White & White
[2008] FamCAFC 147
•9 October 2008
FAMILY COURT OF AUSTRALIA
| WHITE & WHITE | [2008] FamCAFC 147 |
| FAMILY LAW - APPEAL – COSTS – Appeal by the wife against cost order made against her in relation to the trial – where the trial judge ordered that the wife pay 50% of the husband’s costs – whether the trial judge erred in her assessment of the financial circumstances of the parties and the conduct of the respondent husband – whether the trial judge erred in finding that “considerable weight” should be given to the offers for settlement made by the respondent husband – no merit found in this challenge. FAMILY LAW - APPEAL – COSTS – The costs of the appellant wife’s unsuccessful appeal against the property settlement orders – circumstances do not justify the making of a further costs order. |
| Family Law Act 1975 (Cth) s 117 |
| Browne v Green (2002) FLC 93-115 C & C [2006] FamCA 300 Harris & Harris (1991) FLC 92-254 McAlpin & McAlpin (1993) FLC 92-411 Pennisi & Pennisi (1997) FLC 92-774 Robinson and Higginbotham (1991) FLC 92-209 |
| APPELLANT: | Mrs White |
| RESPONDENT: | Mr White |
| FILE NUMBER: | DNF | 188 | of | 2001 |
| APPEAL NUMBER: | NA NA | 59 72 | of of | 2005 2004 |
| DATE DELIVERED: | 9 October 2008 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | By way of written submissions |
| JUDGMENT OF: | Finn, Coleman and Boland JJ |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 18 March 2005 |
| LOWER COURT MNC: | [2005] FamCA 193 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Marjorie Pagani |
| SOLICITOR FOR THE APPELLANT: | Michael Whelan & Associates |
| COUNSEL FOR THE RESPONDENT: | John Waters QC and John Stirk |
| SOLICITOR FOR THE RESPONDENT: | Povey Stirk Lawyers & Notaries |
Orders
That the appeal against the order with respect to costs made on 18 March 2005 (“the costs appeal”) be dismissed.
That there be no order for costs with respect to the costs appeal.
That there be no order for costs with respect to the appeal against the orders with respect to property settlement made on 15 October 2004.
IT IS NOTED that publication of this judgment under the pseudonym White & White 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 BRISBANE |
Appeal Number: NA 59 of 2005; NA 72 of 2004
File Number: DNF 188 of 2001
| Mrs White |
Appellant
And
| Mr White |
Respondent
REASONS FOR JUDGMENT
introduction
On 17 April 2007 this Full Court made orders dismissing an appeal by the wife against orders with respect to property settlement made by Moore J on 15 October 2004.
We included in our orders of 17 April 2007 directions for the parties to file written submissions in relation to:
(i)an appeal which the wife had also filed against an order for costs made against her by Moore J on 18 March 2005 (in relation to the costs of the property settlement proceedings before her Honour), and
(ii)the costs of the wife’s appeal against the property settlement orders made by Moore J.
The precise terms of our directions for such written submissions were:
(2)(a) That within 28 days of the date hereof each party be at liberty to file and serve any written submissions in relation to:
(i) the appeal by the wife against the order for costs made on 18 March 2005, and
(ii) any application for costs in relation to the appeal against the orders of 15 October 2004 with respect to property settlement.
(2)(b) That each party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party.
On 14 May 2007 two sets of submissions were filed on behalf of the respondent husband. One set was directed to the wife’s appeal against Moore J’s costs order, but was directed only to the grounds contained in the wife’s notice of appeal and not to any submissions in support of those grounds for the reason that no such submissions had at that time been filed on behalf of the appellant wife. The other set of submissions was directed to the costs of the property settlement appeal and sought that the wife pay the husband’s costs of the appeal.
Two sets of submissions were then filed on behalf of the appellant wife on 15 May 2007. One set was directed to her appeal against the costs order made by Moore J. The other set was directed to the costs of the property settlement appeal and sought that each party should pay his or her own costs of the appeal.
On 12 June 2007 a further two sets of submissions were filed on behalf of the respondent husband, each responding, respectively, to the two sets of submissions filed on behalf of the wife on 15 May 2007.
