Steele & Stanley
[2009] FamCAFC 39
•18 March 2009
FAMILY COURT OF AUSTRALIA
| STEELE & STANLEY | [2009] FamCAFC 39 |
| FAMILY LAW - APPEAL - COSTS - Wife appealed against the magnitude of an order for costs made in her favour against the husband – Offers of settlement - Wife argued that in the context of her offers of settlement the trial Judge erred in failing to order the husband to pay the whole of her costs on a party/party basis - Husband resisted the appeal and sought to maintain the trial Judge’s orders - Appeal dismissed and wife ordered to pay the husband’s costs of the appeal on party/party basis |
| Family Law Act 1975 (Cth) ss 79, 117(1), (2), (2A), (2B) Family Law Rules 2004 r 19.50 |
| Biltoft & Biltoft (1995) FLC 92-614 Brown v Brown (1998) FLC 92-822 Horsley & Horsley (1991) FLC 92-205 House v The King (1936) 55 CLR 499 I & I (No 2) (1995) FLC 92-625 Kelly & Kelly (No. 2) (1981) FLC 91-108 Mallet & Mallet (1984) 156 CLR 605 Penfold v Penfold (1980) FLC 90-800 Pennisi & Pennisi (1997) FLC 92-774 Robinson & Higginbotham (1991) FLC 92-209 Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 Sun Alliance Insurance Limited v Massoud (1989) VR 8 |
| APPELLANT: | Ms Steele |
| RESPONDENT: | Mr Stanley |
| FILE NUMBER: | SYF | 4369 | of | 2005 |
| APPEAL NUMBER: | EA | 67 | of | 2008 |
| DATE DELIVERED: | 18 March 2009 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Faulks DCJ, Thackray and Ryan JJ |
| HEARING DATE: | 6 February 2009 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 May 2008 |
| LOWER COURT MNC: | [2008] FamCA 332 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Twigg |
| SOLICITOR FOR THE APPELLANT: | Adrian Twigg & Co |
| COUNSEL FOR THE RESPONDENT: | Ms Christie |
| SOLICITOR FOR THE RESPONDENT: | Wyatt Attorneys |
Orders
That the appeal be dismissed.
That within 30 days of agreement or assessment of quantum the wife shall pay the husband’s costs of and incidental to this appeal, calculated on a party/party basis.
IT IS NOTED that publication of this judgment under the pseudonym Steele & Stanley is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 67 of 2008
File Number: SYF4369 of 2005
| Ms Steele |
Appellant
And
| Mr Stanley |
Respondent
REASONS FOR JUDGMENT
Introduction
Ms Steele (“the wife”) has appealed against the magnitude of an order for costs made in her favour against her former husband. Following completion of a defended property hearing the wife applied for an order that her former husband pay her costs of and incidental to the proceedings on an indemnity basis. On 15 May 2008 the trial Judge ordered the husband to pay 50 percent of the wife’s party/party costs for the period between 14 August 2007 and 8 February 2008.
By her Notice of Appeal filed 12 June 2008 the wife challenged all of the orders made on 15 May 2008. However, the wife abandoned her challenge to the trial Judge’s refusal to order indemnity costs and now asserts only that, in the context of her offers of settlement, the trial Judge erred in failing to order the husband to pay the whole of her costs on a party/party basis.
Mr Stanley (“the husband”) resisted the appeal and sought to maintain the trial Judge’s orders.
Background facts
The parties married in 1984 and separated in 2004.
On 8 November 2005 the wife filed an Application for property orders under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The husband filed a Response to the wife’s application on 12 December 2005.
Benjamin J heard the property proceedings on 8, 9, 10 and 26 October 2007. On 8 February 2008 his Honour delivered judgment and made orders in the s 79 proceedings. Simply put, by way of adjustment to matrimonial property the wife was ordered to pay the husband $577,237 and a superannuation splitting order with a base amount of $268,291 was made in the wife’s favour in respect of the husband’s D Scheme superannuation. This gave the wife 33 percent of the husband’s D Scheme superannuation and 77 percent of the non-superannuation property.
On 7 March 2008 the wife filed an Application in a Case in which she sought orders that the husband pay her indemnity costs of and incidental to the property proceedings.
The husband filed a Response to the wife’s Application in a Case on 21 April 2008. He sought that the wife’s application be dismissed.
