TWN and PAQ

[2006] FamCA 430

FAMILY COURT OF AUSTRALIA

TWN & PAQ  [2006] FamCA 430

FAMILY LAW – COSTS – Between parties - Offer of settlement – Where offer of settlement less than amount awarded by trial judge - Whether trial judge failed to provide adequate reasons – Whether trial judge failed to give sufficient consideration to matters advanced by the husband including uncertainties about the offer of settlement by reason of contingent liabilities – Trial judge identified relevant issue – Trial judge’s reasoning readily discernable - Whether trial judge failed to give consideration to the mix of assets each party sought and the dispute over these assets – No submissions made to trial judge on this issue at the hearing – Inappropriate for this issue to be raised on appeal - No error by trial Judge in exercise of discretion - Whether trial Judge failed to adequately consider the husband’s financial circumstances, including after judgment if the husband was unsuccessful – Husband did not address this ground in submissions – In the circumstances this ground irrelevant and without merit – No error by trial judge in exercise of discretion - Whether trial judge’s consideration of wife’s offer of settlement needed to be viewed in light of the parties’ dispute over capital gains tax – Issue not sufficiently raised before the trial judge – Trial judge considered issue of tax and other liabilities – Trial judge gave appropriate consideration to the offer of settlement.

FAMILY LAW – COSTS – Between parties – Costs of appeal against property orders – Where both parties had capacity to meet costs orders – Where error in trial judge’s orders found to be incapable of remedy under “slip rule” – Where husband successful on appeal only in relation to this issue – Where husband unsuccessful in respect of majority of grounds of appeal – Not appropriate that husband pay whole of wife’s costs of the appeal – Order that husband to pay two thirds of wife’s costs of the appeal.

FAMILY LAW – COSTS OF COSTS APPEAL - Where wife sought costs following husband’s appeal against trial Judge’s costs order – No factors warranting departure from general rule in s 117(1) – No order made in respect of costs incurred in relation to the appeal against the costs order.

Family Law Act 1975 (Cth), s 117

Federal Proceedings (Costs) Act 1981 (Cth)

Family Law Rules 2004, Chapter 19

Bennett (1991) FLC 92-191

C and C [2006] FamCA 300

Metwally (No 2) v University of Wollongong (1985) 60 ALR 68

Penfold v Penfold (1980) 144 CLR 311

Robinson and Higginbotham (1991) FLC 92-209

Suttor v Gundowda Pty Ltd (1950) 81 CLR 418

APPELLANT:  TWN

RESPONDENT:  PAQ

FILE NUMBER:  SYF 4909 of 2002

APPEAL NUMBER:  EA 30 of 2004; EA 65 of 2004

DATE DELIVERED:  2 June 2006  

PLACE DELIVERED:  Sydney

JUDGMENT OF:  Bryant CJ, Finn and Boland JJ

HEARING DATE:  By way of written submissions

LOWER COURT JURISDICTION:                   Family Court of Australia

LOWER COURT JUDGMENT DATE:             8 June 2004 and orders of 16 July 2004

LOWER COURT MNC: [2004] FamCA 789

REPRESENTATION

SOLICITORS FOR THE APPELLANT: Mr Doolan, of Barkus Edwards Doolan Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Richardson, SC and Mr Kearney

SOLICITORS FOR THE RESPONDENT: Newnhams

ORDERS

1. That appeal number EA 65 of 2004 is dismissed.

2. That each party pay his or her own costs of appeal number EA 65 of 2004.

3. That the appellant husband pay two thirds of the respondent wife’s costs of appeal number EA 30 of 2004 as agreed, or failing agreement, as assessed under Chapter 19 of the Family Law Rules2004.

FAMILY COURT OF AUSTRALIA AT SYDNEY

APPEAL NUMBER: EA 30 of 2004; EA 65 of 2004

FILE NUMBER: SYF 4909 of 2002

TWN

Appellant

And

PAQ

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 30 June 2005 we delivered our reasons for judgment in respect of the husband’s appeal against property settlement orders made by Faulks DCJ on 27 February 2004.  The appeal was allowed and, on the re-exercise of discretion, we made orders relating to the parties’ property.

2. As well as filing his appeal against the substantive orders of the trial judge, the husband had also filed an Amended Notice of Appeal against costs orders made by Faulks DCJ on 8 June 2004 and 16 July 2004.  The effect of those orders was that the husband was obliged to pay the wife’s costs in respect of a stay application made to the trial judge, and to pay the wife’s costs as agreed or assessed in respect of the proceedings from 1 April 2003 (‘the costs orders’).

3. At the conclusion of the hearing of the appeal against the property settlement orders we indicated we would deal with the appeal against the costs orders made by the trial judge and also with the costs of the appeal against the property settlement orders by way of written submissions.  In our orders made on 30 June 2005 we provided a timetable for the filing of written submissions.  Written submissions were duly filed by both parties. 

