23,557.
Otherwise all extant applications are dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Joiner & Dane (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 5611 of 2014
| MR JOINER |
Applicant
And
| MS DANE |
Respondent
REASONS FOR JUDGMENT
On 10 August 2017 the Court made final property orders in these proceedings. The orders included, relevantly, the following order:-
“1. Within 60 days of the date of these orders (‘the date’), the wife pay to the husband the sum of $231,442.00 (‘the payment’).”
Thereafter, and on 6 September 2017, the Applicant husband (‘the husband’) made application for orders that:-
“1. That the Wife pay the Husband’s costs in the sum of $58,521.72 calculated in accordance with Schedule 1 of the Federal Circuit Court Rules 2001.
2. That the Wife pay the Husband’s costs arising from and incidental to this application.”
The husband’s application is supported by affidavits of evidence sworn by Ms N on 9 November 2017 and by Ms L on 6 September 2017.
The Respondent wife (‘the wife’) seeks dismissal of the application of the husband together with the following orders:-
“2. That the husband pay the wife’s reserved costs of and incidental to the adjournment of the final hearing ordered on 3 June 2015.
3. That the husband pay the wife’s reserved costs of and incidental to her application in a case filed 27 April 2016 and the adjournment of the final hearing ordered on 2 May 2016.
4. Further and/or alternatively the husband pay such sum towards the wife’s costs of the proceeding as is considered by the Court to be just.
5. That the husband pay the wife’s costs of and incidental to the husband’s application in a case filed 6 September 2017 and the costs of and incidental to the wife’s response to that application.
6. Such further or other orders as the Court deems appropriate.”
The wife relied upon affidavits of evidence sworn by Mr Mark Mileo on 25 September 2017 and on 8 November 2017.
Consideration
Section 117 of the Family Law Act 1975 (Cth) (‘the Act’) is relevantly, as follows:-
“FAMILY LAW ACT 1975 - SECT 117
Costs
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(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 answer 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.”
The Court notes the matters to which the Court shall have regard in determining whether any order for costs should be made, as set out in s.117(2A) of the Act, including the mandatory and non-exhaustive nature of that consideration.
The husband’s application for costs arises from two alleged written offers that were made by him during the running of the proceedings. The first was correspondence from the husband’s then lawyer on the record, Mr Peter Pryles, of 18 May 2015. That correspondence is headed “Without prejudice save as to costs”. In that correspondence was, relevantly, the following information:-
“…
We are instructed that our client will accept the sum of $210,000 in full and final settlement of this claim.
We await your reply”
The correspondence of 18 May 2015 was in response to a letter to Mr Pryles, of Pryles & Co, the husband’s then lawyers, from the solicitors for the wife. That correspondence, of the 15 May 2015, was as follows:-
“I refer to the above matter and your client’s application filed 26 June 2014.
In that application your client sought to be excused from particularising his claim until such time as my client had provided financial disclosure.
My client has on any view done that some considerable time ago.
In the circumstances I would ask you to spell out what it is that your client wants i.e., the orders that he will be seeking and I will get instructions from my client.”
The second alleged offer made by the husband to the wife was contained in correspondence from the husband’s solicitors to the wife’s solicitors of 1 June 2016. This second offer was made a little over a year after the first. This written offer of settlement emanated from Pearsons Lawyers, the solicitors acting for the husband, to the solicitors acting for the wife. It was also headed “Without prejudice save as to costs”. In that correspondence was, relevantly, the following information:-
“Our client proposed to resolve the matter on a final basis as follows:
1. Your client pay our client the sum of $215,000 (“the payment”) within 60 days of the date of the Orders being made (“the date”).
2. Your retain all of her right, title and interest in the real property situate at and known as Property A, and our client relinquish all interest in that property.
…
We note that the above represents a division of 17.5/82.5% in favour of your client.