The wife’s application for costs was listed for hearing before Benjamin J on 22 April 2008. At the hearing the parties each relied upon supporting affidavits filed at the same time as their respective Application and Response. Neither party was cross-examined.
Benjamin J delivered judgment in the costs proceedings and made costs orders on 15 May 2008. These orders, insofar as they are material to this appeal, are set out below:
(1)The husband pay 50 per cent of the wife’s costs of the property proceedings, on a party/party basis; such costs to be as and from the 14 August 2007 up to and including the date of final orders on 8 February 2008, subject to the following:-
(a) such costs are not to include the fees of the single expert in relation to the preparation of any of her expert reports and the expenses associated with her giving evidence;
(b) noting that these were complex proceedings for which the attendance of senior counsel for both parties at the hearing was certified pursuant to Rule 19.50 of the Family Law Rules 2004.
(2)The husband pay the wife’s costs, on a party/party basis, on the application for costs.
(3)Costs payable pursuant to this order are to be as agreed between the parties or as otherwise determined under the Rules of this Court…
Section 117
Section 117(1) of the Act provides that subject to certain other provisions, including s 117(2), each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides the Court with a general discretion to make an order for costs if it is of the opinion there are circumstances that justify it in so doing. Section 117(2A) comprises a list of factors that the Court must consider in determining what costs order (if any) should be made.
The portion of s 117 which is relevant to this appeal is set out below:
117 Costs
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) 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) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (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 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…
The trial Judge’s reasons
As no error is alleged concerning his Honour’s statement of the applicable law, we will refer only to his findings of fact and the reasons he gave for his decision.
Benjamin J commenced his consideration of the wife’s application for costs by incorporating into his costs judgment his findings made in the property judgment. This includes his Honour’s findings concerning the identity and value of the parties’ property, financial resources and liabilities which are set out below.
Assets
Proceeds of sale of W property
$0.00
Wife’s interest in D property
$1,920,000.00
Loan to Mr Steele
$165,000.00
Husband’s Westpac account
$203.00
Husband’s AIG shares
$4,480.00
Wife’s AIG shares
$3,541.00
Wife’s David Jones shares
$12,606.00
Husband’s Jaguar motor vehicle
$26,000.00
Wife’s Lexus motor vehicle
$60,000.00
Toyota Corolla motor vehicle
$13,000.00
Peugeot motor vehicle purchased for A
$24,000.00
S Pty Ltd
$3,293.00
Husband’s house contents acquired jointly
$10,860.00
Husband’s personal effects
$31,000.00
L Pty Ltd
$476,760.00
H Pty Ltd
$0.00
Wife’s house contents
$46,640.00
Gifts to wife from Mr Steele
$9,490.00
Wife’s items from parents
$3,845.00
Wife’s bank account
$450.00
Add back in terms of bridging loan interest on D property
$307,914.00
Add back of wife’s legal costs
$84,018.00
Add back of part of husband’s legal costs
$5,000.00
Add back – wife’s travel
$18,900.00
Total non-superannuation assets
$3,227,000.00
Liabilities
Equity Access loan of wife
$234,000.00
Toyota finance of husband
$14,000.00
Husband’s American Express credit card
$3,700.00
Husband’s MasterCard
$500.00
Personal loan from wife’s sister
$15,000.00
Personal loan NAB
$22,055.00
Legal fees in sale of W property
$1,346.00
Total liabilities
$290,601.00
Superannuation
Husband’s interest in D superannuation scheme
$670,729.00
Accumulation scheme superannuation:-
- C Superannuation roll-over (husband)
$81,474.00
- C Superannuation roll-over (wife)
$13,831.00
His Honour referred to his earlier findings concerning the parties’ financial circumstances. He recorded that the husband was employed by the defence force for which he received an income of $122,000 per annum. Upon retirement the husband will be entitled to an indexed pension, the value of which will be reduced as a consequence of the superannuation splitting order. The husband’s capital position was less than that available to the wife, with the husband able to continue in full-time employment for the medium term.
His Honour found the wife was presently unable to undertake paid employment and her prospects of future paid employment were limited. The wife was found to have significant assets and, to a significant degree, to have been financially supported by Mr Steele with whom she was in a stable relationship.
