DISTRICT COURT OF QUEENSLAND

Background

1. [1]
   On the 11^th January 2007, judgment was handed down in favour of the applicant in respect of her claim for relief pursuant to Part 19 of the Property Law Act 1974. The background facts which gave rise to that claim are set out in the written judgment which was handed down in this matter. At that time, I invited the parties to make submissions in writing in respect of costs within 28 days in the event that neither party agreed that the normal rule set out in s.341(1) of the Property Law Act 1974 should apply to the proceedings and in respect of any reserved costs order previously made.

2. [2]
   Outline of Submissions were then delivered by both parties for my consideration. Those respective outlines and reply have now been marked as an exhibit for the purpose of this decision.

The relevant costs regime – s.341 of the Property Law Act 1974

3. [3]
   Both parties agree that the relevant costs regime to be considered is s.341 of the Property Law Act 1974.

4. [4]
   s.341 provides:

341Party bears own costs

(1)  A party to a proceeding under this part bears the party’s own costs.

(2) However, if the court is satisfied there are circumstances justifying it making an order, it may make any order for costs or security for costs it considers appropriate.

(3)  The court may make an order at any stage of the proceeding or after the proceeding ends.

(4)  In considering whether there are circumstances justifying it making an order, the court must consider the following matters—

(a)  the income, property and financial resources of each of the parties;

(b)  whether any party has legal aid and the terms of the legal aid;

(c)  the conduct of each of the parties in relation to the proceeding, including, for example, conduct about pleadings, particulars, disclosure, inspection, interrogatories, admissions of facts and production of documents;

(d)  whether the proceeding results from a party’s failure to comply with a previous order made under this part;

(e) whether any party has been wholly unsuccessful in the proceeding;

(f)  whether any party made an offer to settle under the Uniform Civil Procedure Rules 1999 and the terms of the offer;

(g)  any fact or circumstance the court considers the justice of the case requires to be taken into account.

5. [5]
   A helpful discussion regarding this section can be found in Grace v Jeneka [2002] QCA 335. In that case, the court noted that s.341 had been introduced to give effect to a different costs regime with regard to property disputes between partners or former partners to de facto relationships from the costs regime which applies to most civil litigation before the courts of this State.

6. [6]
   It is also true that while the Family Law Act 1975 and comparable de facto relationships legislation in other states and territories are of assistance, it is the words of s.341 which primarily govern its application (LF v RA [2006] QSC 072). Accordingly, when determining whether a costs order should be made under s.341 of the Property Law Act 1974, s.341(4) states that the court must consider the matters listed in that subsection. That approach requires that each matter set out in that subsection should be considered with regard to its relevance and whether deviation from the usual order in such a case that each party should bear its own costs is justified.

1. (a)
   the income, property and financial resources of each of the parties

7. [7]
   The evidence available shows that both parties have little income, property or financial resources at their disposal. The applicant’s income is derived solely by the receipt of a disability pension, which I accepted, was ‘income tested’. The respondent’s income is derived from his business which produces a small profit. Accordingly, the disparity between the parties in respect of their current income is limited.

8. [8]
   Counsel for the respondent submits that because the applicant did not produce evidence at trial to support the assertion that she was unable to work, it follows that she has an ability to earn income derived from paid employment. That submission however overlooks the findings which were made by this court, namely that any ability she may have to ‘sell’ her skills on the open labour market would clearly be less than that of the respondent. That submission also overlooks the fact that the respondent is also a qualified mechanic which equips him with a far better skill to ‘sell’ his skills on the open labour market. The evidence at hearing showed that the respondent had been struggling to keep his own business afloat for many years, as demonstrated by the limited profit it has produced, but that he had chosen to remain in his own business because that was his personal preference.

9. [9]
   The property and financial resources of the wife resulting from the judgment of this court is in effect $134,259.00. After the property adjustment order is given effect, the property and financial resources of the respondent will be $109,850.00.

10. [10]
    As such, the disparity which currently exists between the parties is limited.

2. (b)
   whether any party has legal aid and the terms of the legal aid

11. [11]
    Not relevant.

3. (c)
   ‘the conduct of each of the parties in relation to the proceeding, including, for example, conduct about the pleadings, particulars, disclosure, inspection, interrogatories, admissions of acts and production of documents.

12. [12]
    Counsel for the applicant submits that very little turns on any issue taken between the parties regarding valuation, disclosure and the like, except for the whole of the proceedings before Judge Tutt which became necessary as a result of the position which had been taken by the respondent on that issue. Counsel for the respondent, on the other hand, argues that it was the applicant who was the one who had brought unnecessary applications before the court, not only in respect of the application before Judge Tutt seeking a declaration that the parties’ relationship had ceased after the commencement of Part 19 of the Property Law Act 1974, but also in respect of two other applications relating to discovery on the 20^th April and 7^th June 2006 respectively.