…
The offer of compromise contained in this letter is:-
(a) made without prejudice;
(b) made to avoid further costs, disbursements and expenses associated with litigation;
(c) made pursuant to the principles in Calderbank v. Calderbank [1976] FAM 93; [1975] 3 All ER 333 and Cutts v. Head [1984] 1 All ER 597, and Hazeldene’s Chicken Farm Ltd v. VWA (No. 2) (2005) 13 VR 435;
(d) may be produced to a Court in the future and relied upon in support of any costs application which will be sought on a Solicitor/Client indemnity basis; and
(e) open for acceptance by your client by 10.00am on Friday 3 June 2016.
We await your urgent response.”
Both alleged offers of settlement were lower in sum than the amount to be paid to the husband in accordance with the judgment. The sum payable in accordance with the judgment represented a 20% adjustment of the property pool to the husband and a further $5,622 payment to the husband for an outstanding taxation debt incurred by him during the relationship. The second alleged offer of settlement also represented a lower percentage adjustment (of 2.5%).
As to First ‘Offer’
The Court accepts the evidence of the wife’s solicitor as set out in paragraph four of Mr Mileo’s affidavit of 25 September 2017. It is, relevantly, as follows:-
“4. At the time of sending the letter of 18 May 2015 the husband:-
(a) had not filed a tax return for 10 years;
(b) had not lodged business activity statements for various businesses owned or controlled by him;
(c) had not made any or any proper disclosure of his financial circumstances (including not having lodged tax returns for 10 years and not having lodged business activity statements);
(d) had not provided discovery of the documents used as the basis for the creation of spreadsheets which were exhibited to his affidavit;
(e) had not provided business activity statements for Business A;
(f) had not provided any bank statements, financial statements, statutory returns or business activity statements for the company Business B Pty Ltd.
In those circumstances the wife was not in a position to properly consider the “offer”. It will be asserted on behalf of the wife that the letter of 18 May 2015 was not an offer and reference in this affidavit to it as an offer is not a concession or admission that it was in fact an offer.”
It is clear from the above, that as a result of the husband’s failure at that time to make proper disclosure and to have his business affairs in order that the wife was in no position to properly, that being in an informed way, consider any figure suggested by the husband which might resolve the property proceedings between them. Nor did the Court have evidence before it on which it could be satisfied, in the context of s.79(2) of the Act, to make any orders. Section 79(2) of the Act is as follows:-
“(2) The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”
It was simply impossible to assess the prospects of the parties as at 18 May 2015.
The correspondence of Mr Pryles did not represent an offer because, as submitted by Mr Mileo, it was uncertain in its terms and was clearly incapable of being accepted. It did not seek to establish for the benefit of the wife what precisely the husband’s claim was, that claim being one which the husband was indicating he would settle on a full and final basis. The correspondence did not deal with the parties superannuation; other assets of the parties; the time for payment of the sum stipulated; or any withdrawal of a caveat lodged by the husband against real property registered in the wife’s name. Any costs claimed by the husband to be payable by the wife as a result of the correspondence of Mr Pryles of 18 May 2015 cannot be awarded. That part of the husband’s application must fail.
As to reserved costs of 3 June 2015
The hearing of the trial, listed on 3 June 2015, was required to be adjourned on application properly made by Counsel for the wife, because of the husband’s non-disclosure of relevant matters either completely, or in a timely way. It was only on 3 June 2015 that the wife became aware of the orders then sought by the husband. At that time the husband sought he be paid the sum of $391,839 representing a 65/35% division in the wife’s favour, with a superannuation split to the wife of $24,000.
The orders made on 3 June 2015 were, relevantly, as follows:-
“…
2. The husband within 90 days hereof lodge his taxation returns for the financial years ending 30 June 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015.
3. The husband within 90 days lodge business activity statements for the period 1 July 2008 to the present time.
4. The husband within 30 days hereof provide discovery of any and all documents in his possession or power pertaining to exhibits “J1” and the proposed replacement to exhibit “J2”.
5. The wife within 30 days hereof provide discovery of any and all documents in her possession or power pertaining to exhibits “J1” and the proposed replacement to exhibit “J2”.
6. The husband within 90 days provide business activity statements in respect of Business A.
7. The husband produce within 90 days all bank statements and all corporate financial documents including profit and loss statements, statutory returns and business activity statements of the company known as Business B from 30 August 2011 to date.