No further responding submissions were filed on behalf of the wife.
The wife’s appeal against the costs order made on 18 march 2005
The order for costs made by Moore J on 18 March 2005 related to the costs of property settlement proceedings which her Honour had commenced to hear on 9 April 2003 and which ultimately concluded on 14 October 2004 after six days of hearing (which included a re-opening at which further evidence was given concerning the sale by the husband of significant assets) and the filing of written submissions by both parties. (The reasons for the delayed conclusion of the hearing are explained in our judgment of 17 April 2007, particularly at paragraphs 22 to 25.)
The terms of her Honour’s order for costs are as follows:
1.The wife pay on or before one month from the date of these orders:
(a) to the solicitors for the husband 50% of the husband’s costs of and incidental to the proceedings calculated on a party/party basis in an amount to be agreed and failing agreement, as taxed.
(b) to the solicitors for the intervenor, Mr [B], the intervenor’s costs of and incidental to his intervention in the property proceedings DN188 of 2001 in an amount agreed or, failing agreement, as taxed.
The reasons for the costs order
In her reasons for judgment in relation to that order, her Honour explained at the outset that there were two applications for costs before her. The first was by the husband who sought that the wife pay 75% of his costs of the property settlement proceedings, and the second was by the intervenor in those proceedings, Mr B.
Her Honour then explained the principles to be applied in determining these applications for costs in the following way:
4. These [applications] fall to be determined under the provisions of S.117 of the Family Law Act 1975. It is the general rule under S.117(1) that each party shall bear his or her own costs. However, by S.117(2) the Court may make such order as to costs as it considers just if it is of the opinion that there are circumstances that justify it in so doing. In considering what order (if any) should be made the Court is required to have regard to the matters referred to in S.117(2A). They are:
(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, in accordance with section 117C or otherwise, 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.
Her Honour proceeded to consider the submissions made on behalf of each party in relation to the various matters in s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) upon which each party relied.
For the husband those matters were his “offers to settle from the start and throughout the proceedings”, with her Honour concluding that these offers “should be given considerable weight”; and the wife’s conduct in the proceedings, with her Honour concluding that there was merit in the arguments put on behalf of the husband in relation to such conduct.
For the wife, reliance was placed on the husband’s non-compliance with a spousal maintenance order; on his conduct both in the proceedings and in relation to the parties’ property; and on the parties’ respective financial circumstances. Her Honour can be read as determining that none of these matters negated the merit of the husband’s claim for costs.
Accordingly, her Honour concluded that there were “justifying circumstances” to make an order for costs in the husband’s favour and that the wife should pay 50% of his costs of, and incidental to, the property settlement proceedings.
So far as the claim for costs of the intervenor, Mr B, was concerned, her Honour accepted that he had had no alternative but to intervene in the proceedings to protect his interests after the wife had rejected his explanation of a joint venture agreement with which he was involved with the husband. However, as her Honour explained, there was ultimately a concession from the wife which enabled Mr B to withdraw from the proceedings. Her Honour determined that in these circumstances the wife should pay Mr B’s costs.
The scope of the appeal against the costs order
The wife’s notice of appeal indicates that her appeal is against “all” of her Honour’s order, thus apparently encompassing the costs awarded both to the husband and to Mr B. However, no ground of appeal would appear to be directed to the award to Mr B – although Ground 3 asserts error on her Honour’s part in allegedly attaching weight to Mr B’s intervention when determining the costs order in favour of the husband.
Furthermore, the written submissions on behalf of the wife make no reference to the costs order in Mr B’s favour. We thus proceed on the basis that there is no challenge to her Honour’s order in so far as it related to Mr B’s costs.
As to the wife’s challenge to the award for the husband of 50% of his costs, there are three grounds in the notice of appeal, with the first ground having four paragraphs, each with one, or in some cases, many sub-paragraphs.