His Honour referred to the effect of his s 79 orders and noted that since the making of those orders the wife’s equity access loan had increased to about $436,925. This increase partly related to a seven week overseas holiday the wife, Mr Steele and two of the parties’ children enjoyed in December 2007 and January 2008. In discussing the wife’s capacity to pay the husband $577,000 his Honour recorded that the wife was considering additional borrowings or selling her home. His Honour also considered the different nature of the parties’ assets and noted in particular that included in the husband’s share of the asset pool was about $81,000 with the C superannuation fund compared to about $13,000 in the wife’s case.
His Honour also noted that the husband continued to pay assessed child support.
At paragraph 21 his Honour referred to the wife’s offers of settlement. He incorporated by reference the wife’s history of offers of settlement summarised in paragraphs 6(a), (b), (c) and (d) of her affidavit filed 7 March 2008 [Appeal Book 96]. Because of the significance of the offers of settlement these paragraphs are fully set out below:
6.…
(a)Offer of 5 May 2005, was that I pay the husband $300,000 and the husband retain his [D superannuation fund] pension. We otherwise retained the assets we had. At the time, [W property] was still owned. It was then thought to be worth $3,400,000 and the husband’s super then thought to be worth $606,880. I offered to pay the husband $300,000 and with each of us otherwise retaining assets in our own names.
(b)Offer of 8 September 2005. I offered the husband $400,000 on the basis he retain his [D superannuation fund] pension. On a total pool therein described of $3,890,307, on the basis the husband were to retain his various assets including his [D superannuation fund] pension ($660,000) and the Jaguar ($45,000). This offer is therefore better than the outcome that the husband received on trial by about $92,000.
(c)Offer of $310,000. This proved to be approximately $1,000 better than the outcome the husband received on trial.
(d)Offer of $350,000. This proved to be approximately $43,000 better than the outcome the husband received on trial.
These offers were all predicated upon the basis there would be no superannuation splitting order. The offer of settlement dated 5 May 2005 is at Appeal Book 106; the offer dated 8 September 2005 was provided at the hearing of the appeal; the offer at paragraph 6(c) is dated 21 June 2007 and found at Appeal Book 121-126 and the offer at paragraph 6(d) is dated 14 August 2007 and found at Appeal Book 127-133.
His Honour correctly concluded that in a “pure money sense” the offer of settlement made in September 2005 and the offers made thereafter would have delivered the husband a better outcome than he achieved at trial. However, he observed that this conclusion was reached by assuming that “the amount payable by the husband is set off against the value of the wife’s lump sum entitlements to the husband’s [D] superannuation entitlements” and that there had been argument as to whether “this simple set off was an appropriate approach”.
His Honour next noted the emphasis the wife had placed on the “serial nature” of her offers. He observed that the husband had also made offers. He recorded that he was obliged to have regard to all offers but properly indicated that he would give little or no weight to one of the husband’s offers, which had been made after the orders were made.
Benjamin J then referred to the significant forensic and valuation issues which arose in the substantive hearing. The valuation of the wife’s minority interest in a family company, L Pty Ltd, was specifically mentioned. His Honour noted that the valuation of that asset and the husband’s D superannuation fund entitlement required expert evidence and that ultimately their respective values were only determined at trial. Having regard to the evidence of the single expert and the “complex nature of the underlying property”, his Honour determined that the expert’s fees ought to be met equally by the parties.
His Honour concluded this part of his discussion by recording that the proceedings had been “a complex property matter” in which both parties had properly engaged senior counsel and that there had been “live issues at the trial as to add backs, contributions and to the other factors”.
Having next stated the legal principles to be applied, his Honour determined that the parties’ financial circumstances and the various offers made prior to the 8 February 2008 orders constituted circumstances which justified an order for costs. His Honour went on to make findings pursuant to ss 117(2A) (a), (f) and (g), the parties having previously agreed that ss 117(2A)(b), (c), (d) and (e) were irrelevant.
In dealing with s 117(2A)(a), his Honour described the wife as being “asset rich and income poor” comparative to the husband. He emphasised the significant equity in her home and recorded that to an extent she continued a lifestyle for which she utilised capital. Subject only to the extent the wife’s partner contributed towards her financial support, his Honour accepted the wife’s submission that he should not take into account her partner’s financial circumstances. His Honour also referred again to the disparity in the parties’ entitlements in the C superannuation fund. He noted that when the wife turned 55 she would have access to both her C superannuation entitlement and the D superannuation fund entitlement established by virtue of the superannuation splitting order.