8. Costs are reserved.
...”
The Court notes the husband had the documents used to create the replacement exhibit “J2” but had not provided them to the wife.
On 3 June 2015, costs were reserved. The wife now seeks payment of her costs of an incidental to the adjournment of the trial. Mr Mileo assessed those costs as being a total of $12,342 calculated in accordance with the Federal Circuit Court scale of costs as set out in Schedule 1 to the Federal Circuit Court Rules 2001 (Cth) (‘the Rules’).[1] The Court takes no issue with the method of calculation. The claimed “preparation for trial” sum of $6,937 however, is an amount not thrown away in the Court’s view save as to a small part, in relation to which the Court shall make an allowance of $1,000 to be paid by the husband to the wife. The balance claimed, are costs referrable to the hearing date, in circumstances where the proceedings needed to be adjourned.
[1] This is as set out in paragraph 7 of the affidavit of 8 November 2017.
The Court, in the exercise of its discretion as to the making of costs orders and with reference to s.117(2A)(c) of the Act, in particular, finds that the wife incurred costs thrown away by reason of the husband’s defaulting conduct, on 3 June 2015, which resulted in an inability for the parties to proceed with the trial. The Court noted on 3 June 2015 that “it would seem to be on balance it would be the wife’s costs are reserved but … you can argue about that at trial”. The order was not discharged. The wife is at liberty to seek payment of this sum. The Court determines that the husband should pay the wife’s costs of 3 June 2015 in the total sum of $6,405.
As to the wife’s reserved costs of application in a case filed 27 April 2016 and the hearing adjourned on 2 May 2016
On 29 April 2016 the wife filed an application in a case seeking the following orders:-
“1. That the husband’s application be dismissed pursuant to r.13.03B of the Federal Circuit Court Rules 2001.
2. That the husband pay the wife’s costs or and incidental to this application in the sum of $4,800.
3. That the husband pay the wife’s costs thrown away by reason of the adjournment of 3 June 2015 in the sum of $10,740.
4. That the husband pay the wife’s costs of and incidental to this proceeding such costs to be taxed in default of agreement.
5. That the husband do all things and sign all documents necessary to remove the caveat lodged by him or on his behalf on the Title to the property at Property A, being caveat registered number.
6. Such further or other orders as this Honourable Court deems appropriate.”
The filing of the wife’s application in a case resulted from earlier orders made by the Court on 12 October 2015 when dealing with the husband’s non-compliance with the orders made on 3 June 2015. The orders made on 12 October 2015 were, relevantly, as follows:-
“1. The trial date of 4 November 2015 is vacated.
2. The matter be listed for final hearing on 22 February 2016 at 10.00am for final hearing (with an estimated hearing time of three days).
3. The parties file and serve any further affidavit material they intend to rely upon not less than seven days prior to the final hearing.
4. The husband comply with all the Orders made on 3 June 2015 within 60 days hereof.
5. The husband pay the wife’s costs of this Application fixed in the sum of $4,806.80.
6. In the event the husband fails to comply with Order number 4 herein, the wife is at liberty to seek that the husband’s Application be dismissed pursuant to r.13.03B of the Federal Circuit Court Rules 2001 (Cth) on the final hearing date.”
The wife’s application in a case was predicated on the husband’s failure to prosecute his claim at the relevant time. Rule 13.03B of the Rules is relevantly as follows:-
“FEDERAL CIRCUIT COURT RULES 2001 - RULE 13.03B Orders on default
Orders on default
(1) If an applicant is in default, the Court may order that:
(a) the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant; or
(b) a step in the proceeding be taken within the time limited in the order; or
(c) if the applicant does not take a step in the time mentioned in paragraph (b)--the proceeding be stayed or dismissed, as to the whole or any part of the relief claimed by the applicant.”
The wife’s application in a case was listed to 2 May 2016, the same date as the then re-listed trial date. The Court indicated to the parties that the husband had filed sufficient material such that the proceedings would not be dismissed.
