NEST & NEST

[2015] FamCA 179

FAMILY COURT OF AUSTRALIA

NEST & NEST [2015] FamCA 179

FAMILY LAW – COSTS – protracted dispute – wife seeks to rely on Calderbank letter – where wife claims the husband’s conduct justifies the making of a costs order on an indemnity basis– where neither party wholly unsuccessful – limited order for costs of three interim applications.

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.08, 19.18

Brown & Brown (1998) FLC 92-822
Calderbank v Calderbank (1975) 3 All ER 33
Penfold v Penfold (1980) FLC 90-800

APPLICANT: Ms Nest

RESPONDENT: Mr Nest

FILE NUMBER: ADC 1821 of 2008

DATE DELIVERED: 19 March 2015

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 5 February 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Litigant in Person

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Litigant In Person

SOLICITOR FOR THE RESPONDENT:

Orders

1. That the husband pay the wife’s costs fixed in the sum of FOUR THOUSAND SEVEN HUNDRED AND THIRTY EIGHT DOLLARS ($4,738).

2. That upon presentation to I Conveyancers of a copy of this order, they be authorised and directed to pay to the wife from monies held in their Trust Account for and on behalf of the parties, an amount equal to the wife’s costs as ordered herein.

3. That the balance of monies remaining in I Conveyancers Trust Account be held pending resolution of the Application in a Case filed 29 January 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Nest & Nest 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 ADELAIDE

FILE NUMBER: ADC 1821  of 2008

Ms Nest

Applicant

And

Mr Nest

Respondent

REASONS FOR JUDGMENT

INTRODUCTION 

1. By Amended Initiating Application filed on 10 October 2013, Ms Nest (“the wife”) sought orders for property settlement following a period of cohabitation with Mr Nest (“the husband”) which spanned a period of 19 years.

2. The proceedings have a long and complex history which commenced with the wife filing an Initiating Application for final orders on 14 September 2006.

3. The wife sought that there be a division of the assets of the parties as to 65 per cent to her and 35 per cent to the husband.  A similar adjustment was sought in respect of her superannuation entitlement.

4. The husband filed a Response on 29 November 2006.  The husband generally opposed the thrust of the orders sought by the wife and sought orders that the bulk of the “net value of the assets” be divided as to 90 per cent to him and 10 per cent to the wife.  The wife’s superannuation was to be split as to 70 per cent to him and the balance to the wife, with a separate provision that the wife’s Qantas shares to be divided equally.

5. The final hearing took place on 28, 29 January 2014 and 6 February 2014.

6. Judgment was delivered on 16 July 2014 with a summary of the orders made as follows:-

   ·That within 90 days of the order the husband pay to the wife a settlement sum of $700,009

   ·That upon payment of the settlement sum the wife do all things necessary to transfer her interest in a property situate at C Street, Suburb K to the husband

   ·That in default of payment by the husband of the settlement sum, the husband do transfer his interest in the property at P Street, Suburb S, the wife pay to the husband a settlement sum of $89,990. The balance of the orders provided for the giving of indemnities and other procedural matters.

7. The orders made resolved to finality the proceedings for property settlement.

8. It is from those orders that by Application in a Case filed 29 October 2014, the wife seeks that her legal costs associated with the trial be paid by the husband and that they be deducted from the settlement sum payable by her.

9. The husband did not pay the settlement sum and accordingly the wife sought orders as to the transfer to her of his interest in the Suburb S property.  By order made 10 November 2014, the settlement sum of $89,990 remained in the trust account of I Conveyancing for and on behalf of the husband subject to the following disbursements:-

   (a)To Fines Enforcement and Recovery Unit $1,550.25;

   (b)Bank SA $56,947.17 or such other amount as may be required to discharge mortgage number 8118839;

   (c)Any amount to water and sewerage, emergency services levy or such other rates, taxes, levies and charges as outstanding on the Suburb S property to enable the transfer of the husband’s interest in the property to the wife to occur on 12 November 2014 or such other settlement date and time as the wife may designate;

   (d)The balance of monies to be retained by I Conveyancing subject to further order of the Court.

10. The wife alleged that there were difficulties in her being able to give effect to the final orders, in particular (once she had elected to retain the Suburb S property) to transfer her interest in the Suburb K property on the basis that the husband refused to authorise the release from a Bank SA safety deposit envelope the Certificate of Title to the property.