Fortunately, counsel for the wife was able to divide the complaints contained in the grounds of appeal into the following three discrete areas, being that her Honour erred (emphasis added):
a)…in finding that the parties’ financial circumstances were such that the husband was only “a little better positioned” than the wife;
b)…in her assessment of the conduct of the husband, and in particular, the husband’s conduct in failing to pay ordered maintenance; the husband’s unilateral use of matrimonial funds for his own use including the injection of those funds into a failed joint venture with his de facto partner; and the husband’s disposal, without the knowledge or consent of the wife, of a major asset, whilst awaiting judgment; and
c)in attributing ‘considerable’ weight to the offers of the husband, in circumstances where the offers either did not include a significant asset of the parties (the mining venture) or where the offers attributed a ‘nil’ value to the mining asset.
The financial circumstances of the parties
In relation to the financial circumstances of the parties, which was a matter on which the wife relied in opposing the husband’s application for costs, her Honour said in her reasons for judgment in relation to the costs order:
20. There were other submissions on [the wife’s] behalf about her financial circumstances and position in life at this point; that is, matters were put related to her age, income and earning capacity as well as other matters, including the continued agitation of issues about funds [the husband] had available after separation. It is contended on her behalf that if any order is made for costs it should be [the husband] paying 75% of her costs. This does not seem to amount to a positive application for costs on her behalf but rather to resisting an order for costs against her.
21.The parties received an equal division of their property so, prima facie, there is nothing to separate them so far as capital is concerned. What does require some consideration is a comparison of their general circumstances now the proceedings are behind them, at least at first instance. It seems reasonable to conclude that [the husband] is a little better positioned than his former wife by reason of the fact that he and his present wife are able to pool their capacities and resources in meeting their general financial commitments. But that by no means negates the merit of his costs claim so as to dismiss it; it merely effects [sic] the proportion of his costs to be covered by a costs order.
In the submissions to us in support of the wife’s appeal against the costs order, it is asserted that her Honour failed to address or adequately address in paragraphs 21 and 22 of her reasons, the submissions made to her on behalf of the wife in relation to the parties’ respective financial circumstances.
The submissions made on behalf of the wife to her Honour concerning the parties’ financial circumstances were before us (Costs Appeal Book, pages 52-53). We do not need to set out those submissions here. It is sufficient that we say that we are satisfied that in paragraph 20 of her reasons her Honour summarised adequately, albeit very briefly, the matters relied upon in the submissions made to her on behalf of the wife concerning the parties’ respective financial positions.
More particularly, the submissions to us assert that her Honour:
2. …gave no or no adequate reasons for finding that the husband was only “a little better positioned” than the wife, in circumstances where the husband had the support of his de facto partner; where the husband and his de facto partner were able to jointly fund their living expenses; where the husband was employed and tendered no medical evidence to suggest that he had no capacity for future employment; where the husband was awarded a commercial building attracting rental of about $50,000.00 per annum (in comparison with the major component of the wife’s award being the former matrimonial home about which there was no challenge to her stated desire to retain it for her own use and that of the children and grandchildren of the marriage); and where the wife was in receipt of a pension and the evidence was that it would be unlikely, given her age, state of health and qualifications, that she would be able to achieve full-time employment status.
3.…failed to take into account the wife’s high level of indebtedness ($100,000.00 as at the date of trial) and inability to borrow to fund that debt, in circumstances where her borrowings had been necessitated, in part, by the husband’s failure to comply with the orders of the court in respect of spousal maintenance notwithstanding the husband’s failure to challenge those orders by way of an appeal or further application to have them set aside.
It is important, we think, in considering the wife’s complaints concerning her Honour’s findings regarding the parties’ financial positions following the property settlement orders, and in particular the complaints concerning the level of the wife’s indebtedness, to have regard to the following passages from her Honour’s property settlement judgment, where she set out the assets available for division between the parties, the position in relation to their liabilities, her conclusions regarding the maintenance arrears owed by the husband to the wife, and then the effect of the division of assets which she proposed to make (emphasis added):
45.…Otherwise, the parties agree about the composition and value of their assets. They are as follows:
Assets:
[Former matrimonial home at K] 260,000
Furniture and mower 15,085
Mazda … vehicle 12,000287,085
… Superannuation Fund
Building [O] Street, [in K] 390,000Cash invested 179,918
Shares Nominal 569,918Total assets: 857,003
46.Both parties have debts. [The wife’s] are said to be outstanding legal costs of $70,000 and well as owing to her sister $13,500, credit card balance of $6,825, and owing to [A] $1,564, all said to be related to living expenses. [The husband’s] are said to be outstanding legal costs of $70,398, overdraft to ANZ Bank of $9,690, credit card balance of $19,946, and [debts to an engineering company] of $5,935. He also borrowed $20,000 from Mr [B] in March 2003 (partly to pay for legal costs) but this was not included in his recent financial statement sworn June 2003 and so, despite Mr Water’s submission yesterday to the effect that it remains owing, I could not take it into account as a debt in the absence of any mention of it in [the husband’s] evidence updating his financial circumstances.