On 2 May 2016, the wife, after being unsuccessful in her application in a case to have the proceeding dismissed, sought an adjournment. The husband sought to commence the final hearing. The wife argued that because the husband had not served his material in compliance with Court orders, the wife had not had sufficient time to consider the material. Counsel for the wife submitted the husband’s material was emailed to the wife’s solicitors at 5.35pm on 22 April 2016. It included:-
(a)an affidavit sworn by the husband on 21 April 2016 which contained tax liability estimates (but not filed tax returns) from the husband’s accountant;
(b)an affidavit sworn by Dr G, General Practitioner on 21 April 2016;
(c)an affidavit sworn by Mr D on 21 April 2016 which contained an updated valuation for the property Property A; and
(d)an affidavit affirmed by Mr B, quantity surveyor on 22 April 2016.
A further affidavit sworn by Mr D on 28 April 2016 containing a retrospective valuation of Property A, and an affidavit sworn by Mr A, Accountant on 29 April 2016 were filed on 29 April 2016.
Counsel for the husband did not concede that the material had been filed late, submitting that the email was conveyed to the solicitors for the wife on 22 April 2016 at 4.28pm. The husband wished for the trial to proceed, and so made concessions that he would not seek to rely on the affidavit of Mr B and further, that the husband’s tax liability be limited to $11,244 and that the Court could disregard any other tax liability of the husband and in relation to which the husband would indemnify the wife. The husband proposed that Mr L, a Valuer from whom the wife had obtained a valuation in the proceeding, meet with Mr D during the week to come to an agreed value, as they had done earlier in the proceedings. The problem with that was that the trial was due to commence and the husband had not conveyed to the wife that he disputed the real property values and had obtained an updated valuation for the purposes of trial. This was a significant matter which saw the Court make orders as sought by the wife.
On 2 May 2016 the Court ordered the following:-
“1. All extant applications be adjourned to 6 June 2016 at 10.00am for final hearing with priority (with an estimated hearing time of three days).
2. The Respondent wife’s costs are reserved of and incidental to the application in a case and the hearing this day.”
When making the order to reserve the wife’s costs, the Court noted “that can be argued along with everything else on 6 June and of course the valuation issue will be resolved.” The costs issue was not raised at trial, nor dealt with specifically in the reasons for judgment.
Again, the wife is at liberty to seek payment of costs in respect of the adjournment of the trial and her application in a case. The Court determines the husband’s conduct again caused the incurring of the trial adjournment expense by the wife. However, the wife was not successful in her application in a case albeit in the circumstances surrounding the need for the bringing of the application, or the perceived need, the Court, without further evidence, determines each party should bear their own costs in respect of this application. As to the trial adjournment, the Court determines the husband should pay the wife’s costs in the sum of $11,261 as claimed save the preparation for trial sum of $6,937 in relation to which the Court shall make allowance of $1,000 for the same reasons as set out in paragraph 16 above. The Court determines that the husband should pay the wife’s costs of 2 May 2016 in the total sum of $5,324.
The total of the amounts owing by the husband to the wife is $11,729. The Court in its judgment discharged an order wherein an amount owing by the wife to the husband of $2,200 was no longer payable on the basis that the husband has caused the wife to incur unnecessary costs. They are now being brought to account and so it is appropriate that from the sum now quantified of $11,729 is deducted $2,200, leaving an amount owing of $9,529.
Other
The husband seeks costs in circumstances where rulings and/or orders have already been made by the Court in relation to part of those costs. On 12 October 2015 the Court ordered the husband pay the wife’s costs of that day. Those costs were paid in accordance with the order. There was no appeal against that order nor any application to set it aside. The Court finds on the evidentiary material as contained in the affidavits relied upon in these proceedings no basis on which to disturb that order. On 14 October 2016 the Court was required to consider whether the proceedings should be re-opened. That was a matter that required determination by the Court and the Court indicated to the parties on that day when the issue of costs was raised, that each party should bear their own costs.
