Withers and Withers (Costs)

[2013] FamCA 887

FAMILY COURT OF AUSTRALIA

WITHERS & WITHERS (COSTS) [2013] FamCA 887

FAMILY LAW – COSTS – Where the wife seeks an order for costs – Offer of settlement – Where the wife made settlement offers to the husband which were less favourable to her than the final Orders of the Court – Where the husband made a settlement offer to the wife which was more favourable to him than the final Orders of the Court – Where costs are ordered on a party and party basis.

Family Law Act 1975 (Cth) s 117(1), s 117(2), s 117(2A)
Family Law Rules 2004 (Cth) r 19.8(1), r 19.8(3)

Lenova & Lenova (Costs) [2011] FamCAFC 141

APPLICANT: Ms Withers

RESPONDENT: Ms Withers

FILE NUMBER: BRC 2405 of 2011

DATE DELIVERED: 14 November 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 23 September 2013 (with last Submissions received on 4 November 2013)

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Charles Cooper Lawyers

SOLICITOR FOR THE RESPONDENT: Pender & Whitehouse Solicitors

Orders

1. That the husband pay the wife’s costs of and incidental to these property adjustment proceedings from the 13^th October 2011 until the end of the last day of trial on a party and party basis as agreed or, failing agreement, as assessed by a registrar pursuant to Chapter 19 of the Family Law Rules 2004.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Withers & Withers (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 2405 of 2011

Ms Withers

Applicant

And

Mr Withers

Respondent

REASONS FOR JUDGMENT

1. I delivered judgment in substantive property adjustment proceedings between these two parties on 16 August 2013.

2. I now determine the wife’s application for an order that the husband pay her costs of those proceedings from 29 September 2011 to the end of the trial. She initially sought a fixed sum of $60,061 – the amount she spent on legal costs and outlays in that time – but now only seeks an order that the costs be paid on a party and party basis.

3. Affidavit evidence was filed and relied upon by both parties and the matter proceeded, by agreement between the parties, by the filing of written submissions for the Court to consider in chambers before determining the application.

4. At the trial which took place in March 2012, the parties substantially agreed about their property interests and the value of those interests. They had property interests and superannuation interests that they agreed were worth, in total, $5,998,958.77. In addition, I determined that the husband had shares in a private company that were worth $679,923.13, taking the value of their interests in property and superannuation to $6,678,881. I also added to that another $87,000 for money received by the wife prior to trial by way of partial property settlement.  I also added another $13,000 to that, being the amount I determined to be owed by the wife’s adult daughter to the husband, following dispute about it. That took the total amount of property and superannuation interests being considered to $6,778,881.90.

5. At trial the husband contended that those property and superannuation interests should be divided between the parties as to 65 per cent to him and 35 per cent to the wife in order to effect a property adjustment that was appropriate, just and equitable. For her part, the wife contended that it should be an equal division. In the end I determined that a 52/48 division in favour of the husband was the basis of appropriate, just and equitable orders. That resulted in orders that provided for the wife to retain and receive property and superannuation interests to a total value of $3,253,863.31.

6. The orders made provided for the wife to retain or receive an unencumbered real property, a motor car, a motor boat and trailer, a jet ski and trailer, the debt owed by her daughter to the husband, money in her bank accounts, her own superannuation interest and $1,424,491.50 in superannuation from the husband’s Self-Managed Superannuation Fund.

The Power to make costs orders

1. Whilst s 117(1) of the Family Law Act provides that each party to proceedings under the Act shall bear his or her own costs, s 117(2) confers a discretion on the Court to make such order as to costs as the Court considers just if the Court is of opinion that there are circumstances that justify it in doing so. In the exercise of this discretion, the Court must have regard to the list of factors set out in s 117(2A).

2. Further, Rule 19.8(1) of the Family Law Rules 2004 provides also that the Court may order that a party is entitled to costs:

   (a)of a specific amount;

   (b)as assessed on a particular basis (eg lawyer and client, party/party or indemnity);

   (c)to be calculated in accordance with the method stated in the order; or

   (d)for part of the case, or part of an amount, assessed in accordance with Schedule 3.

3. Rule 19.8(3) of those Rules sets out factors the Court may consider in making an order under Rule 19.8(1). Those factors can, in my view, be fairly described as factors that also fall within the bounds of the factors set out in s 117(2A).

The Arguments of the Parties

1. In support of the argument that the husband should pay her costs from 29 September 2011, the wife points to two written offers of settlement that she made to the husband contained in letters from her solicitors to the husband’s solicitors.

2. The first written offer of settlement was contained in a letter of 8 July 2011. In that letter, the wife offered to settle the property dispute that was already under way in the Court by reference to a percentage division of 48 per cent to her and 52 per cent to the husband. On percentages alone, that was a result exactly equal to the percentage division the Court ultimately determined was an appropriate, just and equitable basis for the division of their property and superannuation interests. It included an offer that the wife retain and receive certain property and a cash payment of $1,603,881.60. That offer of settlement was not accepted by the husband. In the end, the Court’s orders did not provide for the wife to receive as much as that.