47. The parties outstanding debts are for their own legal costs and otherwise for what might be called ‘discretionary expenditure’ related to their own circumstances since their separation. The total amounts are not dissimilar, though [the husband’s] debts are higher by more than $11,000. Given the nature of the debts (as best can be determined) and the fact they were incurred post separation, I do not propose to deduct the amounts owing from the value of the available assets for the purpose of later calculating their respective entitlements though, of course, their debts are taken into account overall in arriving at a conclusion about their entitlements. In the result, they will each be left to pay their own debts from what they receive by way of property settlement and that, in my assessment, is a fair outcome.
…
56.It is the case that [the husband] was obliged under the interim order to pay spousal maintenance to [the wife] and there are now arrears amounting to $36,480. The question arises as to how those arrears are to be dealt with and the impact of that upon any assessment of their post-separation contributions. The answer to that, in my opinion, depends upon the parties’ respective financial circumstances – need and capacity – in the period since the arrears have accrued; namely, since June 2003.
57.As for [the wife’s] need for additional financial support, her evidence does not fully cover that topic. Her most recent financial statement puts her income from a government benefit at $200 per week and she has had some casual employment since July last year. Her income, in any event, is modest from all sources. I should say I accept that her age and limited work skills do inhibit her capacity to support herself and while she has obtained some work over this past year it could not reasonably be said in all the circumstances that she was able to support herself adequately from her earnings. Her personal expenditure in her most recent financial statement totals $289 but that does not include day to day living expenses. Obviously when her government benefit is put to one side, as the law requires, she does have a need for financial support. Probably that has been the case in the period since the spousal maintenance ceased though her case does not allow any precision to be brought to bear in making the assessment of any particular amount.
58.The other aspect, of course, is [the husband’s] capacity to pay maintenance in that period. His only income earning activity has been through [PMC] until the shut down of its operations and sale of its assets and more recently in his son’s [business]… in [K] where he has been paid for part-time employment at rates that have varied between $100 and $200 and more recently $50 and $60 per week. Earlier in the year he was ill and unable to work. The income of the company over the period under review is apparent from exhibit 29. Income totalled $130,099 from sales and profit on sale of assets and expenses totalled $174,149 to bring about a loss of $44,050. None of those expenses include wages – paid either to [the husband] or to [Ms M]. If one adds back the depreciation item of $52,290 as not representing a call on cash, the result for the year would be a small income of some $8,000. Even if all of this could be considered to be [the husband’s] – rather than to be distributed between two shareholders – it remains a very modest sum and when his income from his son’s business in more recent times is added to that it becomes apparent that what [the husband] has had available should be considered necessary to his own support. It follows that he has had no capacity to pay spousal maintenance in the relevant period. In the result, I do not propose making any provision for payment of arrears accrued under the interim order and will formally discharge the order to the date upon which it stands paid.
…
64.Overall, when one stands back and views the prospects for their future broadly it is my assessment that to the extent that there ought to be an adjustment between them it ought to be such as to remove the weighting that favours [the husband] by reason of the inheritance factor so as to now divide their assets equally between them. Such an outcome would entitle them each to receive assets to the value of $428,500.
