FAMILY COURT OF AUSTRALIA

SINDEL & SINDEL (COSTS APPLICATION)	[2010] FamCA 243	

FAMILY LAW – COSTS – offers of settlement – conduct during the proceedings 	

Family Law Act 1975 (Cth) 	

Browne and Green (2002) FLC ¶93-115	

APPLICANT:	Ms Sindel	

RESPONDENT:	Mr Sindel	

FILE NUMBER:	SYC	5856		of	2007	

DATE DELIVERED:	23 March 2010	

PLACE DELIVERED:	Sydney	

PLACE HEARD:	Sydney	

JUDGMENT OF:	Justice Fowler	

HEARING DATE:	29 January 2010 and by written submissions	

WRITTEN SUBMISSIONS:		

REPRESENTATION:

APPLICANT:	In person	

RESPONDENT:	In person	

Orders
(1)	The husband is to pay to the wife 60% of her costs of and incidental to the proceedings calculated on a party and party basis, as agreed or assessed, excluding costs solely referable to parenting issues.
(2)	The amount of costs payable under Order 1 above be payable not earlier than 30 days after the determination or disposal of the Appeal in these proceedings or at the time of their agreement or assessment, whichever is the later.
(3)	The husband is to charge in favour of the wife his entitlement under the Orders of 19 August 2009 with the obligation created by these Orders, to pay the wife’s costs as set out.

IT IS NOTED that publication of this judgment under the pseudonym Sindel and Sindel (Costs Application) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

Family Court of Australia at Sydney	

FILE NUMBER: SYC 5856 of 2007

MS SINDEL 	
Applicant

And

MR SINDEL 	
Respondent

REASONS FOR JUDGMENT
Introduction
1.	Before the Court is an Application by the wife for an order that the husband pay her costs of certain proceedings on an indemnity basis as from 9 August 2007 to 19 August 2009.
2.	In his Response to that Application the husband has sought orders dismissing the wife’s application and seeking an order that the wife pay the husband’s costs of and incidental to the conduct of the matter since separation on 3 April 2006 and until 29 September 2009.  The husband further seeks orders for “set off” against amounts due to the wife by way of alteration of property interests.
3.	In the alternative, the husband seeks an order that each party pay and bear their own costs of and incidental to the conduct of the proceedings, other than specific amounts sought by the husband for particular parts of the proceedings which he enumerates and for which he seeks an order for set off against the amount due to the wife.
4.	Those costs which the husband claimed are as specified below:
a)	an amount of $1,195.50, being 50% of the total costs incurred by the husband in a divorce application;
b)	an amount of $5,572, being the costs incurred by the husband to challenge the wife’s failure to comply with the court’s pre-action procedure;
c)	an amount of $3,457.85 for the costs incurred by the husband in the appointment of N Valuers; and
d)	an amount of $8,424 for legal costs incurred by the husband on parenting.