RELEVANT BACKGROUND

1. In his judgment with respect to the property settlement, the trial judge found the parties had net assets and liabilities, including superannuation, totalling $10 643 419.  The trial judge found the parties’ net assets and liabilities should be apportioned between them as to 53 per cent to the husband and 47 per cent to the wife.

2. Shortly prior to the commencement of the trial, the husband, who had initially not opposed the transfer of the property on the Lower North Shore of Sydney (‘the matrimonial home’) to the wife, changed his orders sought to orders whereby he retained that home. 

3. In the judgment of the Full Court majority (Bryant CJ and Boland J) of 30 June 2005, it was  noted that the issues raised by the husband in his grounds of appeal were as follows:

   ‘The husband’s appeal is directed to three broad areas of challenge to the trial Judge’s orders.  He asserts the orders made by the trial Judge do not reflect the findings in the judgment, the practical effect of the orders being that the wife is to receive approximately $170,000 more than her entitlement of $5,002,406.93.  He asserts this error is a matter of substance and cannot be corrected under the “slip rule”.  He further asserts that the trial Judge erred in failing to admit expert evidence of the quantum of capital gains tax (“CGT”), referable to two properties inherited from his late mother’s estate, and in failing to include CGT as a liability in the parties’ list of assets and liabilities.  The third broad area of challenge to the trial Judge’s findings is that he failed to give sufficient weight to the husband’s financial contributions, particularly his initial contributions.  The husband also submits that the trial Judge erred in ordering the sale of an investment property abutting the matrimonial home rather than acceding to the husband’s proposed order that this property be transferred to him, and in ordering that the wife receive a fixed monetary adjustment from the husband without regard to the selling costs of the investment property.’

4. We upheld Ground A of the husband’s amended grounds of appeal, which was directed to the first asserted error on the part of the trial judge referred to in the above quoted paragraph from the majority judgment.  We re-exercised the discretion to make orders to correct the error there referred to. 

APPEAL AGAINST THE COSTS ORDERS

The trial judge’s reasons for judgment

1. On or about 25 March 2004 the wife caused an application to be filed in which she sought an order that the husband pay her costs of and incidental to the proceedings, including an interim hearing, in the sum of $97 761.24.  The trial judge heard oral submissions from the parties’ legal representatives and delivered ex tempore reasons for judgment on 8 June 2004.

2. Having referred to the position adopted by the legal representatives before him, which we will refer to later in our reasons, the trial judge said:

   ‘2. In relation to the question of costs, the application on the part of the wife is that she should have the costs of and incidental to the proceedings after essentially 1 April 2003. This is based on a number of submissions on her behalf, the most telling of which in my opinion relates to offers of settlement that were made, and which I am entitled to take into account under section 117(2)(A) [sic]. These offers of settlement are conceded to have been more favourable to the husband than the final result that was achieved, and therefore, if accepted, would have eliminated, one presumes, the balance of the litigation.

   3.      I am indebted to the realistic position taken by both counsel in this matter and by Mr [G] in acknowledging that offer [referred to] is in that situation. 

   4.      In the circumstances it seems to me that where, as Mr [G]’s affidavit illustrates, the parties were in significant negotiation and had been for some time; were on top of the issues that were involved in the proceedings to the extent that the property pool was identified and substantially, if not entirely agreed, the significance of an offer to resolve the proceedings, which finishes up being worse or better than or coincident with the final result cannot be underestimated.  It seems to me that in general terms a party who refuses such an offer does so at his or her peril as to costs, subject to the caveats that I have just indicated.

   5.      The submission by [senior counsel for the wife] that the husband chose, for whatever reason, to come back over ground that had previously been agreed in negotiations does not, however, in my opinion, hold weight in these proceedings [for costs].  Concessions that might reasonably be made for the purposes of settlement are not necessarily to be adhered to in the final hearing.

   6.      I accept that as it turned out the issues raised by the husband were, from his point of view, extraordinarily unsuccessful in the long run, but it did take rather a large number of pages in my judgment to dispose of the arguments advanced in relation to those matters, and it would not be reasonable to say that there was not a significant and proper legal basis for raising them. 

   7. Nevertheless, bearing in mind that there are no other relevant matters that I should take into account on the question of costs under s 117(2)A [sic], it does seem to me that the wife’s offers of settlement in this matter are such as to entitle her to an order for costs on a party and party basis.

   8.     I accept the realistic concession made by [senior counsel for the wife] that an order for indemnity costs would not be appropriate, and I further accept that the order for costs must necessarily therefore be but a part reimbursement of the outlays of the wife in relation to these questions.’

3. His Honour then made the following orders:

   ‘1.     Upon receiving the wife’s undertaking, as filed in court, in respect of [the matrimonial home], the application for stay of Order 5, made by me on the 27 February 2004 is refused.