11. It was also apparent that there were difficulties in the husband understanding that he was obliged under the order to leave the premises and give vacant possession to the wife.  An order was made that he do vacate the Suburb S property by 4pm on 24 November 2014 and should he fail to comply with the order for vacant possession, then the Marshal of the Family Court or such other named persons were authorised to give effect to the order namely, the delivery up of the property to the wife.

12. Further consideration of the wife’s application for costs in relation to the trial and costs of and incidental to the Application in a Case filed 29 October 2014 was adjourned to 16 December 2014.

13. It is now a matter of history that the recalcitrant conduct of the husband resulted in an order being made on 25 November 2014 which caused a Writ of Possession to issue with a further order that:-

    The proper costs necessary to execute the Warrant and Writ of Possession are to be paid from the balance of the settlement monies remaining in the trust account of [I Conveyancing].  Further consideration of the wife’s application for costs be adjourned to 9.15am on 16 December 2014.

14. Tragically the husband was required to be forcibly removed from the premises in order to give effect to the terms and conditions of the orders made 16 July 2014.

THE APPLICATION

1. The matters relevant to a consideration of the costs application are set out in the wife’s affidavit filed 8 December 2014.

2. The wife seeks that the husband pay her legal costs in the sum of $61,747 together with disbursements of $8,637.  The costs sought are on the basis of indemnity costs and to support such a proposition the wife summarises her complaint against the husband as follows:-

   (8)The husband’s history of non-compliance, non-attendance, accusing at least three judges and several court staff of bias, unwillingness to accept rulings, time spent on arguments that were dismissed, using the weather as an excuse not to attend trial, appealing judgments and then abandoning the appeal, driving my legal costs up by filing applications that were dismissed, avoiding service, are all evident on the Court file.

3. The wife seeks to underpin her complaint that the husband obfuscated the proceedings by focusing on what she says was a significant delay of 18 months in a dispute between the parties arising out of the husband’s refusal to agree the method and manner by which the real property could be valued, together with the remarks of Burr J made on 13 May 2008 are indicators that the husband adopted a variety of stalling tactics for no reason than to forestall a resolution.

4. I indicate at an early stage in these reasons that I do not propose to place any weight on the remarks of his Honour or indeed on the remarks of Doyle CJ in respect of litigation unrelated to these proceedings.

5. As advised by the wife, as at 8 December 2014, of the settlement sum originally paid in to the conveyancers trust account, there remains the sum of $30,150.  It is likely that this figure will be significantly reduced following the payment out of fees and charges directly related to the execution of the Warrant and Writ of Possession in order to gain vacant possession of the Suburb S property together with the likely conveyancing costs in relation to the transfer of the wife’s interest in the Suburb K property of the husband.

THE LAW

1. The general rule in proceedings under the Family Law Act 1975 (Cth) (“the Act”) is that each party should bear their own costs.

2. Pursuant to Rule 19.08 (1) of the Family Law Rules 2004 (Cth) (“the Rules”), the wife applies for an order that the husband pay her costs. The application is made by an Application in a Case. The wife also seeks an order for costs payable by the husband on an indemnity basis.

3. Rule 19.08 (3) provides:-

   A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

4. The wife annexes to her affidavit in support of the application a costs agreement entered into with her solicitor in respect of work done on or after 18 July 2013.

5. The document sets out the scale of costs to be charged by the solicitor for work undertaken on behalf of the wife, but in terms of a broad overview, the charge-out rate is in the sum of $400 per hour for the professional time spent by a lawyer and $200 per hour for time spent by a clerk or other employee.

6. The wife seeks costs for a period that appears to commence in January 2006.

7. The method of calculation of costs is referred to in Rule 19.18:-

   (1)A court may order that a party is entitled to costs:

   (a)of a specified amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

8. Sub-Rule 19.18 (3) provides that the Court may consider:-

   (a)the importance, complexity or difficulty of the issues;

   (b)the reasonableness of each party’s behaviour in the case;

   (c)the rates ordinarily payable to lawyers in comparable cases;

   (d)whether a lawyer’s conduct has been improper or unreasonable;

   (e)the time properly spent on the case, or in complying pre-action procedures; and

   (f)expenses properly paid or payable.

9. In considering what order should be made (if any) in respect of the wife’s costs, s 117 (2A) provide an exception to the general rule that each party should bear their own costs.  If applicable, I am required to consider and have regard to the following:-

   (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 fact, 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 any 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 such offer;

   (g)such other matters as the court considers relevant.

