WENTNER & RATER

[2011] FamCA 104

FAMILY COURT OF AUSTRALIA

WENTNER & RATER [2011] FamCA 104

FAMILY LAW - COSTS – Circumstances justifying order - offer of settlement

Family Law Act 1975 (Cth)

Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 FamLR 123
Penfold v Penfold (1980) FLC 90-800
Stephens and Stephens and Ors (enforcement) (costs) (2010) FamCAFC 172
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029

APPLICANT: Mr Wentner

RESPONDENT: Ms Rater

FILE NUMBER: MLC 1003 of 2007

DATE DELIVERED: 28 February 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Justice Cronin

HEARING DATE: By way of written submissions

SUBMSISIONS RECEIVED FROM:

SOLICITOR FOR THE APPLICANT: Gadens Lawyers

SOLICITOR FOR THE RESPONDENT: Schetzer Constantinou

Orders

1. That the husband’s application that the wife pay costs is dismissed.

2. That the wife’s application that the husband pay her costs is granted and that the husband pay the wife’s costs fixed in the sum of $35,000.

IT IS NOTED that publication of this judgment under the pseudonym Wentner & Rater is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1003  of 2007

Mr Wentner

Applicant

And

Ms Rater

Respondent

REASONS FOR COSTS JUDGMENT

1. On 20 December 2010 I made orders in a property dispute between the parties and made provision for the determination of any costs disputes by way of submissions.

2. On 24 January 2011, the wife filed an application supported by submissions drawn by her counsel in which she sought costs initially on an indemnity basis and then in the alternative, according to the scale.  She sought costs for the period subsequent to 20 July 2009 and in the alternative for the specific hearing in December 2010.

3. The husband responded by application and submission on 14 February 2011.  In addition to opposing the wife’s application for costs, he sought costs himself. 

4. In this case, I propose to make an order for costs in favour of the wife and to refuse the husband’s application.  In the reasons for judgment I set out that the discrete issues were what each party was to receive from the pool of assets both as to the percentage entitlement and as to the specific assets.  The other issues related to an argument by the husband about an extra skill claimed by him and which was said to have increased his contribution.  There were arguments about adding amounts notionally to the pool and also arguments about the future financial circumstances of each party. 

5. The husband also sought an order for spousal maintenance but he abandoned that at the conclusion of the evidence.

6. Despite the long gestation period to trial, a number of matters changed during the hearing itself.  The husband initially argued that there had been wastage on the part of the wife in her choice and ultimate disposal of motor cars but in the end, that argument was not pursued.  There were also claims by the husband for the adding back of notional amounts to the pool because it was asserted by the husband that the wife had sold assets on a “fire sale” basis.  I rejected that argument in the reasons for judgment.

7. The wife argued that there had been a concluded agreement in 2005 that finalised the property dispute between the parties when they then separated.  I rejected that argument.

8. In respect of the credibility of the parties as witnesses, I found that I was unable to determine that one was more credible than the other.

9. The wife argued that there was evidence about her parents’ contribution to renovations to the parties’ home and she quantified it but I rejected the amount of that claim.

10. The husband presented the Court with evidence as to his opinion of the value of various assets at times during the relationship and in respect of that, I concluded that he was correct in respect of some but not of others.

11. Ultimately, in respect of the assessment of contribution, I found that the husband’s contribution was greater than that of the wife.  I made quite clear findings about that. 

12. I also found that the contribution by the husband through an inheritance did make a difference to the pool.

13. All of these issues had been contentious and it was clear that the parties were unable to resolve the matter.

14. The submission of the wife was that the costs order in her favour was justified by virtue of an offer that she had made in writing to the husband in 2009 and a subsequent offer in early 2010.  The husband having received the wife’s 2010 offer, rejected it by virtue of his counter offer.

15. What became clear was that the wife’s offer was more favourable to the husband than the ultimate outcome in the orders.

16. The wife pointed to the fact that the spousal maintenance issue had been withdrawn, that there was an argument about wastage without evidence, that the special contribution argument did not proceed or was rejected and that the offers of compromise had not been accepted. 

17. The wife quantified her costs at $87,000 or thereabouts on an indemnity basis and to that extent, a costs agreement was tendered along with all of the relevant bills.  The wife quantified her claim at $68,000 in the event that I rejected the indemnity argument. 

18. In respect of the hearing itself over three days, the costs varied between $19,500 on an indemnity basis down to $12,300 on a scale basis.

19. The husband’s argument was that the wife had not been cooperative in respect of a variety of matters including dealing with offers and also requiring the involvement of experts at the husband’s expense.  The husband pointed to the fact that the wife’s conduct had increased his costs because she refused to agree to a single expert witness.  Nothing specifically was pointed to which would have enabled me to conclude that the wife had been less than diligent in approaching the task of resolving the matter.  I note that at the conciliation conference, the husband’s costs were reserved.  I am unable to find any evidence and none was presented, indicating the basis for the reserving of those costs.  I am unable to determine whether the wife’s attitude was unreasonable having regard to the inference I have drawn that she adopted a position and did not budge from it.  If that was in fact what occurred, the ultimate outcome would suggest that she was correct.