13. [13]
    Counsel for the respondent argues that the hearing before Judge Tutt was unnecessary because that issue could have been determined during the trial of the matter and as such, the applicant has caused undue expense. That submission however overlooks the fact that even if that issue could have be determined at the trial, the evidence which was given before Judge Tutt for his consideration would have still needed to be heard before me in any event, in order that a determination might be made on that point.

14. [14]
    Counsel for the respondent also argues that the applicant could have simply relied on the alternative relief sought (seeking the declaration of a constructive trust) without the necessity of also pursuing relief under Part 19 of the Property Law Act 1974. That submission however overlooks the clear legislative intention behind the introduction of Part 19 of the Property Law Act 1974 and the main purposes of that Part (s.255). It also overlooks the fact that it was only as a result of the respondent’s defence, filed on 18^th August 2004, that any question regarding when the relationship between the parties’ had ceased was being placed in issue. Nor does it take into account the fact that even though the respondent knew, as a result of the amended statement of claim being filed 7^th April 2005, which was also the first day of hearing before Judge Tutt, that alternative relief for a constructive trust was also being sought by the applicant, such relief in respect of which there was no time limitation, the respondent nevertheless continued to resist the application (unsuccessfully) before Judge Tutt.

15. [15]
    Accordingly, I cannot accept the submissions which have been made on this point.

16. [16]
    Counsel for the respondent also submit that the two further (chamber) applications brought by the applicant with respect to discovery on the 20^th April and 7^th June 2006 respectively were unnecessary as any delay in discovery would have been able to have been solved by solicitors’ letters rather than by bringing unnecessary applications before the court. That submission overlooks however the affidavits which were filed in support of those applications by Mr Thomas, Solicitor, sworn 18^th April 2006 and 7^th June 2006 respectively, the relevant annexures of which clearly demonstrate the reasons behind the applications being filed.

4. (d)
   whether the proceeding results from a party’s failure to comply with a previous order made under this Part.

17. [17]
    Not relevant.

5. (e)
   whether any party has been wholly unsuccessful in the proceeding.

18. [18]
    The respondent was wholly unsuccessful, not only in defending the application seeking a declaration before Judge Tutt, but also in respect of the application for a property adjustment order pursuant to Part 19 of the Property Law Act 1974 before me. The respondent’s position, which did not change even at trial, was that the applicant was not entitled to any property adjustment order at all because she had already received her full entitlement, when he had paid her $100,000 in April 2003, not long after she had vacated their matrimonial home.

19. [19]
    The findings which were made on this issue however did not support the position which was taken by the respondent throughout the course of the proceedings.

20. [20]
    Counsel for the respondent submits that the applicant’s unsuccessful assertion at trial as to her (inflated) value of the respondent’s cars/car parts and her unsuccessful reliance upon a de facto entitlement, as a ‘financial resource’ attributable to the respondent in respect of his current de facto partner’s (‘H’) assets, were factors which had resulted in her proceeding to trial and forcing the defendant to consume valuable time in disproving. Counsel also submits that the applicant’s claim for 80% of the available assets as at the date of separation was unsuccessful at trial as she was ultimately awarded a much lesser percentage.

21. [21]
    Those submissions however overlook the fact that the applicant was ultimately successful in her application for a property adjustment order, which was assessed with reference to the divisible assets and their value as at the date of trial. It also overlooks the fact that the amount which was actually awarded to the applicant ($63,759.00) by way of the property adjustment order was indeed greater than any offer to settle made by the respondent on 23^rd February 2005 ($8,000 in full and final satisfaction of all claims under Property Law Act 1974 or otherwise) and also greater than any offer to settle which had been made by the applicant on the 2^nd February 2005 , 16^th May 2005, 4^th October 2006 respectively (as annexed to the applicant’s submissions on costs), all of which were well before the trial actually took place before me in January 2007.

6. (f)
   whether any party made an offer to settle under the Uniform Civil Procedure Rules 1999 and the terms of the offer

22. [22]
    The annexures to the applicant’s submissions on costs clearly demonstrates that the applicant had attempted to settle this matter in a timely fashion. The offers made, even those some did not strictly comply with the Uniform Civil Procedure Rules 1999 (UCPR) insofar as time allowed for acceptance, were subsequently rejected by the respondent. Each of the offers made sought an amount which was less than what was ultimately awarded to the applicant (except for the offer made 2^nd February 2006 for $75,000).

23. [23]
    Counsel for the respondent has submitted (under paragraph (c)) that the respondent had been forthcoming in attempting to settle the matter in April 2003 when he paid to the applicant the sum of $1000,000 by way of a property settlement. That submission however ignores the fact that the relevant proceedings had not even been commenced at that point and that payment was not considered to be, in any event, a sum which had been paid by way of full and final property settlement as between the parties at that time.