His Honour recorded that in addition to her financial circumstances and the amount of costs ($137,000) she had incurred in the proceedings, the wife’s primary submission was that each of her offers was either close to or better (for the husband) than the outcome his Honour ordered. His Honour rejected the wife’s contention concerning her offers of settlement. This was because her contention was reliant upon the Court treating “the sum of about $268,000.00 by way of a splitting order as cash to be set off against the payment provided under the orders to be paid to the husband”. His Honour said the D superannuation fund splitting amount could not be treated as cash, as it was unavailable to the wife for at least two years. His Honour accepted the submission made by counsel for the husband that the wife’s proposition involved comparing “apples with oranges”.
His Honour also held that the offers of settlement “must be seen in the context of the complexity of these proceedings”. He made specific reference in this regard to the valuation of L Pty Ltd, noting that the wife initially asserted it was worth $25,000, whereas his Honour ultimately determined its value at trial as being $476,760. Complex real estate transactions were referred to, as were issues concerning the life entitlements of the wife’s parents in L Pty Ltd. His Honour also referred to the add-back claimed by the husband of $487,740 which although not acceded to, had involved “a significant contribution by the husband towards the care of the children”.
His Honour recorded that he was “satisfied on the evidence that there was not a clear picture as to assets and liabilities of the parties until about August 2007” and that “absolute clarity was only determined after all the evidence was before me”. He also referred again to the parties’ offers and counter offers which he said he had considered “in the light of the outcome in these proceedings”. He recorded that he had given weight to the wife’s offers of settlement.
His Honour turned next to consider “such other matters as the Court considers relevant” (s 117(2A)(g)). He pointed out that the wife had the capacity to fund the capital sum payable to the husband in a number of ways. He considered and rejected her solicitor’s submission “that the end result of this case was ‘very clear’”. On this point, his Honour held:
Hindsight is a wonderful thing whereas in complex financial arrangements looking ahead can be more difficult. The tension in the dispute between the parties is the superior asset position of the wife (including non-superannuation assets), the superior income position of the husband and the proximity of the offers in terms of the overall result (albeit putting superannuation and non-superannuation assets together).
Having discussed and found against the wife’s application for indemnity costs, his Honour concluded:
Exercising the broad discretion I have in relation to such costs matters I determine that the husband should pay 50 per cent of the wife’s costs as and from the letter of 14 August 2007.
Principles governing this Appeal
The law governing an appeal from a discretionary judgment is well settled. It is as set out in the following passage from House v The King (1936) 55 CLR 499 where Dixon, Evatt and McTiernan JJ said at 504-505:
The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred.
The grounds of appeal
Ground 1 – failure to provide sufficient reasons
By this ground the wife asserted that “his Honour provided insufficient reasons”.
In support of this ground, the wife’s solicitor asserted it was impossible to discern from his Honour’s reasons why the wife received only half of her costs. It was submitted that whilst his Honour’s decision is a discretionary judgment, it was incumbent upon him to exercise that discretion in a way that was transparent. Having referred to oft cited authorities such as Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 and the passage from House v The King referred to above, the wife’s solicitor submitted that his Honour failed to disclose “not only the findings of fact upon which the decision is made, but also the reasoning process which led to the result”.
The wife’s solicitor conceded in his written submissions that a lack of reasons in a costs matter need not constitute a fatal error, however, he submitted (relying upon Penfold v Penfold (1980) FLC 90-800 at 75,054) that a lack of reasons will “ipso facto give an entrée to the Full Court to examine the circumstances itself and to determine whether the circumstances show the discretion was erroneously exercised”. However, in his oral submissions, the wife’s solicitor moved away from this concession. He submitted that s 117 is now in a different form than when Penfold was decided and he argued that “the bar had been raised” because the Court now has an obligation to consider the matters set out in s 117(2A).
In response to these submissions, counsel for the husband relied on Sun Alliance Insurance Limited v Massoud (1989) VR 8 (cited with approval in Horsley & Horsley (1991) FLC 92-205) where Gray J said:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if:–
(a) the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b) justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
Counsel for the husband also relied upon the joint judgment of Stephen, Mason, Aickin and Wilson JJ in Penfold where their Honours said (supra at 75,054):
Judges very frequently make orders for costs without giving reasons or making findings, even when costs are an issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, although it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised. (Kent v Kent (1970) 92 W.N. (NSW) 503, at page 505). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
Counsel for the husband conceded that s 117 had been amended since Penfold was decided but submitted that the inclusion of s 117(2A) had been designed to direct the Court’s attention to specific matters in exercising its discretion but was not designed to limit the Court’s discretion, as was evidenced by the inclusion of s 117(2A)(g).