   2.      Order 6 made by me on the 27 February is stayed until delivery of the Judgment of the court [sic] in relation to the appeal from my orders, subject to the following conditions;

   (a) The husband will do such things as may be necessary to place that property on the market to be leased for a period of six months.

   (b) Pending further order, the husband be and is hereby restrained from occupying, entering upon or otherwise disturbing the occupation of [the Lower North Shore of Sydney property (‘the fourth property’)] by any tenant.

   (c) If the husband’s appeal should fail then he will pay interest on the sum of $118,778.00 at the rate from time to time applying under the Family Court Rules as and from the 27 April 2004. 

   3.      The applications for the stay of orders relating to the transfer of the ski lodge and about the removal of the caveat in respect of the [Lower North Shore of Sydney property (‘the third property’)] are refused.

   4.      The husband will pay the wife’s costs of and incidental to the application for stay.

   5.      The husband pay the wife’s costs of and incidental to the proceedings before the court from the 1 April 2003 in a sum either to be fixed by me by supplemental Order in chambers or, alternatively, as taxed or agreed between the parties.

   6.      If the matter should be the subject of taxation, I certify that this was a matter in which it was appropriate that both Senior and Junior Counsel should be briefed.’

4. Thereafter, his Honour noted the time and expense involved in a taxation of costs (now an assessment of costs under Chapter 19 of the Family Law Rules2004 ( ‘the rules’)), and afforded the husband’s solicitor a short period of time to consider the itemised bill of costs annexed to the wife’s solicitor’s affidavit filed in support of the application.  As the parties failed to reach agreement, the trial judge subsequently made his order of 16 July 2004 which was as follows:   

   ‘1.     The husband pay the wife’s costs as agreed or taxed.’

GROUNDS OF APPEAL

1. The husband’s Amended Notice of Appeal (filed 26 July 2004) which was directed to the trial judge’s costs orders, contained four grounds of appeal.  The husband abandoned ground 1 of his grounds of appeal and relied on the following grounds:

   ‘2.     That the learned trial judge erred in failing to give any reasons or adequate reasons for ordering that the Husband pay the Wife’s costs of and incidental to the proceedings before the Court from 1 April 2003.

   3.      When assessing the Offer of Compromise relied upon by the Wife in support of her Application for Costs, that the learned trial judge erred by failing to give any proper consideration to the mix of assets which each party sought and the dispute that continued to the trial in relation to that matter.

   4.      That the learned trial judge failed to consider or adequately consider the Husband’s financial circumstances, including after Judgment in the event that the Husband’s appeal was unsuccessful.’

2. We understand from the content of the appellant’s written submissions that he appeals only O 5 of the orders of 8 June 2004 and O 1 of the orders of 16 July 2004 (see paragraph 13 of the respondent’s submissions). 

RELEVANT LAW

1. Before we commence our discussion of the grounds of appeal, it is convenient we set out the relevant statutory provisions and rules in respect of costs. We note it is not submitted to us by either party’s legal representative that any formal offer made under s 117C of the Family Law Act 1975 (Cth) (‘the Act’) was a relevant consideration to be taken into account by the trial judge.

2. Section 117 of the Act provides:

   ‘Section 117 Costs

   (1)    Subject to subsection (2) and sections 117AA 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.’

3. The power to award costs involves a wide exercise of discretion.  The breadth of the discretion is well recognised by authority.  See Penfold v Penfold (1980) 144 CLR 311, at 315 – 316.

GROUND 2

The parties’ submissions

1. The submissions made on behalf of the husband asserted the trial judge failed to provide adequate reasons and were centred on the premise that his Honour’s reasons

   ‘fail to give sufficient or any consideration to those matters advanced in the Affidavit of the husband’s then instructed solicitor Mr [G]… the significant issues that existed as and between the parties at the time of the making of the Offers in respect of the nature of contingent liabilities which may or may not ultimately be taken into account as liabilities in calculating the net pool of assets’.

2. The wife’s counsel in their written submissions in opposition to the appeal noted the matters now relied on by the husband were not agitated before the trial judge, and said the trial judge’s reasons ‘clearly disclose the basis upon which the determination was made and the path by which it was arrived at’.

3. The wife’s counsel summarised the argument before the trial judge and said:

   ‘19.1it was common ground between the parties that the proposals of the Respondent, and in particular that of 27 March 2003 [CAB 51] [‘Costs Appeal Book’], represented an outcome more favourable to the Appellant than that achieved [CAB 119.25 and 122.10];

   19.2 the position of the Appellant, having made such concession, was confined to the propositions that no order for costs should be made as there was a great deal of communication in trying to settle and nothing in the manner in which the trial was prepared or conducted which would attract costs one way or the other [CAB 121.20];

   19.3the Respondent identified the thrust of the application for costs as being the offers exchanged and the success of the Respondent on various discrete issues before the trial judge CAB [117.31]’

4. The hearing before the trial judge was conducted with the parties each relying on affidavits filed by their respective solicitors, and oral submissions.  The wife’s solicitor’s affidavit set out a short chronology, an itemised schedule of costs, and annexed correspondence between the parties relevant to offers to settle. 

