ORTLEIB & LLOYD - [2016] FamCAFC 231

FAMILY COURT OF AUSTRALIA

ORTLEIB & LLOYD

[2016] FamCAFC 231

FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where the father seeks to appeal an order dismissing his application for costs in proceedings under the Child Support (Assessment) Act 1989 (Cth) – Where leave to appeal is required under s 102A of the Child Support (Assessment) Act 1989 (Cth) – Where the determination of leave requires consideration of the grounds of appeal – Where the father asserts that the trial judge erred in not awarding costs on the basis of offers of settlement made to the mother – Where it could not be said that the offers were readily capable of acceptance – Where the decision as to award costs is a matter of discretion for the trial judge and the threshold for appellate intervention is high – Application of test set out in Medlow & Medlow (2016) FLC 93‑692 – Leave to appeal refused.

Child Support (Assessment) Act 1989 (Cth) ss 100, 102A

Family Law Act 1975 (Cth) s 117

Harris and Harris (1987) FLC 91-822
Johnston and Johnston (2004) FLC 93-189
Kemp v Ryan and Anor [2012] ACTCA 12

Laurie & Child Support Registrar and Anor [2010] FamCAFC 38
Masters v Cameron (1954) 91 CLR 353
Medlow & Medlow (2016) FLC 93-692
Mifsud v Campbell (1991) 21 NSWLR 725
Paxton & Child Support Registrar and Anor [2016] FamCAFC 116
Penfold v Penfold (1980) 144 CLR 311
Perry v Comcare (2006) 226 ALR 724

APPLICANT:

Mr Ortleib

RESPONDENT:

Ms Lloyd

FILE NUMBER:

CAC

524

2013

APPEAL NUMBER:

2016

DATE DELIVERED:

17 November 2016

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Ainslie-Wallace J

HEARING DATE:

4 October 2016

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

7 April 2016

LOWER COURT MNC:

[2016] FCCA 747

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Howard

SOLICITOR FOR THE APPLICANT:

Farrar Gesini Dunn

THE RESPONDENT:

In person

Orders

Leave to appeal the order of Judge Brewster made on 7 April 2016 is refused.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ortleib & Lloyd has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY

Appeal Number: EA 71 of 2016
File Number: CAC 524 of 2013

Mr Ortleib

Applicant

and

Ms Lloyd

Respondent

REASONS FOR JUDGMENT

By Notice of Appeal filed on 2 May 2016 Mr Ortleib (“the father”) seeks leave to appeal an order dismissing his application for costs made by Judge Brewster on 7 April 2016.
His Honour’s order concluded proceedings between the father and Ms Lloyd (“the mother”).
On 27 February 2015 the trial judge determined a dispute as between the parties in which the father sought to recover child support arrears from the mother. Orders were made in accordance with this determination on 23 November 2015.
It is necessary to refer to the background to the principal matter before the trial judge in order to give context to the present application. The background matters are, it seems, not contentious and are gleaned from his Honour’s principal judgment.

Background

The parties, who were married in 1998 and divorced in January 2003, have two children, X who was born in 1998 and Y who was born in 1999.
On separation in September 2001, the father remained living in the former marital home and the mother moved out. The children remained living with the father, although consent orders were made in October 2001 that provided for the children to spend time with the mother each weekend. Over time that arrangement changed and in November 2012 X moved to live with the mother full-time. In January 2013 Y too began living with the mother.
During the time that the children lived with the father, he sought no payment of child support from the mother. He did, however, seek assessments of child support, apparently because of a Centrelink requirement. In the period from 1 September 2002 to 8 January 2013 the total amount of child support assessed, but not sought from the mother, was $95,541.
However, when the living arrangements of the children changed the mother not only sought child support assessments, but also sought their payment. She obtained an assessment on 11 January 2013 and at the date of hearing before his Honour, the total owing was $16,783.
It seems that on the mother seeking the payment of child support from the father, the father countered by seeking to enforce the assessed child support owed by the mother.
His Honour concluded that he would enforce the arrears of child support payable by the mother only to the extent that it reflected the father’s present obligation to pay child support. In effect, his Honour ordered a “set off” of the child support obligations.
On 23 November 2015 his Honour made orders in accordance with a proposed minute of orders provided by the father. Order 1 declared the mother to owe $95,540.90 in respect of outstanding child support. Relevant to this appeal, the orders then provided:
2. It is declared that the debt referred to in Order 1 is enforceable by the Father against the Mother to the extent that he either has been, or is now or in the future liable to pay money to her by way of child support assessments or adult maintenance in relation to the children.
3. That within 28 days of the date of these Orders, the Mother is to pay to the Father the sum of $18,479.20, that being the amount of child support the Father has paid to the Mother for administrative assessments issued by the Department of Human Services Child Support since 11 January 2013 in relation to the children.
His Honour further ordered that if any party sought an order for costs, it was to be by way of application supported by written submissions and a supporting affidavit, if required.
The father made an application for costs and his Honour considered it in chambers. On 7 April 2016 his Honour dismissed the father’s application that the mother pay his costs of the enforcement hearing.
It is against this order that the father now seeks leave to appeal.
The father’s claim that the mother pay his costs of the application before the trial judge was principally based on her rejection of his offers of settlement.
It is of assistance then to consider the offers and the context in which they were made before turning to the trial judge’s reasons for the impugned order.
Particular importance was placed on an offer made by the father on

