SABELL & MEDHURST (NO 3)

[2011] FamCA 597

FAMILY COURT OF AUSTRALIA

SABELL & MEDHURST (NO 3) [2011] FamCA 597

FAMILY LAW - COSTS – Oral applications made by the wife - Relevant legal principles - Relevant matters including weight to be given to offers of settlement

Family Law Act 1975 (Cth): ss 117(1), 117(2), 117(2A)

Penfold & Penfold (1980) FLC 90-880;
Pennisi & Pennisi (1997) FLC 92-774;
Robinson & Higginbotham (1991) FLC 92-209

APPLICANT: Ms Medhurst

RESPONDENT: Mr Sabell

FILE NUMBER: SYC 3944 of 2009

DATE DELIVERED: 30 June 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rose J

HEARING DATE: 30 June 2011

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

COUNSEL FOR THE RESPONDENT: G Johnston

SOLICITOR FOR THE RESPONDENT: Hazan Hollander

Orders

Order 8 amended pursuant to the ‘slip rule’

1. That by consent pursuant to the ‘slip rule’ Order 8 made 30 June 2011 is varied by inserting the following words after the words “[School 1]”:

   “8.That the husband pay the following costs of the attendance by the two children at [School 1] for their primary school education unless otherwise agreed between the parties in writing as and when such costs fall due:

   (a)      Tuition fees and levies.

   (b)      School required books and stationery.

   (c)      Computers.

   (d)      Computers.

   (e)      Musical instruments.

   (f)       Uniforms.

   (g)      Local extra curricular expenses.”

Husband’s oral application for costs of and incidental to the application determined on 9 June 2011

1. That the husband pay the wife’s costs of and incidental to the application determined on 9 June 2011 in the sum of $4,760.00.

2. That in relation to Order 2 the costs order be deemed to be satisfied by the deduction of that amount from the lump sum which the wife is otherwise liable to pay the husband pursuant to Order 1(c) made 30 June 2011.

Wife’s oral application for costs of the substantive proceedings

1. That the wife’s oral application for costs of the substantive proceedings is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Sabell & Medhurst (No 3) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3944 of 2009

Ms Medhurst

Applicant

And

Mr Sabell

Respondent

REASONS FOR JUDGMENT

Introduction

1. In these proceedings, following Orders and judgment having been given today in the substantive proceedings, an oral application is made on behalf of the wife for an order for costs reflecting the following:

   a)costs reserved by the orders made 9 June 2011 following determination of the husband’s application to reopen his case;

   b)costs of the substantive proceedings.

   I will proceed to deal with each application in that sequence.

Husband’s oral application for costs of and incidental to the application determined on 9 June 2011

1. With regard to the application for an order for costs of and incidental to the husband’s application determined on 9 June 2011, I have concluded that it is proper that there be an order for party/party costs in favour of the wife and I certify senior counsel’s fees for those costs.  My reasons for doing so are as follows. 

2. The leading case in relation to costs is the High Court’s judgment in Penfold[1].  The principles enunciated in the joint judgment and otherwise referred to in the judgment of the remaining member of the court are that in this jurisdiction the general principle is that each party bears his or her own costs.  Costs do not follow the event.  That is as a consequence of the interpretation of section 117(1) of the Act. 

   [1] Penfold v Penfold (1980) FLC 90-880

3. However, the Court has a wide discretion to make an order for costs in the event that a circumstance has been established which may make it proper that such an order be made having regard to subsection (2) and consideration of the matters of relevance that emerge from subsection (2A).

Conclusion

1. I have concluded that a circumstance has indeed been established in favour of the wife, in that the orders made on 9 June 2011 reflect the husband having been almost wholly unsuccessful in his application to re-open the case.

2. The findings were that the husband’s application be dismissed for the reasons given, save and except for identification of subject matters of expense, as opposed to the quantum of them.  Those subject matters included liability for New South Wales land tax, accommodation expenses in both Hong Kong and Sydney and travel expenses as between Hong Kong and Sydney for the purpose of the husband spending time with the two children of the marriage.

