SAFAR & MALOUF

[2021] FamCA 445

FAMILY COURT OF AUSTRALIA

SAFAR & MALOUF [2021] FamCA 445

FAMILY LAW – NATIONAL ARBITRATION LIST – decree made pursuant to s 13K varying the arbitral award – orders made directing $50,000 to be held in trust pending ascertainment of costs.

FAMILY LAW – COSTS – offer to settle not responded to prior to arbitration – arbitral award making provisions more favourable to applicant than were the terms of her settlement offer – costs order made under s 117(2).

Family Law Act 1975 (Cth) ss 13K, 79, 106A, 117
Family Law Rules 2004 (Cth) div 10.1.2

Fitzgerald v Fish (2005) 33 Fam LR 123
Guild & Stasiuk [2020] FamCA 348
In the Marriage of Hogan (1986) 10 Fam LR 681
Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Ms Safar

RESPONDENT: Mr Malouf

FILE NUMBER: SYC 5068 of 2020

DATE DELIVERED: 1 July 2021

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 29 June 2021

DATE OF FINAL SUBMISSION: 29 June 2021

REPRESENTATION

COUNSEL FOR THE APPLICANT: Not applicable

SOLICITOR FOR THE APPLICANT: Mcgrath Dicembre & Company

COUNSEL FOR THE RESPONDENT: Not applicable

SOLICITOR FOR THE RESPONDENT: Kalpaxis Legal Pty Ltd

Orders

1. I make a decree pursuant to s 13K(1) of the Family Law Act varying paragraph 1 of the arbitral award made on 9 April 2021 and registered by me on 24 May 2021 to the extent that from the amount of $194,944 referred to in paragraph 1 of the arbitral award, the applicant pay to the respondent the sum of $144,944 and pay the remaining $50,000 into the trust account of the applicant’s legal representatives, McGrath Dicembre & Company, pending either agreement or determination of costs as recorded in paragraph 2 herein.

2. The respondent pay the applicant costs of and incidental to this proceeding incurred from 20 November 2020 up until the conclusion of the arbitration hearing on 16 March 2021 as agreed or assessed.

3. Costs must be agreed on or before 30 July 2021 or failing agreement, costs must be assessed by a registrar with the assessment to be concluded by 30 September 2021.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Safar & Malouf has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: SYC 5068  of 2020

Ms Safar

Applicant

And

Mr Malouf

Respondent

REASONS FOR JUDGMENT

Introduction

1. Following the publication of the arbitral award in this proceeding[1] and its registration by order made on 24 May 2021, the applicant sought three orders in her application in a case filed on 28 May 2021.

   [1] The award was published on 9 April 2021 by Peter Batey of Waratah Chambers, arbitrator.

2. The first order sought by the applicant related to costs in which she sought payment by the respondent of costs of and incidental to this proceeding from 20 November 2020 until the conclusion of the arbitral hearing on 16 March 2021 as agreed or as assessed.

3. The second order sought related to the costs of the application in a case filed on 28 May 2021.

4. The third order sought related to a variation in paragraph 1 of the arbitral award permitting an amount of $50,000 to be paid into a trust account pending agreement or determination of costs.

5. In essence, the applicant sought her costs by reason of the fact that she obtained a result in the arbitration that bettered an offer to settle the litigation she made in November 2020.

6. In her affidavit made in support of her application in a case, the applicant deposed to costs and disbursements she had incurred subsequent to the respondent’s refusal to accept the applicant’s offer of settlement totalling $66,535.31.[2]

   [2] She stated that the sum mentioned included the arbitrator’s fees.

Synopsis

1. In my view the respondent should pay the applicant her costs consequent upon the respondent’s refusal to accept the applicant’s settlement offer.  It is appropriate also to modify paragraph 1 of the arbitrator’s award to give effect to that conclusion.

Relevant factual setting

1. The applicant brought a property settlement proceeding pursuant to s 79 of the Family Law Act against the respondent in which she sought orders giving effect to a division of the parties’ net assets as to 75% to her and 25% to the respondent.  The respondent sought a division of the parties’ net assets as to 55% to the applicant and 45% to the respondent.

2. The parties married and commenced cohabitation in February 2000.  They separated under the one roof in December 2014.  The arbitrator found that the period of cohabitation was 14 years.[3]  Five children of the marriage aged between 15 and 6 were cared for primarily by the applicant.[4]

   [3] Paragraph 12 of the arbitral reasons.

   [4] Paragraph 21 of the arbitral reasons.

3. The arbitrator found that the net assets of the parties totalled $799,005.

4. The arbitrator found that the marriage was lengthy, 17 years in total.[5]

   [5] Paragraph 39 of the arbitral reasons.

5. The arbitrator addressed s 79(4) considerations, undertaking the analysis in accordance with the requirements of Stanford v Stanford.[6]  The arbitrator found that the applicant was entitled to 70% of the net assets and superannuation, equating to the sum of $559,303.  The arbitrator found that the respondent was entitled to 30% of the net assets and superannuation, equating to the sum of $239,701.[7]  The arbitrator stated that the “wife will be receiving $319,602 more than the husband”.[8]

   [6] (2012) 247 CLR 108.