65. There is then the question of how that assessment is to be applied to their existing assets. There is no dispute about [the wife] being entitled to retain the family home, the contents and her motor vehicle. To receive her 50% entitlement of $428,500, therefore, she will need to receive a further $138,415. It is plain that there will have to be a splitting order applied to that Fund for her to achieve that. The formal orders sought by both parties contemplated a split, though the form in which those orders were drafted could not effectively bring about that result. It is also apparent from the entitlement assessment that [the wife] cannot retain both the home and the [O] Street property as her application contemplates but she will receive the home and other assets and the balance will come from her entitlement to superannuation out of the cash component of the fund. In any event, it is a more fair arrangement that they each retain one of the two pieces of real estate they have acquired, directly or indirectly, over the years. Of course the [O] Street property is income earning in that the lease generates in the order of $2,500 per month for the Fund and that would be to [the husband’s] advantage were he to eventually retain the property on retirement. On the other hand, the home to be retained by [the wife] is a substantial property and provides her with the advantage of relatively superior accommodation no longer available to her former husband.
66.The splitting order, set out below, will apply to the cash component of the Fund and [the wife] will be free to take such steps as she is advised about rolling over the money into another fund or taking her entitlement upon retirement.
67.After a long marriage and having regard to their contributions overall and to their future, an equal distribution of their current assets is the result. They will each have realty – either home or commercial property in [K] – and some cash funds. Also they will each be free to work according to their capacity, given health and age considerations. In my opinion, the orders proposed will bring about a just and equitable result overall.
It will thus be seen from paragraph 47 of her Honour’s property settlement judgment that so far as indebtedness was concerned, the husband was in fact in a worse position than was the wife as at the time of the property settlement judgment. As to the complaint concerning the husband’s failure to pay spousal maintenance, this complaint would seem to overlook the finding made by her Honour in paragraph 58 of her property settlement judgment, that the husband had no capacity to pay spousal maintenance in the relevant period.
There can thus be no substance in the complaints made by the wife that in her decision in relation to costs, her Honour failed to take into account the wife’s high level of indebtedness, allegedly caused, at least in part, by the husband’s failure to pay spousal maintenance. This is because the husband’s indebtedness was greater than the wife’s at least at the time of the property settlement judgment, and he had been found to have no capacity to pay spousal maintenance at the relevant time.
As to the complaint concerning her Honour’s conclusion that the husband was “only a little better positioned” than the wife, it is important to note that her Honour did not preface the words “a little better positioned” with the word “only” as the wife’s submissions suggest. Her Honour simply said in paragraph 21 of her reasons in relation to the costs order, that the husband was “a little better positioned” than the wife because he could share resources and commitments with his new wife. It is also important to observe that her Honour then reduced the amount of costs awarded to the husband because of this matter.
It is true that her Honour did not in her judgment in relation to the costs order refer to the fact that the husband had, as a result of the property settlement orders, received the benefit of an income-earning property (the O Street property). But this was a fact which she had recognised in paragraph 65 of her property settlement judgment (given only some five months earlier), and which, moreover, she had balanced against the fact that the wife had a superior residential property. Her Honour can also be read in paragraph 67 and elsewhere in that earlier judgment as recognising the limited capacity each party would have in the future for working to earn income.
We are not persuaded that the absence of specific reference by her Honour to the husband’s income-earning property and to the wife’s limited income-earning capacity in her costs judgment are matters which would warrant our interference with that judgment given the well-recognised discretionary nature of such a judgment (see for example Harris & Harris (1991) FLC 92-254 at 78,711; McAlpin & McAlpin (1993) FLC 92-411 at 80,213; and Pennisi & Pennisi (1997) FLC 92-774 at 84,544).
Conduct of the husband
It will have been seen from counsel’s summary of the three discrete areas of complaint by the wife (at paragraph 20 above) that the second area of complaint, which was directed to her Honour’s assessment of the husband’s conduct, encompassed three discrete aspects of alleged conduct on the part of the husband, being his failure to pay spousal maintenance, his unilateral use of matrimonial funds, and his disposal of a major asset without the knowledge or consent of the wife.
In relation to the maintenance issue, it was submitted by counsel for the wife that:
8.…her Honour erred in finding that the husband’s clear breach of court orders to pay maintenance (and the consequential need of the wife to rely upon borrowings and government assistance to fund her daily living expenses) “does not weaken [the husband’s] costs argument (Reasons para 17),” simply because he told the wife he was going to stop paying maintenance and why so.