3. The second written offer of settlement was contained in a letter of 29 September 2011. In that letter, the wife offered to settle the property dispute still under way in the Court by reference to a percentage division of 47 per cent to her and 53 per cent to the husband. On percentages alone, that was a result more favourable to the husband than the Court ultimately determined was an appropriate, just and equitable basis for the division of their property and superannuation interests.

4. However, more relevantly, the wife set out in that offer all of that which she was prepared to settle for. She said she would accept the same real property that she ultimately received. In addition, she said she would take the same motor car, the same motor boat and the same jet ski that she ultimately received. She also said she would retain her bank accounts and superannuation interests and receive from the husband a payment in the sum of $1,385,000 to make up the balance of her accepted entitlement. The offer of settlement was expressed to be “open for acceptance within 14 days from the date” of the letter. There is no dispute that it was not accepted by the husband.

5. In the end, by the outcome provided for in the Court’s orders, the husband has been obliged to ensure the wife retains or receives all of those items of property or superannuation interests that she said in that letter she would settle for and she is entitled to receive from his superannuation interests in his SMSF (at a time when both are, as I understand the law, completely entitled by their age to access all of their superannuation interests) an amount that is actually $39,491.50 greater than the amount of the cash payment that she said she would accept from the husband by way of settlement.

6. In addition, the wife also received another $87,000 by way of partial property settlement received between separation and trial and a $13,000 debt owed by her adult daughter to the husband.

7. Accordingly, I am quite satisfied that the outcome of the property adjustment proceedings for the wife as provided for in the judgment of the Court is a better outcome than that which she offered to settle the proceedings for in the letter to the husband of  29 September 2011.

8. No submission has been made for the husband that the fact that she offered to accept $1,385,000 “by way of cash payment” to make up her entitlement and actually obtained the benefit of an order that she receive $1,424,491.50 by way of a superannuation split from the husband’s superannuation interest in his SMSF is relevant in the consideration of this issue. I would not hesitate to agree that it would be quite a relevant fact if neither the husband nor the wife had yet reached the minimum age at which he or she could access their superannuation entitlements and the superannuation split to the wife had to stay in its accumulation phase for some time. In such circumstances, it might be very hard to determine that a superannuation split of $1,424,491.50 is necessarily a better outcome than a cash payment of $1,385,000. But that is not the case in this matter. As I have said, both parties have reached the age at which they can freely access their superannuation interests. As such, I am quite satisfied that the order made for the super split, combined with the balance of the orders, effects a better outcome for the wife than the offer of settlement she made to the husband in the letter referred to.

9. For the husband it is argued that the wife’s offer of settlement and the fact that she ultimately obtained a better outcome from the Court than she offered to settle for six months before the trial ought not be the basis for a costs order against the husband as the husband was “until approximately November 2011…unable to consider any offer because of his inability to recover documents the possession of which he was entitled to, but retained in the possession and control of the solicitor for the applicant”.

10. That submission is apparently based on the husband’s evidence that the wife’s solicitor left a mediation on 27 May 2011 taking with him some of the original documents which the husband had provided at the mediation which the husband deposed had not been returned to the husband despite request. The husband deposed that it “proved impossible” for him to “consider properly” any offer made by the wife to settle the proceedings. The husband deposed that only after obtaining copies of those documents and calculations from his accountant and a detailed report from other forensic accountants “shortly after 15 November 2011” was it possible for him to give any meaningful response.

11. That evidence appears to me to be extraordinary and, with respect, simply unbelievable having regard to other evidence put before the Court on this costs application by the husband. In the same affidavit in which he deposed to the matters I have referred to in the previous paragraph, the husband deposed to putting his own written offer of settlement to the wife through his solicitor on 18 October 2011. He exhibits the letter from his solicitor to the wife’s solicitor bearing that date. The letter includes an offer that the wife retain the particular real property that she wanted and ultimately received, the same motor car she retained, the same motor boat she retained, the same jet ski she retained, her bank accounts, her own superannuation interests, the amounts she had already received by partial property settlement and the $13,000 debt from the wife’s daughter. In addition, and without any reservation, the husband offered to settle by the wife receiving another real property he said was worth $700,000 and a cash payment of $146,350. He also offered to transfer some household chattels to her.

12. By my calculations, the husband’s offer was $361,883.31 less than the wife ultimately received by way of the orders. Nowhere in that letter is it asserted that the husband was not in a position to properly assess the wife’s offer of settlement of 29 September 2011 or to properly assess the appropriateness of his own offer to settle in response due to a lack of information and/or documents. Nowhere is there a reservation of any right to reconsider or withdraw the offer in the event of any particular information coming to light or further advice being obtained. Express reference is made to the offer being made “pursuant to Family Law Rules 2004 Reg 10.02”. That is a reference, as I understand it, to Rule 10.02 of the Rules that were referred to.

