Petrucci and Petrucci

[2010] FamCA 150

FAMILY COURT OF AUSTRALIA

PETRUCCI & PETRUCCI [2010] FamCA 150

FAMILY LAW – COSTS

Family Law Act 1975 (Cth) s 117

In the Marriage of Johnston (2004) 32 Fam LR 308
In the Marriage of Greedy (1982) FLC 91-250; 8 Fam LR 669

APPLICANT: Mr Petrucci

RESPONDENT: Ms Petrucci

FILE NUMBER: SYC 1489 Of 2008

DATE DELIVERED: 3 March 2010

PLACE DELIVERED: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

PLACE HEARD:   Sydney

HEARING DATE: 16 February 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT HUSBAND:	Mr R. Lethbridge SC
SOLICITOR FOR THE APPLICANT:	Stacks Family Law

SOLICITOR FOR THE RESPONDENT Mr B. Frakes
Watts McCray Lawyers

Orders

1. The solicitor for the wife shall pay to the wife or as she may direct $3,000 from the funds held by that solicitor on behalf of the parties, in respect of the assessed costs of the wife of and incidental to these costs proceedings.

2. Thereafter the solicitor for the wife shall pay the balance of those funds to the husband.

IT IS NOTED that publication of this judgment under the pseudonym Petrucci & Petrucci is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1489 of 2008

MR PETRUCCI

Applicant

And

MS PETRUCCI

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for costs of property proceedings determined by me.

Applications

1. In accordance with his Application filed on 8 September 2009 the husband seeks:

   1.That the Wife pay the Husband’s costs of and incidental to the substantive property proceedings.

   2.That, in the alternative, that the Wife pay such of the Husband’s costs of the substantive property proceedings in a proportion fixed or assessed by this honourable Court.

   3.Further or other Order.

2. The wife seeks that the application be dismissed and that she receive the costs of the costs proceedings in the sum of $4,342.03 or in a sum assessed by the Court.

Background facts

1. Following a hearing on 16 & 17 July 2009, on 11 August 2009 I made the following orders:

   1.The interim spousal maintenance order contained in Order 1 of the Orders of 2 June 2008 is discharged from the date of these orders.

   2.The parties are to forthwith do all things and sign all documents necessary to cause the net proceeds of sale of the former matrimonial home held in a controlled monies account in the names of Watts McCray and Stacks Family Law on behalf of the parties, together with interest accrued thereon, to be divided in the following proportions:

   2.1      $1,070,337 to the wife;

   2.2any sums owing to the wife under previous orders for costs or maintenance to the wife; and

   2.3      the balance to the husband.

   3.Pursuant to paragraphs 90MT(1)(b) of the Family Law Act, as amended, whenever a splittable payment becomes payable in respect of the interest held by the husband, [Mr Petrucci], member number […] in the MacQuarie Wrap Solutions Fund, the wife, [Ms Petrucci], is entitled to be paid an amount calculated in accordance with the Family Law (Superannuation) Regulations 2001, using a base amount in the sum of $52,245 at the operative date and there shall be a corresponding reduction in the entitlements the husband would have had in the said Fund but for this order.

   4.Having been afforded procedural fairness, orders 3, 4 & 5 bind the Trustee of the MacQuarie Wrap Solutions Fund to observe the requirements of the Family Law Act and the Family Law (Superannuation) Regulations 2001.

   5.The operative time for order 3 is 4 days after the date of service of the sealed Orders on the Trustee.

   6.The husband shall forthwith do all acts and things and execute all documents necessary to cause the transfer of the Toyota Prado motor vehicle to the wife and shall discharge all liabilities in relation to that vehicle at his cost.

   7.Upon compliance with order 6 the wife shall indemnify the husband and shall keep him indemnified in relation to all further liabilities in respect of the vehicle.

   8.Each party shall otherwise retain all other assets currently in his or her possession, custody or control, including, but not limited to shares, stock options, funds at bank, motor vehicles, and furniture and effects.

   9.In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders, then the Registrar of the Family Court of Australia shall be appointed pursuant to Section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of Affidavit.

   10.The applications in relation to spousal maintenance are otherwise dismissed.

