Simmons v Willaims (No. 3) No. DCCIV-01-20

[2003] SADC 141

SIMMONS & WILLIAMS (No. 3)
[2003] SADC Enter judgment number

Judge Robertson
Civil

1. I have the following applications by the Plaintiff before me:

   ·First,  that Plaintiff have his costs of action;

   ·Secondly,  relying upon a Calderbank letter, that the Plaintiff  should have his costs on a solicitor and client basis; and

   ·Thirdly, that the costs of an application heard by Bishop DCJ on 24 June 2003 be included in such order for costs.

2. The Defendant opposes each application.  The Defendant submits:

   ·That each party pay their own costs; and

   ·In any event the Plaintiff is not entitled to the costs of the application before Bishop DCJ.

3. The proceedings were brought under the De Facto Relationship Act 1996 (“the Act”).  Both parties sought apportionment orders for property identified in the proceedings.  The Plaintiff maintained throughout the proceedings that there should be an equal apportionment of the property.  The Defendant, at the end of the Trial indicated that the Plaintiff should receive an apportionment of twentyfive to thirty percent of the property.  At the commencement of the Trial the Defendant took the position that the Plaintiff should receive an apportionment of a lesser percentage than she indicated at the end of the Trial.  My decision was that the property be apportioned forty percent to the Plaintiff and sixty percent to the Defendant.

4. In considering these applications I need to start with the submission made by Ms Morosini, Counsel for the Defendant, that I should adopt the approach set out in Section 117 of the Family Law Act, namely, that I should order that each party bear their own costs. Section 117 of the Family Law Act, provides that in Family Court proceedings each party should bear their own costs except in circumstances where the Court considers it just to order costs.

5. In my opinion, my discretion to order costs would miscarry if I ordered that there be no order for costs on the basis that this Court should adopt the approach to costs enshrined in the Family Law Act. This Court is a costs jurisdiction Court. I need to exercise my discretion with that in mind. In my opinion it would not be a valid exercise of the discretion to simply adopt the philosophical approach enshrined in other legislation.

6. It can be seen from my decision that neither party was successful in the sense that each failed to achieve the apportionment of property sought. This is not a case where there has been a successful party and that party can start from the position that “prima facie” a successful party is entitled to an order for costs.  It seems to me that to do justice to the parties any order for costs needs to be determined by considering the success of the parties with respect to the issues which arose in the Trial.

7. The extent of the relevant contributions to the renovations of the house at Osborne Street, Williamstown, Victoria was probably the major issue in the Trial.  It took by far the greatest amount of time in the Trial.  It is clear from my Judgment that the Plaintiff was largely successful on this issue.  The Plaintiff’s contribution to the renovations of the Wattle Street Malvern property was also a significant issue.  Once again the Plaintiff was largely successful.  To a far lesser extent there was issue of the work done by the Plaintiff at Williamstown.  The Plaintiff was also successful on this issue. 

8. On the other hand there were a number of other issues on which the Defendant succeeded.  Included in such issues, was the Plaintiff’s claim that the relationship should be considered as a joint enterprise; the level of non-financial contributions on the part of each party; the loan for the purchase of the Plaintiff’s motor vehicle and the level of direct financial contributions by the Defendant, particularly in the latter period of the relationship and in the period after the relationship had ceased.

9. I should also mention that a great deal of time was taken up on the question of the value of the Wattle Street property.  In the end I did not accept the valuations of any of the valuers who gave evidence.  It cannot be said that either party was successful on this issue.  However, the Plaintiff was successful on the issue of whether the Wattle Street house should be sold, although this issue did not take up a great deal of the Court’s time.

10. In looking at the overall position regarding the success on issues in the Trial I consider that appropriate orders for costs are that the Plaintiff should receive eighty percent of his costs and the Defendant should receive twenty percent of her costs.

11. I now turn to the Plaintiff’s application for solicitor/client costs based upon what the Plaintiff claims is a “Calderbank” letter dated 30 October 2000 being a letter from the Plaintiff’s solicitors to the Defendant.

12. It was the submission of Mr Frayne, Counsel for the Plaintiff, that the letter contained an offer to settle for $157,000 and therefore as the Plaintiff received in excess of that amount, he is entitled to his costs on a solicitor and client basis.

13. The offer in the letter is in similar terms to that contained in the Rule 41 Offer.  What I said in relation to that Offer applies equally here.  The terms of the offer here were not simply that the Plaintiff would accept $157,000 in full settlement of his claim.  There were other terms of the offer with which the Defendant needed to agree.  I accept that the effect of the offer in the letter is that the Plaintiff was prepared to accept $157,000 provided the Defendant agreed to pay the Plaintiff’s mother $1,500 being half a debt of $3,000 owed by both of them and that the Defendant agreed to the transfer to the Plaintiff of a rug and sofa which Plaintiff valued at $400 and $750 respectively.