3. Whilst the husband was permitted to re-open his case for the purpose of identification only of the subject matter represented by those potential liabilities, it was certainly open for argument that those subject matters would necessarily have been able to be inferred from the evidence given during the hearing.

4. The reasons are that the husband was the owner of an investment property in Sydney which automatically attracts the potential for land tax, subject to the necessary elements being established.  It was clear from the evidence that the husband would be incurring expense for rental accommodation in Hong Kong and also in Sydney for his proposed travel to Sydney from Hong Kong in order to spend periods of time with the two children.  The same observation applies to the travel expense itself of airfares between Hong Kong and Sydney.

5. In addition, I have found that there was little, if any, evidence to meet one of the necessary principles relevant to the issue of whether or not a party may re-open his or her case prior to judgment and that is whether or not the proposed evidence could have been obtained and adduced with reasonable diligence during the course of the hearing.  Consequently, having regard to the last‑mentioned matter, as well as the others to which I have referred, the husband’s application was unsuccessful with the very narrow limitation to which I have made reference.

6. The wife was put in the position of having to prepare and be ready to contest that application.  The matters raised by her and the submissions subsequently made on her behalf were reasonable, in terms of the considerations that I had to direct my attention to, for the purpose of determining the husband’s application.

7. The wife had been represented at the hearing by senior counsel without a junior.  The potential ramifications of the husband’s application to reopen were substantial for the reasons set forth in her material and highlighted by senior counsel in his submissions.  There is no need for me to reiterate those matters, as they were touched upon in the Reasons for Judgment given by me on 9 June 2011.

8. I accept that the assessment of the solicitor’s costs at $800.00 is on the basis of a party/party scale.  Consequently, an order will be made that the husband pay the wife’s costs of and incidental to the application determined by orders made 9 June 2011 in the sum of $4,760.00.  Counsel was heard with regard to time to pay.

9. It was submitted by counsel for the husband and consented to by the solicitor for the wife that payment of the costs order of $4,760.00 be deemed to be satisfied by the deduction of that amount from the lump sum which the wife is otherwise liable to pay the husband pursuant to Order 1(c) made 30 June 2011.

Wife’s oral application for costs with respect to the substantive proceedings

1. With regard to the wife’s application for costs in relation to the substantive proceedings, the following matters arise.

2. The general principle to be applied in relation to costs in this jurisdiction is that each party bears his or her own costs in accordance with the provisions of section 117(1).  The court has a wide discretion to make an order for costs provided that a circumstance is established pursuant to section 117(2), and having regard to relevant matters that arise pursuant to section 117(2A).  That is the interpretation of those provisions that has been enforced for many years, pursuant to the High Court’s judgment in Penfold[2], as previously referred to.

   [2] Supra 

Conclusion

1. I have concluded that a circumstance has not been established to justify an order for costs, given the exchange of offers for settlement conveniently summarised in the schedule attached to a tender bundle being Exhibit A.  The husband’s last offer was that dated 3 December 2010.  That had the effect of the wife facing a financial burden initially to a far lesser degree than now faced pursuant to the property settlement orders made today.

2. The reasons are that the amount of refinancing was substantially less than the then outstanding amount pursuant to the mortgage.  In addition, the lump sum to be paid to the husband, on the other hand, was a greater amount which the wife, for her part, accepted should be paid, and on the basis to which I have earlier referred, as emerges from her offer dated 16 December 2010.

3. Both parties, in terms of those offers, had put forward terms which did not include any spousal maintenance.  Each of the parties had put forward offers reflecting half of school fees for not only primary school education, but also secondary school education at School 1.

4. An issue for agitation before me was whether the husband should be liable for any school fees and related expenses at School 1, whether primary school or secondary education.

5. In addition, a further matter of controversy that remained between them was the matter of whether the husband should pay periodic child support and, if so, the quantum, as well as payment by him of additional expenses associated with school attendance, health insurance and the gap for medical expenses for the children.