   11.Each of the parties is at liberty to re-list this matter on 48 hours notice to each other in relation to the form of these orders within 14 days and otherwise on seven days notice for the purposes of implementation of all or any part of these Orders.

2. In relation to Order 2.2 there had been earlier orders made against the husband for costs of 19 December 2008 and 12 June 2009.

3. On 8 September 2009 the husband filed the Application in a Case and it was made returnable on 17 November 2009.

4. On 15 September 2009 the matter was restored before me at the application of the solicitor for the wife in relation to machinery and enforcement issues. I made orders including a costs order against the husband. I ordered that the solicitor for the wife provide information as to the basis for a costs estimate for the proceedings heard that day including a mechanism for agreement about quantum.

5. On 30 September 2009 Registrar George was told that the costs payable by the husband in respect of 19 December 2008 and 12 June 2009 were settled at $4,000.

6. On 17 November 2009 the husband’s costs application of 8 September 2009 was fixed for hearing before me on 27 January 2010. The husband’s further evidence was to be filed by 24 December 2009 and the wife’s by 20 January 2010.

7. On 17 December 2009 I made orders in chambers reflecting an agreement as to the quantum of costs payable by the husband to the wife in relation to the proceedings on 15 September 2009. The costs were agreed at $8,467.47 and were to be paid to the wife out of funds being held on behalf of the husband by the wife’s solicitors.

8. The husband did not file an affidavit in the costs matter by the 24 December 2009 due date. The wife’s affidavit was filed on 19 January 2010.

9. On 27 January 2010 both parties appeared and were represented. The husband’s representative sought and was granted an adjournment. I noted that the husband had filed nothing pursuant to the orders of 17 November 2009. The time within which the husband was to file his affidavit was extended for a further 7 days. A costs order was made against the husband in relation to the costs of the wife thrown away, in the sum of $400. The matter was adjourned to 16 February 2010.

10. The husband’s second affidavit was filed on 3 February 2010.

11. On 16 February 2010 the parties were present and represented. The husband’s costs application was heard and judgment was reserved.

The approach to costs

1. Section 117 of the Family Law Act 1975 provides:

   117  Costs

   (1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)  If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   (2A)  In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (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.

Discussion

1. I refer to the findings made in the substantive judgment in relation to the financial circumstances of the parties. Subject to an adjustment for costs the husband was to receive from a controlled moneys fund, about $324,717. In addition, the husband was to retain the following non-superannuation assets and liabilities:

Assets	Value
2008 Volvo car (H)	$49,700
Proceeds of sale of Saab motor vehicle (H)	$2,000
Household contents (H)	$15,000
NAB Account No …2 (H)	$0
NAB Account No …1 (H)	$1,716
NAB Account No …4 (H)	$625
St George Bank Account No …8 (H)	$2,838
Bank of America share portfolio	$11,763
Macquarie Bank Margin Lending Portfolio (H)	$141,402
Macquarie Bank Margin Lending Loan	-$99,952
Bank of America Car Loan	-$59,502
Bank of America Car Loan – Prado	-$11,135
Total	$54,455.00

1. Subject to a superannuation splitting order relying on a base amount of about $52,245, the husband was to retain his superannuation interests:

Superannuation Interests	Value
MacQuarie Wrap Solutions Fund (H)	$260,575
MLC Superannuation Plan 2 (H)	$293
Vanguard Portfolio Equity (H)	$4,682
Total	$265,550.00

1. After payment of legal fees the husband received $142,697.79 by way of property settlement. Since that date he has paid out over $44,000 towards, school fees and other debts and living expenses. The husband was made redundant in October 2009 and on 11 December 2009 received a net payment of $441,118, together with a payment to an account of $36,538. He also received and an unencumbered Volvo motor vehicle.

2. The wife retained the benefit of the following non-superannuation assets:

Assets	Value
Wife's bank accounts	$11,285
Funds in Watts McCray Trust Account (W)	$511
Citigroup share portfolio (W)	$4,480
2002 Toyota Car	$16,000
Total	$32,276.00

1. In addition the wife was to receive $1,070,337 from the controlled moneys account. The wife had the benefit of the following superannuation assets:

Superannuation Interests	Value
MacQuarie Wrap Solutions Fund (W)	$57,640
Total	$57,640.00

1. She also had the benefit of the splitting order in respect of the husband’s superannuation relying on a base amount of about $52,245. The wife had some personal debts, including her legal fees.