20. The husband also criticised the wife’s approach by virtue of the fact that he had to expend significant money on adversarial witnesses but so did the wife.

21. It is difficult in the circumstances to see any particular issue that would enable me to say that the wife’s conduct or any other particular factor justified the Court making an order for costs against her having regard to the legal issues to which I shall turn.

22. The husband argued that there ought not be an order for costs against him because he had no income and was not receiving child support.  Many of the matters raised in the husband’s submission related to the impact of the findings and outcome of the proceedings concerning his superannuation, the wife’s earning capacity, the involvement of her de facto relationship partner and her ability to draw on family financial support.  The conclusion I was asked to draw was that the husband was in difficult financial circumstances.  Whilst that may be so from an income point of view, the parties had a divisible pool of in excess of $1 million.

23. The husband argued that there had been a failure of the wife to disclose the de facto relationship but it is hard to see how that had a significant impact on the outcome of the case because it would only be a factor taken into account under s75(2) of the Act.

24. The husband argued that the wife had maintained a denial of his contribution through his family inheritance only to concede that at trial but my impression was that the dispute raged over the production of corroborative material that only became apparent clearly at trial.  It would seem to me that that too did not affect the outcome of the proceedings nor did it have any impact on the offers that the parties made to each other during the period prior to the trial. 

25. In respect of the offers, the husband complained that the wife had failed to comply with the discovery and that impacted upon  his capacity to resolve the matter but that too is difficult to accept having regard to the fact that the ultimate outcome was better than that which she had been prepared to settle for in January 2010.

26. Section 117 of the Act requires that each party pay their own costs unless there are circumstances that justify a departure from that principle. (see Penfold v Penfold (1980) FLC 90-800).

27. Once the determination is made that there are justifying circumstances, the Court must consider what order (if any) should be made taking into account the matters in s 117(2A).  None of the particular factors in s 117(2A) is more dominant than the other and there does not have to be more than one particular factor.  (see Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 FamLR 123).

28. I find in this case that there are justifiable circumstances to make an order for costs against the husband.  These were protracted financial proceedings.  Offers were made which the husband did not accept.  In the light of the findings I have made, the offers were sensible.  The husband put the wife to the expense of preparing for and conducting a trial concerning spousal maintenance, wastage, contribution and similar matters all of which were unnecessary having regard to the findings I have made.  This was not simply a case where the evidence was clear cut and the discretionary assessment was required.  There were matters in which the husband took a stand as did the wife.  In the circumstances, there is a justifiable circumstance for making an order against the husband.

29. The wife too took a stance in relation to matters concerning the concluded agreement and the various values but those were matters that were open to argument.  There is therefore no justifying circumstance to make an order against the wife.

30. Having regard to the matters in s 117(2A), I find that both parties have assets albeit to different degrees.  I appreciate the husband’s dilemma in relation to financial circumstances on an income level but he does have assets.  He is not impecunious.

31. There is certainly an argument about the negotiations and cooperation and what occurred at the conciliation conference.  Nothing was drawn to my attention indicating that the wife had been less than diligent in relation to the preparation for trial or avoided the necessary processes of the Court.  It was certainly argued by the husband that the wife had failed to comply with requirements to file an offer but whilst that may be technically so, there could be no doubt about the wife’s position in respect of what was on offer.

32. Neither party was wholly unsuccessful but in this case, the husband was far less successful than the wife having regard to the offers that had been made.  The quantum of success affects the percentage of the costs that I propose to make. 

33. In my view, there is a justifying circumstance here to make an order that the husband pay two-thirds of the wife’s costs in total.

34. The next question that must be determined is that of the wife’s application for indemnity costs.  In Stephens and Stephens and Ors (enforcement) (costs) (2010) FamCAFC 172 the Full Court referred to indemnity costs and said the following:

    72.The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin (1993) FLC 92-411 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1993) FLC 92-340 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman (1997) FLC 92-784 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) (2007) 38 Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).

    73.An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 per Lindgren J at [53] to [90].

35. I have considered all of the relevant authorities to which the Full Court has referred.  This is not a case which fits within the categories referred to in Colgate Palmolive or in Yunghanns.

36. On the basis of those matters, it is appropriate that the husband pay the wife’s costs determined according to the relevant scale. 

37. Having regard to the problems that this case has caused the parties in trying to conclude their dispute, it would be unwise and unhelpful to have a registrar endeavour to assess the disputed costs.  I have sufficient information from the wife’s submissions to enable me to make that determination in the exercise of my discretion.  I propose therefore to make an order that the husband pay the wife’s costs which I fix at $35,000.

I certify that the preceding Thirty Seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 February 2011.

Associate

Date:  28 February 2011