4 November 2013. It was argued that this offer was considerably to the mother’s advantage and his Honour’s ultimate decision rendered the mother’s position considerably worse.
The father made four offers to the mother in email correspondence, the first on 24 September 2013 and the last on 24 June 2014 (clarified by the father on 28 June 2014). It seems that an offer was also made on 24 October 2013 at the hearing, but there was dispute between the parties as to the circumstances in which this offer arose and indeed, which party first made the offer.
A reading of the correspondence between the parties reveals that in relation to the father’s offers the mother rejected these and put forward counter offers. The father then too rejected and counter offered in response. Clearly then, the offers represented a continuum of efforts to resolve the matter. As his Honour’s reasons reflect, the letters of offer and counter offer were often heavily larded with invective and criticism.
It is important too to note that each of the offers contained different terms or variations of earlier offers. The first offer of 24 September 2013, for example, contained a term that any agreement was subject to “successful execution and acceptance” by the court of a binding child support agreement. Further, this offer was conditional on the mother repaying all child support collected from the father, including child support collected after the date of settlement. The offer noted that at the date of offer some $11,066 had already been paid. It is not apparent on the face of the offer when the settlement might be concluded, it being dependent on the court accepting the binding child support agreement.
The offer of 4 November 2013 provided:
Outline of Terms of Settlement
Child support
·Child support continues as assessed from time-to-time by the CSA.
·No departure orders by either party which would alter the basic child support formula (i.e., the formula currently being applied is the one that remains);
Other allocations of costs for children
·Parties each bear the costs of the children while the children are in their care;
·Costs of private schooling are borne by [the mother], unless [the father] later agrees to contribute;
·Parties each pay half costs of major medical expenses for the children (e.g., hospital, surgery, ambulance);
·No payments from [the father] other than for the above costs;
Past child support
·[The mother] pays [the father] the sum of $2,850.32 within 30 days of settlement. This represents the estimate shortfall in [the mother’s] estimate of costs once correction is made to the estimates of piano payments (estimated at $1,280 when it was actually only $320);
·Payment of this amount does not mean that [the father] accepts the estimated costs or liabilities given by [the mother] in her affidavit;
·[The father] drops his present claim for back-payment of child support, and all arrears under that claim are cancelled;
·Parties each pay half costs of drafting all legal documents pertaining to settlement in the matter;
·Other than for drafting of documents for settlement, parties each bear their own legal costs for the matter;
It concluded with these words:
Drafting of formal agreement
This proposal is an outline only, since it is anticipated that a formal legal agreement would need to be drafted to give effect to this. If both parties indicate that the terms here are agreeable in principle then [the father] will arrange to have the agreement drafted and given to [the mother’s] lawyer for review. Before doing this, both parties will agree to pay half the cost incurred for drafting the proposed agreement, even if this does not lead to settlement (i.e., even if one party pulls out after drafting).
It must first be said that there is some doubt whether what is contained in the letter is, in truth, an offer or, as identified in Masters v Cameron (1954)

91 CLR 353, an “agreement to agree” in that the agreement is not intended to have any binding effect on its own. Further, the offer did not identify what the potential costs of drafting might be, or how such costs would be determined, a matter which, one imagines, might be significant in determining whether or not it was capable of immediate acceptance.
However, on 18 December 2013, the mother responded to this offer and said that she wished to “propose a slightly different settlement of this matter”, and then made her counter offer. On 21 December 2013 the father responded to the mother’s offer of 18 December 2013 and after saying that “we might be getting close to settlement here” added that “there are a few aspects of what you are proposing that are not agreeable to me”. The father than discussed his view on departure orders, the settlement payment and the drafting of the agreement. Notably, in his response the father added a condition that he would be guaranteed to spend a certain amount of time with the children.
There followed correspondence correctly characterised by his Honour as “pejorative” and on 12 May 2014 the father made another offer, this time offering the mother a choice of two options to settle. On 13 June 2014 the mother responded to this offer and noted “some attraction” to one of the offered options. The mother then proposed a counter offer in similar terms to the second option proffered by the father on 12 May 2014, but with a smaller sum to be paid by her to the father.
In a letter dated 19 June 2014, after several pages of recriminations and allegations, the father said that the chances he would accept the mother’s counter offer were low and he made a further offer. After noting that the time for acceptance of his earlier offers had expired the father said “I am willing to allow those terms of settlement to remain open to you, subject to you also reimbursing me for all legal costs and filing fees since the expiry date (i.e., all costs after 19 May 2014)”.
Given the terms in which the offer was made, it is unsurprising that on 24 June 2014 the mother wrote to the father asking him to clarify what the offer was that he was proposing. In response on the same day the father remade the offer of 12 May 2014, noting that the offer was contingent on the mother agreeing to pay all of his legal fees incurred since the offer, when first made, expired, that is 19 May 2014. No indication was given within the offer as to what those costs might be.
On 28 June 2014 the father emailed the mother to reject her offer of 13 June 2014. In this email the father noted that his legal costs since 19 May 2014 were $5,253.20 and indicated that acceptance of either option 1 and option 2 of the 19 June 2014 offer (as set out in the father’s email of 24 June 2014) would require payment of different amounts of money to reflect the increase in his legal fees.
In the event, there was no compromise of the matter.

Trial judge’s reasons

Before turning to the matters to which s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) speaks, his Honour said of the result of the hearing:
5.The end result of the case was that I ordered that there be, in effect, a “stand off”. That is that the applicant could collect arrears of child support but only such as to offset his liability to pay child support to the respondent. The net result was that no child support was payable by either party to the other.
His Honour then turned to s 117 of the Act noting that s 117(1) provided that each party to proceedings shall bear his or her own costs. As to whether there were circumstances which would justify an order for costs against a party, his Honour then considered the relevant matters referred to in s 117(2A).
His Honour found that the mother’s financial statement showed that she was not in a strong financial position (at [7]). Nor did his Honour conclude that the mother’s conduct of the proceedings was sufficient to justify an order for costs being made against her.
As to whether any party had been wholly unsuccessful in the proceedings, his Honour noted that the decision of the mother to seek child support was ill considered. However, his Honour then said “[b]ut I do not believe that the end result could be described as her being wholly unsuccessful. [The father’s] formal position before the court was for the recovery of the whole of the arrears of child support” (at [11]).
Turning then to s 117(2A)(f), which deals with circumstances where a party has made an offer to settle the proceedings, his Honour said:
12. …If an offer of settlement is made and rejected and if the offeree does not obtain a result more favourable than the terms of the offer the offeror is normally entitled to an order for costs from the date of the offer. It would be fair to say that in financial proceedings under the Family Law Act it would be unusual if a successful Calderbank offer did not result in an order for costs. … Had [the father] made a clear and unconditional offer to settle the case on terms similar to my orders his application for costs would have been hard for [the mother] to resist.
(Emphasis added)
His Honour continued:
13. The relevant correspondence is set out in annexure G to an affidavit filed by [the father] on 14 December 2015. I do not propose to discuss this in detail. On 4 November 2013 [the father] made an offer to settle the matter in terms similar to the end result. Ultimately on 18 December, after a good deal of pejorative correspondence between the parties, [the mother] basically accepted this offer. However [the father’s] response of 21 December added a condition concerning the time he was to spend with the children. This condition was not acceptable to [the mother] and the opportunity to resolve the matter passed.
14. I do not believe that [the father] can rely on paragraph (f).
Finally his Honour concluded that neither party’s position in the litigation could be considered “unreasonable” and noted that the end result was uncertain. His Honour noted that another judge may have come to a different conclusion and that the case raised complex issues of law, and said; “Whilst my sympathies are with [the father] in that I think it would have been better if [the mother] had never sought payment of child support from him nevertheless she was pursuing a legal right when she did so and I do not believe her conduct is such as to justify an award of costs against her” (at [16]).

Leave to appeal

This is a matter in which leave to appeal is required. The father’s position in this regard was somewhat fluid, it being contended in the Notice of Appeal that leave was not required. The summary of argument adopted a different approach and argued that leave was required, however in oral submissions counsel for the father reverted to the position that leave was not required.
Although counsel for the father conceded that the substantive proceedings would have required leave to appeal, having been brought under the Child Support (Assessment) Act 1989 (Cth) (“the Assessment Act”), he argued that as the order for costs was made with respect to s 117 of the Act leave to appeal was not required. This argument hinges on the basis that although orders made by the Federal Circuit Court exercising original jurisdiction under the Assessment Act require leave to appeal, final orders made under the Act do not require such leave.
Section 102A of the Assessment Act provides:
(1) An appeal lies, with the leave of the Family Court, to the Family Court from:
(a)a decree of the Federal Circuit Court of Australia exercising original jurisdiction under this Act; or …
Section 100 of the Assessment Act provides that the Act applies to proceedings under the Assessment Act as if the proceedings were brought under the Act. This allows costs orders to be made in proceedings under the Assessment Act pursuant to s 117 of the Act.
Nevertheless, the requirement for leave attends by reason of s 102A, as the Assessment Act provides the jurisdiction for the proceedings and the subsequent costs hearing. This approach is consistent with the decision of the Full Court in Paxton & Child Support Registrar and Anor [2016] FamCAFC 116 and Laurie & Child Support Registrar and Anor [2010] FamCAFC 38.
Thus, the father requires leave to appeal his Honour’s order.
In considering this issue, the father must demonstrate that the decision from which the appeal is sought to be brought is attended by sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong (see Medlow & Medlow (2016) FLC 93-692 at [57]).
It is thus necessary to consider the asserted grounds of challenge to his Honour’s order.
Although the Notice of Appeal raises four challenges to his Honour’s order, the thrust of the appeal is the contention that his Honour erred in not giving proper regard to the settlement offers made by the father, that his Honour gave insufficient reasons for his decision and finally, that in refusing to make an order for costs in the father’s favour, his Honour’s discretion miscarried.

Grounds 1 and 2

Although these grounds contend that in determining the matter the trial judge failed to have proper regard to the offers of settlement made by the father, or failed to properly take into account those offers, the thrust of the appeal turns on a consideration of the father’s offers of settlement. Seminal to acceptance of the father’s contentions of error is acceptance that the father’s offers of compromise to the mother amounted to a Calderbank offer.
An offer of compromise must be clear, precise, certain and capable of being accepted and concluding the proceedings by creating a binding contract (see Kemp v Ryan and Anor [2012] ACTCA 12 and Perry v Comcare (2006) 226 ALR 724). In Perry v Comcare, Greenwood J said:
56. Accordingly, the respondent’s letter of offer was not sufficiently clear so as to convey without any room for ambiguity that the applicant as a term of a proposed settlement would obtain his taxed costs of the proceedings to the date of the offer. Accordingly, the letter of offer did not satisfy the central requirement of a Calderbank letter.
In Johnston and Johnston (2004) FLC 93-189 the Full Court agreed with the Court’s observation in Harris and Harris (1987) FLC 91-822, and said that an offer of settlement should be expressed with precision and in terms which are objectively capable of being clearly understood and readily capable of acceptance or rejection by the other party.
His Honour’s reasons, particularly at [13], refer to Annexure G which contained the offers and while his Honour did not cite chapter and verse of each offer (and was not obliged to do so – see Mifsud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA), it is clear that his Honour considered them in coming to his conclusion at [12] and [13] that the father’s offers to the mother were neither clear nor unconditional.
Having considered the correspondence and the offers in their various incarnations, this conclusion was not only open to his Honour but driven by the evidence.
It could not be reasonably said that the offers, the variations, additions and conditions were such that, objectively considered, the mother could have understood the offers nor could any one of them have been readily capable of acceptance. So much indeed is demonstrated by the mother’s letter to the father on 24 June 2014 asking him to clarify what he was offering.
This finding of his Honour is, in my view, conclusive in determining as he did at [14] that the father could not rely on the offers to found a costs application.
It is to be borne in mind that the determination of whether costs is to be paid by a party to litigation is governed by s 117 of the Act and it is particularly apt to observe that, unlike the determination of costs in other jurisdictions, in this Court the section abjures: “each party to proceedings under this Act shall bear his or her own costs.” Thereafter s 117(2A) of the Act provides matters to which the court shall have regard in determining whether an order for costs is otherwise justified.
The decision as to whether costs are to be ordered is a matter of discretion for the trial judge, and it is well accepted that there is an extremely high threshold to warrant appellate interference in costs orders (see Penfold v Penfold (1980) 144 CLR 311). That judicial minds might differ as to result is insufficient for appellate intervention.

Ground 3

Ground 3 contends that his Honour failed to give adequate reasons for failing to order costs against the mother.
His Honour’s reasons make it perfectly plain the process by which he concluded that the father had not established the basis for a costs order by reason of the various offers as [12] and [13] establish.

Ground 4

Finally, ground 4 contends that his Honour’s decision was against the weight of the evidence. I understand this to be a contention that his Honour’s decision, while not necessarily demonstrating particular error, was “plainly wrong” being no proper exercise of his discretion. As I have indicated his Honour’s conclusion was entirely supported by the evidence before him.

Conclusion

It follows that the father has not established that the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court and that substantial injustice would result if leave were refused, supposing the decision to be wrong.
Leave to appeal will be refused.
The mother advised the Court that she did not seek any application for costs were the father to be unsuccessful. Therefore there will be no order as to costs.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on 17 November 2016.

Associate:

Date: 17 November 2016