2. Neither of the parties was in receipt of legal aid.

3. As to the conduct of the proceedings, costs orders were made against the husband on 19 December 2008 and 12 June 2009.

4. The proceedings were not necessitated by reason of a failure to comply with court orders.

5. Neither of the parties was wholly unsuccessful.

6. As to written offers of settlement - in a letter from his solicitors dated 21 October 2008 the husband made an offer of settlement. The operative parts of which were as follows:

   “We are instructed to propose the following by way of full and final settlement:

   a.that the wife receive and / or retain assets equivalent to 65% of the total nett asset pool, and

   b.a superannuation split in her favour equivalent to 50% of the parties’ joint superannuation entitlement.

   In achieving this settlement, my client proposes that the Wife retain the Prado motor vehicle, her savings in the [S] Credit Union and St George Bank and other items, including household furniture in her possession, as part of her adjustment entitlement, the balance comprising a cash payment from the parties’ controlled monies account. There are however, a number of personal effects and family heirlooms that my client wishes to retrieve, including but not limited to artwork produced by the Husband’s maternal grandmother.

   Further my client proposes that the parties enter into a Child Support Agreement to reflect the current arrangement for the children’s support.

   ….”

7. The wife gave instructions for a letter to be prepared and sent in response. That letter was dated 31 October 2008 and the operative parts of the letter are:

   “We refer to your letter dated 21 October 2008 containing an offer of settlement.

   We note that your client is proposing settlement on the basis that our client receives 65% of the net matrimonial pool and 50% of the parties’ superannuation. With regard to this letter:-

   1.Please clarify the matrimonial asset pool on which this offer of settlement was based, including details of each asset and the value your client attributes to same;

   2.Please clarify whether your client is proposing for the parties respective superannuation assets to be equalised. Your offer is unclear given that the parties do not hold superannuation in their joint names.

   With regard to your client’s proposal to enter into a Child Support Agreement, we note that there is one currently in force which was entered into by the parties on 14 December 2007 and subsequently registered with the Child Support Agency.

   We refer to our letter dated 25 September 2008 and note that we have not received a response from you in that your client has failed to provide up with the documents requested in that letter. Further, we have not received a response from you in relation to our letter dated 15 August 2008. Please provide us with your response.

   ..”

8. Rather cryptically, the husband deposes as follows: “I cannot recall receiving a copy of the wife’s solicitor’s letter in response to my offer of settlement dated 31 October 2009”. Although there is no affidavit from the husband’s solicitor, I gather from the submissions of Senior Counsel that there is no concession that the letter was received by the husband’s solicitors. I accept that the letter was sent.

9. The submission of behalf of the husband is that the husband made an offer, albeit not in the same terms nor, from the wife’s point of view, in any more advantageous terms than the ultimate outcome but “within the range”. On the other hand the wife made no written offer.

10. The submission on behalf of the wife is that the offer was not precise and without understanding what the net pool of assets comprised, the wife was not able to get advice on or respond to the offer. In that regard I am referred to the Full Court decision of In the Marriage of Johnston (2004) 32 Fam LR 308 where the Full Court said:

    35.The terms of any offer of compromise must be stated clearly, precisely and with reasonable certainty.  Any such offer ought be explicit.  See for example Duncan & WellerPty Ltd v Mendelson & Ors (1989) VR 386. Common sense and/or the interests of justice dictate(s) that any serious offer to adjust financial differences should be framed in plain English terms that are easy to perceive or understand, leaving no doubt as to the terms of that offer. We are of the opinion that having regard to the introduction of the phrase “monetary value” in Letter 3, and to the terms of both letters 1 and 2, one is left in doubt as to what the wife had in mind in relation to the Woolworths shares and options.  Its use gives rise to a clear ambiguity, that is, an interpretation capable of having more than one meaning.  This is made more readily apparent when one considers the other paragraphs of Letter 3 that unequivocally expressed agreement to various of the issues raised for consideration.