In an endeavour to understand this submission, we will set out the full text of paragraph 17 of her Honour’s reasons in relation to the costs order, since it would seem that the alleged error in question is to be found in that paragraph:
17.On the question of compliance with orders, it is pointed out on [the wife’s] behalf that [the husband] did not comply with the order of the Federal Magistrates Court for payment of spousal maintenance. It is true he ceased to pay at some point, but I do not accept the proposition the need to determine arrears prolonged the hearing, if that is the substance of the submission. [The husband] advised at the time he would be ceasing to pay the spousal maintenance and why he was taking that step. Some might argue he ought to have returned to Court and sought a discharge accompanied by the evidence of his circumstances but the point does not weaken his costs argument.
It will be seen that her Honour understood that the reason why the wife relied on the husband’s failure to comply with an order for spousal maintenance, apparently as a defence to the husband’s application for costs, was because that failure was asserted to have prolonged the property settlement proceedings on account of the need to determine the arrears of maintenance. Her Honour’s understanding appears correct when regard is had to the wife’s submissions to her (see Costs Appeal Book, pages 55-56).
However, as will also be seen from paragraph 17 of her reasons, her Honour was not prepared to accept the proposition that the need to determine the maintenance arrears prolonged the hearing. As the Judge who had conducted the property settlement hearing, her Honour was clearly well placed, indeed uniquely placed, to determine whether or not the need to determine the arrears had prolonged the hearing. It has not been demonstrated to us that her Honour was wrong in that determination.
The second and third issues addressed in the submissions of counsel for the wife under the heading “Conduct” appear to be directed to the following observations made by her Honour in paragraphs 15 and 16 and then in paragraphs 18 and 19 of her reasons in relation to the costs order:
15. [The husband] also relies on conduct to support his claim. For example, she did not comply with the initial Trial Notice and the matter was put into the defaulter’s list when it was set for hearing in December 2002, though it was then not reached and the matter came on for hearing again at a later sittings. The financial circumstances were then complicated by the case mounted on her behalf in so far as they related to the business he operated post separation and that was pressed to the last, despite the self-evident facts revealed on discovery and at trial. At no stage did she concede this and she opposed the re-opening of the case in the face of a clear change in [the husband’s] financial circumstances in 2004. Her persistence in these claims resulted in the intervention of Mr [B] with all the attendant expense and delay involved in that, even though she had been given the documents related to the arrangement with Mr [B] from early on. Furthermore, the cross-examination of [the husband] was prolonged and ‘utterly unsuccessful’ and in the final analysis she was wholly unsuccessful in her claims.
16.There is merit in these arguments and the arguments put on behalf of [the wife] either missed the point or were irrelevant and unfounded. In particular, it was not the conduct of [the husband] that brought about the ‘parlous’ result for her and I do not accept it was his actions that ‘dramatically changed the course of valuation and the end matrimonial pool result’. The result is now to be subject to review at appellate level and the outcome of that may put this argument in a different light. But at this stage, I reject the submissions as being without any proper foundation.
…
18.There are other submissions for [the wife] on matters of conduct and success in language that would tend to give the casual reader unfamiliar with the facts presented at trial an inaccurate impression. For example, there were submissions about the failure to give discovery or call witnesses and there was an allegation of fraud on his part, but they have no foundation in any findings. Her resistance to the re-opening is dealt with by the observation that this was the result of [the husband’s] unilateral decision to dispose of a major asset which had been the subject of expensive and extensive valuation evidence and therefore ‘he ought to be responsible for the costs thus wasted.’ None of this helps to counter the arguments put on his behalf.
19.The fact of the matter is that the wife pursued a position about issues related to the royalty entitlement, the crushing operation, and the value of the waste stockpile, amongst other things, in an unhelpful, unproductive and ultimately unsuccessful way that lacked clarity or direction and had the result of prolonging the hearing. [The husband] sold the enterprise and walked away from the quarry because he was going broke or he would go broke if he stayed any longer. There was no gold mine to be found in the stockpile and those advising [the wife] ought to have seen that well before he walked away from it.