5. The husband’s solicitor filed a brief affidavit.  He agreed the dates set out in the wife’s solicitor’s chronology were correct, but said ‘they do not represent all court appearances in this matter’.  He annexed to his affidavit correspondence between the solicitors and the parties, the majority of such letters being identical to the letters annexed to the wife’s solicitor’s affidavit.  We set out below details of that correspondence.

6. The wife’s solicitor swore an affidavit on 25 March 2004.  In his affidavit the wife’s solicitor set out the history of negotiations, which commenced in about June 2002.

7. On 12 June 2002 the wife’s solicitors wrote to the husband’s solicitors setting out their understanding of the parties’ assets and liabilities, and proposed settlement on two bases.

8. On 29 July 2002 the husband’s solicitors replied to the wife’s solicitors’ letter and noted the liabilities set out in the wife’s solicitors’ letter ‘did not include any consideration for the capital gains tax’.  The parties were noted to be in dispute about the value of their real property.  The husband’s solicitors proposed an in specie distribution of assets and liabilities, which they asserted represented a division of assets as to 60 per cent to the husband and 40 per cent to the wife.  They also noted the husband’s income tax liability would have to be taken into account.  As an alternate proposal the husband’s solicitors suggested if capital gains tax was not taken into account the husband should retain the matrimonial home and the wife should retain the fourth property.

1. On 2 August 2002 the wife’s solicitors wrote to the husband’s solicitors and said:

   ‘The view of Ms [E] and your counsel is, with respect, contrary to the decisions by which the Family Court is bound.  Perhaps your counsel would be prepared to put that advice in writing that this case is one which comes within the exceptions suggested by the Full Court in Rosati.  On the face of it, the only suggestion of a possible sale is in my client’s offer of 12 June, 2002 in relation to the sale of [the fourth property] and obviously Capital Gains Tax would have to be taken into account, subject to the advice of the parties’ accountants.  Other than in respect of that property, it is not a relevant consideration and my client will not take it into account in the negotiations.’

2. The parties communicated with each other via email without any resolution.

3. On 27 March 2003 the wife’s solicitors wrote to the husband’s solicitors with an offer of settlement.  The offer was based on figures, used at the Conciliation Conference which was held on 10 January 2003, of a total net asset pool calculated by the wife’s solicitors at $9 143 732.  The salient features of the offer were:

   ‘The proposal put at the Conciliation Conference was that credit be given to your client for a contribution equivalent to $1,000,000.00, and then the balance of the asset pool which amounted to $8,143,732.00 being divided equally.

   The above proposal insofar as my client is concerned, would therefore equate to the following:

   ·Transfer to my client of [the matrimonial home]

   ·She retaining [the Inner West Sydney property (‘the fifth property’)] and North Sydney [‘the North Sydney unit’]

   ·She retaining all other bank accounts, shares, other assets and superannuation as set out in the Conciliation Conference particulars sheet.

   Insofar as the husband is concerned, this settlement would provide the following:

   ·Transfer of [the third property] to the Husband

   ·He to retain [the second inherited property] and [the first inherited property]

   ·He to retain all other assets and superannuation in his name. 

   The [fourth property] would as part of the settlement be sold and on the basis of the above figures the wife would be entitled to receive an amount equivalent to 80% of the net proceeds, subject to there being arrangements put in place for the proper accounting of any potential Capital Gains Tax liability of the parties.

   …

   This offer is open until 4.00pm on Friday 4 April, 2003 whereupon it will be withdrawn, other than in relation to the question of costs.’

4. On 24 April 2003 the husband’s solicitors wrote to the wife’s solicitors and said:

   ‘The problem with the values of the properties is caused by our client using the present day values, and some of your client’s values for the properties do not reflect any changes from the time of separation some 15 months ago.

   …

   The second issue is that of the liabilities.  For purposes of a negotiated settlement only, our client is prepared to relinquish his rights as to an allowance for the capital gains tax on all of the properties except [the fourth property] provided [the third property] is transferred to our client..[sic]  The other liabilities which our client considers your client has not taken into account is that of our client’s personal income tax for his outstanding debt to the ATO and that which will be required to be paid on the distribution of the monies held in our client’s company’s bank account and the capital gains tax on the shares held by our client.  Our client estimates that the income tax on those monies will amount to over $150,000.00.  As those funds are a matrimonial asset therefore the liability should also be taken into consideration.  For settlement purposes only, our client is prepared to accept the offered $1 million adjustment to offset the difference in contributions, as long as the company and personal income tax liabilities of $150,000 are taken into account.

