Spark and Bernard (No.2)
[2014] FCCA 2392
•20 October 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SPARK & BERNARD (No.2) | [2014] FCCA 2392 |
| Catchwords: FAMILY LAW – Costs – application for costs – application for costs in property proceedings – where applicant wholly successful in property proceedings – conduct of the parties to the proceedings – where applicant made two written offers of settlement – where respondent was wholly unsuccessful in the proceedings – imprudent refusal of offers of settlement – where costs sought on a party and party basis in accordance with Rules. |
| Legislation: Family Law Act 1975 (Cth), ss.95, 117 Federal Circuit Court Rules 2001, Sch.1, Part 1 |
| Cases cited: Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248 Spark & Bernard [2014] FCCA 866 |
| Applicant: | MR SPARK |
| Respondent: | MS BERNARD |
| File Number: | SYC 2856 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | In chambers |
| Date of Last Submission: | 13 August 2014 |
| Delivered at: | Sydney |
| Delivered on: | 20 October 2014 |
REPRESENTATION
| Solicitor for the Applicant: | Ms Jamieson |
| Solicitors for the Applicant: | Gibson Howlin Lawyers |
| The Respondent: | In person |
ORDERS
The Respondent is to pay the Applicant’s costs in the sum of $19,169.14.
The Respondent is allowed three (3) months to pay.
IT IS NOTED that publication of this judgment under the pseudonym Spark & Bernard (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 2856 of 2012
| MR SPARK |
Applicant
And
| MS BERNARD |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application for costs by a successful Applicant in property proceedings finalised by a decision of this Court handed down on 30th April 2014 (Spark & Bernard[1]). In that decision, an Order was made that under s.90SM of the Family Law Act 1975 (Cth) that the Respondent should pay to the Applicant by way of settlement of property the sum of $162,555.00 within three months.
[1] [2014] FCCA 866
An order was also made that:
Any party who seeks an Order for Costs must file and serve an Application in a Case and an affidavit setting out the amount of costs sought and how such an amount is calculated within one (1) month from the date of this Order.
The Applicant’s solicitor filed an Application in a Case and an affidavit in support on 27th May 2014, within the time prescribed by the Order. The Applicant seeks an amount of $19,169.04 in costs and disbursements under the provisions of Schedule 1, Part 1 of the Federal Circuit Court Rules 2001.
The Respondent has filed a Response to an Application in a Case and two affidavits, one by herself and one by Ms R, on 13th August 2014. In her Response, the Respondent seeks (relevantly) an order that the parties should pay their own costs.
Evidence
The Applicant relies on an affidavit affirmed by his solicitor, Jodie Sue Jamieson, on 26th May 2014, in which she sets out that her client seeks costs in accordance with Items 1(a), 1(b), 4, 7, 9, 12, 13 and 16 of Part 1. Those amounts claimed total $15,549.00.
The Applicant also seeks disbursements totalling $3,620.04. Those disbursements do not include any amount for counsel’s fees, as
Ms Jamieson appeared for the Applicant herself.
Annexed to Ms Jamieson’s affidavit marked “A” and “B” respectively are copies of letters dated 27th May 2013 and 22nd January 2013 addressed to the Respondent’s then solicitors. Each letter contains an offer of settlement.
The earlier letter, dated 22nd January 2013, makes two alternative offers:
a)That the Respondent agrees to property Orders made by consent in the [omitted] Local Court being set aside, the parties’ Interim Application and Response be dismissed with no order for costs, and the parties should then negotiate a property settlement in accordance with s.90SM of the Family Law Act; or
b)In the alternative, that the Respondent pay to the applicant the sum of $50,000.00 by way of instalments of $20,000.00 immediately and $30,000.00 within three months.
Neither of these offers was accepted by the Respondent.
The later letter, dated 27th May 2013, made an offer to settle in the sum of $95,000.00 in two instalments, the first of $30,000.00 to be paid within 14 days and the balance of $65,000.00 to be paid in a further 4 weeks. This offer was to remain open until 4:00pm on 29th May 2013, as the final hearing was due to commence on 13th June 2013.
