Lennon & Lennon (Costs)
[2012] FamCA 116
•14 March 2012
FAMILY COURT OF AUSTRALIA
| LENNON & LENNON (COSTS) | [2012] FamCA 116 |
| FAMILY LAW – COSTS – where the wife seeks an order that the husband pay her costs of and incidental to the trial – where the husband resists the wife’s application – where the husband does not apply for costs – consideration of the factors contained in s 117(2A) – where factors do not justify an order that the husband pay the wife’s costs of the trial – where the factors warrant an order that the husband pay the wife’s costs in respect of particular Applications in a Case filed by the wife, and in respect of a hearing after the judgment had been delivered |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| Browne & Green (2002) FLC 93-115 Harris & Harris (1991) FLC 92-254 In the Marriage of Murray (1990) 14 Fam LR 311 In the Marriage of Steel (1992) 15 Fam LR 5 Kilch & Wood (2003) FLC 93-169 Lenova & Lenova [2011] FamCAFC 141 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123 Penfold v Penfold (1979 – 1980) 144 CLR 311 Pennisi & Pennisi (1997) FLC 92-774 |
| APPLICANT: | Ms Lennon |
| RESPONDENT: | Mr Lennon |
| FILE NUMBER: | BRC | 8876 | of | 2008 |
| DATE DELIVERED: | 14 March 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 4 November 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Hogan |
| SOLICITOR FOR THE APPLICANT: | Belinda Eyers and Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Hamwood |
| SOLICITOR FOR THE RESPONDENT: | Stephen Tester & Associates |
Orders
IT IS ORDERED THAT
The husband pay the wife’s costs of and incidental to:
(a) The Application in a Case filed by the wife on 8 June 2011; and
(b) The hearing before Justice Murphy on 28 September 2011.
The husband pay the wife’s costs thrown away on the hearing listed before Justice Murphy to commence on 14 July 2010.
The amount of costs payable in each case shall be as agreed by the parties in writing or, failing agreement within 28 days of the date of this Order, as assessed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lennon & Lennon (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC8876/2008
| Ms Lennon |
Applicant
And
| Mr Lennon |
Respondent
REASONS FOR JUDGMENT (COSTS)
On 19 July 2011 I made Orders and delivered Reasons consequent upon a trial involving competing applications of the husband and wife for parenting orders and property settlement. On that date, and for Reasons given (at [239] – [243]), I afforded the parties the opportunity to formulate, together, the precise terms of orders giving effect to my findings.
The parties were unable to provide agreed minutes of order, and on 28 September 2011 the matter again came before me. On that date, counsel for the wife submitted a minute of order and, upon hearing the submissions of each party’s representatives, Orders were made by me in accordance with the minutes prepared on behalf of the wife.
On 4 November 2011, the matter again came before me for hearing in relation to costs. Both parties were represented by counsel at that hearing.
It was submitted on behalf of the wife that the circumstances justified an order that the husband pay the wife’s “costs of and incidental to the proceedings, to be agreed or assessed”. Alternatively, it was submitted that the Court would be satisfied that the circumstances warrant an order that:
66.…[t]he Husband…pay the Wife’s costs of and incidental to the Applications seeking interim Orders brought by her, the costs thrown away as a result of the Husband’s failure to comply with the Consent Directions made 25 February 2010 and the appearance before the Court on 28 September 2011.
Notwithstanding several references to “indemnity costs” in the wife’s material, counsel for the wife confirmed during oral submissions that costs were not being sought on an indemnity basis.
The husband opposes the wife’s application for costs.
Costs and the Family Law Act
In Penfold v Penfold (1979 – 1980) 144 CLR 311 at 315 the plurality of the High Court held
It is an accurate description of s. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this, there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117(2) in “a clear case”.
It is important, in my view, to note that the plurality went on to say (at 315 - 316):
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs, there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. … Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs. [Citations omitted]
The Court is given the power to award costs upon a finding that “there are circumstances that justify it in doing so” (s 117(2)). The matters that might justify a central finding are at large (s 117(2A)(g)) but must include regard being had to a number of specified matters (s 117(2A)(a)-(f)).
It is plain that s 117(2A) does not prescribe that more than one factor must be present or that any one factor has more or less weight than any other. They are each and all matters which inform the overall discretion inherent within the section. (PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123.)