24. [24]
    Counsel for the respondent has also confined his submissions in respect to the offer to settle of the 4^th October 2006 only under this heading. Those submissions  overlook however the other offers which had also been made by the applicant, in particular, the earlier offer of $51,500 made on the 16^th May 2005 (which was in accordance with Ch 9 Pt 5 of the UCPR), served on the respondent’s solicitors at Manly on that date.

25. [25]
    While it is true that Ch 9 Pt 5 of the UCPR cannot be strictly applied to cases involving Part 19 of the Property Law Act 1974 because it has its’ own costs regime (s.341), the Uniform Civil Procedure Rules clearly have relevance in light of s.341(4)(f) which requires this Court to consider what offers to settle have been made under those rules. I see no reason therefore why the offer to settle made by the applicant on the 16^th May 2005 should not be considered when looking at the offers which have been made under the UCPR as required by s.341(4)(f). Indeed r.360 of the UCPR, while not applicable here, provides that where there has been more than one (1) offer to settle made in the course of civil litigation, it is the first offer in time which is taken for the purpose of that rule’s application. Costs are then usually ordered on an indemnity basis unless the defendant shows another order for costs is appropriate in the circumstances. While it is accepted that r.360 of the UCPR can have no application here, it does however provide some guidance in respect of the types of costs orders that may be made in respect of civil litigation generally.

26. [26]
    Counsel for the respondent has asked that the offer to settle made by the applicant on the 4^th October 2006 be viewed in isolation. Even if I was to accept that submission, the fact remains the same. The judgment given in the applicant’s favour was still better than the offer to settle which she had made to the respondent on the 4^th October 2006.

27. [27]
    While I accept the submission made by counsel for the respondent that any offer to settle does not take any special priority and its importance must be viewed in light of all the relevant matters which the court is required to take into account as required by s.341(4), I cannot accept the submission that the respondent was ‘not in a position’ to properly consider the offer made on the 4^th October 2006 because there had not been a valuation carried out of the plaintiff’s relocatable home or its’ improvements to it at that time. Both parties (by consent) had agreed upon directions being made by the court on the 9^th May 2006 which had included that a valuation of the respondent’s business be carried out by the applicant on or before 27^th June 2006. No such direction was sought in respect of the applicant’s mobile home, although it is accepted that it is the applicant who must prove her case at trial. It is also evident from the documents filed by the applicant on the 28^th June 2004, (see file index documents nos. 2 and 3) that the value which the applicant had attributed to her mobile home was $70,000 (plus $30,000 improvements to accommodate her disability), a date well before the request came in from the respondent’s solicitors on 31^st July 2006 that the respondent be allowed to have the mobile home valued. The submissions also overlooks the findings which I ultimately made in respect of the value of that mobile home as the figure which I considered to be most likely representative of its’ value as at the date of the trial ($70,000).

7. (g)
   any fact or circumstances the Court considers the justice of the case requires to be taken into account.

28. [28]
    Counsel for the applicant submits that the effect which the protracted dispute has had upon the applicant’s financial resources has been great in that the judgment which she has received will likely all but disappear after the payment of her own costs. That same submission has, in effect, been made on behalf of the respondent, particularly if he was ordered to pay the applicant’s costs in addition to his own.

29. [29]
    Counsel for the respondent submits that the financial circumstances of each of the parties, their very limited financial resources, the small size of the divisible pool of assets and the devastating impact a costs order would have on the defendant all balance against any costs order being other than as provided for by s.341(1), namely that each party should bear their own costs.

30. [30]
    While it would be trite to say that both parties will have suffered financially as a result of the protracted litigation between them, in the end, this Court must make a decision, after taking into account all of the relevant circumstances, that it considers appropriate. Accordingly, it is my view, after careful consideration of all the matters set out in s.341(4) of the Act, that the usual order as contemplated by s.341(1) should not be made. While the matters raised by Counsel for the respondent certainly have some force, particularly as it relates to the parties’ current respective financial positions, the size of their respective property and their available financial resources, the fact that the usual order made in cases such as this is that each party should bear their own costs and the fact that any other costs order than that proposed in s.341(1) will undoubtedly have an impact on the respondent financially, I am unable to ignore the offers to settle which were made by the applicant throughout the course of the litigation process which, in my view, afforded the respondent sufficient opportunity to consider his position, even though I accept some of those offers did not comply with the requirements of Ch 9 Pt 5 of the UCPR as it related to time allowed for acceptance.

31. [31]
    All of the offers to settle made by the applicant, except one, were for less than the outcome which the applicant ultimately achieved. Notwithstanding those offers, the respondent continued to resist, firstly before Judge Tutt and subsequently before me. The respondent’s continued stance even at trial, which in the end proved to be unsuccessful, was that the applicant was not entitled to any property adjustment order whatsoever.

32. [32]
    Accordingly, in order to do justice to both parties, I consider the following costs order is appropriate:

That the respondent pay to the applicant her costs of the proceedings including reserved costs to be assessed on a standard basis and on the District Court scale from the 16^th May 2005.