Ritchie v Styles (No 2)
[2011] TASSC 60
•17 November 2011
[2011] TASSC 60
COURT: SUPREME COURT OF TASMANIA
CITATION: Ritchie v Styles (No 2) [2011] TASSC 60
PARTIES: RITCHIE, Shane Leigh
v
STYLES, Tina Maree
FILE NO/S: 531/2008
DELIVERED ON: 17 November 2011
DELIVERED AT: Launceston
HEARING DATE: 14 November 2011
JUDGMENT OF: Holt AsJ
CATCHWORDS:
Family Law and Child Welfare – De facto relationships – Adjustment of property interests – Other matters – Costs.
Aust Dig Family Law and Child Welfare [500]
REPRESENTATION:
Counsel:
Applicant: K Stanton
Respondent: S P Bishop
Solicitors:
Applicant: Legal Solutions
Respondent: Bishops
Judgment Number: [2011] TASSC 60
Number of paragraphs: 20
Serial No 60/2011
File No 531/2008
SHANE LEIGH RITCHIE v TINA MAREE STYLES (No 2)
REASONS FOR JUDGMENT HOLT AsJ
17 November 2011
Judgment was handed down on 4 August 2011. Ritchie v Styles [2011] TASSC 39. The question of costs is now to be determined.
The proceeding was brought under the Relationships Act 2003, but was argued and determined as a contract case. The parties had, prior to the end of their relationship, entered into a separation agreement which provided for the adjustment of their property at the end of the relationship. In addition, the parties had, shortly after the end of their relationship, entered into an occupancy agreement whereby the respondent would continue to reside in the couple's former home pending its sale, in exchange for her making sufficient payments into the mortgage account to ensure that the debit balance at the time of settlement of the sale was the same as at the time of separation.
The mortgage debt increased from $84,697.38 at the time of separation to $130,107.64 at the time of settlement of the sale of the house. This was the result of the respondent failing to make payments and making substantial redraws. The respondent refused to account for the difference. Part of the balance proceeds of the sale, being $94,484.07, was paid into a trust account pending the resolution of the dispute. The respondent refused to acknowledge her obligation under the occupancy agreement and claimed that under the separation agreement she was entitled to be paid the entirety of the money held in trust. The applicant's position was that, when the mortgage increase was taken into account, his entitlement under the separation agreement was about half of the money held in trust.
The dispute was determined with an order that out of the trust account the applicant be paid $39,700.16, and the respondent be paid the balance, being $54,783.91 with interest earned on the trust sum divided between the parties in shares proportionate to their shares in the principal.
The applicant claims that he was the substantially successful party as he had succeeded on the two major matters in dispute. Firstly, he had succeeded in having the respondent account for the mortgage increase. Secondly, the respondent's claim that two motor vehicles having a combined value of $33,500 were joint assets, and that she was entitled to half under the separation agreement, failed. The applicant also claims that as he had been awarded an amount close to what he had contended was due to him, he was in any event the substantially successful party in the litigation.
The respondent claims that she was the successful party as her award exceeded that of the applicant and amounted to about 58% of the trust money, compared to the applicant's 42%.
It was common ground that the ordinary rule as to costs is that they follow the event, unless the circumstances are such that the justice of the case rests with some other order.
The 58% apportionment of the trust money in favour of the respondent is a reflection of the fact that significantly more was paid into the trust account than the applicant had ever claimed. Accordingly it cannot be regarded as a reflection of success in the litigation. The primary matters in dispute were resolved in favour of the applicant. He recovered a substantial portion of what he had claimed. The respondent was unsuccessful in the two major matters in dispute, and she only recovered about half of what she had claimed. I conclude the applicant was the substantially successful party.
On behalf of the respondent it was submitted, in the alternative, that the determination of each issue constituted a separate event so that there ought be separate costs orders on particular issues or a single order proportioned to take into account the respective successes of the parties and the costs involved in relation to each issue.
It was submitted that the applicant had raised some issues which were not pursued or in respect of which he did not succeed. There were three referred to in argument.