Section 117(2A)(a) – Financial circumstances of the parties
It is submitted on behalf of the wife that whilst at the time my Reasons were delivered, “[t]he Husband and Wife are in reasonably similar financial positions”, “[t]he Husband’s current Child Support Assessment is such that he is not required to pay…child support” and, consequently, there is a disparity between the parties’ current financial positions.
The wife contends, in an affidavit filed by leave on 4 November 2011, that the husband’s current Child Support Assessment is based on an incorrect estimate of the husband’s income. The wife annexes a Child Support Assessment dated 1 September 2011 to her affidavit. That assessment advises the wife that the husband’s calculated payment for each of the parties’ five children from 1 September 2011 to 31 March 2012 was “nil”. That assessment was based on an “estimate” of $36,019 for the husband’s “adjusted taxable income”. The wife asserts that the husband had in fact received $60,045.30 from 1 June to 4 November 2011 in rental proceeds from the parties’ farms.
I accept the submission that the wife is currently solely bearing the financial burden of the parties’ five children. As I said in my Reasons:
228.There is, on the evidence before me, reasonable cause for pessimism about the husband having an income that would see a child support assessment commensurate with the needs of the five children. Independent of that, the evidence also reveals a significant cause for pessimism as to financial contribution to the children apart from any assessed child support.
Section 117(2A)(c) – Conduct of the parties
Counsel for the wife submits that the husband’s conduct throughout the proceedings necessitated the filing of a number of Applications by her which should result in an order for costs of and incidental to the proceedings, as a whole. Should the Court be against the wife in this respect, her counsel submits that:
…the Court would be persuaded to make an Order requiring the Husband to pay the Wife’s costs of and incidental to the Applications seeking interim Orders brought by her, the costs thrown away as a result of the Husband’s failure to comply with the Consent Directions made 25 February 2010 and the appearance before the Court on 28 September 2011.
Application in a Case filed 6 March 2009
The first such Application in a Case was filed by the wife on 6 March 2009. That Application sought various parenting orders and was necessary, the wife says, because the husband had sought to “unilaterally” vary the parenting arrangements that had, until that date, been in place. The existing arrangement, it ought be noted, stemmed from an agreement between the parties; as at the date of filing the Application in a Case, no parenting orders had been made.
It was submitted on behalf of the husband that the husband’s actions in attempting to alter the pre-existing arrangement such that each parent spent an equal amount of time with the children, was entirely justified. Such action, it is submitted, not only accorded with the views of the parties’ children, but was also consistent with the contents of a “Children and Parents Issues Assessment” prepared on 6 April 2009.
I referred extensively to the children’s views in my Reasons (see for e.g., [54] – [60]). Those views were relatively consistent throughout the proceedings; the children, in particular the older children, wanted to spend more time with their father. Similarly, the Children and Parent Issues Assessment suggested that a “shared parenting arrangement” may have some “value”.
The wife’s Application in a Case came before me for hearing on 27 April 2009. At that hearing, Counsel for the wife handed up Minutes of Consent and Orders were subsequently made in accordance with those Minutes. The Orders resulted in greater time between the children and their father, although not to the extent sought by the husband.
I am not convinced that the husband’s actions in seeking to alter the existing arrangement were unreasonable. Conflict had arisen in agreed arrangements that needed an Order. The husband received more time as a result of the Application. .
Application in a Case filed 6 November 2009
On 6 November 2009 the wife filed a further Application in a Case seeking orders that the time spent between the husband and the parties’ children be supervised and that she have sole parental responsibility.
Counsel for the wife submitted that this Application was necessary because of the husband’s behaviour, including for instance, discussing the proceedings with the children. On 19 November 2009 the wife’s solicitors wrote to the solicitor for the husband seeking various undertakings from the husband. Those undertakings were given on 25 November 2009 and the Application was discontinued on 1 December 2009.
Counsel for the husband submitted that the “ill-conceived and hastily abandoned” Application was entirely unnecessary; when asked, the husband provided the undertakings. I agree. There is no evidence of prior requests for undertakings nor is there any evidence to suggest that the husband had previously refused to provide such undertakings.
I am unwilling to make an adverse finding against the husband in circumstances where he has complied with a written request for undertakings and where such a request could have been made prior to, and thus negated the need for, the filing of the Application in a Case.
Application in a Case filed 8 June 2011
The wife filed an Application in a Case on 8 June 2011 seeking an order that certain witnesses be permitted to give evidence at the trial by electronic communication. The Application was made one day out of time and an order was sought abridging the time to enable the making of the Application.