Background facts
5.	There were defended proceedings before me seeking alterations of property interests.
6.	They were the subject of a judgment and orders delivered and made on 
19 August 2009.  That judgment is at the date of this judgment the subject of an appeal not yet determined.
7.	The background facts of the application for orders for settlement of property were set forth in my judgment delivered on that day and it is not my intention to repeat them here since that judgment should be read in conjunction with this judgment. 
8.	The proceedings were commenced by application dated 20 August 2007.
9.	The initial application sought relief in relation to the property matters and orders in relation to parenting.
10.	The parenting application was concluded by consent orders made on 29 July 2009.
11.	The proceedings for alteration of property interest were heard from 29 July to 31 July 2009 and were determined on 19 August 2009 when the following orders were made:
1.	Forthwith from the making of these orders the parties are to do all acts and things and sign all documents necessary to sell the property at [P] in the State of New South Wales for the best price reasonably obtainable and the following is to apply unless agreed to the contrary:
a.	the sale is to be by way of public auction as soon as practicable;
b.	the reserve price is to be agreed or as determined by the President of the Real Estate Institute of New South Wales or his/her nominee; 
c.	in the event the [P] property does not sell by auction the parties shall do all things, pay all necessary monies (equally) and sign all documents to cause [P property] to be offered by sale by public auction successively each six (6) weeks until sold and unless otherwise agreed, at a reserve price five (5) per cent below the reserve price set at the auction pursuant to Order 1(b) above, and for each subsequent auction at a reserve price five (5) per cent lower than the last.  The orders in relation to the sale by auction shall otherwise apply;
d.	the parties are to pay equally all necessary and reasonable costs in relation to the sale of the property;
e.	the husband is to pay all council and water rates and insurance whilst ever he remains in occupation of the [P] property, and on his vacating the same such costs are to be borne equally;
f.	each party is entitled to bid at auction, as permitted by law; and
g.	on completion of the sale the proceeds of sale are to be paid as follows:
i.	in payment of agent’s commission, expenses of sale and legal costs, and the usual adjustments between vendor and purchaser;  and
ii.	as to the balance 50% thereof to the wife and the balance to the husband.
2.	Forthwith from the making of these orders the parties are to do all acts and things and sign all documents necessary to sell the property at [G] in the State of New South Wales for the best price reasonably obtainable and the following is to apply unless agreed to the contrary:
a.	the sale is to be by way of public auction as soon as practicable;
b.	the reserve price is to be agreed or as determined by the President of the Real Estate Institute of New South Wales or his/her nominee; 
c.	in the event the [G] property does not sell by auction the parties shall do all things, pay all necessary monies (equally) and sign all documents to cause [G property] to be offered by sale by public auction successively each six (6) weeks until sold and unless otherwise agreed, at a reserve price five (5) per cent below the reserve price set at the auction pursuant to Order 2(b) above, and for each subsequent auction at a reserve price five (5) per cent lower than the last.  The orders in relation to the sale by auction shall otherwise apply;
d.	the parties are to pay equally all necessary and reasonable costs in relation to the sale of the property;
e.	the parties are to share equally the cost of all council and water rates and insurance until the date of sale; 
f.	each party is entitled to bid at auction, as permitted by law; and
g.	on completion of the sale the proceeds of sale are to be paid as follows:
i.	in payment of agent’s commission, expenses of sale and legal costs, and the usual adjustments between vendor and purchaser; and
ii.	as to the balance 50% thereof to the wife and the balance to the husband.
3.	For the purposes of Orders 1 and 2 above the husband and wife shall co-operate in every way with the agent, including (without limiting the generality of the foregoing):
a.	making the key(s) to the property available to the agent(s);
b.	allowing inspection of the property at all reasonable times requested by the agent(s);
c.	doing or saying nothing to hinder or prevent a sale being effected;
d.	ensuring that the property, including the grounds, is in a neat and clean condition at the time of inspection by the agent(s) and prospective purchasers;
e.	signing all documents requested by the agent in relation to the listing for sale of the property; 
f.	undertaking a marketing campaign in accordance with the recommendations of the agent; and 
g.	attending the auction.
4.	From the proceeds of sale received by the husband under Order 1(g)(ii) above or Order 2(g)(ii) above, the husband is to contemporaneously pay the wife the sum of $238,529.40, unless otherwise paid beforehand.  The husband shall forthwith apply the proceeds of any sale to which he is entitled in payment of his obligation to pay the wife the sum of $238,529.40, and the proceeds of sale shall be charged with that obligation.
5.	Forthwith upon the making of these orders the husband is to sign all documents and do all things necessary to transfer to the wife his interest in the funds held in the Macquarie Cash Management Account.