6. It was arguable, that on the evidence that I heard, for those matters to be raised in terms of the negotiations between the parties.  There is no suggestion that either party approached their various settlement offers and particularly the two to which I have referred, as being irresponsible or lacking in bona fides, or making outrageous demands.

7. Indeed, as counsel for the husband has emphasised, Exhibit A demonstrates concerted efforts by the parties to reach a compromise at various times during last year commencing on 11 January 2010 and culminating with the last offer on 16 December 2010.

8. The Full Court has emphasised, on a number of occasions, in particular in its judgments in Robinson & Higginbotham[3] and later in Pennisi& Pennisi[4] that offers for settlement are encouraged and that, subject to their terms, they may be given considerable weight.  At the same time, a court is required not to lose sight of the fact that applications for costs do not rise or fall solely on the basis of offers for settlement that may have been made.  Other matters are required to be taken into account pursuant to section 117(2A), and the legislation does not provide for a scale of priorities in that regard.

   [3] Robinson & Higginbotham  (1991) FLC 92-209

   [4] Pennisi& Pennisi (1997) FLC 92-774

9. In summary, the offer made by the husband on 3 December 2010, whilst not reflecting the orders that were ultimately made, nonetheless on a projected mathematical basis warranted serious attraction, particularly in view of the ultimate refinancing required by the wife, including payment of the lump sum, as leaving her marginally better off than as a result of the orders made this day.   School fees, even on a fifty per cent basis, reflected both primary and secondary school education.

10. In the alternative to the conclusion previously reached, it is open to me to find that a circumstance has been established by the wife which may make it proper for an order for costs to be made.  That circumstance is that the husband, whilst gaining a slightly greater benefit in terms of the wife’s immediate financial obligations so far as discharge of the mortgage and payment of lump sum is concerned on the other hand, would not have been required to meet an order for spousal maintenance.  In addition, the periodic amount for child support was $100.00 per week less and his commitment in relation to school fees represented fifty per cent, albeit that in the immediate future, the financial implication was for primary school fees, notwithstanding that many years further down, secondary school fees on an equal basis also have to be faced.

11. The extras that were the subject of disagreement between the parties were certainly capable of sensible resolution.  There did not seem to be any good reason advanced why health and medical expenses for children, including gap expenses, should not have been met by him due to the vastly superior financial position that he has and has had in recent times, compared to the wife’s overall financial circumstances and the limitations imposed on them the subject of the judgment.

12. However, I have to take into account additional matters.  The financial position of the parties, as previously referred to, greatly favour the husband both at the present time and for the foreseeable future.  His capacity to earn income is far greater than the wife.  The wife has the ongoing care and control of children.  To be balanced against that, the offers of settlement to which I have referred, and those offers for settlement have attractive features about them in terms of each party’s later offers, reflected in those made on 3 December 2010 and 16 December 2010.

13. As previously referred to, I am required to give weight to offers for settlement, depending upon their terms and the context in which they have been made.  I have set out my observations of those offers earlier in this judgment, which do not bear reiteration.

14. I note that an earlier offer made by the wife was that she pay the husband a lump sum of $200,000.00.  That was the offer made on 20 August 2010.  On the face of it, that was an extraordinary offer which does not bear any resemblance to the evidence given by the wife of her financial circumstances and capacity to earn income and implicitly, being able to generate funds of that order, let alone to be able to service any borrowings for that purpose.

15. I can only conclude that the wife may have had some potential benefactor for that reason or, had made potential arrangements for finance of an extraordinarily generous level which was not the subject of any evidence before me.  There may have been good reasons why there was a lack of such evidence.  It is not for me to speculate about it.  Nonetheless, that evidence does demonstrate that perhaps the wife has potential financial resources that were not evident from the evidence adduced during the course of the hearing.  Consequently, for those reasons, on either of the alternative basis, the application for costs is dismissed.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose J delivered on 30 June 2011.

Associate: 

Date:  6 July 2011