Kaplan and Kaplan

[2013] FMCAfam 114

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KAPLAN & KAPLAN [2013] FMCAfam 114

FAMILY LAW – Property proceedings – application for costs following final orders – relevance of offers made during course of proceedings – application dismissed – applicant ordered to pay respondent’s costs.

Family Law Act 1975, s.117

Penfold (1980) 144 CLR 311
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123
Robinson and Higginbotham (1991) 14 Fam LR 559 at 561; FLC 92-209
Pennisi v Pennisi (1997) FLC 92-774 84,547
Browne and Green (2002) FLC 93–115
Lenova v Lenova (Costs) (2011) FLC 93-467

Applicant: MR KAPLAN

Respondent: MS KAPLAN

File Number: WOC 274 of 2011

Judgment of: Foster FM

Hearing date: 13 November 2012

Date of Last Submission: 10 January 2013

Delivered at: Wollongong

Delivered on: 13 February 2013

REPRESENTATION

Solicitors for the Applicant: Dribbus Kovacevic Lawyers

Solicitors for the Respondent: Rita Thakur & Associates

ORDERS

1. That the husband’s application for costs be dismissed.

2. That the husband pay the wife’s costs of and incidental to the present application assessed in the sum of $1,881 within one month from this date.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT WOLLONGONG

WOC 274 of 2011

MR KAPLAN

Applicant

And

MS KAPLAN

Respondent

REASONS FOR JUDGMENT

Proceedings

1. The present application before the court arises from judgment delivered on 17 August 2012 in relation to property proceedings between the applicant wife and respondent husband ([2012] FMCAfam 858).

2. On 17 August 2012 the court ordered in summary that the husband pay to the wife the sum of $137,687 and concurrently with that payment the wife do all things necessary to transfer to the husband all her right title and interest in the matrimonial property at [omitted]. The court further ordered that there be splitting orders in favour of the wife totalling the sum of $61,315 from the husband’s interests in the [omitted] fund.

3. On 17 September 2012 the husband made application for an order that the wife pay the husband’s costs of the proceedings in the sum of $18,360.66 and that costs be secured as against the sum payable to the wife pursuant to orders on 17 August 2012.

4. On 11 October 2012 the husband filed an amended application in a case seeking additional orders that provided that pending finalisation of the application for costs the amount of $18,360.66 be deducted from monies payable to the wife and be retained in the trust account of the wife’s solicitors pending determination of the cost application and that the wife pay costs of the costs application.

5. The wife in her response to the husband’s application in a case seeks an order dismissing that application and an order for costs.

6. The husband’s application for costs arises as a consequence of offers of settlement made by him during the course of the proceedings.

7. The court notes that the asset pool of the parties as found at trial was uncomplicated. It comprised the former matrimonial home, the wife’s motor vehicle, the husband’s motor vehicle, the wife’s jewellery, the husband’s IAG shares and furniture with those assets totalling $387,650. In addition the parties held superannuation totalling $173,724 comprising $148,467 for the husband and $25,257 for the wife.

8. Ultimately at trial the court determined that contribution assessment is favoured the husband as to 80% and the wife has to 20% and that the wife was entitled to an adjustment of 20% in relation to the subjective considerations set out in section 75 (2).

9. At the conciliation conference on 23 May 2011 the husband was prepared to resolve the matter on the basis of a payment to the wife of $140,000 in consideration of which she would transfer the matrimonial home to him together with a net superannuation adjustment of about $47,000 in favour of the wife.

10. It is noted that this offer overall falls somewhat short of the result at trial.

11. In his submissions the husband makes reference to the orders sought in his response filed on 9 May 2011, his amended response filed on 15 June 2011 and his further amended response filed on 17 April 2012. None of the orders sought in those documents assist the husband in relation to the issue for determination.

12. On 25 May 2012 the husband made a further offer of settlement which relevantly offered the wife a cash adjustment of $110,000 and the sum of $50,000 from the husband’s superannuation.

13. It is noted that this offer falls well short of the result achieved at trial.

The Law

1. Pursuant to section 117 of the Act, 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) that provides as follows:

   “If the court is of the opinion that there are circumstances that justify it in so doing, that it may, subject to the further subsections hereof and the applicable rules of 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: see Penfold (1980) 144 CLR 311.

4. There is nothing to prevent any one factor being the sole determinant for an order for costs: see PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123.

5. The matters relevant to determining what order, if any, should be made for costs are set out in subparagraph (2A) of section 117. They relevantly, in these proceedings, relate to the following:

   a)The financial circumstances of each of the parties to the proceedings.

   b)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.

Offers of Settlement

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

2. As was observed by Nygh J. in Robinson and Higginbotham (1991) 14 Fam LR 559 at 561; 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 …”

3. In Pennisi v Pennisi (1997) FLC 92-774 84,547, referring to s.117(2A)(f), the Full Court said:

   “The plain words of the paragraph do not limit a Court's attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.

   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.”

4. In Browne and Green (2002) FLC 93–115 the Full Court commented:

   “57. We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. 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…”

5. In Lenova v Lenova (Costs) (2011) FLC 93-467 the Full Court said [10-12]:

   “10. In this jurisdiction, costs do not “follow the event”; the Act prescribes, relevantly, that “subject to subsection (2) ... each party to proceedings under this Act shall bear his or her own costs” (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.

   11. A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.

   12. That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order can not be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.”

6. The court is satisfied that none of the offers made by the husband during the course of the proceedings were sufficient to displace the normal rule as to each party paying their own costs.

7. The husband relies on the respective financial circumstances of each of the parties as the remaining basis such as would warrant an order for costs. As a consequence of the orders made by the court the husband has retained the former matrimonial home with a mortgage sufficient to discharge his obligation to make the capital payment to the wife.

8. The wife’s only substantial asset is the capital sum payable to her by the husband.

9. There is a significant income disparity between the parties in favour of the husband, the wife has the primary care of the three youngest children of the marriage, the husband has a well settled superannuation entitlement with the wife’s capacity to contribute to superannuation into the future limited by her capacity to work and the limitations on her prospective income.

10. In all the circumstances the court is not satisfied that there are circumstances justifying an order for costs and accordingly the husband’s application for costs is to be dismissed.

11. The wife seeks an order for dismissal of the husband’s application and in that event an order that he pay her costs.

12. In circumstances where by the husband has been wholly unsuccessful in his application for costs the court is satisfied that that circumstance justifies an order that the husband pay the wife’s costs of the present application.

13. Schedule 1 provides for a Stage 2 lump sum of $1,617 in addition to which the matter came before the court on 13 November 2012 for a short mention for directions. Schedule 1 provides for the sum of $264 for that mention.

14. The court assesses the wife’s costs in respect of the present application in the sum of $1,881. The husband will be ordered to pay that sum.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Foster FM

Associate: 

Date:  13 February 2013