KR v IJ

[2007] QDC 52

DISTRICT COURT OF QUEENSLAND

CITATION:	KR v IJ [2007] QDC 052
PARTIES:	KR
Applicant V
IJ
Respondent
FILE NO/S:	D5/2004
DIVISION:	Civil
PROCEEDING:	Originating Application
ORIGINATING  COURT:	District Court of Queensland, at Emerald
DELIVERED ON:	23 March 2007
DELIVERED AT:	Brisbane
HEARING DATE:	20 March 2007
JUDGE:	Alan Wilson SC, DCJ
ORDER:	Each party bear its own costs of and incidental to the proceedings
CATCHWORDS:	COSTS – PROCEEDINGS UNDER PART 19, PROPERTY LAW ACT 1974 – RULE THAT EACH PARTY BEAR ITS OWN COSTS – whether circumstances warrant departure from that rule
Property Law Act 1974, s 341
COUNSEL:	L Nevison for applicant W Westbrook for respondent
SOLICITORS:	Anne Murray & Associates for applicant South and Geldard for respondent

1. Following a hearing in Rockhampton on 7 and 8 February 2007 Reasons for Judgment, signifying the kinds of Orders which would appropriately divide the property of a couple formerly living in a de facto relationship, were delivered on 7 March 2007. Subsequently, the parties were able to agree on the terms of those orders, which were made on 20 March 2007. The parties remain at arm’s length, however, concerning the costs of the proceedings.

2. The principal asset of the parties was a property at Blackwater. Their financial affairs were clouded by the fact the applicant’s husband had discharged the mortgage debt over that property, and an overdraft granted to a company which ran a plumbing business in which the parties had been involved. Additional complications arose because the company had other debts over assets in the parties’ possession. The draft orders affect the transfer of the Blackwater property to the applicant, in exchange for which she takes steps which will relieve the respondent of obligations in respect of the property and those assets (and some outstanding rates obligations).

3. The applicant seeks an order that the respondent pay her costs of and incidental to the proceedings. The respondent resists an order for that kind and, indeed seeks an order that the applicant pay his costs in relation to his retainer and calling at trial, of a forensic accountant. The costs sought include the forensic accountant’s fees, and the respondent’s own legal fees associated with the accountant’s evidence.

4. Under s 341 of the Property Law Act 1974 parties in proceedings of this kind are to bear their own costs, unless there are circumstances justifying some other order. The factors the court must consider in deciding whether or not circumstances of that kind arise are listed in s 341(4):

(a)	the income, property and financial resources of each of the parties;
(b)	whether any party has legal aid and the terms of the legal aid;
(c)	the conduct of each of the parties in relation to the proceedings, including, for example, conduct upon pleadings, particulars, disclosure, inspection, interrogatories, admissions of facts and production of documents;
(d)	whether the proceeding results from a party’s failure to comply with a previous order made under this part;
(e)	whether any party has been wholly unsuccessful in the proceeding;
(f)	whether any party made an offer to settle under the Uniform Civil Procedure Rules 1999 and the terms of the offer;
(g)	any fact or circumstance the court considers the justice of the case requires to be taken into account

1. The applicant relies on subsections 341(4)(a), (f) and, to a lesser extent, (e). It is said, in respect of (a), that the position of the respondent is far better than that of the applicant and that is likely to continue notwithstanding the orders made in these proceedings. The submission is not compelling: while the applicant is unemployed, and has some health problems, the orders enable her to ascend to ownership of the moderately valuable property in Blackwater, and she continues to have the support of her husband who is earning good wages.

2. The point of the proceedings was to effect a fair adjustment of property between the applicant and the respondent in a way which accords with Part 19 of the Property Law Act. It would be discordant with the tenor and intent of the principal provision, s 341(1), to delve too far into the parties’ financial circumstances after an order has been made and consider an award of costs solely on the basis that one party might remain, or have ended up, in a better financial position than the other.

3. As to (f) it is said, firstly, that the respondent made an offer under Ch 9 Part 5 of the UCPR on 30 October 2006 - but the applicant has done better than that offer. The submission misconstrues the nature and effect of this part of the UCPR, which provides that the respondent might be entitled to his costs if the result had been better than the offer he made. The provisions do not, on their face, operate so as to add weight to an argument for costs in the applicant’s favour where the respondent did not do better than his own offer, and the applicant has made no offer under that Part.

4. Reliance was also placed, over objection, on several ‘without prejudice’ letters sent by the applicant’s solicitors to the respondent’s lawyers in 2005, and 2006, but s 341(4)(f) only refers to offers under the UCPR, and the letters are not of that kind. It is surprising the applicant’s offers were not made under those rules but that fact means they do not fall to be considered under the sub-rule.

5. Finally it is submitted for the applicant, with reference to sub-rule (e) that while the respondent had not been ‘wholly unsuccessful’ in the action the applicant has been ‘substantially successful’ in that she pursued the transfer of the Blackwater property to her, and that transfer has been ordered. The orders ultimately made, however, fell short of those pressed in submissions from her Counsel and it is impossible to describe the respondent’s position, in the wash-up of the action, as wholly unsuccessful.

6. For the sake of completeness it should be noted that, even if submissions had been directed to sub-rule (g), and the ‘without prejudice’ letters were taken into account, I do not consider this is an appropriate matter for an order in the applicant’s favour. It is an unexceptionable case, and does not justify departure from the ordinary rule expressed in s 341(1).

7. As the Reasons published 7 March 2007 show, the respondent’s case focussed in large part on the applicant’s conduct of the plumbing business after separation and the quality of her disclosure of, in particular, company financial records. While it was found that those records were deficient and to some extent unreliable, I was not persuaded the applicant had received anything much different, in actual income, from the net figures shown in the company’s returns for those years or, in particular, that she received any significant amount of additional income. At para [30]:

   … There is simply no other evidence suggesting, with any degree of probability, something of that kind. The business lost its central asset, a qualified experienced plumber, when the respondent left and income would be expected, logically, to decline. The applicant did attempt to struggle on, so continued outgoings could also be expected. That accords with the process revealed, essentially, by the records and tax returns.

8. The premise apparent in that passage was always, and should always have been, manifest to the respondent and his advisors. While it is true they were compelled to press for disclosure, and that the applicant’s disclosure was inadequate, the propositions that the financial records would show the applicant had enriched herself from the plumbing business or reveal significant undisclosed income were both, obviously, improbable. Pursuing this kind of evidence was always speculative; but it is also, in cases of this kind, not uncommon.

9. For these reasons I am also unpersuaded by the respondent’s application for part of his costs.

10. The order then will be that each party bear its own costs of and incidental to the proceedings.