6.	Pursuant to s90MT(1) of the Family Law Act 1975 (“the Act”) the parties as Trustees of the [Sindel] Superannuation Fund do all acts and things and execute all deeds, documents, instruments and writings necessary to cause the [Sindel] Superannuation Fund (“the Superannuation Fund”) to make a splittable payment to an eligible superannuation fund nominated by the wife and for that purpose the wife is entitled to 44.4% of the husband’s interest in the Superannuation Fund at the operative date and the husband’s entitlement in the Superannuation Fund is correspondingly reduced.
7.	The parties do all such acts and things as shall be necessary to cause the wife to cease to be a member of the Superannuation Fund and to resign as a trustee of the said fund.
8.	The Trustees of the Superannuation Fund shall do all such acts and things and sign all such documents as may be necessary to:
Calculate, in accordance with the requirements of the Act and the Family Law (Superannuation) Regulations 2001 the entitlement created for the wife in Order 6 above; and
Pay the respective entitlements whenever the Trustee makes a splittable payment out of the wife’s interest in the Superannuation Fund.
9.	Having been afforded procedural fairness, Orders 6, 7, and 8 bind the Trustee of the [Sindel] Superannuation Fund to observe the requirements of the Act and the Family Law (Superannuation) Regulations 2001.
10.	The operative time for Order 6 is the date of this order.
11.	Unless specified in these orders, each party is otherwise entitled to retain absolutely to the exclusion of the other all property of whatsoever nature or kind owned by that party and held in the name or possession of that party as at the date of these orders.
12.	If either party refuses or neglects to sign, within fourteen (14) days of a written request to do so, any documents necessary to effect the terms of these Orders, a Registrar or such other officer or person as may be appointed by the Family Court of Australia is hereby appointed pursuant to the provisions of Section 106A of the Family Law Act to execute such documents on behalf of such party.
13.	Any application for costs be filed an served within 28 days of the Orders herein made, and subject to the following;
a.	any costs application is to be accompanied by affidavits setting out the evidence in chief on which the applicant wishes to rely together with any written submission in support of that application;
b.	any respondent to a costs application must file within a further 14 days a response, together with a written submission in support of that response, and any affidavit material, setting out the evidence in chief upon which they wish to rely; and
c.	the applicant will have a further 7 days in which to file any submission in reply.
14.	In the event that no application is filed within the time limit specified in Order 13 above, then each party is to pay their own costs of an incidental to these proceedings.
Section 117 considerations
12.	The Court has a broad discretion as to the orders that it makes for costs and that discretion is set out in section 117(2) of the Family Law Act 1975 (“the Act”).  In the consideration of the exercise of that discretion I am obliged to consider the matters set out in section 117(2A) of the Act.  Those matters are set out in the following sub sections of that section namely:
(a)	the financial circumstances of each of the parties to the proceedings
13.	Each of the parties filed an up-to-date statement of their financial circumstances.
14.	The wife deposed to a current income of $1,654 weekly with expenses of $1,266 weekly.  She asserts that her property is of value $791,168 and her superannuation of value $525,264.  She claims liabilities of $81,988.
15.	The husband informed the Court that he had not secured a significant position of employment and that he had leased out the former matrimonial home following the making of an order by way of conditional stay pending appeal and applied that income to the costs of advances procured to pay the sum required by the condition of his stay of the proceedings. 
16.	The husband gave evidence that he was earning some money from teaching.  The husband filed a Financial Statement on 29 January 2010 in which he deposed to earning a total average weekly income of $825.39, with a total personal expenditure of $2,576.99 and superannuation to the value of $3,503,858.  The husband claims liabilities of $885,050.54.  The figures would have changed as a result of the borrowing of the husband to meet the conditions of the stay and the rental of the former matrimonial home.  It is noted therefore that the husband’s present financial position is occasioned by his failure to accept and implement the orders made at trial and, in my view, the obligations which he has assumed are of his choice and cannot be the basis on which the issue of costs is determined.
17.	It is noted that the wife asserts that the Court should take into account, in assessing the relative financial position of the parties, the fact that the wife’s financial position was one in which her available resources were diminished by paying rent for her accommodation whilst the husband previously lived mortgage- and rent-free in the former matrimonial home.  Since I have taken this factor into account under section 75(2) in making property adjustments under the Act in the substantive property proceedings it is not my intention to again take it into account in relation to costs.
18.	I find that, subject to the orders for property adjustment ordered being given effect, either the husband or the wife would be able to meet any order for costs that I might make, upon the implementation of my orders.
(b)	whether any party to the proceedings is in receipt of legal aid and, if so, the terms of the grant of that assistance to that party
19.	There is no evidence that either party is in receipt of legal aid.
(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
20.	The husband claims to have unnecessarily incurred costs under 38 specific headings because of the actions or omissions of the wife.