As to ‘Second offer’
The second offer was sent on 1 June 2016. The offer was open to be accepted until 10.00am on Friday, 3 June 2016, effectively giving the wife slightly more than one day to consider the offer. This time frame, the Court finds, was significantly too short for a Calderbank offer to be relied upon.[2] The issue for the Court though, is whether it should exercise its general discretion, taking into account those matters to be considered in s.117(2A) of the Act, to make an award of costs against the wife in respect of her conduct in relation to her consideration of this offer, if any, and her conduct thereafter in the seeking of a dismissal of the husband’s application with no payment to be made to him. The Court considers this matter pursuant to s.117(2A)(c),(e),(f) and (g) of the Act.
[2] Calderbank v Calderbank [1976] FAM 93.
The wife would have been in a better position financially if she had accepted the husband’s offer. So too, importantly, would have been the husband. The Court finds the letter of 1 June 2016 was clearly an offer of settlement provided at a time when the parties were in a position to assess their respective prospects. The offer was set out with great clarity. The wife did not accept its terms. She did not do so in the time allocated, but that was insufficient time. She did not, however, seek an extension of the time provided for. She simply did not engage in any way to resolve the matter save on her terms, which were totally unrealistic. The husband had twice endeavoured to resolve the proceedings. He had made a written offer on 1 June 2016 for payment in a sum below that which ultimately he received. The wife countenanced no proper consideration of the offer; no counter-offer; she provided no co-operation in the provision of her mother’s will, a relevant matter; and she simply refused to engage in any realistic discussion to put an end to the husband’s escalating and ongoing incurring of costs. This was in circumstances where quite possibly his costs could exceed his entitlement. The wife was unsuccessful in her pursuit of an order that saw no payment to the husband. The Court concludes a costs order must be made in favour of the husband.
The wife has assets and financial resources including income which can be utilised to satisfy a costs order made against her. There is no issue in relation to Legal Aid for either party. The husband did not own any real assets. He was to receive however a payment in the sum of $231,442 from the wife. Both parties have historically earned income from which they have been able to adequately support themselves. The wife’s rejection of the offer of the husband, her ongoing conduct and the outcome of the proceedings determine that in the exercise of the Court’s discretion costs should be calculated for the trial and some other matters relating to it as set out below.
The Court then takes no issue with the calculation of quantum by the wife’s solicitors in respect of those allowed amounts as referable to the Court’s Rules, save as to numbers 1, 10 and 11 which are explained within the below table.
Work Performed
Item No. Per Scale
Date
Amount
1
Explaining judgment. The Court records show no appearance. There may well have been an appearance but there is not sufficient evidence before the Court.
9(a)
10 August 2017
$299
2
Daily Hearing fee for Ms L for a short mention
13(a)
28 April 2017
$294
3
Daily Hearing fee for Ms L for a short mention
13(a)
7 December 2016
$294
4
Daily hearing fee for John Williams of Counsel, full day
12 and 13(c)
8 June 2016
$2,162 + 50% advocacy loading $3,243
5
Daily hearing fee for John Williams of Counsel, full day
12 and 13(c)
7 June 2016
$2,162 + 50% advocacy loading $3,243
6
Daily hearing fee for instructor, full day
13(c)
7 June 2016
$2,162
7
Daily hearing fee for John Williams of Counsel, full day
12 and 13(c)
6 June 2016
$2,162 + 50% advocacy loading $3,243
8
Daily hearing fee for instructor, full day
13(c)
6 June 2016
$2,162
9
Preparation for final hearing (3 day matter)
7 and 8
June 2016
$6,937
10
2 x Court daily hearing fee (the hearing fee for the first day was paid on 2 May 2016)
14
28 August 2016 & 16 October 2016
$1,180
11
Printing disbursement.
The printing disbursement figure supplied by the solicitors for the husband is not sufficiently itemised for the Court to make an order in the sum claimed. An amount of $500 will be allowed as a discretionary consideration of this disbursement.
15
Various
$500
$23,557.
Each party shall pay their own costs in respect of these competing costs applications. Each has been partially successful and unsuccessful in respect of the various part of their competing applications. There is nothing therefore, the Court concludes, that should disturb the ordinary application of matters pertaining to costs which is that each party shall pay their own.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Hartnett
Date: 6 July 2018
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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Jurisdiction
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