We accept that the insertion of s 117(2A) in the Act has placed a greater obligation on judicial officers in giving reasons in costs matters than was originally the case. Benjamin J clearly accepted this, as is evident from his citation from Brown v Brown (1998) FLC 92-822 at 85,347 where Kay J drew attention to the fact that the matters contained in s 117(2A) are now a “mandatory consideration”. Benjamin J also cited I & I (No 2) (1995) FLC
92-625 at 82,277, where the Full Court said that the “relevant matters referred to in s 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”.
In our view, his Honour complied with these requirements. He identified the parties’ financial circumstances and the various offers as matters justifying consideration of an order for costs. He then went on to discuss each of the s 117(2A) factors that had been identified as being relevant to the exercise of his discretion, before determining than an order for costs was warranted.
Concerning the quantum of costs, his Honour was clearly influenced by the wife’s superior asset position, which the Act makes a relevant consideration and which authority demonstrates is a permissible basis for reaching the conclusion which his Honour did: Mallet & Mallet (1984) 156 CLR 605; Kelly & Kelly(No.2) (1981) FLC 91-108. His Honour also clearly took into account the fact that the wife’s offers of settlement only provided a “better” outcome for the husband than what was ultimately ordered if an assumption were to be made that an interest in the husband’s D superannuation fund entitlement was the same as cash, which assumption his Honour found not to be well founded.
We are not persuaded that his Honour needed to go further in explaining why the wife should receive only half her costs. Consequently ground 1 fails.
Ground 2 – excessive weight placed on the value of the wife’s interest in L Pty Ltd
By this ground the wife asserted that “his Honour erred in placing excessive weight on the issue of the Wife’s interest in [L] Pty Limited”.
The value of the wife’s minority interest in L Pty Ltd was an important issue in the substantive proceedings. The parties had appointed a single expert who, in December 2006, valued the wife’s interest at $374,000. Upward movements in the value of the company’s underlying assets resulted in an increased valuation as at October 2007 of $490,000. As we have earlier recorded, his Honour ultimately determined the value to be $476,760.
The wife submitted that “[i]n terms of the outcome, the difference in values amounted to about $23,634 between the first report and the finding”. This is incorrect insofar as the submission referred to the first report but accurate if the calculations are undertaken by reference to the October 2007 report. The wife further contended that asset pool “was sufficiently well settled well before October 2007” to enable the parties to consider offers. In the circumstances, it was submitted on the wife’s behalf that his Honour fell into error by attaching any weight of substance to the value of her interest in L Pty Ltd in determining the application for costs.
The wife’s solicitor emphasised in his submissions that the husband had made no contribution to the wife’s interest in L Pty Ltd, it being a private family company established and controlled by the wife’s parents. The point being the greater the value of the wife’s interest the greater the contributions made by or on her behalf to the matrimonial assets. For the purpose of her application for costs, the gravamen of the wife’s submission was that provided the asset was disclosed to the husband, he had sufficient information to consider her offers of settlement and thus his Honour was wrong to attach significant weight to this factor. As an associated but slightly different submission, the wife asserted that long before October 2007 the husband knew enough about the value of her interest in L Pty Ltd to evaluate and consider her earlier offers of settlement.
In response, counsel for the husband submitted that the trial Judge was entitled to place weight on the point at which the value of the wife’s minority interest in L Pty Ltd was clarified, whether that be at trial or at about the time the single expert provided her second valuation. Counsel highlighted the complexity of this valuation issue and observed that while the wife had originally valued her interest in L Pty Ltd at $25,000, her interest had been valued in June 2007 at $1,000,096 (without a discount factor), before it was ultimately valued in accordance with his Honour’s finding. Counsel for the husband submitted his Honour was uniquely and well placed to assess the significance of this valuation issue.
