Webster and Halmek
[2012] FMCAfam 1094
•27 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WEBSTER & HALMEK | [2012] FMCAfam 1094 |
| FAMILY LAW ─ Costs ─ respondent wholly unsuccessful. |
| Family Law Act 1975 (Cth), ss.4AA, 90RD, 117 Family Court Rules 2004 (Cth) Federal Magistrates Court Rules 2001 (Cth), r.21(10) |
| Penfold & Penfold (1980) 144 CLR 311 Robinson & Higginbotham (1991) FLC 92-208 |
| Applicant: | MS WEBSTER |
| Respondent: | MR HALMEK |
| File Number: | DGC 968 of 2011 |
| Judgment of: | Phipps FM |
| Hearing date: | 27 September 2012 |
| Date of Last Submission: | 27 September 2012 |
| Delivered at: | Dandenong |
| Delivered on: | 27 September 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stewart |
| Solicitors for the Applicant: | Richard Calley Family Lawyers Pty Ltd |
| Counsel for the Respondent: | Mr Devries |
| Solicitors for the Respondent: | Berry Family Law |
ORDERS
The respondent pay the applicant’s costs in relation to the question of when the parties’ de facto relationship ended fixed at $15,419.65.
That payment of the amount of $15,419.65 is stayed until the determination and conclusion of the proceeding or further order.
IT IS NOTED that publication of this judgment under the pseudonym Webster & Halmek is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT DANDENONG |
DGC 968 of 2011
| MS WEBSTER |
Applicant
And
| MR HALMEK |
Respondent
REASONS FOR JUDGMENT
(Revised from Transcript)
On 14 June 2012, I delivered judgment on the issue of when the parties’ defacto relationship ended. I declared that pursuant to ss.90RD and 4AA of the Family Law Act 1975 (Cth) a defacto relationship existed between the applicant and the respondent and that it came to an end on 18 March 2009. The applicant defacto wife, Ms Webster, applies for an order for costs against the respondent, Mr Halmek. The costs sought are in relation to the hearing on the question of whether or not there had been a defacto relationship.
The parties commenced a relationship in 2001 and began living together in January 2002. They lived with the applicant’s three children from a previous relationship. They lived in two premises. They separated, according to the respondent, in November 2008 and according to the applicant, on 18 March 2009. The issue was significant because the court has jurisdiction under the defacto relationship provisions of the Family Law Act1975 (Cth) only in relation to defacto relationships that broke down after 1 March 2009.
It was a single issue hearing and the applicant defacto wife has been successful and so seeks costs in relation to that hearing. Costs are dealt with in s.117 of the Family Law Act 1975 (Cth). Section 117(1) provides that subject to s.117(2) … each party to proceedings under this Act shall bear his or her own costs.
Section 117(2) says that If … the court is of opinion that there are circumstances that justify it in doing so, the court may make an order for costs.
Section 117(2A) sets out the matters the court shall have regard to in making orders for costs. In Penfold & Penfold (1980) 144 CLR 311 the joint judgment of Stephen, Mason, Aitken and Wilson JJ discusses the relationship between s.117(1) & (2) and they say at [14] that s.117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs. They say that there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.
The considerations in s.117(2A) relied on by the applicant are:
(a) the financial circumstances of each of the parties to the proceedings;
(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.
Apart from the terms of the offer, a matter of contention is whether I should consider the letter containing the offer. As to the financial position of the parties, there is little dispute. The parties have two jointly owned real estate properties, Property S which has an approximate value of $345,000 and Property J which has an approximate value of $425,000, the net total of the mortgage loans against both properties is $380,000, so equity is about $390,000.
The respondent owns real estate at Property A purchased subsequent to the breakdown of the relationship. The respondent, in his financial statement, values that at $170,000, less the mortgage of $164,994. The applicant asserts that the respondent purchased that property in January 2010 for $218,000 so that it must have a higher value. The respondent, in his financial statement, describes shares of $5,090 and a motor vehicle worth approximately $13,000.
The respondent is employed as a (omitted) with (omitted) where he has been for the last three years. His salary is $44,148 per annum.
The applicant is a (omitted) with the (omitted). Her salary is about $96,000. Both parties have relatively modest but fairly solid financial circumstances.
It is common ground that if an order for costs is made, it should be satisfied from the proceeds of the ultimate property settlement or ultimate order in these proceedings.
The next consideration is whether any party to the proceedings has been wholly unsuccessful. So far as the application for a declaration about the date on which the defacto relationship came to an end, the respondent, the defacto husband, has been wholly unsuccessful. The nature of the hearing was such that there could only be complete success or a complete lack of success for either party. I will deal with the question of the offer subsequently. Even without the offer the proper exercise of the discretion in these circumstances is that the applicant should have her costs.
I have described the financial circumstances of the parties. The respondent is in a position where the costs will be able to be satisfied. The applicant’s position so far as finances are concerned is a little stronger than the respondent’s because she has a higher income but not significantly stronger, not such that it should make any difference to an order for costs. The other consideration is that the respondent has been wholly unsuccessful.
I then turn to the issue of the offer. I consider that what I have said already is sufficient to justify an order for costs in favour of the applicant. The offer is a letter dated 7 February 2012 from the applicant’s solicitors to the respondent’s solicitors. It says that the solicitor’s preliminary view is that their client has a strong prospect of succeeding on the jurisdiction issue. It then goes on to say:
However, even if she fails on this point, she will, of course, file for a property settlement in the County Court of Victoria under the Relationships Act (2008). The parties’ entitlements under either legislation are likely to be similar. To avoid the parties spending unnecessary legal fees, we invite your client to agree to opt into the Family Law Act (1975) pursuant to section 80A of the Family Law Amendment Act (2008). This will, of course, allow the parties to make no admissions regarding date of separation but in the meantime, will allow them to address their property settlement in the most expedient manner available.