10. In respect to the obligation created under s 117 (2A), in Brown & Brown (1998) FLC 92-822 Kay J said at 85,346:-

    The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder.  This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the Court may in making an order take into account various matters.  The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance. (my emphasis)

11. To further highlight the interplay between s 117 (1) and s 117 (2) but in particular the extent to which judicial discretion is to be exercised the judgment of the High Court in Penfold & Penfold (1980) FLC 90-800 at 75,053-4 is informative:-

    It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117 (2). 

    As subsec (1) is expressed to be subject to subsec (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. 

    Subsection (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 impose 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 sec. 117(2) in “a clear case”. 

    Subsection (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 appellant court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised…

12. Accordingly, I have a wide discretion when considering what order, if any, should be made.

FINANCIAL CIRCUMSTANCES OF THE PARTIES

1. I had the advantage of receiving significant financial information in relation to the wife but less so in respect of the husband.  In my reasons delivered 16 July 2014, I found that the total pool of property was in the sum of $1,386,523 and that the wife should retain $762,587 by way of adjustment.  Of that sum, the wife held modest property and superannuation totalling $62,578 and accordingly, the settlement sum to which the wife was initially entitled was $700,009.

2. The husband was to retain modest assets together with the Suburb K property in the sum of $500,000 totalling $533,945.  In addition, the husband was to receive a further settlement sum payable by the wife of $89,990.

3. The wife is aged 53 years and the husband 62 years.  There are no dependent children.  The wife retains her employment and whilst I do not bring to account any uncertainty in terms of her job security, I find that her income whilst reliable is modest.

4. The husband made no discovery and accordingly the Court was not assisted in determining his current employment status, income or indeed prospects of future employment.

WHETHER ANY PARTY IS LEGALLY AIDED

1. No party is in receipt of any legal aid in respect of the proceedings.

CONDUCT OF THE PARTIES

1. The wife relies upon an allegation that the proceedings have been made more complex and of longer duration because of the husband’s conduct namely:-

   his non-compliance, non-attendances, accusing at least three judges and court staff of bias, unwillingness to accept rulings, time spent on arguments that were dismissed, using the weather as an excuse not to attend the trial, appealing judgements and then abandoning the appeal, driving my legal costs up by filing applications that were dismissed, avoiding service.

2. She relies on the various applications made by the husband asking for extensions of time, stay orders and other process on six separate occasions leading up to the commencement of the proceedings.  Indeed even on the date of trial, the wife notes that the husband was late in his arrival at Court and then argued for a stay.  On the second day of trial he arrived 75 minutes late and on the third day of trial he did not appear.  The matter was then further adjourned to inform the husband that the trial would continue on 26 February 2014.  On the adjourned date he did not turn up but was contacted by telephone and a further hearing ensued.

3. It seems to me that the wife seeks to rely upon the conduct of the husband and the manner in which he attended the litigation for the dual purpose of her application for costs and if successful, that they be assessed on an indemnity basis.

4. It is further argued by the wife that the husband had historically adopted an unreasonable approach to the proceedings and that even though the outcome was less beneficial to her than the orders she sought, when compared to the position adopted by the husband namely, that she should receive approximately 10 per cent of the asset pool, it could be said that the wife was substantially successful.

WHETHER THE PROCEEDINGS WERE NECESSITATED BY A PARTY’S NON COMPLIANCE WITH ORDERS OF THIS COURT

1. It could not be said that the wife has clearly enunciated the circumstances in which she says non-compliance by the husband has exacerbated the proceedings.  Whilst the wife may assert that the husband’s conduct has been difficult and that there has been a fusillade of applications with the result that the proceedings became protracted, that is significantly different to an assertion that the husband did not comply with Court orders to the wife’s detriment.

2. The wife however does refer to orders made for the reservation of costs on 23 January 2014, 31 January 2014 when the husband did not attend trial and a further order made on 26 February 2014 due to the husband’s further non-attendance.

WHETHER ANY PARTY TO THE PROCEEDINGS WAS WHOLLY UNSUCCESSFUL

1. It cannot find that either party was wholly unsuccessful.  It could be said that the wife was substantially successful in that whilst she sought an adjustment of 65 per cent of the asset pool in her favour, the order made by me reflected a 55 per cent adjustment, significantly better than the trenchant position adopted by the husband namely, that if the wife was entitled to anything it was no more than 10 per cent of the asset pool.

2. It is not the case however that the purpose of a costs consideration could be considered as a threat to the parties in proceedings in this jurisdiction where the overarching consideration is that each party should pay their own costs.  It may well be that the husband had adopted an unreasonable and difficult position motivated by his clearly expressed view namely, that the wife should not be entitled to any property adjustment and certainly not any interest in the two pieces of real property.  Whilst the husband was clearly misguided in that outlook, it could not be said that he was wholly unsuccessful.  It might be said that he was substantially unsuccessful, but I do not consider that is the test.