   Our client considers that the [fourth] property will be sold for at least $1.8 million.  Therefore in accordance with our client’s calculations, 80% of the proceeds less the capital gains tax and mortgage for that property would amount to a figure of approximately $800,000.00 to your client from the [fourth] property. 

   …

   If and only if a negotiated settlement can occur, our client will agree to sell the [fourth] property.

   …

   After valuations are obtained, use those figures to total the matrimonial assets and calculate the capital gains tax liability on [the fourth property], deduct the $1million to be given to our client, deduct the $450,000 mortgage on [the fourth property], deduct $150,000 for the above liabilities and the capital gains tax on the sale of both parties’ shares, transfer the [third property], to our client, and then divide the net proceeds including each party’s superannuation benefits equally.  Our client will sell [the fourth property] and pay any amount owing from the above split of assets from the proceeds or, if preferred, by a transfer of superannuation.’

5. On 8 May 2003 the wife’s solicitors wrote again to the husband’s solicitors and said the wife was ‘prepared to resolve the matter on the following basis:

   1.     A division of assets as previously outlined in my letter of 27 March, 2003.

   2.     That in relation to the [fourth] property (and given your client’s estimate of value of the property) my client is prepared to accept a sum certain of $666,000.00 from the net proceeds (after payment of mortgage, costs of the sale and funds being put aside for the CGT).  The calculation of this amount takes into account my client’s estimated taxation liability of $16,000.00, and, subject to written verification from you, your client’s estimated taxation liability of $150,000.00.’

6. On 23 May 2003 the husband’s solicitors wrote to the wife’s solicitors setting out the values for assets asserted by the husband at the conciliation conference and proposed the following assets should be retained by the wife:

‘DISTRIBUTION OF THE ASSETS
To the wife
[The matrimonial home]	$2,500,000.00
[The North Sydney unit]	$295,000.00
[The fifth property]	$480,000.00
Wife’s shares	$114,522.00
Managed funds	$55,400.00
Ski Lodge	$17,000.00
Business’ assets	$10,000.00
Bank accounts	$193,713.00
Motor vehicle	$25,000.00
Super	$434,332.00
$4,124,967.00
Less liabilities to be taken by the Wife
Mortgage on [the fifth property]	$244,000.00
Total net	$3,880,967.00
All furnishings held at [the matrimonial home] with the exception of the furnishings stated above.’

It was proposed that the wife receive a further adjustment of $242 640 from the proceeds of sale of the fourth property such that she would retain assets to the value of $4 123 607 based on the husband’s valuations.  On the same day the husband’s solicitors served an unsealed offer of settlement on the wife’s solicitors.

1. On 11 August 2003 the wife’s solicitors, in order to assess potential capital gains tax liabilities, wrote to the husband’s solicitors requesting the following information:

   ‘Please advise forthwith which of: [the fourth property]; [the second inherited property]; [the first inherited property]; shares; or other assets held by or on behalf of your client that he wishes to sell, and provide me with a copy of the draft interim orders setting out the orders your client is prepared to agree to in relation to the sale of those assets.’

2. On 1 September 2003 the husband’s solicitors wrote to the wife’s solicitors:

   ‘Your client suggests that she may be prepared to consent to an Order that certain assets of the marriage be sold.

   Your suggestion is premature.  The proceedings have not been heard and it is not yet clear what Orders the Court would make in relation to provision/transfer of assets.  Your letter seems to have assumed a certain outcome in relation to the proceedings.

   Our client will be able to make the appropriate decision once the Court’s Orders are made and not before.’

Evidence before the trial judge

1. The transcript of the proceedings before the trial judge is illuminating.  Having first submitted that the determination of the costs issue was premature pending determination of the appeal, the husband’s solicitor submitted that each party should bear their own costs, or if an order for costs was made, that the order should provide for costs as agreed or taxed on the basis this would be a fairer process.  The husband’s solicitor, in response to a question from the trial judge, conceded acceptance of the wife’s offer would have produced a better result for the husband than that achieved at trial.  We will return to this concession in our discussion of the other grounds of appeal.

2. The requirement to give adequate reasons is not in doubt.  In Bennett (1991) FLC 92-191 at 78,266 the Full Court considered that the test as to the adequacy of reasons propounded by Gray J in the passage appearing hereunder was a useful one and one which applies to discretionary judgments. The Court observed:

   ‘In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal.  Gray J, who delivered the principle judgment, said, at 18:

   “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.”’

3. However, it is well recognised in costs matters such reasons need not be extensive.  The majority of the High Court in Penfold v Penfold (supra) at 315 – 316, with reference to s 117(2) (in the form s 117 then was), said:

   ‘Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order.  It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication.  Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue.  The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though 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 WN (NSW) 503 at 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.’