The first was a claim by the applicant that the separation agreement contained an implied term that a party remaining in occupancy of the house after separation would bear the outgoings. This claim was pursued until the respondent, in the course of closing submissions by her counsel, conceded the existence and enforceability of the subsequent occupancy agreement requiring her to keep the mortgage balance the same as it was at separation. This concession resulted in the applicant succeeding on his claim that the respondent had to account for the increase in the mortgage debt, and so the question of whether the term was implied in the separation agreement did not need to be further considered. The question would not have arisen but for the respondent's failure to agree to account for the increase in the mortgage.
The second and third claims referred to by the respondent, which the applicant abandoned, were his claim for $4,000 being a share in a grocery prize which the respondent had won, and his claim for about $2,000 being the purchase price of an entertainment system which he had purchased for the family. These were relatively small claims. The respondent had also abandoned some of her claims such as a claim for a share in a boat gifted to the applicant by his father.
In the circumstances to which I have referred, I consider that the justice of the case rests with the event being identified as substantial success in the proceeding, rather than numerous events being identified based upon the multiplicity of issues raised by the parties and contested for a time.
Counsel for the respondent submitted that if the application of the ordinary costs rule favoured the applicant, the circumstances justified a departure from the usual order.
Counsel referred to settlement offers which had been made from time to time. An analysis of the offers, however, does not support a departure from the usual order. The most which the respondent offered to the applicant was $25,000. The award to the applicant was substantially more than this. Early in negotiations the applicant had offered to accept $35,000, which was less than the amount with he ultimately obtained. I find nothing in the exchange of offers which justifies a departure from the usual order.
It was submitted that the respondent had behaved reasonably in the litigation by negotiating and trying to get assets valued. Even if this were so, absent disentitling conduct by the applicant, the fact that a losing party has behaved reasonably does not justify depriving the successful party of an order for costs. In considering whether a departure from the usual order is appropriate, the focus is on the conduct of the successful party. This proposition is clear from the judgment of McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72, where his Honour said, at par[69]:
"The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd, Devlin J formulated the relevant principle as follows:
'No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.'
'Misconduct' in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; succeeds on a point not argued before a lower court; prosecutes the matter solely for the purpose of increasing the costs recoverable; or obtains relief which the unsuccessful party had already offered in settlement of the dispute." [Footnotes not reproduced.]
It was submitted that the applicant had forced the respondent into the litigation and that the litigation was unnecessary because of the existence of the separation agreement. I reject this submission. The highest payment which the respondent was prepared to concede to the applicant was $25,000. His entitlement, being $39,700.16, was significantly in excess of this. He had offered to settle for $35,000 shortly after the couple separated but the respondent did not accept his offer. The evidence does not support the respondent's contention that the litigation commenced by the applicant was unnecessary.
Finally, on behalf of the respondent it was submitted that any order for costs should be expressed to be taxable on the scale specified in Pt 1 of Sch 1 of the Magistrates Court (Civil Division) Rules 1998. This is the scale specified in Sch 1, Pt 2 of the Supreme Court Rules 2000. Rule 835(5) provides that in any proceeding the court or a judge may order that a party recover costs on the lower scale.
It was conceded that the amount in dispute exceeded the monetary jurisdiction of the Magistrates Court, being $50,000. However, counsel submitted that it did not exceed it by much. The respondent wanted an order awarding to her the whole of the $94,484.07, paid into the trust account and more. In the result, she was awarded more than $50,000. Jurisdiction to determine the dispute and to award the amounts ultimately awarded rested solely in the Supreme Court. The parties would have had a reasonable expectation throughout the conduct of the litigation that the successful party would be compensated for costs on the Supreme Court scale. The justice of the case, where the Magistrates Court could not have had jurisdiction to grant the relief obtained, generally rests with the costs being taxed on the Supreme Court scale. There is no sufficient reason to treat this case differently.
The order is that the respondent pay the applicant's taxed costs of the proceedings.
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