Whilst counsel for the husband highlighted the fact that the Application was out of time, that emphasis is, in my view, unmerited. As the following discussion will reveal, I am of the view that the Application, and the delay in its filing, was the result of conduct (or more specifically, the lack thereof) by the husband.
The wife’s solicitor, Ms Eyers, filed an affidavit on 21 October 2011, which sets out the background to the filing of the Application. According to Ms Eyers, the Application (and its delay) arose as a result of “failures to respond in a timely manner…by the Husband or his Solicitor”.
That affidavit sets out the steps taken prior to the filing of the Application. Letters annexed to the wife’s affidavit reveal that:
·On 28 April 2011, Ms Eyers wrote to the husband’s solicitors enclosing “Request to attend by electronic communication” forms in relation to five witnesses. The letter requested, in compliance with Rule 5.06(2), that the husband’s solicitor, Mr Tester, “advise in writing in regard to each witness as to whether you have any objections to their appearance by electronic communication”.
·Having not heard from the husband or his solicitors with respect to the requests, a further letter was sent by the wife’s solicitors to Mr Tester on 6 May 2011 enclosing the same requests and seeking the same advice. No response was received.
·A further letter was sent via facsimile to Mr Tester on 10 May 2011 seeking, inter alia, the consent or otherwise of the husband to the letters sent by the wife’s solicitors on 28 April and 6 May 2011.
·Mr Tester sent a letter via facsimile to the wife’s solicitors on 12 May 2011. That letter did not address the wife’s requests for witnesses to attend by electronic communication.
·Two further letters were sent via facsimile to Mr Tester on 13 May 2011 seeking a response “as a matter of urgency” to the wife’s requests.
·On 17 May 2011 Ms Eyers emailed Mr Tester advising him that the requests were to be filed that day. The email referred to conversations between the husband and wife in the preceding days during which the husband had indicated that he had not spoken with his solicitor since April. Ms Eyers sought confirmation that the husband’s solicitor was in fact still acting for the husband.
·On 19 May 2011, the wife’s solicitors received, via facsimile, a letter from Mr Tester stating:
I apologise for the lack of communication in this matter recently. My client is currently in [Town 1, Western Australia] and will be returning to the area next Thursday. I have an appointment scheduled for Friday, 27 May 2011. I will revert back to you after I have had an opportunity to have a conference with my client.
·Ms Eyers again wrote to Mr Tester, via facsimile, on 31 May 2011 and said:
We refer to our communications regarding our client’s requests that certain witnesses be able to attend to give evidence electronically.
…
It is now the 31 May 2011 and we have had no further communication from you. Our client has no alternative other than to make an Application in a Case seeking Orders for certain of her witnesses and also for the single expert witness to be able to attend electronically.
…
We are also instructed to seek an Order that the costs of such application be paid by your client on an indemnity basis.
Ms Eyers deposes to the following communications occurring between herself and Mr Tester following the filing of the Application in a Case on 8 June 2011:
·At 5:40pm on 8 June 2011, Ms Eyers received, via facsimile, “a letter from the Husband’s solicitor advising he did not require certain witnesses for cross examination, that he required others to be made available electronically and others in person”. Mr Tester deposes to sending the fax at 3:58pm that day.
·Ms Eyers wrote to the husband’s solicitor on 9 June 2011 advising him of the steps that had been taken by the wife to make the witnesses available to give evidence via electronic communication. In that same communication, the wife’s solicitors sought confirmation from the husband’s solicitor that he still required a particular witness in person.
·On 16 June 2011 (that is, one business day before the commencement of the trial and approximately seven weeks after the initial letter enclosing the requests was sent to Mr Tester), Mr Tester sent an email to the wife’s solicitors stating “I have had a further conference with my client today and we have no objections to the witnesses appearing by video/telephone link…”.
In summary then, the unchallenged evidence before the Court is that it took the husband’s solicitor some 3 weeks to respond to six separate communications from the wife’s solicitors regarding the wife’s proposed requests for certain witnesses to give evidence via electronic communication. When Mr Tester did respond he did not provide the information sought by Ms Eyers (such information being required pursuant to Rule 5.06(2)) nor did he offer any explanation for the delayed response, other than that the husband was in Town 1, Western Australia. There was no suggestion that Mr Tester had been unable to contact his client; indeed, the wife’s unchallenged evidence is that she had been in contact with the husband during the relevant period.
Then, after the Application in a Case was filed, Ms Eyers received correspondence by way of facsimile from Mr Tester providing the information that had been first sought some 6 weeks earlier. Having maintained the need to cross-examine at least one witness in person, Mr Tester informed Ms Eyers, one business day prior to the commencement of the trial, that he no longer required that witness in person.
Mr Tester says, in an affidavit filed on 3 November 2011:
20.The material served on behalf of the wife was extensive. The Husband is not a proficient reader. It took him some considerable time to read the wife’s material in readiness for me me [sic] have meaningful conferences with him.
21.Those conferences took place on 2 June and 8 June. As soon as I had adequate instructions in relation to the evidence I wrote to the wife’s solicitor [the husband’s solicitor then annexes the letter faxed by him to the wife’s solicitors at 3:58pm on 8 June 2011].
I heard the wife’s Application in a Case at the commencement of the trial on 20 June 2011 at which time I granted leave to abridge the time for the filing of the Application. The husband’s solicitor (who represented the husband during the trial) subsequently indicated that only one of the witnesses may be required for cross-examination.
The Rules required the wife to “ask the [husband] whether [he] agree[d], or object[ed], to the use of electronic communication for the purpose proposed by the [wife]” (Rule 5.06(2)). This requirement was, in my view, satisfied when Ms Eyers sent the letter to Mr Tester on 28 April 2011. It was also the wife’s responsibility to make the arrangements necessary to facilitate the relevant witnesses giving evidence via electronic communication. In this respect, it bears noting that the wife made bookings at several regional courthouses, and a state government agency in the event that the husband decided he wanted to cross-examine the witnesses.
The wife was, in my view, forced to take the steps she did because the husband, through Mr Tester, failed to respond to the correspondence of Ms Eyers.
Rule 1.08(1)(g) of the Family Law Rules 2004 (“the Rules”) confers upon parties to proceedings the responsibility to “assist…the just, timely and cost-effective disposal of cases”. Pursuant to Rule 1.08(2), a lawyer for a party has a responsibility to comply, as far as possible, with the contents of sub-rule (1). Further, the nature of a lawyer’s obligations in proceedings in this Court is well understood and his or her duty to his or her client is subject to an overriding duty (described as a paramount duty) to the Court (see e.g., Giannarelli v Wraith (1988) 165 CLR 543 at 555–556, per Mason J).
I do not accept the explanation offered for the failure to respond timeously. Notwithstanding the responsibilities and obligations just referred to, even if the reason for the delay was the husband being unreachable due to his remote location, which is contrary to the evidence of the wife, the affidavits of the witnesses the subject of the wife’s requests had been served on the husband’s solicitor on 31 March 2011. The husband’s solicitor was thus aware of the evidence-in-chief of the witnesses and, having assumed the role of the husband’s advocate for the trial, could have formed, at least, a tentative view of whether or not he would require the witnesses for cross-examination and if so, whether he required them in person.
Mr Tester could have responded to the letter of Ms Eyers on 28 April 2011 indicating, at the very least, that he was unable to contact his client. That response might well have provoked information provided by the wife as to the means she had used to make contact with the husband.
There was also nothing preventing Mr Tester indicating his tentative position regarding the wife’s requests, pending instructions from his client. What is more, despite having a conference with the husband in late May, Mr Tester failed to provide any indication of the husband’s position regarding the wife’s requests prior to the Application in a Case being filed on 8 June 2011.
The 28 September 2011 Orders
It is submitted on behalf of the wife that “the appearance on 28 September 2011 was solely the consequence of the Husband’s failure to agree to the terms of the Draft prepared by the Wife’s solicitor” and that the “Husband failed to persuade the Court” of any matters he sought to have included in the draft orders or of any issues he had with the terms of the draft.
It is agreed that at the hearing before me on 28 September 2011, the husband had issues with three of the orders proposed by the wife. The husband did not agree to the wife being appointed Trustee in relation to the sale of the real properties or to his being required to resign as Director of the parties’ companies.
As I made plain at the hearing on 28 September, the opportunity afforded to the parties by my Orders on 19 July 2011, was to draft agreed minutes giving effect to my Reasons. It was not an opportunity for the parties to re-engage in a negotiation regarding the distribution of their property; I had determined that issue and my Reasons clearly set out the distribution of property to be effected.