4. The matters in issue in the costs application were narrowly confined by the parties. We accept as correct the wife’s counsel’s submission that at the costs hearing her senior counsel limited the issues under s 117(2A) of the Act to the offers, and the husband’s solicitor did not challenge that position in any significant way. Notwithstanding that narrowing of issues, his Honour did at paragraph 6 of his reasons inferentially refer to matters the husband has now submitted were relevant, including all issues raised by the husband at trial, such as capital gains tax, and said ‘it would not be reasonable to say that there was not a significant and proper legal basis for raising them’.

CONCLUSION – GROUND 2

1. The trial judge, correctly in our view, identified the relevant issue to be determined by him in the costs application, namely the significance of the offer made by the wife on 27 March 2003 in the light of all the matters raised at trial, and his findings about the parties’ assets and liabilities.  We are readily able to discern his Honour’s reasoning and accordingly find no merit in this ground.  

GROUND 3

1. Whilst this ground of appeal was directed to the asserted failure by the trial judge to ‘give any proper consideration to the mix of assets which each party sought’, the thrust of the husband’s submissions in respect of this ground were directed to difficulties the husband faced in accepting the wife’s offer in light of ‘the nature of contingent liabilities which may or may not ultimately be taken into account as liabilities in calculating the net pool of assets.’  

2. The wife’s counsel’s submissions in respect of this ground were twofold.  First, the wife’s counsel submitted, again correctly in our view, that the issue of the mix of assets to be retained by the husband was not part of the case run before the trial judge at the costs hearing.  Second, it was submitted that no objection was raised at the costs hearing on behalf of the husband when the wife’s senior counsel said:

   ‘… because the division of assets in specie remained in a pattern subject to what I will say about [the third property], consistent with the distribution by your Honour.  So it was really a question of properties – despite the issues that existed at trial, one of the things that your Honour will see demonstrated through annexures G through to J is that – and it is almost extraordinary, the level to which this ultimately coincided with your Honour’s determinations. 

   But firstly, for the purpose of the offers that were being made between the parties, it was common ground that [the fourth property] should be sold.  It was common ground that my client would have transferred to her, and she would live in [the matrimonial home], it was common ground that the only area of capital gains tax on real estate that would be taken into account would be the capital gains tax in relation to [the fourth property] which was being sold.  The husband, under these proposals, was going to take [the third property], that being a course which your Honour might recall my client had left at his option throughout the trial, and he subsequently decided that he didn’t want to take that course. 

   So it provides a convenient measure for comparison.  And when one takes as against annexure G your Honour’s pool, takes off $1 million, puts that to the husband’s side and then divides the balance, that would equate to my client taking 45.3 per cent of the total net property, compared as against 47 per cent on your Honour’s determination.’

3. Annexure G referred to by the wife’s senior counsel is the offer contained in the wife’s solicitors’ letter of 27 March 2003, the relevant portions of which we have extracted above.

Discussion

1. We have already noted we accept the submission of the wife’s counsel that the husband did not in his oral submissions put anything to the trial judge on the issue of contingent liabilities, or difficulties asserted to be caused to the husband in considering the wife’s offer because of the nature of contingent liabilities and the uncertainty as to which liabilities may be taken into account in determining the net pool of assets.  Further, except inferentially, the husband’s written submissions do not appear to address the ground of appeal as framed.  The husband’s solicitor did rely on an affidavit sworn on 7 May 2004 by the husband’s former solicitor.  That affidavit annexed correspondence between the parties and the parties’ solicitors.  The husband’s submissions did not highlight any particular item of the correspondence as being relevant to this ground. The restriction on raising matters before an appellate court which were not raised before the trial judge is clearly enunciated in the authorities.  The High Court said in Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438:

   ‘The circumstances in which an appellate court will entertain a point not raised in the court below are well established.  Where a point is not taken in the court below and evidence could have been given there which by any possibility could have prevented the point from succeeding, it cannot be taken afterwards.’

2. See also Metwally (No 2) v University of Wollongong (1985) 60 ALR 68 at 71:

   ‘It is elementary that a party is bound by the conduct of his case.  Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.’

3. It appears to us that the only matter which could support the assertion now made by the husband is his letter of 29 July 2002 which raised the issue of capital gains tax, but his position in relation to capital gains tax was clarified by the time of his letter of 24 April 2003 in which he conceded, for negotiation purposes, the issue of capital gains tax on all properties except the [fourth] property.In the latter letter the husband also raised the issue of his tax liability asserted to be $150 000 when the funds in the company controlled by him were distributed to him.  However, the wife’s counter-offer contained in her solicitors’ letter of 8 May 2003 was reframed to take into account both parties’ tax liabilities.

4. From our discussion above we do not find anything in the affidavit relied on by the husband before the trial judge which supports the contention that the issue of the mix of assets to be retained, or uncertainties relevant to liabilities, made it impossible for the husband to understand the wife’s offer contained in her letter of 27 March 2003 as modified by subsequent correspondence.  Further, we are satisfied the issue was not directly raised before the trial judge, and that it is inappropriate for it to now be raised as a ground of appeal.