We have not found the written submissions made on behalf of the wife, which challenge various observations made and conclusions reached by her Honour in paragraphs 15, 16, 18 and 19 of her reasons, easy to comprehend. However, it would seem that the principal complaints raised in this context by the wife relate to her Honour’s apparent criticism of the wife’s opposition to the husband’s application to re-open the hearing before her Honour; to her Honour’s observation that there was “no gold mine” in a waste stockpile which had been in the husband’s possession when the valuation evidence was asserted to be to the contrary; and to her Honour’s conclusion that the wife was wholly unsuccessful in her claims relating to the quarry and crushing business in which the husband had been involved.
It seems to us that many of these complaints under the heading “Conduct” in the wife’s submissions in support of the appeal against the costs order, would more appropriately have been made in the context of the appeal against her Honour’s substantive property settlement orders. That appeal has of course been dismissed, so no purpose could be served by us now considering matters that were, or could have been, considered in the context of that appeal. We note in passing that a similar interpretation has been placed on the submissions of the wife in the submissions on behalf of the husband filed on 12 June 2007.
Rather our task is to consider whether her Honour’s assessment of the parties’ conduct of, and in, the proceedings before her would provide support for the costs order which she made. Again, her Honour as the trial judge in a relatively long and complex case was uniquely placed to determine whether the conduct of either party could provide either justification for, or alternatively a defence to, a costs order. We have not been persuaded that her Honour’s discretion miscarried because of her assessment of each party’s conduct in the proceedings.
The offers for settlement made by the husband
In the following paragraphs of her reasons for judgment in relation to the costs order, her Honour set out a history of the offers made and a summary of the submissions made to her as to the weight to be given to those offers when considering whether a costs order should be made:
6.[The husband] made several offers to avoid or settle the proceedings by proposing either an equal division of the assets or a 60:40 split in favour of [the wife].
7.His first offer was made on 17 January 2001 prior to the commencement of the proceedings. His formal application filed on 8 March 2001 sought an equal division. In May 2001 [the wife] rejected his earlier offer and countered with a proposal that would have meant he was left with companies and a business that depended on a new lease being negotiated for its value. In the Response she filed thereafter she sought the same orders she had proposed in her earlier letter together with an application for lump sum spousal maintenance of no specific sum. She made no further offers. Her Response was followed by [the husband] filing an offer proposing a 60:40 split of the assets in her favour. On his behalf it is said this offer was not premature, contribution was not a major dispute between them, and she had ample opportunity to accept the proposal while the hearing was pending. Had his offers been accepted at any point from prior to the proceedings commencing or thereafter, costs would have been saved.
8.The submission on [the wife’s] behalf is that no weight should be placed on the offers. Reference was made to his alleged failure to disclose, his failure to produce documents during the course of the proceedings, his dissipation of assets, and his retention of the proceeds of operation of the business he conducted. His sale of the business obviated the necessity of a ruling as to value and that was evidence [the wife] was entitled to adduce and which she had adduced. She was not able to consider his offers until he had made full disclosure, Mr [B] had made full disclosure, and the business enterprise had been valued and proved.
9.In my opinion, there is no foundation in fact for some of these submissions on her behalf and no merit in them. The offers [the husband] made were equal to or more generous than what she received by orders a long way down the track and with a lot of costs incurred in the meantime.
10.No complaint is made about the form of the offers he made; that is to say, it is not suggested their terms were not clear or ambiguous and therefore his offers do not fall foul of the discussion of the Full Court in Harris and Harris (1987) FLC 91-822…
Then having cited relevant passages from Harris and Harris (supra), and also from Robinson and Higginbotham (1991) FLC 92-209, Pennisi v Pennisi (supra), Browne v Green (2002) FLC 93-115, her Honour concluded:
14.With these principles in mind, [the husband’s] offers to settle from the start and throughout the proceedings should be given considerable weight. It can be accepted that [the wife] needed to satisfy herself about the arrangements he entered into post separation, but what ought to have been clear to [the wife] a long time prior to the prolonged hearing was the facts related to the arrangement he had with Mr [B], the state of the financial gearing of the machinery he used in the conduct of the business, the limited markets for the sale of raw materials from the stockpile and to the competition in those markets for other products. Had that been reviewed in the sober light of reality, it should have come as no surprise that he ultimately sold the enterprise for what he did and got out of it.