I delivered short ex tempore Reasons at the hearing on 28 September 2011. As those Reasons reveal, I did not accept the submissions proffered by the husband’s solicitor in relation to the husband’s issues with the wife’s minutes of order; the husband’s objection to three of the proposed orders was, in my view, unreasonable in each case. I subsequently made orders in accordance with the minutes prepared on behalf of the wife which I found to “contemplate an orderly and appropriate means by which” the property of the parties could be distributed in accordance with my Reasons of 19 July 2011.
Vacation of the 2010 trial dates
It is submitted on behalf of the wife that “the Court would be persuaded that the vacation of the hearing dates in July 2010 was as a result of the Husband’s advised inability to comply with the directions made by the Court on 25 February 2010…”.
On 25 January 2010, I made orders by consent that, inter alia, the parties each file an affidavit in chief, any affidavits of any witnesses to be called, and any updated valuations “not later than 42 days prior to the first day of trial”.
Ms Eyers deposes to writing to the husband’s solicitor on 27 May 2010 to ascertain whether or not the husband intended to obtain further valuations. On 31 May 2010, Mr Eyers says she received a response from Mr Tester indicating that “he did not think it appropriate to obtain valuations”. Following further communication from the wife’s solicitor, the husband’s solicitor indicated in a subsequent letter dated 23 June 2010 that the husband required updated valuations.
On 24 June 2011, Ms Eyers emailed Mr Tester in an attempt to set out an updated timeframe for filing of the relevant material by each party which would enable the matter to proceed to hearing on 14 July 2011.
In a letter to Ms Eyers dated 29 June 2010 Mr Tester says:
…I understand that my assistant…has tried to make the earliest possible appointment with [the husband] but he cannot come until Thursday. I have tried to telephone him this afternoon (29 June) and he has not answered. I have left a message.
I cannot be confident that having regard to the volume of material to be transverse [sic] in this matter, and the fact that I have not settled my client’s affidavit it will be difficult to file affidavits in time, respond adequately to the material contained in those affidavits, and brief accountants in relation to the financial aspects of the matter which require clarification…I hope my client will call tomorrow to confirm his instructions in relation to an application to vacate. Despite those instructions I still hold the view that the matter cannot possibly be ready for hearing by 14 July…
Counsel for the wife contended, during oral submissions, that the husband’s alternating position regarding the need for updated valuations was indicative of his approach generally to the proceedings. Counsel for the husband submitted that both parties failed to comply with the directions. In an email from Ms Eyers to Mr Tester dated 24 June 2010, Ms Eyers states “we expect to be able to in a position to file our affidavit in chief and support affidavits on or before the 30th [of June]”.
I accept that the wife also failed to comply with the consent directions. But, her approach was that, although about two weeks late, her affidavit would be filed about two weeks out from trial and sought to have the trial proceed. In the email to Mr Tester on 24 June, Ms Eyers sought to make arrangements that where suitable to each party and would enable the matter to proceed to hearing on 14 July. That position should be contrasted with the approach of the husband, as evidenced in the letter from Mr Tester dated 29 June 2010.
Other conduct of the husband
It was submitted by counsel for the wife that conduct of the husband necessitated the drawing and filing of a further affidavit by the wife on 17 June 2011. Specifically, counsel argued that an additional affidavit was required to address changes in the wife’s financial circumstances arising as a result of the husband closing the bank account into which rental proceeds from one of the parties’ farms was paid in April/May 2009, and redirecting those proceeds to an account to which the wife had no access.
I dealt with the issue of the husband closing the joint bank account, in addition to withdrawals made by the wife from joint funds, at some length in my Reasons for Judgment (see [181] – [192]). I do not accept that the husband’s actions in April/May 2009 can be said to have caused the wife to file an updated affidavit, such affidavit having been filed three months after her affidavit in chief, in which the wife addressed the husband’s actions in April/May 2009 and the impact they had had on her financial circumstances (see [781] – [793]).
Counsel for the wife also submits that the husband failed to pay his share of the expert fees. It became apparent during the trial that the husband had provided a cheque to his solicitor covering part of his share of the expert fees to be paid to the wife’s solicitors and had requested that the remainder of the fees be paid from joint funds. This matter was not further pressed at trial by counsel for the wife.
It is also submitted on behalf of the wife that the wife incurred additional expenses because “the Husband was 6 weeks late in filing his trial material, such delay amounting to a failure to comply with the Order made 3 February 2011” (emphasis in original).
The wife filed her affidavit in chief on 21 March 2011. In Orders made by Registrar Coutts on 31 March 2011, “[t]he outstanding trial preparation” was noted to include “the Respondent Husband’s evidence in chief and the affidavit of his witness/s”. On 6 April 2011 the husband filed his affidavit in chief. The wife did not file an affidavit in reply.
On 16 April 2011, the husband filed an affidavit of Mr LL. Mr LL was not called at trial and his evidence was not relied upon. On 17 April 2011, the husband filed a Case Outline and Financial Statement. The wife also filed a Case Outline on 17 April 2011 along with a Balance Sheet and a further affidavit updating her financial circumstances.
There is nothing to suggest that the wife was prejudiced or incurred additional expense as a result of the husband’s belated filing of either his affidavit in chief or the affidavit of Mr LL.
Non-disclosure by the husband
Counsel for the wife submits that the husband “persistently refused to cause his solicitor to respond to the requests for disclosure in a timely way…”. In support of this contention, counsel for the wife refers to Ms Eyers’ affidavit, filed 21 October 2011, which annexes “an index of a bundle of documents being communications wholly or partially raise and relate to the Husband or the Husband’s Solicitor failing to provide full and frank disclosure…” (at [75]). The documents listed in that annexure can, according to the affidavit, be “made available for inspection if so required”.
Ms Eyers also states that “[t]he Husband did not file an Undertaking as to Disclosure” as required by Rule 13.15. It bears noting that, the first paragraph of the Orders made by Registrar Coutts on 3 February 2011 states “both parties continue to provide disclosure in accordance with the Family Law Act Rules”.
Counsel for the husband submits that there is no evidence of non-disclosure on the part of the husband. Counsel further submits that not only has there not been an application for disclosure by the wife at any time during the proceedings, but any alleged non-disclosure by the husband has not prejudiced the wife.
There is no evidence before me to suggest that the husband has failed to disclose or has not provided full and frank disclosure. No issues arose during the trial to indicate that the wife had not received full and frank disclosure.
Counsel for the wife also submits that the wife incurred “additional expense” as a result of the husband’s request to “produce all of the documents (Which filled some 10 large roller boxes)” at the trial and, “then did not require a single document”. It seems to me that the husband, in requesting the documents, was exercising a right conferred upon him by the Rules: if the documents were subject to disclosure obligations, the husband was entitled to request that they be produced (see generally Part 13.2).
Whether one party has been wholly unsuccessful – s 117(2A)(e)
It is submitted on behalf of the wife that the husband has been “…wholly unsuccessful” in terms of the parenting and property orders he sought. The orders ultimately sought by each party are set out in my earlier Reasons (see [8], [11] – [16]).
The wife sought an order for sole parental responsibility, and an order that time between the husband and the children be reduced to each alternate weekend. The husband ultimately sought an order for equal time, in the form of alternate fortnights.
I made Orders that the wife have sole parental responsibility for the parties’ children, and that the husband spend time with the children from after school Thursday to before school Monday each alternate week.
Whilst the Orders ultimately made by me more closely reflect the wife’s proposals they do not, in my view, sustain a finding that the husband was “wholly unsuccessful”. As my Reasons make plain, I am satisfied the husband’s proposals with respect to parenting orders were bona fide and based on his perception of his children’s best interests and, indeed, reflected the express wishes of his children. Further, the Orders made by me provided for twice the number of nights between the husband and his children each fortnight than was proposed by the wife.
With respect to property, the husband sought a division of 55:45 per cent in his favour. At the outset of the trial, counsel for the wife submitted that contributions favoured the wife. During oral submissions at the conclusion of the trial, counsel for the wife contended that contributions were equal, however, there should be an adjustment pursuant to s 75(2) of 15 per cent in favour of the wife. Thus, the wife’s proposal was, ultimately, a property division of 65:35 per cent in her favour.
Contrary to each party’s proposals, I ultimately determined that the property should be distributed in the proportion of 55:45 per cent in favour of the wife. I reached that result, having determined that “…the contributions favour[ed] the husband” which I assessed to be “…in the proportion of 55 per cent to the husband and 45 per cent to the wife”. Having regard to the relevant s 75(2) factors, in particular the fact that the orders made by me would result in the wife being primarily responsible for the parties’ five children, I determined that an adjustment of 10 per cent should be made in favour of the wife.
Thus, neither party was wholly successful, or wholly unsuccessful, in their proposals regarding either property settlement or parenting arrangements.