13. In the light of that piece of evidence, put before the Court by the husband himself, I simply do not accept the husband’s other evidence that he was not in a position to “consider properly” the wife’s written offer of settlement of 29 September 2011.

14. There is no doubt, having regard to s 117(2A) of the FLA and statements of principle such as that cited in the written submissions filed for the wife from the Full Court’s decision in Lenova & Lenova (Costs) [2011] FamCAFC 141, that a timely offer in writing that is clearly and genuinely made and is easily understood in circumstances where it can be properly considered will be an important factor in the discretionary determination as to whether there are circumstances that justify the Court making an order as to costs that it considers just.

15. For the husband in this case, it was further submitted that another reason for not considering that there are circumstances that justify the Court making an order as to costs, is the asserted fact that the parties had reached an agreement at a “further informal mediation” that took place in July 2011 that the wife receive 44 per cent of the property and the asserted fact that the wife later resiled from that agreement.  

16. The husband’s evidence is that he arranged for that informal mediation to take place with the assistance of a counsellor of the wife who is a psychologist. He says verbal agreement was reached at that mediation that he would pay to the wife “44% of the property at that time”. The husband says he “signed the agreement” and the wife took it to be checked by her solicitor. The husband then immediately says that the after the wife obtained that advice she did not proceed with the settlement. Although the husband asserts the agreement was for the wife to receive 44 per cent of the property, he says that the offer he made her would have seen her receive greater than she ultimately received even though she was determined to be entitled to 48 per cent of the total value of the property and superannuation interests.

17. Other than the husband’s evidence, there is nothing to confirm that agreement was actually reached as he asserts. However, the husband has put into evidence a document that appears as if it could be construed to be a written offer of settlement that was conditional upon the wife not only settling the property adjustment proceedings but also discontinuing proceedings for family violence protection orders under State legislation. Even if there was a conditional agreement, the wife was, of course, not bound by it and was entitled to resile from it once she obtained further legal advice about it.  The issue is of relevance though, I accept, because the document the husband has put into evidence can be considered as a written offer of settlement. Its terms should therefore be considered.

18. As I read the document, the husband offered the wife the real property that she ultimately obtained, the car, the motor boat, the jet ski, the amounts in her bank accounts, the partial property settlement amount of $7,000, the debt of $13,000 owed by her daughter, two other real properties said to be worth $975,000 in total and a further cash payment of $216,928. The document asserts that the total of what the wife was to receive was $3,164,558, including two additional properties and cash worth $1,191,928. That total was, however, still less than the wife ultimately obtained by way of total and the value of the two additional properties and the cash that the offer effectively included was still less  than the cash amount she ultimately received as part of the property interests she was to retain and receive. Accordingly, I do not regard the fact that the parties may have reached an agreement in these terms which the wife resiled from soon after upon receipt of legal advice as a matter carrying much weight at all in this discretionary process. I do not accept, having regard to the figures I have just been referring to, that there is merit in the submission made for the husband that at that time a settlement of 44 per cent in the wife’s favour was somehow greater than the determination of 48 per cent in favour of the wife at the trial.

19. As to other relevant considerations, neither party was in receipt of legal aid and each has incurred substantial legal costs and outlays in conducting the proceedings. Each retains in excess of $3,000,000 in property interests pursuant to the Court’s orders. In that regard, the husband clearly has the financial capacity to meet the costs order sought by the wife, given that her evidence is that she spent approximately $60,000 from 29 September 2011 to the last day of the trial.

20. Although submissions were made for each party that there was conduct on the part of the other and the other party’s solicitors in respect to the proceedings that was relevant, without more I am not satisfied that I can make findings in that respect that carry weight in this discretionary determination. Neither party received, pursuant to the orders, the percentage division which each sought. The wife received 2 per cent less than she sought and the husband received 13 per cent less than he sought. As such, neither could be said to have been totally successful nor wholly unsuccessful, although it is clearly seen that the wife had a better outcome relative to that which she sought than did the husband relative to that which he sought.

21. Ultimately, that the wife made a written offer to settle approximately six months before the trial that was clearly less favourable to her than the ultimate outcome after hearing and determination of the matter in circumstances where the husband was clearly in a position to properly consider that offer and seek professional advice in respect of it persuades me to the opinion that the circumstances justify making a costs order as sought by the wife.

22. I will order that the husband pay the wife’s costs of and incidental to the proceedings for property adjustment orders from 13 October 2011. I determine that date as it is the day that was fourteen days from the date the relevant written offer to settle was made. Fourteen days was a reasonable period within which the husband could have obtained advice and properly considered the wife’s written offer of settlement. Had he accepted the offer the wife would have received less than she ultimately did though she would have paid a lot less in legal fees than she ultimately paid. Had he accepted the offer, the husband too would have paid a lot less in legal fees than he ultimately paid.

23. I will order that the costs be paid on a party and party basis as agreed or, failing agreement, as assessed by a registrar pursuant to the Rules. I consider this a just order in all the circumstances.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 14 November 2013.

Associate: 

Date:  14 November 2013