GROUND 4

1. This ground related to an asserted failure by the trial judge to consider adequately, or at all, the husband’s financial circumstances, including after judgment ‘in the event that the Husband’s appeal was unsuccessful’.

2. The husband’s written submissions did not address this ground.

3. The wife’s counsel’s written submissions on this ground asserted that this ground has no merit.  The wife’s counsel noted this was not a position raised at the costs hearing, and even if it had been, the husband’s financial position was such that the ground was irrelevant, observing that after determination of the appeal the husband retained assets to the value of $5 817 198.

4. We accept the submissions of the wife’s counsel and find no merit in this ground.

OTHER MATTERS

1. Whilst not directing his submissions to any particular ground, the husband’s solicitor in paragraph 7 of his submissions raised the issue of the consideration by the trial judge of the offer of settlement contained in the wife’s letter, but said that ‘needed to be viewed in the light of the significant dispute as to the relevance of Capital Gains Tax, a notoriously difficult area’ and referred to Rosati (1998) FLC 92-804.

2. The wife’s counsel submitted whilst there may be cases where there could be some uncertainty about how the Court would treat capital gains tax, ‘this was clearly not such a case’.  In support of this submission the wife’s counsel noted:

   ·the husband gave no evidence of intention to realise any asset;

   ·the husband had, prior to commencement of the trial, failed to advise of any property he intended to sell; and

   ·the husband did not adduce admissible evidence of the amount of capital gains tax sought to be taken into account.

3. The wife’s counsel also submitted that the husband did not seek to argue at the costs hearing, or on appeal, that the principles in Rosati (supra) did not represent the law, or represent anything other than a correct statement of principle.

1. We refer to our discussion above concerning the correspondence between the parties and their solicitors.  Having regard to our view that the correspondence did not sufficiently raise before the trial judge the issue of capital gains tax, the lack of oral submissions to his Honour by the husband’s solicitor on the issue, and taking into account the trial judge’s obvious consideration of the issue of such tax and other liabilities, which he noted had been conceded for the purpose of negotiations, but were properly run at the hearing, we are satisfied his Honour focused his attention appropriately on the relevant matter, namely offers made by the parties.

2. The importance and weight to be afforded to offers of settlement in property matters is not in doubt, the principles being clearly enunciated in cases such as Robinson and Higginbotham (1991) FLC 92-209 at 79,417 where Nygh J said:

   ‘… 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 that the cost 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.’

CONCLUSION - GROUNDS 3 AND 4

1. The trial judge made orders that the husband should pay the wife’s costs from April 2003 as agreed or taxed (assessed).  From the matters raised before the trial judge at the costs hearing, and in the written submissions received by us, we discern nothing which demonstrates any error by the trial judge in the exercise of his discretion in reaching his determination.  The offer made by the wife was clear.  If accepted, the wife would have received less than she ultimately achieved under the trial judge’s order, or as a result of our order on the re-exercise of the discretion.  Accordingly the husband’s appeal against the costs order must fail.

COSTS OF THE PROPERTY SETTLEMENT APPEAL

1. On delivery of our reserved judgment on the appeal, we provided a timetable for the parties to file written submissions in respect of the costs of the appeal.

2. The written submissions since received by us disclosed the following applications:  

   a)        On behalf of the husband

   i)An order the wife pay his costs of the appeal; or

   ii)If we determine it is appropriate that each party should pay his or her own costs of the appeal, then the husband be granted a certificate pursuant to the Federal Proceedings (Costs) Act 1981 (Cth); or

   iii)If the husband is unsuccessful in the costs appeal, that an order should be made that he pay the wife’s costs fixed in the sum of $1,000. 

   b)        On behalf of the wife

   i)That the costs appeal be dismissed;

   ii)The husband pay the wife’s costs of the costs appeal;

   iii)That the husband pay the wife’s costs of the appeal, or

   iv)That the wife be granted a certificate pursuant to s 6 of the Federal Proceedings (Costs) Act1981 (Cth).

RELEVANT LAW

1. We have already set out in these reasons the provisions of s 117 of the Act which are apposite to this application.

The parties’ written submissions

1. The husband’s solicitor’s written submissions were confined to matters relevant to s 117(2A)(e). He submitted that the husband was successful in respect of Ground A. He noted that the trial judge’s orders were incapable of remedy under the slip rule, and said the husband had no option other than to file an appeal against the orders. The husband’s solicitor noted the wife argued unsuccessfully that the defect in the orders could be addressed by the trial judge under r 17.02. He said:

   ‘Whilst neither the husband nor the wife have been wholly unsuccessful in the appeal, the effect of the Orders of the Full Court are to adjust the monetary position between the parties by an amount of approximately $170,000 in the husband’s favour.  In those circumstances, the wife should pay the husband’s costs of and incidental to the appeal’.