It is also submitted on behalf of the wife that the husband was wholly unsuccessful in respect of “any argument that there by any notional add-back (other than legal fees) to the pool of property available for division between the parties and that any such amount added-back would be apportioned to the Wife.” I do not accept this submission. The only add-back issue ultimately determined by me was in relation to legal fees about which the party’s were agreed.
Offers to settle – s 117(2A)(f)
Litigation in this Court is expensive and, it seems, increasingly so. The consistent emphasis of the procedures of this Court and indeed the Rules is to encourage – at every stage of the proceedings – conciliation and the resolution of disputes by agreement.
Further, and to that end, separate from the Court processes and procedures, the Court encourages actively the use of private alternative dispute resolution processes.
Where negotiation – whether formal or informal – fails, for whatever reason, there is, as a matter of practical reality, but one method by which parties can seek to avoid for themselves the cost of litigation. That is by making a written offer to settle demonstrating their bona fides and asserting clearly and unequivocally what they consider to be (relevantly) a just and equitable outcome of the proceedings the subject of their dispute.
Bona fide offers made in this way can be seen as involving significant peril if litigation is pursued in rejection of them. (See e.g., In the Marriage of Murray (1990) 14 Fam LR 311; In the Marriage of Steel (1992) 15 Fam LR 5; Pennisi & Pennisi (1997) FLC 92-774).
In Browne & Green (2002) FLC 93-115 the Full Court said (at [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 is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation on 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.
Counsel for the wife submits that two offers were made to the husband.
First Offer – 4 April 2008
The first offer occurred via correspondence dated 4 April 2008 (sent to the husband’s solicitor via facsimile on 7 April 2008). That letter proposes a property settlement resulting in the wife receiving approximately 54 per cent of the property (based on the then current market values for the real estate) and no orders with respect to the children, save in relation to financial support, which, it was proposed, would be shared equally by the parties.
On 1 May 2008, Mr Tester wrote to Ms Eyers stating, inter alia:
In relation to the property settlement in general, we are not likely to reach agreement while ever your client insists on payment to her of more than one half of the pool of assets.
There can be no doubt that on contributions, my client would be entitled to a significant adjustment in his favour. It is conceded that your client may be entitled to an adjustment under Section 75(2), but certainly no more than the contribution adjustment in my client’s favour.
...
… It is proposed that once agreeing on an appropriate percentage division of property, we will then need to jointly instruct a valuer to establish whether there needs to be a cash adjustment…
In relation to parenting issues, my client instructs me that he is still seeking a substantially share care arrangement. I note that this is opposed by your client. My client proposes that there be further Mediation at the Family Relationships Centre…
Until such agreement has been reached in relation to the case of the children, there is little point responding to your proposal in relation to the financial support for the children …
In that same correspondence, the husband’s solicitor indicated that the husband did not agree with the wife’s “revised estimates”, referring to the market values ascribed by the wife to the properties.
Second offer – 26 February 2009
On 26 February 2009, the wife’s solicitors sent, by way of facsimile, a further letter of offer to the husband’s solicitor. The wife proposed two alternative scenarios, which varied depending on the properties retained by each of the parties. Both alternatives were based on the assumption that there would be an equal division of the pool and that the children would remain living primarily with the mother and spending time with the father as they had since separation.
Ms Eyers deposes to having received “no response to that letter of offer.” Mr Tester states, in an affidavit filed by him on 3 November 2011, that he did in fact respond to that letter of offer on 27 February 2009. In support of this, the husband’s solicitor annexes a letter to the wife’s solicitors dated 27 February 2009 which states:
In response to your offer, my client is happy to accept scenario A as set out in your letter of 26 February 2009, with the main exception that he does not agree to pay your client a cash adjustment…
The husband’s solicitor also annexes to his affidavit an email from Ms Eyers dated 3 March 2009 in which receipt of the letter dated 27 February 2009 is acknowledged.
The Husband’s counter-offer – 20 April 2009
In a letter sent to the wife’s solicitors on 20 April 2009, Mr Tester states:
…I am instructed to restate my client’s offer of settlement…
…
In relation to the parenting issues, I confirm that my client has secured appropriate accommodation in [Town 2, NSW]. He has not yet moved in but anticipates doing so shortly. From the time my client has secured the accommodation, he will be seeking (as he has always done) that the children will reside with each parent on an equal shared basis, preferably week about…
I am instructed that from the time the children are residing on an equal basis …my client would like to put in place arrangements whereby the lease payments from the two farming properties are paid in equal shares into separate accounts for the husband and wife. The parties can then contribute equally to the children’s [expenses].