21.	A number of those matters related to issues which had arisen between the parties in relation to parenting which, as related above, were resolved by final orders.  Those orders made no provision for the reservation of the costs of those proceedings.  Those matters having been determined by final order on 29 July 2009, I do not consider that I have power to make an order for the costs of those proceedings at the present time.  I put to both parties my view as to this matter and each of them agreed that that was so.
22.	In the husband’s affidavit filed 29 September 2009 he outlines the processes of mediation undertaken by the parties in relation to the parenting proceedings between them, in which orders were ultimately made by consent on 29 July 2009.  It is further the husband’s submission that he was successful in having the Court make the interim consent orders in relation to parenting on 
18 September 2008 and the final orders on parenting on 29 July 2009.  At paragraph 85 of his written submissions filed 19 October 2009 the husband contends “… that he achieved consent orders on parenting” and in summary says, at paragraph 99, that “[t]he wife failed to obtain the orders she sought on parenting at the trial.”  In his written submissions filed 19 October 2009 the husband, in considering whether any party has been wholly unsuccessful in the proceedings argues in relation to parenting that the wife failed to obtain the orders she sought as to parenting on 29 July 2009. 
23.	The husband further argues that the wife attempted to avoid mediation in relation to parenting matters and then withdrew from mediation in relation to same after agreement was reached.  In relation to this the husband says the parties attended mediation with Ms A on 27 May 2008 and later attended two sessions at the Family Relationships Centre.  The husband says he then forwarded the parenting plan that was agreed to at the meeting to the mediator and the wife.  Despite the purported agreement reached at mediation, the husband says the wife obtained further legal advice and the mediation ultimately failed.  Furthermore, the husband says the wife refused to participate in mediation without legal representation.  Consequently, the husband says he has incurred costs of some $8,424 in the subsequent legal processes leading up to the final parenting consent orders.
24.	It is the husband’s submission, contained in his written submissions filed 
19 October 2009, that a determination of costs in this matter requires a consideration of both parenting and property issues.  I reject that submission so far as it relates to parenting matters.
25.	If I had such power having considered the matters raised, I would not in the exercise of my discretion, make such an order in relation to issues brought before this Court by each of these parents, each no doubt motivated by a desire to do what they saw as best for the child of the marriage.  Any order for costs that I do make either in favour or against the husband or wife will therefore not include costs of litigating those parenting issues.
26.	The husband seeks to revisit the breakdown of the marriage and claims victim status and his submission is reminiscent of a time when matrimonial fault or its absence was of some importance to financial outcomes.  He says he worked hard to support his family and details what he provided to the wife.  He refers to the wife as “walking out of the marriage” and spurning his requests to reconcile, mediate and attend counselling rather than waste money on lawyers.  He observes that the wife did not initiate reconciliation or counselling.
27.	He further says that she did not initiate mediation in relation to property.  In that regard it appears the husband declined to provide to the wife’s solicitors a sworn Financial Statement prior to litigation.  Whilst I agree that there is no direct requirement to do so the fact is that it is not an unreasonable request to give the other party some assurance that the husband is prepared at least to put himself under possible penalty for falsely swearing a document if the document misrepresents the position.  The failure of the wife to continue negotiations in the face of such failure is in my view not unreasonable.  Parties are required to be sensible and responsible in their approach to pre-action procedures and, in my view, the failure to provide the assurance requested could not fall within that description.  It would be a foolish attorney who permitted his client to negotiate a settlement where his client lacked confidence in the disclosure made by the other party and did not have at least the assurance that there was a sworn disclosure.  In addition, that failure alone in my view warranted the wife seeking the assistance of the Court. 
28.	As to so much of these submissions which suggests the Court should take into account the circumstances of marital breakdown and matrimonial virtue or fault in its determination of an issue of costs I reject them.
29.	As to the question of resolution of property issues I note that there were the usual pre-trial procedures which did not yield a settlement.  It seems clear from the offers which were made that such a settlement would have on the wife’s requests been unlikely in whatever manner it was sought to be achieved.
30.	The husband says that he progressed his offers to the wife whilst the wife did not move from her position.  Her position was, however, one which was largely vindicated in the orders made;  indeed her offers of settlement would have provided to the husband on one view a result better than the orders made.
31.	It is not the style adopted in the process of negotiation and the moveable nature of an offer which, in any event, requires it to be taken into account but the substance of it.  I find the wife behaved reasonably in the negotiations.
32.	The wife says that in the proceedings the husband’s conduct caused additional costs to be incurred in a number of respects, namely:
a)	The husband provided limited discovery initially and then discovered irrelevant documents requiring the wife to incur costs unnecessarily.