There is some force to the wife’s submission that the manner by which her interest in L Pty Ltd was introduced into the pool of matrimonial assets would almost certainly have resulted in her contributions being evaluated in the manner outlined in her solicitor’s submission. Even so, as authority makes plain, it is necessary to identify and value the asset pool. Biltoft & Biltoft (1995) FLC 92-614. Indeed, as counsel for the husband said, even if the contributions component of the property adjustment exercise saw the wife’s interest in L Pty Ltd treated in the manner contended for, inevitably s 75(2) factors would come into play. We therefore accept that it was open to his Honour to afford weight to the time at which the value of the wife’s interest in L Pty Ltd was valued within reasonable range of his Honour’s ultimate finding.
The wife’s challenge to his Honour’s reasons as enunciated in ground 2 does not succeed.
Ground 3 – insufficient weight afforded to the wife’s various offers of settlement
By this ground the wife asserted that “his Honour gave insufficient weight to the various offers made by the Wife to settle the matter”.
In support of this ground the wife contended that his Honour ought to have found that each of her offers of settlement (save for the offer of 26 June 2007) was better than the outcome that the husband achieved at trial. Had his Honour so found, the wife submitted that he ought to have determined that she was entitled to the whole of her costs calculated from the commencement of the substantive proceedings.
The wife complained that his Honour did not set out a detailed analysis of her various offers of settlement. His Honour erroneously, it was said, inferentially determined that for s 117(2A)(f) to be relevant the parties must know with precision the value of the pool of assets. It was further submitted that by effectively making s 117(2A)(f) applicable only when the pool was well settled “his Honour emasculated the subsection in a way that is neither supported by other case law, nor the intention of Parliament”.
The wife submitted that s 117(2A)(f) should be approached in the same way as it had been in Robinson & Higginbotham (1991) FLC 92-209 where Nygh J said (Simpson and Smithers JJ concurring):
Similarly, when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure the costs of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition. In the circumstances of this case, although paragraph (f) does not have a priority per se, the considerations represented by paragraph (f) are of overriding importance.
It is, therefore, my view that her Honour erred in not awarding the wife reasonable costs incurred after the date on which the offer was made …
In response, counsel for the husband referred to Pennisi v Pennisi (1997) FLC 92-774 where the Full Court (per Nicholson CJ, Barblett DCJ and Faulks J) said:
The plain words of the paragraph [s 117(2A)(f)] 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 matter 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.
There is no inconsistency between Robinson & Higginbotham and Pennisi vPennisi. From both cases it is apparent that the significance of offers of settlement may differ and the context in which the offer of settlement is made is a proper matter to be considered.
Counsel for the husband highlighted his Honour’s numerous references in his reasons to the wife’s offers of settlement. As a reading of the judgment reveals, the wife’s offers of settlement were afforded considerable attention by his Honour. The husband submitted that it was clear his Honour had regard to each of the wife’s offers of settlement and that ultimately her offer of settlement made 14 August 2007 was the primary reason which led to a departure from the general rule that each party should pay his or her own costs. We accept that submission.
With respect to the wife’s submission, his Honour’s rationale that greatest weight should be afforded to the wife’s 14 August 2007 offer of settlement in the context of this case is consistent with the approach to s 117(2A)(f) referred to in Pennisi & Pennisi. Although not a concession immediately proffered, it is noteworthy that the wife’s solicitor agreed, before his Honour, that the substantive proceedings were not without complexity and the engagement of senior counsel was warranted [Appeal Book 211]. We also note counsel for the husband’s submission that it was from August 2007 his Honour could be satisfied that the asset pool had been settled [Appeal Book 207].
We perceive no error of principle in his Honour attaching greatest weight to the wife’s offer of settlement made at a point when the asset pool, including values, was well settled. While the wife would have wanted his Honour to give greater weight to her submission regarding the husband’s failure to accept her earlier offers, we see no error of principle in his Honour deciding the issue in the manner he did. We accept the husband’s submission that his Honour did consider the wife’s offers of settlement preceding August 2007 and that they were not overlooked.
Ground 3 accordingly fails.
Conclusion and costs
There was no error in his Honour’s application of the relevant legal principles. He provided adequate reasons for his decision. The decision he reached was within the range of his discretion. Accordingly, the wife’s appeal will be dismissed.
The wife appropriately conceded we should order costs in the husband’s favour if the appeal were to be dismissed. It was not suggested by the husband that costs should be awarded on anything other than a party/party basis.
I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Full Court.
Associate:
Date: 18 March 2009
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