OFFERS OF SETTLEMENT

1. The wife relies upon a “Calderbank” letter dated 16 April 2008 directed to the husband and in the following terms:-

   Dear [Mr Nest],

   At this stage could be settled on the following basis:-

   [Mr Nest] to pay [Ms Nest] the sum of approximately $651,274 at the current time which represents a percentage of 50 per cent plus costs in the sum of $4,000. 

   My superannuation would be split 50 per cent to [Mr Nest] and 50 per cent to [Ms Nest].

   Both parties enter into a Deed of Settlement.

   Your attention is drawn to Calderbank v Calderbank (1976) Fam 93; (1975) 3 WLR 586; (1975) 3 All ER 331 and also the Section 131 of the Evidence Act. The Offer in the nature of a Calderbank Offer. If you reject this offer and it lapses then [Ms Nest] receives an award from the Court in excess of the Offer, then [Ms Nest] will seek an award that will see you pay legal costs of and incidental to the proceedings on an indemnity basis as incurred from the date of this Offer.

   The Offer may only be accepted in writing addressed to [Ms Nest] at the above address via registered post.  The Offer will remain open to be accepted for a period of 14 days from the date of this letter.

   The Offer will lapse after 14 days from the date of this letter.  Time, in all respects, is of the essence.

1. The letter is purported to be a “Calderbank Offer”. See Calderbank v Calderbank (1975) 3 All ER 33.

2. The difficulty for the wife is that the “Calderbank” letter was open for a period of 14 days as and from 16 April 2008 and lapsed thereafter.  Indeed, the wife made it clear that “time in all respects is of the essence”.  The issue therefore is whether in respect of an outcome in July 2014, it was reasonable for the husband to contemplate a compromise of the proceedings in 2008 during the relevant 14 day period.

3. Whilst obviously it could be argued that the husband has not been proactive in terms of any desire to sensibly resolve the proceedings, I am obliged to find that after the expiration period there was no offer available to be accepted.

4. In the circumstances of the case and taking into account the matters put by the wife, I do not find that it was unreasonable for the husband to reject the proposal as set out in the “Calderbank” letter. The circumstances may well have been entirely different if the letter had not been subject to a time limitation. Whilst even a withdrawn offer can be considered I must look at the state of evidence at the time.

5. I am not advised of any other offers made and in circumstances where it could not be said that the wife was wholly successful, the success or otherwise of her application appears to centre upon the manner in which the husband conducted the litigation, residual and outstanding reservation of costs and whether there were any other relevant matters.

OTHER RELEVANT MATTERS

1. The wife would seek to bring to account the events subsequent to the delivery of judgment, but in particular the various applications taken by the wife to seek the delivery up of the Suburb S premises and its vacant possession.

2. Those matters however are raised in the Application in a Case filed 29 January 2014 which has been adjourned to allow the husband an opportunity to respond.  The application currently under consideration is the wife’s costs associated with the trial.  There are no matters that should be considered in this regard.

CALCULATION OF COSTS

1. Accordingly, whilst I do not propose to make orders in terms of the wife’s application for costs, I am minded to resolve and determine the costs reserved in respect of the three applications.

2. To do so I have reference to Schedule 3 Part II of the Rules. In relation to the husband’s failed application on 23 January 2014, I consider that Item 203 namely, an attendance of less than three hours in the sum of $1,080 is an appropriate charge. In relation to the costs thrown away on 31 January 2014, I propose to rely on Item 205 namely, other hearings or trials at the daily rate of $2,678 and in respect of the dismissal of the husband’s Application in a Case on 26 February 2014, I dismissed the husband’s Application in a Case gain seeking to stay previous orders and adjourn the part-heard trial. It is appropriate to apply Item 203 being an attendance of less than three hours at the rate of $1,080.

INDEMNITY COSTS

1. I have made only a limited costs order in favour of the wife and as such there is no basis to consider the costs on an indemnity basis.

CONCLUSION

1. Accordingly, I propose to order that the husband pay the wife’s costs in the sum of $4,738 and that they be deducted from monies currently held in the Trust Account of I Conveyancers upon the presentation of the order.

2. I make orders as appear at the commencement of these reasons.

I certify that the preceding fifty seven  (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 19 March 2015.

Associate: 

Date:  19 March 2015