M and M

[2008] FCWA 20

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: M and M [2008] FCWA 20

CORAM: CRISFORD J

HEARD: 18 OCTOBER 2007, 19 FEBRUARY 2008 & WRITTEN SUBMISSIONS

DELIVERED : 20 FEBRUARY 2008

FILE NO/S: PTW 4515 of 2005

BETWEEN: M

Applicant/Wife

AND

M
Respondent/Husband

Catchwords:

Costs - offers of settlement made during trial - whether information available upon which acceptance reasonable

Legislation:

Family Law Act 1975, s 117

Category: Not Reportable

Representation:

Counsel:

Applicant: Ms G Braddock SC

Respondent: Mr P Dowding SC

Solicitors:

Applicant: Linda E Tudori & Associates

Respondent: DCH Legal Group

Case(s) referred to in judgment(s):

Collins and Collins (1985) FLC 91-603

Fitzgerald v Fish (2005) 33 FamLR 123

I and I (No 2) (1995) FLC 92-625

Pennisi v Pennisi (1997) FLC 92-774

1On 20 December 2007 I delivered reasons for judgment in relation to property matters. After publication of my reasons and the making of orders, counsel for the husband sought an order that the wife pay his costs of and incidental to the proceedings. I have now received written submissions from both the husband and the wife in relation to the issue of costs.

2On 18 February 2008 the husband sought leave to adduce further evidence about the wife’s financial resources based on a [newspaper] article. This was dismissed on 19 February 2008. The wife sought the costs of her counsel’s attendance be considered in this judgment.

The law

3S 117(1) of the Family Law Act 1975 provides that, subject to subsection 117(2), each party to the proceeding shall bear his or her own costs. Subsection 117(2) provides that if the Court is of the opinion there are circumstances that justify doing so, the Court may make such orders as to costs as it considers just. In considering what order, (if any), should be made, the Court is required to have regard to the matters set out in s 117(2A). They are:

(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.

4The Full Court in Collins and Collins (1985) FLC 91-603 referred to the discretion conferred by s 117 as being a “broad” one, and noted that the s 117(2A) factors are not to be read in a restrictive way. The Full Court in Fitzgerald v Fish (2005) 33 FamLR 123 also made clear that any one of the factors referred to in s 117(2A) may be the sole foundation for an order for costs. Nevertheless, as an earlier Full Court said in I and I (No 2) (1995) FLC 92-625 at 82,277, the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.

What the parties seek

5The husband seeks an order that the wife pay:

(a)a contribution towards his costs from 29 November 2006 until 19 September 2007 inclusive, that relate to the issue of Fairland’s interest in the [BP] project; and

(b)all the husband’s costs from and including the commencement of the proceedings on 20 September 2007.

6On the path to trial the parties were involved in numerous interlocutory applications. On one such occasion the wife’s application that the husband pay an amount of $1,650 to reimburse her for valuation costs she paid was adjourned for determination by the Trial Judge. She now seeks a determination on that issue.

Discussion

7As a result of the orders I made, both parties are in a position to pay costs if that is an order, in all the circumstances, it is appropriate to make. The wife, due to health problems, will be unable to work for a period of time. She has far less ability to generate income than the husband. Despite this, both parties have funds as a result of my judgment. Both parties have financial resources. Neither party was in receipt of legal aid.

8As commented upon in my judgment both parties were eager to point out the default of the other in relation to the provision of relevant financial information. I found the husband to be a credible witness however, at times, he adopted a high handed approach to the provision of information and detail in relation to his financial position. The wife was in a difficult position due to her lack of knowledge about the financial dealings of the husband. Coupled with her mental health problems she proceeded in a way that ensured she did what she could to obtain values of the assets.

9Neither party was wholly successful in obtaining what each had sought at the commencement of the trial.

10The main thrust of the husband’s application for costs rests on offers he made to the wife. One offer was sent on 29 November 2006 and a further two offers were made on the second day of trial, 20 September 2007. The wife had commenced proceedings on 31 January 2006.

11The husband made a written offer on 29 November 2006. He was to pay the wife $880,000. He would increase this by a further $50,000 if the offer was accepted within 7 days. The offer related, inter alia, to the issue of the interest of [FI] Pty Ltd in the [BP] project. The husband says by that stage the wife had all the information required to accept the offer.