In the wife’s submissions in support of her appeal against the costs order, it is asserted that her Honour erred in finding that “considerable weight” should be given to the husband’s offers. The principal basis for this asserted error on the part of her Honour would seem to be the wife’s lack of knowledge concerning the husband’s financial circumstances and the value of the mining venture.
When considering these submissions it needs to be borne in mind that similar submissions were made to her Honour (see paragraph 8 of her reasons and the wife’s submissions to her Honour at Costs Appeal Book pages 57-58). Her Honour considered those submissions, and importantly, she expressly recognised in paragraph 14 of her reasons that the wife needed to satisfy herself regarding the husband’s post-separation financial arrangements. Nevertheless, in the exercise of her discretion, her Honour was prepared to place considerable weight on the husband’s offers. We do not consider that it would be open to us to interfere with that exercise of discretion.
Moreover, we note in reaching this conclusion, that no challenge was made before us to her Honour’s conclusion in paragraph 7 that had the husband’s offers been accepted, costs would have been saved, or – and more significantly – to her conclusion in paragraph 9 that the husband’s offers “were equal to or more generous” than what the wife “received by orders a long way down the track and with a lot of costs incurred in the meantime”.
Conclusion in relation to the appeal against the costs order
As we have found no substance in the submissions made in support of the appeal against the costs order, that appeal must be dismissed.
In the responding submissions filed on behalf of the husband on 12 June 2007, it was sought that the appeal against the costs order should be dismissed with costs.
Costs do not automatically follow the dismissal of an appeal determined under the Act. In the absence of submissions as to why an order for costs would be justified in relation to the wife’s unsuccessful appeal against the trial judge’s costs order, we are not persuaded that we should make a costs order in favour of the husband in relation to that last-mentioned appeal. We also in this context draw attention to what was said by the Full Court in C & C [2006] FamCA 300:
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.
The costs of the wife’s unsuccesful appeal against the property settlement orders
As mentioned in the introductory section of this judgment, in submissions filed on 14 May 2007, the husband sought that the wife should pay his costs in relation to her unsuccessful appeal against the property settlement orders made by Moore J on 1 March 2005, while in her submissions filed on 15 May 2007 the wife sought that each party should pay his or her costs in relation to that appeal.
In support of the husband’s application for costs of the property settlement appeal, his legal representatives in their written submissions filed on 14 May 2007, contend:
… that unless the successful [party] can identify section 117(2A) matters, the usual practice of the Full Court is to exercise its discretion so that ordinarily costs would follow the event. To the extent to which the appellant wife has been unsuccessful, the respondent husband should receive his costs in the absence of special circumstances justifying some other order.
We do not agree that this is a correct statement of the law. Success or lack of success in an appeal is simply one of the matters mentioned in s 117(2A) to which the Court must have regard when determining whether or not the circumstances justify a departure from the general rule under s 117 of the Act that each party should pay his or her own costs in proceedings under the Act (including appellate proceedings).
That having been said, however, we acknowledge that in an application for costs in relation to an appeal, significant weight is placed on the outcome of the appeal.
In determining the husband’s application for costs of the appeal, we proceed therefore on the basis that he can rely on his success and the wife’s lack of success in the appeal, as one matter which would justify an order for costs in his favour.
The submissions filed on behalf of the husband on 14 May 2007 also indicated that he would rely on the financial circumstances of the parties as found by the trial judge (being approximately similar); on the extensive number of grounds of appeal pursued (all ultimately unsuccessful) on behalf of the wife; and the fact that the appeal raised no issue of legal controversy.
In opposing any order for costs being made against her, the wife in her submissions filed on 15 May 2007, relied principally on her financial position (asserted to be less favourable than that on the husband), on costs orders already made against her in the proceedings, and on difficulties experienced with her legal representation.
Notwithstanding the lack of success of the wife’s appeal against the property settlement orders, we are not persuaded that the circumstances justify the making of an order for costs in relation to the appeal against the orders with respect to property settlement, particularly having regard to the wife’s financial circumstances including the costs orders already made against her.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 9 October 2008
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