Kuriakin and Kuriakin
[2012] FMCAfam 985
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KURIAKIN & KURIAKIN | [2012] FMCAfam 985 |
| FAMILY LAW – Cost of trial and retrial – offers of settlement – general principles. |
| Family Law Act 1975, s.117 |
| Kuriakin & Kuriakin [2012] FMCAfam 382 Penfold (1980) 144 CLR 311 PBF as Child Representative for AF (Legal Aid Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123 Kuriakin & Kuriakin [2010] FMCAfam 40 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: | MS KURIAKIN |
| Respondent: | MR KURIAKIN |
| File Number: | SYC 5463 of 2008 |
| Judgment of: | Foster FM |
| Hearing date: | 14 September 2012 |
| Date of Last Submission: | 14 September 2012 |
| Delivered at: | Sydney |
| Delivered on: | 14 September 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Marsdens Law Group |
| Solicitors for the Respondent: | Macelbing Mednis & Associates |
ORDERS
That the husband pay 75% of the costs of the wife as agreed or assessed on a party/party basis in relation to proceedings up to and including the first trial and that the husband pay 75% of the costs of the wife of the retrial less any sum paid pursuant to the cost certificate granted.
That the husband pay the wife’s costs of this application as agreed or assessed.
IT IS NOTED that publication of this judgment under the pseudonym Kuriakin & Kuriakin is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 5463 of 2008
| MS KURIAKIN |
Applicant
And
| MR KURIAKIN |
Respondent
REASONS FOR JUDGMENT
Proceedings
The application for determination is the wife's application for an order for costs as sought in her Amended Application in a Case filed on 27 June 2012.
The wife seeks an order in the following terms:
“that the respondent husband pay to the applicant wife costs as agreed or assessed, of the applicant wife in these proceedings.”
In contested property proceedings before the Court, the Court on 22 March 2012 made orders that, in summary, provided for the husband to pay to the wife the sum of $320,058 and that there be a splitting order in favour of the wife from the husband's superannuation fund in the sum of $106,285 (Kuriakin & Kuriakin [2012] FMCAfam 382).
The Law
Pursuant to section 117 of the Act, each party to the proceedings shall bear his or her own costs. That principle is, however, subject to the discretion afforded to the trial judge in subparagraph (2) which 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 thereof and the applicable rules of court, make such order as to costs as the court considers just.”
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.
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:
- The financial circumstances of each of the parties to the proceedings.
-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.
- Such other matters as the Court thinks relevant.
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 Commissioner of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.
The Evidence
The wife relies upon her affidavit filed 30 May 2012 in support of the present Application. The husband relies on his affidavit filed 3 September 2012.
The asset pool for division in the property proceedings was as follows:
Assets:
Husband Property [M] $540,000
Joint Proceeds of Property [I] $167,412
Husband [S] property $305,000
Joint [V] investment property $406,000
Husband One third share [T] property $190,000
Wife Holden Calais motor vehicle $ 13,000
Husband Chevrolet motor vehicle $ 8,000
Husband VW motor vehicle $ 3,000
Husband Boat $ 3,000
Wife [2] Credit Union accounts $ 13,276
Wife [1] Credit Union account $ 624
Husband Commonwealth Bank accounts $ 16,938
Husband ANZ cheque account $ 34,366
Joint ANZ rent account $ 800
Wife [I] shares $ 3,995
Husband [I] shares $ 4,910
Husband [E] shares $ 5,162
Wife Loan to [X] $ 30,000
Wife Loan to Mr S $ 22,000
Husband Colonial life policies $ 26,330
Wife S3 [1] Credit Union account $128,177
Total: $1,921,990
Liabilities:
Joint [V] mortgage $232,682
Wife CGT liability Property [I] $ 2,434
Husband CGT liability Property [I] $ 20,015
Total: $255,131
Superannuation:
Wife [F] Superannuation $ 63,552
Husband [I] $242,588
Husband [I] $ 15,880
Husband [I] $ 11,191
Husband [I] $ 6,463
Total: $339,674
The wife, by letter dated 29 August 2008 (Annexure E), made an offer to resolve the matter of the following basis:
a)That the husband retain his interest in the [T] property;
b)That the wife retained her inheritance of $121,000;
c)That the balance of assets and resources be divided equally between the parties.