14. There are two schools of judicial opinion in Australia regarding the manner in which a Calderbank letter may be used.  The Full Court in Pirrotta v Citibank Ltd (1988-89) 72 SASR 259 reviewed the two schools of opinion but did not consider it necessary to reach a view regarding which one should prevail for the purpose of reaching its decision.

15. For my part, I favour the view that a Calderbank  letter does not give a party a presumptive entitlement to solicitor and client costs in the same way as Rule 41 of the District Court Rules.  I am attracted to the view expressed by Lindgren J in MGICA (1992) Ltd v Kenny and Good Pty Ltd (1996) 140 ALR 707 where he said (at 710):

    “It is important, however, to appreciate that the mere making of an offer by a “Calderbank letter” and its non-acceptance followed by a result more favourable to the offeror (less favourable to the offeree) than that represented by the offer will not automatically lead to the making of an order for payment of costs on an indemnity basis:  WCW Pty Ltd. Charthill Ltd (Fed C of A, Olney J, 7 July 1992, unreported); John S Hayes & Associates Pty Ltd v Kimberly-Clark Australia Pty Ltd (1994) 52 FCR 201 (Hill J) (John S Hayes) at 204-6”.

    and again Lindgren J said (at 711):

    “Notwithstanding the policy of encouraging settlement of litigation, it should not be assumed that the mere writing of a “Calderbank letter” generates the same presumptive entitlement to indemnity costs that is provided for in O 23”.

16. In the application under Rule 41 I determined that I should exercise my discretion to refuse to order solicitor/client costs.  I concluded that the amendment at Trial by the Plaintiff to include as part of his prayer for relief that the Wattle Street property be sold was a substantial amendment.  As I said, it added an entirely new dimension to the Plaintiff’s claim. I concluded that it would be unjust to now allow the Plaintiff to use the proceeds of sale as a method of calculating his monetary return to determine whether the offer had been bettered.  In my view the same reasoning applies to this application.  I refer to my comments in my decision on that earlier application.

17. There is a further reason why the application should be refused.  The offer made in the Plaintiff’s solicitor’s letter was premised on the basis that the property be divided equally.  That was the position of the Plaintiff then and that was the position he maintained throughout the Trial.  The offer was asking the Defendant to accept an equal distribution of the property.  The Defendant rejected that premise.  As it turns out she was justified in doing so as I held that the division of the property should be forty percent to the Plaintiff and sixty percent to the Defendant. 

18. In my view it is not simply a matter of looking at the “bottom line” amount.  In proceedings  brought under the De Facto Relationships Act I consider it an important factor to consider how the offer is structured.  When that is done here it becomes apparent that it would not be appropriate that the Plaintiff’s costs be paid on a solicitor/client basis.  Accordingly, the application is refused.

19. I come finally to the application that the Defendant pay the Plaintiff’s costs of the application before  Bishop DCJ on 24 June 2003.  The Plaintiff  made an application that $60,000 of the proceeds of sale of the Wattle Street property remain in the trust account of the Conveyancer who was completing the sale transaction until the question of the costs of the action was determined.  That application was opposed by the Defendant.  The Plaintiff had earlier sought the Defendant’s agreement to the retention of the $60,000 in the Trust Account but the Defendant refused.  The application came before  Bishop DCJ because I was out of the State at the time.  His Honour decided that the position should be preserved until I returned to allow the parties to bring on the application again before me.  No application was brought before me.

20. In my opinion the proposition by the Plaintiff to preserve an amount of money out of the proceeds of sale to await my decision on the Plaintiff’s application for solicitor/client costs under Rule 41 of the Rules and the Defendant’s application for costs under Rule 40 of the Rules was reasonable.  The entire sale proceeds should not have been disbursed until that decision was made.  Indeed, there is no reason to disburse those funds until the entire question of costs has been resolved by the completion of the taxation of the costs.  The money should be preserved to pay costs.  As the Plaintiff was required to bring on the application for costs before Bishop DCJ because of the Defendant’s refusal to allow the money to remain in the trust account, in my opinion, the Plaintiff is entitled to the costs of the application.

21. By way of summary, I make the following orders:-

    1.That the Plaintiff receive eighty percent of his costs to be agreed or taxed on a party and party basis.

    2.That the Defendant receive twenty percent of her costs on a party and party basis.

    3.That the costs of the Plaintiff include the costs of the application before  Bishop DCJ on 24 June 2003.