12The information was sent to her solicitors “under cover of a letter of DCH Legal dated 29 November 2006 (see exhibit 47)”. The offer was made at the same time. On 31 May 2007 the husband’s solicitors wrote to the wife’s solicitors inviting them to put any queries they had about the financial accounts in writing.

13I accept that all the information the wife had in order to consider the offer had been presented, overall, in a fairly piecemeal manner. The Court at trial had other information before it in order to decide the issue. There was cross-examination of witnesses and detailed explanations. Even then the issue was not clear cut.

14I am not satisfied that in all the circumstances the wife had adequate knowledge of the financial position of the parties at the time the offer was made such that it could be given proper consideration and thereafter accepted. Indeed having managed the matter until the trial, even at the commencement of trial on 19 September 2007 the position was not entirely clear. Some of the information provided to the wife on 29 November 2006 was of little moment in the Court’s ultimate decision on this issue. [Mr Z] had not sworn an affidavit or been cross-examined.

15A second offer was made to the wife on the morning of 20 September 2007. Another offer was made after lunch on that day. The trial lasted six days in total.

16Both parties would have been substantially better off if either offer had been accepted.

17At the time of the offers on 20 September 2007, the wife’s case was incomplete. The husband and his witnesses were not tested.

18In relation to offers in situations where the financial position of the parties is less than clear it is apposite to note what was said by the Full Court in Pennisi v Pennisi (1997) FLC 92-774 at 84,547:

“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 the relationship 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.”

19The offers here were about the same or just over the award given after trial.

20Any offers must be seen in the context of the whole case. It is important to consider the extent of the parties knowledge of values and their understanding of the factual circumstances surrounding the offer. An offer in writing may in hindsight seem “close to the mark” however, if the factual situation was uncertain at the time the offer was made there can be no automatic costs order for non-acceptance.

21A failure to accept an offer which in retrospect perhaps should have been accepted is insufficient to ground an order for costs if at the time the offer was made there was no firm basis upon which it could be assessed.

22I am also mindful that the wife was suffering some serious health difficulties and these, to a large extent, were known to the husband.

23It was not until all the evidence was tested that issues had some clarity. Be that as it may, the offers were a reasonable reflection of a likely outcome despite the uncertainty surrounding some of the evidence and the value of the assets. The offers were seriously made and at a time when it was appropriate to weigh all aspects of the available information and to then realistically conclude the benefit of an acceptance of the offer, given its terms, outweighed the uncertainty of a continuation of a trial.

24I consider it appropriate the wife make a contribution towards the husband’s costs from the morning of the second day of trial. I do not intend to allow all his costs but an amount representing one half of his reasonable costs to be assessed if not agreed.

25I also consider it appropriate the valuation costs the wife incurred in 2006 be offset against any costs payable to the husband. She was left in a state of uncertainty about the husband’s business dealings and could not be expected to assume a position that matched his. Her obtaining of valuation evidence was not unreasonable and was an appropriate step on the way to trial.

26I have considered the minute of orders sought by the wife filed 25 September 2006 and her affidavit in support of the orders sought in the minute.

27On 10 July 2006 the wife, through her solicitor, wrote to the husband’s solicitor to organise a valuer in relation to, inter alia, the joint venture development. The husband’s solicitors replied by correspondence of 27 July 2006. There was nothing in that correspondence to suggest there was no need to value the development and indeed the tenure of the letter is quite the opposite. The husband’s affidavit in reply filed 11 October 2006 deposes:

“Costs of valuation

27. [BP project] was built as a development project with the intention of selling the units for a profit. If there had been any agreement to retain a unit then the wife’s solicitors would have been informed.

28. I oppose having to meet the costs of the valuation report which was not agreed.”

28I am not satisfied that this addresses the issues raised by the wife. In view of my earlier comments about the manner in which financial information was provided and the content of the correspondence of 27 July 2006 I am not satisfied the wife’s position is unreasonable.

29I consider it appropriate that the husband pay the wife’s costs incurred as a result of her solicitor’s attendance at Court on 19 February 2008.

Orders

1.The wife pay one half of the husband’s costs of trial from 10.00 am on 20 December 2007 to be assessed if not agreed.

2.The husband pay $1,650 of the wife’s valuation costs such sum to be offset against the amount payable to him in accordance with order 1 hereof.

3.The husband pay the wife’s costs of her solicitor’s attendance at Court on 19 February 2008, fixed in the sum of $250 such sum to be offset against the amount payable to him in accordance with order 1 hereof.

I certify that the preceding [29] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate