Peck and Peck (No.3)
[2017] FCCA 2357
•30 October 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PECK & PECK (No.3) | [2017] FCCA 2357 |
| Catchwords: FAMILY LAW – Application by the husband for costs following property trial – consideration of offers made and rejected – conduct of husband in running his case on contribution issues to the assets and in particular an (omitted) fund which was out of line with all Full Court authority and High Court authority – Court’s time wasted in doing so and the subsequent unnecessary costs incurred in pointing out erroneous submissions on the law and the facts – Husband’s application for costs dismissed. |
| Legislation: Family Law Act 1975, s.117(2) Federal Circuit Court Rules2001 |
| Cases cited: Collins and Collins (1985) FLC 91-603 |
| Applicant: | MS PECK |
| Respondent: | MR PECK |
| File Number: | PAC 4459 of 2014 |
| Judgment of: | Judge Willis |
| Hearing date: | 27 July 2016 |
| Date of Last Submission: | 24 July 2017 |
| Delivered at: | Cairns |
| Delivered on: | 30 October 2017 |
REPRESENTATION
| Solicitors for the Applicant: | JT Legal Practice |
| Solicitors for the Respondent: | Thomas Henry Bray Lawyer |
ORDERS
That the Husband’s application for costs is dismissed.
All outstanding applications are removed from the pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Peck & Peck (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CAIRNS |
PAC 4459 of 2014
| MS PECK |
Applicant
And
| MR PECK |
Respondent
REASONS FOR JUDGMENT
This is an application for costs by the husband Mr Peck (“the husband”). These proceedings commenced with an application for the finalisation of property matters between the parties filed by the wife Ms Peck (“the wife”) on 4 June 2015.
The property application was heard on 27 July 2016 in Parramatta. Written submissions were filed on 10 and 17 October 2016 after I ordered that the parties obtain a single expert report in relation to the value of the husband’s (employer omitted) superannuation. My reasons for judgment were delivered on 3 July 2017. On that date orders were made for any application of legal costs to be filed within 28 days of the date of this order and any submissions in response were to be filed within 28 days of being served. I also gave a separate decision dismissing an application by both parties for a costs certificate under the Federal Proceedings (Costs) Act 1981.
An application for costs of the proceedings has been filed by the husband on 24 July 2017 seeking a costs order in the sum of $10,220.00 in accordance with the Federal Circuit Court Rules2001. The wife was due to file submissions in response by no later than 21 August 2017. The wife has failed to file any submissions in response or contact the Court at all.
On 1 September 2017 an email was sent to my Associate from Mr Bray representing the husband, advising that the wife is now self-acting and that she has no intentions of filing any submissions in reply. Mr Bray has attached a copy of an email sent from the wife to Mr Bray on 25 August 2017 which reads as follows:
“Good morning
As you know I do not and cannot afford to have any legal representation so therefor [sic] I do not know how to deal with this additional issue relating to my Divroce [sic].
I do not wish to file any submissions and I do not wish to have to attend court again as I could not mentally or physically deal with that so I am more than happy for the court to deal with this on the papers.
regards
Ms Peck”
The husband and wife are content for the matter to proceed on the papers without the need to list the matter for oral submissions.
I have had regard to the submissions and affidavit filed by Mr Bray on behalf of the husband on 24 July 2017, together with the reasons for judgment and the documents relied on for the trial and the written submissions by each Counsel at the trial.
The Law
Section 117(2) of the Family Law Act 1975 is the relevant section. It provides essentially for each party to pay their own costs. S. 117(2) provides that the Court can make an order for costs, and when considering whether to do so, the Court is required to consider certain matters set out in s. 117 (2A) together with any other relevant matter.
In Collins and Collins (1985) FLC 91-603 at page 79,877 the Full Court said:
“In deciding whether the circumstances justify an order for costs, there is a broad discretion to be exercised, having regard to the factors set out in subs. (2A) so far as relevant. Those factors…. are not to be read in a restrictive way, however, the discretion remaining is a broad one: Penfold v Penfold (1980) FLC 90-800 at pp 75,053-75,054 (High Court); quoted in Mallet v Mallet (1984) FLC 91-507 at pp 79,123-79, 124 (by Wilson J).”
In Penfold v Penfold (supra), the High Court overturned a decision of the Full Court of the Family Court who upheld an appeal against the trial judge’s decision to order that the husband pay the wife’s costs in relation to a maintenance application. Importantly the whole of the High Court (who unanimously overturned the Full Court’s decision) held that:
(a) The general rule expressed by section 117 (1) that each party should bear his own costs, is not paramount to section 117(2) and must yield whenever a judge finds a particular case where there are circumstances justifying the making of an order for costs.
(b) Apart from the requirement that the judge must find that there are circumstances justifying a costs order, there is nothing in section 117(a) or (32) which imposes any additional or special onus on an applicant for costs. It is not correct to say that an order for costs can only be made in a clear case.
Justice Murphy of the High Court also added: “Presentation of a false statement of financial circumstances which puts the other party to the trouble and expense of disproving it, is a circumstance which justifies an order for costs. Courts should regard such circumstances which tend to undermine the integrity of proceedings with great concern, and should do everything in their power to determine who is responsible in order maintain that integrity.”
Turning to the considerations under section 117(2):
(a) The financial circumstances of each of the parties
The husband submits he was 51 at the time of hearing and is employed on a part-time basis with the (employer omitted). According to his financial statement filed on 10 May 2016, the husband earns approximately $591.78 per week.
The wife was 46 years of age at the time of the hearing and is employed on a full time basis as a (occupation omitted) with the (employer omitted). According to the financial statement filed by the wife on 24 December 2015, the wife earns approximately $1,372.30 per week.
I do not have evidence of either of their current financial situations. The husband was looking for other work at the time of the trial. I concluded that he had historically had a far greater earning capacity than the wife.
(b) Whether either party is in receipt of Legal Aid
Neither party to the proceedings is in receipt of Legal Aid. Both parties were privately funded and legally represented. Each had Counsel appear at the final hearing.
(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, direction to answer questions, admissions of facts, production of documents and similar matters
The submissions on behalf of the husband refer primarily to the conduct of the wife in failing to accept an offer to settle in November 2015. I am asked to draw from her failure to accept the offer, that it was unreasonable to do so. I will have more to say about this offer and the wife’s conduct when I consider the offers exchanged between the parties.
As to any other conduct, the Solicitor for the husband points to the wife’s initiating application filed on 6 June 2015 seeking a splittable payment of the (omitted) fund in the name of the husband of 70% to the wife and that she did not formally alter her position as to her final orders sought until the morning of the trial on 27 July 2016. At that time the wife indicated for the first time that she was seeking a 55% of the splittable payment. The final decision determined that in order for the wife to receive a 50% division overall, the wife was to retain her own superannuation and other assets and also receive a payment of $408,011.54 as a base amount or as a percentage of the (omitted) fund valued at $890,906.57 which would be 46%. I have had regard to this.
I have also had regard to the husband’s position which likewise had not changed since he filed his initial response on 3 September 2015 as reflected in his response and also his case outline, which was that the wife would receive a splittable payment of $250,000.00 or 37% of the (omitted). The husband was to retain 63% of the (omitted). At least the wife’s position changed on 26 July 2016 however, regrettably, there was no settlement. Having heard the husband’s case, as I have referred to in my reasons, I am critical of his conduct in running the litigation that he did.
In my judgment, I found that the husband’s case was based on fundamental misunderstanding of the relevant law as to contributions. I refer to the judgment under the heading of contributions, and to the erroneous submissions that the husband’s work and career meant that his contributions were significantly more arduous than the wife and therefore worthy of a higher percentage contribution. I rejected the submissions of those representing the husband.[1] The submissions were utterly out of line with the Full Court and High Court case law referred to in my judgment. The pre-occupation by those representing the husband with these contentions, extended the length of the trial and submissions unnecessarily. As can be seen in the judgment, the submissions ignored the role of the wife as a homemaker and parent beyond separation and sought to elevate the husband’s (employer omitted) service as being worthy of greater weight than the wife’s role of raising children. The husband sought to excise any contribution during the first four years of his superannuation because he had not yet met the wife, instead of having regard to the weight to be given to all of the contributions in light of the length of the marriage and other considerations.
[1] Paragraph 83 and various other paragraphs e.g. 84,85,86 and 87.
To that end, the hearing was prolonged due to the husband adopting the position that the nature of his work was more arduous than the wife. This issue was raised in a multitude of ways throughout the trial. It was also continued with despite several suggestions from the Bench that the “special skills” type of argument that was being conducted was not supported by Full Court authority.
Other submissions were made by those representing the husband that the wife “benefited” from him being away for months at a time as the husband earned additional income. This submission and concept was rejected as was the suggestion that the extra income offset any extra effort by the wife. These submissions were found to have devalued the contributions of the wife including her support to the husband in taking on the role she did with their family, to enable him to be away fulfilling his career.[2]
[2] Paragraph 88.
The husband’s case was also conducted on the assumption that his financial contributions ought to attract greater weight during this long marriage with two children, because the husband earned a greater income during the relationship. As I said in my judgment, I found this submission to be legally flawed. It is completely out of line with the authorities such as Mallet and Mallet (1984) FLC 91-587 a High Court decision and Fields and Smith [2015] FamCAFC 57.
I am critical of the husband’s conduct as a litigant for wasting the court’s time further by running an argument and submitting that the contributions made by the husband to his superannuation for a period of around 4 years before he met the wife, ought to be excised from the valuation. The erroneous argument and submission was also put forth that the Court should ignore the increase in the value of the (omitted) fund after the separation date of 2012 because the wife did not contribute. This submission was legally flawed and ignores the case law which says that the Court must have regard to the financial and non-financial contributions of each of the parties. The wife continued in her role as homemaker well past separation. Similarly the submission by Counsel for the husband that “the husband alone contributed post separation to the increase in the value of the (omitted)” was in all circumstances time wasting having regard to the law, and would have lead the Court into error in accepting such a flawed submission. [3]
[3] Paragraph 100.
Further submissions were made that were not accepted regarding the Court adopting a particular figure if it did accept that the wife had made contributions post separation. Paragraph 101 of the reasons for judgment dealt with these flawed submissions. Even when Counsel finally conceded this point, he re-argued it in his written submissions. I accepted the submissions of Mr Schonell of Counsel that the submissions of Counsel for the husband as set out at point 13 “are both factually incorrect and incorrect when the law is applied.” Submissions were made by those representing the husband that were not supported by the evidence such as the Court being able to find that the husband would not readily find outside uses for his qualifications. There was no evidence to support this assertion.
The conduct of the husband in running a case under the Family Law Act which sets out the legislative consideration for property division and relying on these spurious issues as the platform for his case was time wasting. Counsel for the husband submitted more than once, both orally and in writing, that in an interim property distribution the wife received an additional $80,000.00. I referred to this at paragraph 119 of the Judgment. This submission was entirely inaccurate. As I stated in paragraph 120, “It is a fact that the husband received $50,000.00 in the earlier distribution meaning that the wife received $35,751.00 more than the husband. This fact has been continually overlooked by the husband in submissions.” This submission if accepted would have lead the Court into error. Submissions are intended to be based on the evidence and the evidence must be quoted accurately.
There were further unhelpful submissions from the husband and those representing him in relation to the expert report. Overall there was much Court time wasted by the conduct of the husband in deciding to run his case in the manner in which he has as can be seen.
In my view, the husband’s conduct has been time wasting for all concerned including the waste of Court time in what ought to have been a straight forward matter. I consider that the husband’s conduct in this matter to be a significant issue and one upon which I place significant weight.
(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
The proceedings were not initiated due to a failure of either party failing to comply with previous orders of the court.
(e) Whether any parties to the proceedings has been wholly unsuccessful in the proceedings
The wife sought Orders for a 55% division and received a 50% division. To achieve this 50:50 split, an Order was made for the wife to receive 46% of the (omitted). Importantly, the 46% was of the value of the (omitted), not the figure put forth by the husband which included excising the husband’s initial contribution and the post separation contributions and growth.
The husband has been relatively more unsuccessful than the wife as he sought to argue that the husband retain 63% of the (omitted) and the wife therefore retain 37%. As I have said, final submissions were made that the Court should use a base amount of the (omitted) that excluded the husband’s initial contributions and excluded the post separation growth in the (omitted). Neither of these arguments were accepted. Overall I consider that the husband has been wholly unsuccessful in the proceedings.