The offer was not taken up. There has been some discussion with counsel, Ms Stewart for the applicant and Mr Devries for the respondent, about whether that offer could be taken into account. It does not follow the form required by s.117C, which is the provision in the Family Law Act 1975 (Cth) specifically providing for offers. The offer must be made in accordance with applicable rules of court and this one has not been. It is not in the traditional Calderbank form because it does not say that it is made without prejudice, save as to costs. Ordinary principles would say that it was a without prejudice offer. Section 117(2A)(f) says that the court shall have regard to:
(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.
I was referred to a Full Court of the Family Court of Australia decision of Robinson & Higginbotham (1991) FLC 92-208. In that case, the trial judge had rejected an application for costs by the wife on the basis that an offer had been made in virtually identical terms to the order which was made. The Full Court said that the trial judge was wrong in not making an order for costs. The precise terms and form of the offer are not set out but the court does say it is not a s.117C offer. Nigh J delivered the Court’s judgment and said at [2]:
It would appear that on 12 April 1990, that is, to say some considerable time before the hearing before her Honour, the wife, through her solicitors, made an offer to settle her claim on the basis that the husband was to pay her a further sum of $500,000 plus some other matters.
There is no mention of it being in a Calderbank form or that it was made without prejudice save as to costs. It appears to be an offer such as the letter of 7 February 2012.
Section 117(2A)(f), on its face, says that the offer is to be considered. It does not have to be in any particular form. It does not have to be in the Calderbank form or something similar. I consider that the offer does need to be taken into account. It proposes a course of events which would have led the parties to the position that they are now in. That is, that they could proceed to a hearing under the de facto property provisions of the Family Law Act 1975 (Cth) without having gone through and incurred the costs of the hearing which did take place.
It is circumstances different to the type of case that the Full Court was looking at in Robinson & Higginbotham (1991) FLC 92-208 but its acceptance would have achieved the same result which has been achieved. I consider this a further consideration in favour of making the order for costs in favour of the applicant.
The next issue is how those costs should be calculated. Attached to the applicant’s written submissions is a detailed bill of costs in a form suitable for taxation. Ms Stewart, on behalf of the applicant, has submitted that I should order that the costs be taxed in accordance with the Family Court Rules 2004 (Cth), and so they would be taxed under the scale contained in the rules. Mr Devries has submitted that the costs should be calculated using the schedule of costs in schedule 1 of the Federal Magistrates Court Rules 2001 (Cth).
Costs are provided for in r.21(10) of the Federal Magistrates Court Rules 2001 (Cth):
Unless the Court otherwise orders, a party entitled to costs in a proceeding is entitled to costs in accordance with parts 1 and 2 of schedule 1 and disbursements properly incurred.
I do not consider that there should otherwise be an order in this case. There is nothing out of the ordinary in this case. It is a property application with a relatively modest financial pool. The issue of the date of separation was not, either factually or legally, a particularly complex matter. The hearing itself occupied something under a full day’s hearing. There was cross-examination but not to any great extent, largely because much of the relevant factual material was not disputed. There is no reason why there should be an order otherwise.
I have, therefore, used the scale of costs in schedule 1 and I have calculated an amount, subject to whether there are any disbursements that should be added in, of $15,419.68, and I have allowed the following amounts under schedule 1, part 1. I have allowed an amount under stage 1, that is, initiating or opposing an application up to completion of the first court day. I have not allowed the whole amount because I consider it is appropriate to allow only some of the amount for stage 1. The whole amount is $1,942 plus the daily hearing fee, which is approximately $900. I have decided to allow about half and allow $1,500.
The next is stage 5, preparation for a one day final hearing, $4,138.
The case is a circuit case in the Moe Circuit and was fixed for hearing, initially, in August 2011. The consent minutes for the order provided that it should be heard, first, on the question of when was the date of separation and then, secondly, the remaining matters. It was not heard in the August 2011 sitting and was adjourned with an order for costs of $3,500 against the applicant on that day. It was then adjourned over to the February circuit, fixed on 21 February 2012 and heard on 24 February 2012.
The appropriate allowance to make is a half day counsel’s fee on 21 February 2012 which, with the advocacy loading, is $1,455.65. I have allowed a day’s hearing fee with advocacy loading on 24 February 2012, $2,913 and the solicitor attending court, $1,942.
Judgment was delivered in June 2012 and then it was adjourned until 18 July 2012. When judgment was delivered I made the declaration and, in addition, an order that it be adjourned for directions on 18 July 2012 and an order that the parties attend a conciliation conference on 28 August 2012.
It came on before me on 18 July 2012. By that stage the respondent had filed a notice of appeal and there was some argument about whether it should still go to a conciliation conference. I vacated the order for the conciliation conference. The solicitor appearing for the applicant on that day wished to argue the question of costs and counsel, Mr Devries, appearing for the respondent, was not in a position to do so, principally because the respondent had not filed a financial statement.
While the formal order says that it was listed for directions, when judgment was delivered both solicitors appeared by telephone but the question of costs was raised and it was adjourned over to 18 July 2012 for the question of costs to be raised so I consider that a half day fee for the solicitor should be allowed on 18 July 2012, which is $971.
For the costs hearing today I have allowed a counsel’s fee of one day, $2,500, which is a total of $15,419.65.
I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Phipps FM
Date: 11 October 2012
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