S and S - [2003] FMCAfam 58

FEDERAL MAGISTRATES COURT OF AUSTRALIA

S & S

[2003] FMCAfam 58

Family Law – Practice and Procedure.
Costs – settlement offer – property order same as offer – lack of information before hearing – no order as to costs.

Family Law Act 1975

Robinson v Higginbotham (1991) FLC 92-209,Nygh at 78,417
Pennisi v Pennisi 92-774 at 84,547

Applicant:

J M S

Respondent:

M R S

File No:

MLM 3158 of 2002

Delivered on:

3 March 2003

Delivered at:

Dandenong

Hearing Date:

8 January 2003

Judgment of:

Phipps FM

REPRESENTATION

Counsel for the Applicant:

Mr Matthews

Solicitors for the Applicant:

Mirabelli D’Ortenzio & Co

Counsel for the Respondent:

Mr Holmes

Solicitors for the Respondent:

Semmens Hatch & Anderson

ORDERS

That there be no order as to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLM 3158 of 2002

J M S

Applicant

And

M R S

Respondent

REASONS FOR JUDGMENT

This is an application for costs following final orders in a property application.
The order made was that the husband transfer his interest in the former matrimonial home to the wife and that simultaneously the wife pay to the husband $65,000.
Subsequent to the orders being pronounced, I was informed that on the 28th February 2002 the husband had made an offer of settlement to the wife. The offer was in the alternative. The first alternative was sale of the former matrimonial home and equal division of the net proceeds. The second alternative was transfer by the husband to the wife of his interest in the former matrimonial home in return for cash payment to him of $65,000.
The offer had been made in accordance with section 117C of the Family Law Act 1975. The basis for the application for costs was that the wife had achieved no better than the offer.
Provision for costs is made in section 117 of the Family Law Act. Generally, parties to proceedings under the Act bear their own costs, but, if the court is of opinion that there are circumstances that justify it in doing so, it may make such order as to costs as it considers just. The matters relevant to a costs order are set out in sub-section 117 (2A). It provides:
In considering what order (if any) should be made under sub-section (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, in accordance with section 117C or otherwise, 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.
In making application for costs, the husband principally relied upon paragraph (f). This paragraph does not have any particular priority. Its importance must be weighed in the light of all the circumstances of the case: Robinson v Higginbotham (1991) FLC 92-209, Nygh at 78,417.
In Pennisi v Pennisi 92-774 at 84,547 the Full Court said:
“The plain words of the paragraph do not limit a Court's attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the Act carry the same consequences as payments into Court in common law matters.
We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties’ financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.”
The significant issue in the case was what had happened to superannuation payments that the husband had received. In particular, there was an issue about superannuation of $110,000 he had received in 1988. He received another payment of $50,000 in late 2001. The submission put on behalf of the wife at the hearing was that a conclusion should be drawn, from what evidence there was, that the husband had not disclosed what had happened to the balance of the $110,000. That being so, it was submitted, an inference was to be drawn against the husband that he had an undisclosed amount still available to him.
That submission was not accepted. However, the husband's financial position did not emerge fully until his cross-examination. His financial statement filed on 25 July 2001 disclosed state public service superannuation of $50,000. A lump sum was paid later in the year. $50,000, or most of it, was in a bank account at the time of the hearing. The husband's financial statement filed 31 June 2002 did not disclose this. An affidavit of the husband filed on 21 June 2002 stated that in late 2001 he received his final superannuation payment described as “out of $59,000”.
An affidavit of documents was filed by the husband on 21 June 2002. It contains a reference to copy bank statements, six in number. They were not a complete record of the husband's bank accounts. The evidence from both parties referred to amounts that the husband had in bank accounts at various times. It was not a matter of the husband failing to produce bank accounts. He no longer had them in his possession. The husband produced no taxation returns.
My finding that there were no hidden assets of the husband, relied in part, on an absence of evidence. Production of all the husband's bank statements, tax returns and other financial records back until 1989 would have allowed a more positive finding to be made. The most likely explanation for the lack of records is that the husband had not kept them.
Whatever the explanation for lack of records, the result was that the wife was not in a position to assess properly the offer when it was made nor at any time before the conclusion of the hearing. She was entitled to some information on what had happened to the husband’s superannuation payments, particularly the one of $110,000. Nothing was disclosed that could give her any reasonable satisfaction.
Sub-section 117(2) requires other matters to be taken into account, including the financial circumstances of each of the parties.
When I take into account the financial circumstances, the relatively small size of the matrimonial assets and the disadvantage the wife was under in assessing her prospects in relation to the significant issue in the case, I consider the proper exercise of my discretion is to make no order as the costs.
I am conscious that the offer made by the husband is a significant matter, but is it is not the only matter. The other matters balance against its significance.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Phipps FM

Associate: Kwong S

Date: 28 October 2003