It seems to me that the husband has been prepared to put forth almost any position he could muster, to try and reduce the amount that the wife would receive in terms of her share of the property pool, in particular the (omitted). The fact that the legal arguments relied upon to achieve this were inaccurate and out of line with the legislation and the case law has not deterred the husband and those representing him from following through with this tactic right to the end of the trial and to the very last written submission.
(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
The husband submits that an offer was sent to the wife via her then acting solicitors on 22 October 2015. The husband proposed at that time for a 50:50 split of the superannuation assets of both parties.
I have had regard to the correspondence that was sent by the husband’s solicitor enclosing consent orders on 22 October 2015.
The response from the wife’s solicitors on 4 November 2015 was that with respect to the proposed consent orders, “We seek to confirm that they are acceptable to the Trustee” and “Should the orders not be in a type and form actionable and workable by the said Trustee, we would deem the offer invalid. We await your instruction and provide an appropriate response in due course.”
Those representing the husband wrote to the wife’s solicitors saying that they did not agree that the changes needed to be made. The email from the husband’s solicitors of 5 November 2015 effectively said that they knew that the orders they drafted were in a form that would be accepted by the (omitted) trustee because “we have acted for clients in the past who are members of the defence force and who are also members of the same scheme.” The letter continued that “if the wife accepts the form of offer and in particular the amount of the split we will obtain a written advice from the trustee and in the event an amendment to their proposed orders is required, so the trustee can act on the orders to affect the split agreed to by the parties, then the necessary amendment to the orders can be made.” The letter also stated that unless and until there is agreement to the amount of the super split the husband’s solicitors do not propose to incur costs for the husband for something the wife may or may not agree to.
On 9 November 2015 the wife’s solicitors replied with what I regard as a conditional acceptance which was subject to the amendments to the Consent Orders being made. I do not therefore accept the submission made by the solicitor for the husband in this application, that the offer was simply “accepted.” It was accepted with conditions to include their proposed amendments. The conditions were that alterations to clauses 11 and 12 be removed and a clause to be added to reflect an order that each party pay their own costs in respect of the proceedings. The husband through his lawyers instructed that his lawyers had done these types of orders before and that the terms did not need redrafting.
The following day on 10 November 2015 the wife’s solicitors wrote to the husband’s solicitors relevantly saying, “I have today been advised by my client to retract our agreement to enter into Consent Orders. We therefore do not agree to the terms offered.”
It seems to me that at the stage the offer was at in November 2015 it was not capable of acceptance as there were matters left unresolved about the inclusion or addition of terms and not insignificantly, the issue of costs. Moreover, it seems to me that the parties were acting in an area of great uncertainty as they did not then, nor even at the commencement of the trial, comply with their obligation to have a Family Law Valuation completed pursuant to the regulations. It does not matter that the parties agree on the value, as I have referred to in my Judgment. To do justice and equity to the parties, the Court would need to be satisfied that the Orders of the Court are based on the right value. It can be seen, following the Court’s Order to obtain a valuation pursuant to the regulations, the (omitted) valuation had a greater value than the parties “agreed upon” at the commencement of the trial. This would seem to indicate that the value that was being considered at the time of offer would more than likely have been incorrect as well. Even at the trial, Counsel for the husband, who indicated that he had experience with the (omitted) was slow to concede that the (omitted) ought to have been or should be valued.
There was therefore no agreement as to the terms of settlement and particularly the form of the proposed settlement. As the Full Court said in Johnston & Johnston [2004] FamCA 556 at [35] “The terms of any offer of compromise must be stated clearly, precisely and with reasonable certainty.” I refer also to Harris & Harris (1987) FLC 91-822 at 76,187.
Whilst much is made of the offer by the Solicitors for the husband, in all of the circumstances, having considered the offer, I do not consider it as such a significant factor as is submitted. I have though nonetheless taken account of this offer.
(g) Such other matters as the Court considers relevant
I have nothing to add.
Discussion
I have considered all of the circumstances relevant in this application by the husband to have the wife pay his costs, and I do not consider that this is a matter where the wife ought to pay the husband’s costs.
I dismiss the costs application of the husband.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Willis
Date: 30 October 2017
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