…
According to Ms Eyers, that counter-offer “was not accepted.”
It is submitted on behalf of the wife that she obtained a better result following the trial than she was prepared to accept in both offers (54 per cent in 2008 and 50 per cent in 2009). Similarly, it was submitted by the wife’s counsel that the husband’s counter-offer was not only “worse” than what the wife ultimately received, but further, such offer was contingent upon an argument for add-backs which was not pressed at trial.
I accept that these factors are relevant to a consideration of the respective offers by the parties (and their respective refusals). But, they are only two of the factors relevant to the present determination. The Full Court in Pennisi & Pennisi (1997) FLC 92,774 (at 84,547) held:
… the fact that an offer just exceeds the award is no bar to an award for costs. 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 offeror…
…
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…
Related to this consideration, is the issue of what weight ought to be attached to the husband’s failure to accept the wife’s offers and vice versa.
It was submitted on behalf of the husband that he could not accept the offers for two reasons. First, the values upon which the wife’s first offer was made were disputed by the husband. In this respect, the Full Court in Pennisi held that “[t]here 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…” (at 85,457).
Secondly, it was submitted that the husband could not accept the offers regarding property settlement without knowing what the parenting arrangement would be. In cases such as the present where both property and parenting issues are in dispute, it was submitted that those two matters are so interrelated that it is not possible to consider either of them discretely. I do not accept that.
There is no form prescribed in the Rules for making an offer. The Full Court has observed that an offer does not have to precisely accord with s 117C before it may be taken into account (see for e.g., Harris & Harris (1991) FLC 92-254; Kilch & Wood (2003) FLC 93-169). There is nothing preventing a party setting out extensively – indeed prosaically – the basis upon which they will accept an offer. It was open to the husband to respond to the wife’s offers setting out the property settlements he would accept, depending on various parenting arrangements. There is nothing to prevent it and much to commend it.
When I raised this with counsel for the husband, it was submitted that it was “implied” that the only parenting arrangement the husband would accept was a week-about arrangement. I do not agree. The replies to the wife’s offers sent by the husband’s solicitors contain various references to parenting arrangements, including, for instance, “substantially shared time” (which in and of itself does not implicitly suggest equal time) and a willingness to attend mediation regarding the parenting arrangement.
The written submissions on behalf of the wife do not address the husband’s counter-offer. During oral submissions, counsel argued that, to ignore the fact that the husband steadfastly contended that the wife should not receive more than 50 per cent, “works an unfairness” on the wife.
In Lenova & Lenova [2011] FamCAFC 141, the Full Court observed, at [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.
There is no doubt that the husband, just as with any other litigant, was entitled to “chance his arm” by refusing the wife’s offers and proceeding with the matter to trial. The wife was similarly entitled to refuse the husband’s counter-offer and proceed to trial. The issue is if, and if so to what extent, actions in doing so in the face of offers should weigh in pointing to a costs order.
Both parties were advised by legal practitioners at each stage of the proceedings; they each, presumably, knew the risks of refusing to settle. Similarly, both parties were resolute in their position regarding parenting arrangements.
As the above discussion of the parties’ offers and counter-offers reveals, each party was, ultimately, willing to accept an approximately equal division of property. They were, however, resolute in their views with respect to the parenting arrangements. The question is begged why the parties were unable to agree on property, notwithstanding their disparate positions regarding parenting arrangements.
Further, where each party was willing (ultimately) to accept a similar property settlement, a question arises as to whether it is just to visit upon one party the costs of the trial, when there was nothing preventing either party from making an offer for property settlement which set out prosaically the permutations that would be accepted depending on various parenting arrangements.
In the end result, I am unable to persuade myself that it is just for the husband to bear the wife’s costs of trial by reference to the (important) factor of the parties’ respective offers or the combination of one or more of the s 117(2A) matters I have discussed.
I am, however, convinced that those same matters, and, in particular, the “conduct” of the husband earlier discussed point to it being just that the husband should pay the wife’s costs:
a)Of and incidental to the Application in a Case filed on 8 June 2011;
b)Of and incidental to the hearing on 28 September 2011; and
c)Thrown away by the wife on the vacated hearing in July 2010
I order accordingly.
I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 14 March 2012.
Associate:
Date: 14 March 2012
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