At final trial, the Court isolated from the asset pool for division, the husband's interest in the [T] property and the wife's inheritance of $121,000. Accordingly, in relation to the above offer, the question is whether the Court otherwise divided the remaining assets and resources of the parties equally or otherwise.
At trial, the Court determined that the wife was entitled to 52.5% of the asset pool available for division excluding [T] and the wife’s inheritance. It is of note that the value of [T] exceeded that of the wife’s inheritance.
Following the wife's letter of offer dated 29 August 2008 the matter was not resolved and on 17 September 2008 the wife commenced proceedings for property adjustment.
Subsequent to the commencement of proceedings, and in December 2008, the wife made a further offer of settlement dated 17 December 2008. The terms of that offer were as follows:
a)That the wife transfer the [M] property to the husband;
b)That upon transfer the husband pay to the wife the sum of $295,000;
c)That the husband retain the [S] property;
d)That the husband transfer to the wife the Property [I] property and the [V] property with the wife refinancing the mortgages and covering those properties;
e)That the husband retain his interest in the [T] property; and
f)That otherwise each party retained all other property in their respective possession.
This offer represented an overall adjustment of about 55% of all of the assets in favour of the husband.
The proceedings were heard for two days commencing 15 October 2009. Judgement was delivered on 22 January 2010 by Federal Magistrate Wilson who ordered that all of the property of the parties be divided equally (Kuriakin & Kuriakin [2010] FMCAfam 40).
The asset pool, as determined by Wilson FM, included for division both the husband's interest in the [T] property and the wife's inheritance.
Subsequent to His Honour’s orders an Application was made pursuant to the slip rule which was dismissed. From this dismissal the wife appealed to the Full Court. The matter was remitted for re-hearing by the Full Court upon grounds which have no relevance to the present determination. The Full Court granted both parties costs certificates in relation to the appeal and the re-trial.
At retrial orders were made as referred to above.
Financial Circumstances of the Parties
Both parties are in a position to meet a costs order from assets retained following hearing.
Offers of Settlement
The public policy reason behind the encouragement of the making of offers of settlement during proceedings is that it is beneficial to both the parties, the Court and the public at large if people are able to resolve their disputes themselves without the need for litigation.
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 …”
In Pennisi v Pennisi (1997) FLC 92-774 84,547, referring to s.117(2A)(f), the Full Court comprised of Ellis, Strauss and Lindenmayer JJ 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.”
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…”
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.”
It is clear that, at the outset, the wife was willing to resolve the matter on terms that were more favourable to the husband than resulted from orders at trial. He rejected her offer made prior to the commencement of proceedings and the offer made thereafter. Notwithstanding the lapsing, or withdrawal, of such offers, he had the opportunity to resolve proceedings and did not. Whilst the parties were not far apart in their respective positions as to the matter, the husband should have had regard to the wife’s offer that was well within the range of possible outcomes in circumstances where the available pool was in little doubt.
In all of the circumstance, the Court is satisfied that the husband should meet a significant portion of the wife costs and, there should be an order for costs of the first trial and the retrial over and above any sum paid pursuant to the costs certificate.
The Court orders that the husband pay 75% of the costs of the wife as agreed or assessed on a party/party basis in relation to proceedings up to and including the first trial and that the husband pay 75% of the costs of the wife of the retrial less any sum paid pursuant to the cost certificate granted.
As the wife has been successful in this application it is appropriate in all the circumstances having regard to s.117(2A) that there be a costs order as to this application.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Foster FM
Associate:
Date: 14 September 2012
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