Randell and Randell

[2007] FamCA 503

FAMILY COURT OF AUSTRALIA

RANDELL & RANDELL [2007] FamCA 503

FAMILY LAW - COSTS - Costs of and incidental to a slip rule application

APPLICANT: Mrs Randell

RESPONDENT: Mr Randell

FILE NUMBER: BRF 2342 of 2004

DATE DELIVERED: 31^st May 2007

PLACE DELIVERED: Brisbane

JUDGMENT OF: Justice Carmody

HEARING DATE: 14 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Drysdale

SOLICITOR FOR THE APPLICANT: Edwards Lawyers

COUNSEL FOR THE RESPONDENT: Mr Page of Senior Counsel

SOLICITOR FOR THE RESPONDENT: Nicol Robinson Halletts

Orders

1. That the HUSBAND pay with WIFE’s costs fixed in the sum of $5,000.00 within fourteen (14) days;

2. That all outstanding applications be otherwise dismissed

3. That all applications be removed from the list of cases awaiting finalisation..

FAMILY COURT OF AUSTRALIA AT  

FILE NUMBER: BR 2342 F of 2004

Mrs Randell

Applicant

And

Mr Randell

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is a competing claim for the costs of and incidental to a slip rule application under r17.02.

The context

1. On 29^th March I made s 79 orders adjusting the property interests of the parties in their accumulated property of $873,886 so that the husband was to get $433,739 and the wife $440,148. 

2. Paragraph 1 of the orders required the husband to pay to the wife $56,402 in a lump sum.  The practical effect of paragraph 9 was to transfer all the wife’s interest in the superannuation fund to the husband.  Unfortunately, as an unintended consequence of this, the wife received $26,540 less than she was entitled to.  That amount is exactly the same as the credit balance of her account in a self managed superannuation fund.

3. The lawyers for the parties quickly identified the mistake and agreed between themselves to rectify it by rolling the wife’s membership benefits of $26,540 into another fund of her choosing.

4. Regrettably, however, this did not eventuate because of other unresolved issues.

5. The wife later brought a slip rule application to change the provisions of paragraph 9 of the orders to either increase the amount payable by the husband by $26,540 to $82,942 or amend the superannuation split to enable her to withdraw the account balance and resign her membership. That application was dismissed by consent on 6 July 2006. 

6. The next day the husband’s lawyer wrote to the wife’s solicitor (AE1) referring to previous correspondence and indicating that the husband was prepared to transfer $26,540 as “a gesture of good will … to resolve all outstanding matters in respect of the parties’ financial property and financial disputes”.  In addition to the transfer of the wife’s member entitlements the offer “without prejudice save as to costs” was conditional on the wife relinquishing  any employee benefits owed to her by the husband’s business and returning an e-toll transponder to the husband’s company within seven days.

7. The wife did not respond before the expiry date.  On 20^th July 2006  she formally rejected the offer “insofar as it is still held to be open” and made a counter offer effectively accepting the husband’s additional terms for a $5000.00 cash payment.  The husband rejected the counter offer leaving no proposals from either party on the table. 

8. On 27^th September 2006 the wife’s lawyers again wrote requesting the transfer of the superannuation entitlement or a cash payment of $26,450.00 from the husband.  This was rejected by the husband on 9^th October 2006 on the basis of the consent dismissal of the wife’s F2 in the same terms on 6^th July 2006 and her rejection of the husband’s offer of 7^th July 2006. 

9. On 28^th November 2006 the husband was given  “… one further opportunity to transfer the wife’s superannuation entitlement in the amount of $26,450.00 to a superannuation fund of her choice and in consideration of same  she will provide the husband and the company … with an indemnity relinquishing all other claims for entitlements that she may have … “. 

10. On 9^th December 2006 (a day after the stipulated deadline) the husband rejected the wife’s 28^th November 2006 proposal and expressly withdrew from further negotiations. 

11. The wife filed the present F2 on 19^th December 2006 seeking the same relief as the one dismissed on 6^th July 2006.  The husband resisted it on estoppel grounds.  I rejected the husband’s argument on this point in reasons published on 26^th February 2007.

12. On 14^th March 2007 (the day before the husband received a copy of my estoppel ruling) the wife repeated the 28^th November 2006 offer to settle. 

13. The time for acceptance was extended on 28^th April 2007 at the husband’s request.  The wife sent a follow up letter to the husband on 1^st May 2007. 

14. A week later the husband offered to roll over the amount due to the wife to a designated fund provided that she contributed $7500.00 to his costs to date. 

15. That offer was rejected and the matter came on for final hearing on 14^th May 2007.     It ultimately resolved to the mutual satisfaction of the parties after the husband filed an amended response with leave on the day of hearing accepting the terms of the wife’s application and effectively agreeing to rolling over $26,540.00 into another superannuation fund nominated by the wife.