2. The wife’s counsel’s submissions noted that the husband filed an Amended Notice of Appeal to include two further grounds of appeal some two weeks prior to the hearing of the appeal, those grounds relating to the ‘mechanism by which such amendment’ to the trial judge’s orders was to be effected.  It was submitted that it was relevant to take into account that no material objection was taken to the substance of the ground, that the late raising of the ground precluded an opportunity for the issues raised by the ground to be resolved in a consensual way, and the bulk of the appeal dealt with the other 18 grounds unsuccessfully pursued by the husband. 

3. The wife’s counsel submitted that there was no justification for costs as sought by the husband.  Whilst noting that the error as found by the trial judge, which was the subject of ground A, would usually attract the granting of a certificate under the Federal Proceedings (Costs) Act 1981 (Cth), having regard to:

   ·the limited basis upon which the appeal succeeded;

   ·balancing this limited success against the work involved in preparation and conduct of the appeal in respect of the successful grounds;

   ·the limited amount available pursuant to a certificate; and

   ·the financial position of the parties;

   they submitted that an order should be made in the wife’s favour, with certification for both senior and junior counsel.

Discussion

1. It is clear that the parties in their submissions have limited their arguments to three areas, namely the financial position of the parties, the conduct of the appeal, and the success or otherwise in respect of the grounds of appeal.

2. The question of the financial circumstances of the parties is not in dispute.  Each party is engaged in employment and in receipt of significant remuneration in the course of engaging in their respective professions.  At the conclusion of the re-exercise of the discretion we found the husband should retain assets to the value of $5 817 198 and the wife retain assets to the value of $5 158 647.  We are satisfied that both parties have the capacity to meet any costs order made against them, or to bear, subject to the granting of certificates, their own costs incurred in the appeal.  

3. The next issue of significance raised in relation to the appeal was the wife’s assertions about the late amendment to the Notice of Appeal by the husband’s then solicitors.  Whilst the wife submitted that this matter could have been resolved by negotiation, it is clear this did not occur, and the issue was the subject of substantial argument before us.  The husband’s position is that the matter was, as found by us, incapable of correction under the slip rule.  We do not find the fact of the late amendment to the grounds of appeal is such a significant factor as to warrant the making of a costs order in favour of the wife.

4. We accept however that the husband was unsuccessful in respect of the balance of the grounds of appeal, and this fact is a significant matter to be taken into account by us in the exercise of our discretion.

5. Having regard to all of the circumstances discussed above we are of the view this is not a case where it would be appropriate to order the husband to pay the whole of the wife’s costs of the appeal.

6. The matters relevant to the exercise of our discretion in respect of the costs of the appeal are finely balanced. It appears to us that the husband was unsuccessful in respect of the majority of the grounds of appeal. In these circumstances we are satisfied it would be appropriate to make an order that the husband pay two thirds of the wife’s costs of the appeal as agreed, or failing agreement, as assessed under Chapter 19 of the rules.

COSTS APPEAL – COSTS

1. In her written submissions dated 28 July 2005 the wife sought both the dismissal of the husband’s appeal against the trial judge’s costs orders of 8 June 2004 and 16 July 2004 and costs.  In his submissions in reply dated 3 August 2005 the husband sought in the event that his costs appeal was dismissed that the wife’s costs incurred in preparing written submissions in respect of the costs appeal should be limited to the sum of $1 000.  Submissions were received by us prior to the delivery of judgment in C and C [2006] FamCA 300 at [59] – [60] where the Full Court (Finn, Coleman and Strickland JJ) observed:

   ‘59.   Finally, the wife seeks that the husband pay her costs in relation to his appeal against the costs order made by Steele J which we have earlier determined in this judgment is to be dismissed.

   60.    The Full Court of this Court often determines appeals against a costs order made in relation to property settlement proceedings on the basis of written submissions filed after the determination of an appeal against the property settlement order.  It has not to date been the usual practice of the Full Court, so far as we are aware, to make an order in respect of the costs of the preparation of such submissions (be they from an ultimately successful appellant or respondent).  In our view, such an approach on the part of the Full Court can be seen to reflect the general rule in the Court that each party should pay his or her own costs.  Accordingly, we do not propose to make an order in relation to the husband’s appeal against the trial Judge’s costs order.’

2. We are not satisfied in the circumstances of this case that there are factors which warrant departure from the general rule in s 117(1). Thus, we do not propose to make an order in respect of the costs incurred in relation to the appeal against the costs order.

3. Finally, we mention that the wife sought certification for both senior and junior counsel in respect of the preparation of the written submissions on the costs appeal.  Again it has not been the practice of the Full Court to certify for counsel.  We consider that it should be assumed that it is appropriate for senior counsel together with junior counsel to be briefed in appellate matters in the Court at least where they involve issues of the complexity of the issues involved in the substantive appeal in the present case. 

I certify that the preceding sixty nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate:

Date: 2 June 2006