   [7] Paragraph 81 of the arbitral reasons.

   [8] Ibid.

6. Once the arbitrator applied his findings against the pool of net assets divisible among the parties, the arbitrator ordered that the wife retain certain real and personal property, as well as superannuation.  The arbitrator ordered the applicant to –

   a)discharge a modest liability to the mortgagee over the Suburb B property; and

   b)pay the respondent the sum of $194,944.

7. In order to arrive at the 30% division of net assets in favour of the respondent, the arbitrator ordered certain motor vehicles to be transferred to the respondent, a small amount of cash to be likewise transferred, a sum of superannuation and a payment from the applicant of $194,944.[9]

   [9] In fact, in paragraph 92 of the arbitral reasons the figure stipulated is $194,943, a one dollar difference.

8. The applicant contended that her offer of settlement made provision for a payment by her to the respondent of $225,000 and that she was ordered to pay the respondent $194,944, the net effect of which, so she argued, was that she bettered the settlement offer that the respondent declined to accept.  That offer was made soon after a conciliation conference[10] and so was an offer to which division 10.1.2 of the Family Law Rules applied.

   [10] Paragraph 6 of the applicant’s affidavit made 28 May 2021.

9. On 27 May 2021 I made orders requiring the respondent to file and serve any material in reply to the applicant’s affidavit material and he was given until 4pm on 11 June 2021 to do so.  The respondent failed to file any material in opposition to the applicant’s application in a case filed 28 May 2021 within the time ordered.  He filed affidavit material, out of time, without leave.  On 29 June 2021 I heard his application for leave to rely on his affidavit made 28 June 2021 and the exhibits thereto.  I granted him such leave.  In my orders made 27 May 2021 I stated that my decision would be made on the papers to which both parties agreed.

Whether a costs order should be made

1. In my view the answer to that question is in the affirmative.

2. Section 117(1) of the Family Law Act provides, in substance, that each party bears his, her or its own costs in litigation in this court. Section 117(2) of the Family Law Act permits an order to be made, other than one to the effect prescribed by s 117(1) so long as one of the criteria in s 117(2A) are met. Only one of the subsections of s 117(2A) need to be met in order to support a costs order being made under s 117(2).[11]  However, any costs order must in all the circumstances be just.[12]  In this case the applicant invoked s 117(2A)(f).  That subsection mandates the court to have regard to whether either party has made an offer in writing to settle the proceeding and the terms of any such offer.

   [11]Fitzgerald v Fish (2005) 33 Fam LR 123.

   [12]In the Marriage of Hogan (1986) 10 Fam LR 681.

3. Here, the offer made by the applicant involved the applicant paying the respondent the sum of $225,000.  The applicant deposed to the respondent not responding to that offer.  It was made on 20 November 2020.  The arbitration then proceeded.  In the course of making orders in the arbitration the arbitrator ordered the applicant to pay an amount less than the sum the applicant offered.  Had the respondent accepted the offer, it is likely that the entire proceeding would have been compromised.

4. The applicant deposed to having been put to considerable expense in the conduct of the arbitration, especially in being required to borrow amounts totalling $66,535.31.  She sought the recovery of a portion of that amount by adjusting the sum the arbitrator ordered her to pay to the respondent.

5. The question then became whether the sum the arbitrator ordered the applicant to pay to the respondent was less advantageous than the sum the applicant offered to pay the respondent.  The amount ordered was less.  But in the overall, that was not determinative because the offer submitted by the applicant was made up of a collection of component parts.  Those components included –

   a)refinancing of the Commonwealth Bank loan solely into the applicant’s name thereby discharging the joint liability of the applicant and respondent to the mortgagee;[13]

   b)the respondent transferring his title and interest in the Suburb B property to the applicant;[14]

   c)declaring each party the legal and beneficial owners of all personal property such as jewellery, furniture, chattels, monies, motor vehicles and superannuation;[15] and

   d)provisions for the registrar to execute instruments under s 106A of the Family Law Act.[16]

   [13] The arbitrator made an order to that effect in paragraph 2 of the arbitrator’s orders.

   [14] The arbitrator made an order to that effect in paragraph 3 of the arbitrator’s orders.

   [15] Pursuant to paragraph 18 of the arbitrator’s orders, the applicant was declared to be the sole legal and beneficial owner of cash, furniture, personal effects, jewellery, superannuation entitlements and a damaged car.

   [16] That corresponded to paragraph 21 of the arbitrator’s orders.

6. When closely examined and its terms compared with the arbitrator’s orders, the offer corresponded almost precisely to the arbitral orders save for –

   a)the sum the applicant was required to pay to the respondent;[17] and

   b)the declaration as to legal and beneficial ownership of items of personal property.[18]

   [17] The orders involved a payment of a lesser sum than was offered.

   [18] The offer was expressed to be joint whereas the orders were in favour of the applicant on those items.