11. On behalf of the husband I was referred to In the Marriage of Greedy (1982) FLC 91-250; 8 Fam LR 669. The majority identified the approach of the trial judge to a costs issue:

    The next point argued by the appellant was that his Honour erred in granting costs on the basis that the husband had throughout denied the wife's entitlement to any order. The following passage was relied upon:

    “In the present case the response of the husband already referred to, was to deny in its entirety the claim of the wife. He did not endeavour to place before the Court some other orders claimed by him to be appropriate and proper having in mind the claim of the wife, as revealed in her application before the Court, and having in mind, particularly the material which the husband must be taken to be clearly aware of, that is, his own truthful and accurate financial position. The proper response cannot lightly be passed over or put aside by parties to proceedings before the Court where they come asking the Court to make just and equitable orders, or orders which are proper and appropriate in respect of the financial interest of the parties. The Court cannot state more clearly or fully, as the Court sees it, the requirement that the parties do, in fact, frame adequately, fully and properly the claims that they bring before the Court and the counter-claims that they raise in their responding material to an application against them.'' 

    His Honour went on to comment that where a claim is made which is not grossly unreasonable the proper response is to put forward an appropriate alternative order rather than to deny completely the claim. His Honour appears to have taken the view that where the denial is unreasonable the party in question may be put at risk as to costs. In our view, this must depend substantially on whether the denial of the claim led to the prolongation of proceedings or added to the costs or difficulties of the other party. See, for example, the case of Kelly and Kelly (No. 2) (1981) FLC ¶ 91-108  where the wife had considerable difficulty in establishing the facts and obtaining access to material in support of her property claim. In the present case the circumstances were that following upon the husband's affidavit of November 1979 in which he sought dismissal of the wife's claim, his solicitors wrote to the wife's solicitors in December 1980 offering the sum of $20,000 in settlement of her application. This offer was not accepted by the wife and no further offer was forthcoming. His Honour took the view that he ought not to consider the circumstances of this offer unless he had reached a provisional view in favour of awarding costs. His Honour did, in fact, refer to the circumstances of the offer at a later point, though it is not clear what weight he attached to it. 

12. Later the majority said:

    There may be situations where refusal to negotiate, to make an offer or to put forward an alternative order may be a factor justifying an order for costs. The policy of the Act is to encourage conciliation, and the failure of a party to take part in negotiations in a genuine manner may contribute to delay and cost, and obstruct the proper resolution of a matter. This is not such a case. 

13. In the proceedings before me I was required to deal with 5 issues as to the pool of assets. I cannot assume, in the absence of evidence, that at the time the offer was made the parties were in complete agreement about the assets and liabilities. Therefore the husband’s offer was not “stated clearly, precisely and with reasonable certainty”.

14. As to any other matters that may be relevant to costs, it is the wife’s case that the husband’s disclosure was inadequate. I have not made significant mention of such a failure in the reasons for judgment in the substantive proceedings. There is the fact of costs orders made against the husband in interim matters in the course of the substantive proceedings. However, those orders presumably deal with any mischief caused by the husband. Without reviewing the reasons for those orders I do not know that they were occasioned by his conduct, for example.

Conclusion

1. On balance, there is no basis for a costs order in favour of the husband. The parties’ financial circumstances have changed but not so as to warrant a costs order. There is nothing that comes to attention otherwise under section 117(2) that would warrant an order in favour of the husband.

2. As to the costs of the costs proceedings, the proceedings were protracted by the husband’s failure to comply with directions. The husband was wholly unsuccessful. In the circumstances the wife should have her costs. The wife seeks $4,342.03 but in any event asks that they be assessed by the Court. I gather that has been calculated on a lawyer and client basis. There was no argument from either advocate in relation to the basis for quantifying the costs. An order on a party and party basis would be appropriate. In order to avoid a formal costs assessment, I will make an assessment. Doing the best I can I fix the costs at $3,000. Funds of the husband are still held by the solicitor for the wife to abide the outcome of the costs proceedings. I will order that $3,000 be retained from that fund.

I certify that the preceding thirty six (36) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Ian Loughnan.

Associate: 

Date: 3 March 2010