The Law

1. The discretionary power of the Family Court to make orders for costs is entirely statutory [1] and governed by  subsections (1), (2) and (2A) of s 117.  The term “costs” in this context means the charges by a lawyer for professional services rendered together with disbursements in relation to litigation. 

   [1] Knight v FP Special Assets Ltd (1992) 174 CLR 178.

2. Section 117(1) is the basic provision.  It lays down the general rule that each party to family law litigation shall bear his or her own costs. 

3. The intent of s 117(1) and (2) is that in this jurisdiction costs should not follow the event as a matter of course but, rather, when it is just and appropriate in all the circumstances.  Thus, parties to family litigation should ordinarily expect to pay their own costs of litigation. 

4. The rule in s 117(1) is aimed at ensuring that spouses are not deterred from litigating in appropriate circumstances for fear of incurring an intolerable burden of legal expenses[2]. 

   [2] In  the Marriage of Kohn (1977) 30 FLR 175 at 177.

5. The court may depart from the general rule and make a costs order under s 117(2) only if there a circumstances which “justify it in doing so”.  In considering what, if any, order for costs should be made under subsection (2) the court has to have regard to those specific matters set out in subsection (2A), (a) – (f) and any other relevant matters as it considers relevant under par (g).

6. One consideration does not outrank any other and there is nothing to prevent any one relevant factor being the sole foundation for an order for costs.  The weight any of the paragraphs in subsection (2A) carries in a particular case is a matter within the broad discretion of the judge. 

7. Both parties rely on timely and prudent written offers to settle as the circumstance justifying an exception to the general rule that each party to family proceedings bear his or her own costs.  The wife also supports her claim on the basis of the husband’s overall conduct and ultimate lack of success in the proceedings. 

8. The wife contends that the husband was given every opportunity to settle the matter in the way he ultimately agreed to before the filing of the F2 on 19^th December 2006 and on three separate occasions after that.  She says in those circumstances it is entirely proper to allow her claim to partially compensate her for the needless delay and expense his unreasonable actions caused.

9. The husband claims that the offer to transfer the superannuation entitlement  made on 7^th July 2006 was clearly discrete from the other matters referred to in that letter and denies that the superannuation component of the offer was non-severable.

10. I accept the wife’s submission that the husband’s offer of 7^th July 2006 was an “all or nothing” proposition.   At the time it was made both parties were clearly aware that the terms of the original terms of the s79 order had the practical effect of depriving the wife of $26,540.00.  The remedy was also plain and simple.  The wife’s first slip rule application was dismissed by consent so that the defect could be cured without court intervention.    Instead - and despite characterising it as a goodwill gesture in AE1 - the husband made his co-operation conditional on the wife’s willingness to “resolve all outstanding matters”.  In other words, he sought to exploit the wife’s vulnerability to obtain a collateral financial advantage from her with respect to other contentious financial matters.  He was in effect demanding extra payment as incentive to pay her the rest of what he knew she was properly entitled to.  This cynical attempt to gain disputed property or an unfair bargaining advantage does him no credit at all. 

11. Surprisingly, instead of calling on the court to assist in rectifying the order under the rules the wife herself fell into the trap of extraneous negotiation resulting in further delay by offering to accept the husband’s additional terms in exchange for $5,000.00.

12. When the wife did finally get around to refiling on 19^th  December 2006 the husband unsuccessfully tried to resist it on purely technical grounds and continued to ignore the wife’s offers until the eve of the date of hearing.  He even had the audacity to seek a $7500.00 contribution to his costs of litigation.  

13. In my opinion the husband’s unreasonable conduct, total lack of success in the proceedings and failure to accept the wife’s timely and unbettered written offers after 14^th March 2007 combine to justify an order for costs fixed at $5000.00.  This figure is admittedly an arbitrary one but it is two-thirds of the figure claimed by the husband on 8^th May 2007 and I am satisfied it is within the range of reasonable partial compensation for the needless costs and expenses the wife has incurred in the proceedings because of the husband’s delaying tactics.   Leaving the quantum to be assessed would probably only lead to more protracted and expensive enforcement action which the principle of proportionality demands be avoided. 

14. This is clearly a matter in which a minor problem could and should have been resolved by agreement without resorting to needless litigation. 

15. There is no controversy between the parties about the error complained of by the wife.  I am satisfied that the defective s79 orders could have been adjusted under the slip rule in either of the alternative ways suggested by the wife to ensure that the husband did not receive an unintended windfall because of an accidental miscalculation on my part.

16. The husband’s conduct in relation to the proceedings by raising unrelated issues after the event and delaying or withholding payment to the wife in order to achieve an added bonus was beyond the pale and should not be condoned. 

17. The husband is ordered to pay the wife’s costs fixed at $5,000.00 within 14 days.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carmody

Associate: 

Date:  1^st June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as RANDELL & RANDELL