7. In those circumstances it was readily apparent that pursuant to the orders of the arbitrator the applicant bettered the terms she offered the respondent.  It follows that on its proper construction, the offer was more favourable to the respondent than was the outcome of the arbitration.  He failed to accept the offer and thereby put the applicant to the trouble and inconvenience of pursuing the arbitration which, had the respondent accepted the offer, would have been unnecessary. 

8. Costs should flow from that.

9. That invited a consideration of the application made in paragraph 3 of the applicant’s application in a case dated 28 May 2021.  That application was in the following terms –

   That Order 1 of the Arbitrator’s Award now registered with this Honourable Court be varied to the extent that from the amount of $194,944.00 referred to in that Order the Applicant Wife pay to the Respondent Husband the sum of $144,944.00 and to pay the remaining $50,000.00 into the Trust Account of the Applicant Wife’s Solicitors, McGrath Dicembre & Company pending either agreement and/or determination of the costs as sought in Order 1 above.

10. Plainly enough, by that proposal the applicant sought her costs to be addressed, whether as to an agreed amount or as to an assessed amount, up to $50,000 and that such sum should come from the sum she was otherwise required to pay to the applicant pursuant to paragraph 1 of the arbitrator’s orders.  In her affidavit, especially at paragraphs 10 and following, the applicant deposed to her serious concerns that the respondent will not pay her any sum of costs once she makes payment to the respondent of the sum of $194,944.  Accordingly, she sought a variation of paragraph 1 of the arbitrator’s orders so that she was permitted to pay the respondent the sum ordered less $50,000 and that $50,000 be deposited into the applicant’s solicitor’s trust account.

11. In his affidavit made 28 June 2021 the respondent stated that he is unable to pay the applicant’s costs.  He said –

    a)he is a self-employed driver earning about $500 per week after tax;

    b)recently he has noticed a reduction in income to $300 per week;

    c)he needs to find rental accommodation; and

    d)he owes about $100,000 to his brother.

12. None of those address contentions of whether a costs order should be made in the circumstances.  In any event, the order proposed by the applicant has the effect of quarantining a sum from the amount the applicant is required to pay to the respondent pending agreement as to the quantum of costs or as to the assessment of those costs.

13. A time must be set for the parties to reach agreement on costs, in default of which costs will be assessed by a registrar.  I fix 30 days for costs to be agreed.  If agreement cannot be reached, costs must be assessed by a registrar and the assessment concluded by 30 September 2021.

The power to vary the arbitral award

1. Section 13K applies to registered awards. The award in this case was registered pursuant to my order made on 24 May 2021. Section 13K(1) allows the court (me, in this instance) to, among other things, vary the award by decree. Section 13K(2) provides that a decree varying the award may only be made if one of the grounds set out in subsections (a) – (d) apply. Section 13K(2)(c) is of present relevance. It provides that the award may be varied by decree “if the court is satisfied that…in the circumstances that have arisen since the award or agreement was made it is impracticable for some or all of it to be carried out”.

2. The relevantly applicable “circumstances that have arisen since the award was made” are the making of the costs order that the respondent is unlikely to satisfy, meet or pay.  So far as the impracticability of part of the award being carried out is concerned, in Guild & Stasiuk[19] I addressed the legal interpretation of the word “impracticable”, albeit in relation to a different section of the Family Law Act.

   [19] [2020] FamCA 348.

3. Here, it seems to me that in the circumstances that have arisen since the award was made, circumstances have in fact arisen making it impracticable for paragraph 1 of the arbitrator’s order to be carried out. In my view, it is appropriate to make a decree pursuant to s 13K(1) of the Family Law Act varying paragraph 1 of the arbitrator’s award in the manner sought.

Paragraph 2 of the application in a case

1. The applicant sought an order that the respondent pay her costs of this application in a case.

2. Those costs were referrable to the applicant’s affidavit in support of the application in a case.

3. I see no basis for a separate costs order referrable to the application in a case or for the appearance on 29 June 2021.  The costs order canvassed above is adequate in the circumstances.

Orders

1. The orders I make are as follows –

   (1)I make a decree pursuant to s 13K(1) of the Family Law Act varying paragraph 1 of the arbitral award made on 9 April 2021 and registered by me on 24 May 2021 to the extent that from the amount of $194,944 referred to in paragraph 1 of the arbitral award, the applicant pay to the respondent the sum of $144,944 and pay the remaining $50,000 into the trust account of the applicant’s legal representatives, McGrath Dicembre & Company, pending either agreement or determination of costs as recorded in paragraph 2 below;

   (2)the respondent pay the applicant costs of and incidental to this proceeding incurred from 20 November 2020 up until the conclusion of the arbitration hearing on 16 March 2021 as agreed or assessed; and

   (3)costs must be agreed on or before 30 July 2021 or failing agreement, costs must be assessed by a registrar with the assessment to be concluded by 30 September 2021.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 1 July 2021.

Associate: 

Date:  1 July 2021