b)	The husband, the wife says, was insistent that any split of the self-managed superannuation fund had to be on the basis that it was transferred in specie to another self-managed fund which the wife did not want to do.  She asserts that it was necessary to employ an independent expert by reason of this insistence.  The proposal of the husband was rejected by me and his unreasonable insistence upon it required the incurring of expert’s fees in the sum of $8,000.
c)	Although insisting on the appointment of the expert the husband then refused to pay the expert and required the wife to make further application to the court.
d)	In all the offers made by the husband he insisted that the property at G be kept and not sold yet the husband proposed that Capital Gains Tax (“CGT”) on a notional sale be deducted from the pool of assets.  The intransigence of the husband led to the appointment necessarily of another expert to deal with the tax payable and incurred unnecessary legal costs.
(d)	whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court
33.	This is not applicable.
(e)	whether any party to the proceedings has been wholly unsuccessful in the proceedings
34.	The husband has not been successful in the proceedings in the sense that the Court has made orders different from those which he sought.
(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
35.	The orders that I made were for an equal division of the parties’ assets.  The wife says that she made a number of offers to the husband prior to the commencement of the proceedings and continuing throughout the proceedings.  The wife proposed at first, she says, an equal division of all property.  After the commencement of the proceedings and by way of an offer to settle served upon the husband’s then solicitors on 26 March 2008 the wife proposed to settle all property matters on the basis of 55% in favour of the husband and 45% in favour of the wife.
36.	That last offer was, the wife deposes, available to the husband from March 2008 and was re-affirmed as an offer to the husband under cover of a letter dated 16 September 2008 and under cover of a letter dated 27 December 2008.  Thus, the husband has had offers open to him at or over the entitlement determined by the Court.  None of those offers were accepted.  The husband purported to propose a division not dissimilar in percentage but dissimilar in effect since he purported to include in the pool to be divided a liability of CGT which was not incurred on the basis of the orders he proposed, and also insisted on the pool including the entitlement of the parties’ child.  The wife calculates that the effect of his offer would have been to divide the found pool in the order of 42.5% to her and 57.5% to the husband. The husband also in the determination of the pool, the wife says, inflated the value of the furniture in her possession.
37.	Did the husband act unreasonably in refusing to accept an offer of this nature made at a time when the child was living with the wife and the husband had significant earnings?  The husband, in my view, did act unreasonably and in a marriage of the years of this marriage and given his superior earning capacity should reasonably have accepted the proposal.  The offer made was within an acceptable range and should have been accepted.
38.	The Court places importance on the process of parties to litigation in this Court seriously considering their position and requiring them to both make and consider seriously offers of compromise.  It is trite to say that the Court seeks commensurate with justice and equity to act, and require parties to act, in a way which is saving of costs and expense to them and to the public.  It is, therefore, important that it be clearly understood that a failure to act reasonably can be visited with consequences particularly in costs.
39.	The Court’s attention is drawn by the wife to the statement of the Full Court (Kay, Coleman and Warnick JJ) in Browne and Green (2002) FLC ¶93-115 at 57:
“The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer made to give it a proper consideration, is something to which very significant weight indeed ought normally be given.”
(g)	such other matters as the Court considers relevant
40.	I note the husband’s submissions are said by the wife’s lawyers to be unreasonably critical of them and that they in general reject the personal attack made by the husband upon them.  Such attacks are not helpful to the task set before me and, I think rightly, the wife’s solicitors submitted that they would not undertake a self-indulgent defence of those attacks.
41.	The continuation of the husband’s position in the face of what was a reasonable and, on some views, a generous proposal should in the view of the wife lead the Court to make an order for indemnity costs.
42.	Such orders are rare and the Court is referred by the wife to decisions which adumbrate cases in which such a decision might be made.
43.	In this case, although the refusal of the wife’s offer was imprudent of the husband, I do not think that his imprudence is sufficient in this case to warrant such an indemnity costs order.
44.	Nevertheless, I have come to the conclusion that he should bear a proportion of the wife’s costs and that it would be just and appropriate that I make an order that the husband pay to the wife 60% of her costs of and incidental to the proceedings calculated on a party and party basis, excluding costs solely referable to parenting issues as agreed or assessed.
45.	Given the husband’s present financial position I propose to order that the amount of costs be payable unless otherwise agreed be paid at a time when the husband should have had an outcome from the proceedings.
46.	I further will order that the husband charge in favour of the wife his entitlement under the order of 19 August 2009 with the obligation created by this order.
I certify that the preceding forty six (46) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate:  

Date:  23 March 2010