The Applicant’s second offer was not accepted.
The Respondent deposed in her affidavit of 12th August 2014 that she had listed a property at [B] for sale in May 2014, shortly after the substantive judgment was handed down on 30 April 2014. The sale was settled on 25th July 2014. The Respondent deposed:
8. The [B] property sold for $460,000.00.
9.The proceeds from the sale of the [B] property were distributed as follows:
a) $196,390.08 in payment of the mortgage secured over the property
b) $1,210.00 for the costs of the sale
c) $46,000.00 to my daughter Ms R
d) $48,000.00 to my sister-in-law Ms S
e) $95,000.00 for gambling debts.
10.There is $60,000.00 remaining from the sale of the [B] property.[2]
[2] Affidavit of Ms Bernard 12.8.2014 at paragraphs [8]-[10]
The Respondent goes on to depose that she has a significant problem with gambling and she has been diagnosed with depression and post traumatic stress disorder. She claims to owe the sum of $18,000.00 to a finance company, which she is paying off at the rate of $40.00 per fortnight.
The Respondent deposes that she receives a disability support pension in the sum of approximately $701.00 per fortnight. She also claims not to have fixed address and stays with her son and friends.
The affidavit of Ms R confirms that the Respondent paid to her the sum of $46,000.00 on settlement of the sale of the property by way of repayment of a loan of $50,000.00.
Costs in Family Law Proceedings
Costs in family law proceedings are governed by the provisions of section 117 of the Family Law Act. Whilst subsection 117(1) provides that each party to proceedings under the Act shall bear his or her own costs, this subsection is subject to, inter alia, the provisions of s.117(2), which states:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable rules of Court, make such order as to costs or security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Subsection 117(2A) provides that in considering what order (if any) should be made under subsection (2), the Court shall have regard to the matters set out in paragraphs (a) to (g) inclusive of the subsection.
Conclusions
In my view, there are several relevant matters to consider. Neither party is in receipt of legal aid. No criticism can be made of the conduct of the parties to the proceedings during the proceedings. Neither party failed to comply with previous orders of the Court, although the Respondent’s affidavit clearly shows that she failed to comply with a subsequent order of the court, but that is a matter for another day.
The Court should consider the financial circumstances of the parties. The Respondent’s case is that she was only left with $60,000.00 out of the proceeds of sale of the [B] property, but the fact is that she chose to dispose some of the proceeds of sale in the following manner:
a)by paying the sum of $46,000.00 to her daughter;
b)by paying the sum of $48,000.00 to her sister-in-law; and
c)by paying out the sum of $95,000.00 to some unspecified person or persons for “gambling debts”.
To my mind, if the respondent has chosen to dispose of those funds in this way, she cannot be heard to complain that she no longer has any money.
The Applicant has been wholly successful in the proceedings and the Respondent has been wholly unsuccessful (s.117(2A)(e)).
What is the most telling point of all is that the applicant made two offers of settlement, for $50,000.00 and $95,000.00, each of which was significantly lower than the amount of the judgment awarded against her, which amounted to $162,555.00. I note that the Respondent was legally represented at the time each offer was made.
A refusal of an offer of settlement for an amount less than the judgment debt is a very strong reason for making an order for costs against a party. In fact, an imprudent refusal of an offer of settlement, and there were two such refusals, can amount to a reason for a court to exercise its discretion to depart from the usual rule that costs are awarded on a party and party basis (see Colgate Palmolive Company v Cussons Pty Ltd[3] at [24]).
[3] [1993] FCA 536; (1993) 46 FCR 225; 118 ALR 248
In refusing the Applicant’s settlement offers, the Respondent made a significant error of judgment, which led to the defended hearing proceeding for two days. This is clearly a case where an order for costs is justified.
The Applicant seeks costs according to the scale set out in the Rules. The Applicant’s solicitor has calculated the costs correctly in accordance with Schedule 1, Part 1 of the Rules.
I propose to order that the Respondent is to pay the Applicant’s costs in the sum of $19,169.14. I will allow three months to pay.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Associate:
Date: 20 October 2014
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