H v M[2007] QSC 321

SUPREME COURT OF QUEENSLAND

History of the matter

[1] LYONS J:  This matter was commenced by originating application filed by the applicant on 3 May 2005.  Following the commencement of the matter, the parties exchanged several formal offers and counter-offers however no offers were accepted and the matter went to trial on 9 November 2006.  Judgment was delivered on 27 November 2006 and the applicant was awarded 30 per cent of the property pool.  On 15 December 2006, both parties filed submissions on costs.  On 27 December 2006, the applicant lodged a Notice of Appeal and the appeal was heard on 29 May 2007.  On 13 July 2007, judgment was delivered dismissing the appeal and remitting the costs of the trial back to the trial judge.  The matter was listed for mention on 10 August 2007, at which time neither party appeared.  Further submissions on costs were received from the respondent on 27 August 2007 and a further affidavit in relation to costs was filed by the applicant on 12 September 2007. 

The issues in relation to costs

[2] Section 341 of the Property Law Act 1974 provides:

“(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.”

[3] It is clear that in this case costs fall to be determined taking into account the particular considerations set out in s 341(4).  Costs under the Family Law Act 1975 are governed by s 117 which is similarly worded to s 341.  In the decision of In the Marriage of I and I (No 2)[1] the Full Court of the Family Court held that the relevant matters in s 117 “…must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.”[2]

[4] In this case the matters that I must take into account are as follows:

Section 341(4)(a) - the income, property and financial resources of each party

[5] The parties’ financial circumstances have been fully considered and in neither case would the financial resources of each party justify a modification to the usual rule that each party is to bear its own costs.  The property and resources are not of such a nature that either party would be required to bear the other’s costs on the basis that one party has a significantly greater income, property or financial resources than the other.  Accordingly if there is to be a departure from the usual rule then the other grounds must be found.

Section 341(4)(b) – whether any party has legal aid

[6] Section 341(4)(b) clearly does not apply as neither party has legal aid.

Section 341(4)(c) - whether the conduct of each of the parties in relation to the proceedings calls for an order other than the usual order that each party bear its own costs

[7] The conduct of each of the parties in relation to the proceedings can call for an order other than the usual order that each party bear its own costs.

[8] An examination of the conduct of the parties in this case indicates that there were some delays on the part of the respondent in bringing this matter to a hearing.  The respondent did not always co-operate in a timely fashion however I am not satisfied that this has had increased the expenditure by the applicant to any significant degree.  Furthermore this case is unusual in that no mediation was conducted because it was clear that mediation would be unlikely to be successful due to the differing expectations of the parties.  The applicant requested that a Request for Trial Date be dispensed with and this was granted by Chesterman J on 10 May 2006 however this ultimately had to be vacated as the respondent was absent in Townsville and known to be so when the hearing date was sought.  I do not therefore consider that the behaviour of either party is such that there is any justification for any costs penalty against either party based on their conduct.

Section 341(4)(d) – whether the proceeding results from a party’s failure to comply with the previous order

[9] The proceedings do not result from the failure of either party to comply with an order or orders.

Section 341(4)(e) – whether any party has been wholly unsuccessful in the proceeding

[10] As the judgement requires the respondent to make a payment to the applicant neither party has been wholly unsuccessful.

Section 341(4)(f) – whether any party made an offer to settle on the UCPR and the terms of the offer

[11] The applicant initially informally offered that there be a 50/50 split which would have seen her retain Di Caprio Court and receive $123,000 and the respondent would have retained the other three properties.  This was rejected by the respondent who essentially then offered a 33 per cent distribution to the applicant which is very close to the amount of 30 per cent which was ultimately awarded to the applicant. 

[12] Proceedings commenced on 3 May 2005.  The applicant made an offer to settle on 11 August 2005 which was for the respondent to pay $115,000.  The respondent replied on 13 August 2005 offering each party to keep what they had in their possession.  This is essentially an offer which is marginally less than what the court ordered 14 months later which was that each party keep what was in their possession but for the respondent to pay the applicant $9,249.10.  In July 2006 discussions between counsel resulted in an offer to settle by the respondent whereby the respondent was to pay the applicant $75,000.  This offer was rejected by the applicant by letter dated 21 September 2006.

[13] On 27 October 2006 the respondent made a further offer to the applicant to settle on the basis that the respondent pay $94,400 to the applicant.  On 2 November 2006 the applicant made an offer to settle on the basis that the respondent pay the applicant $132,500.

[14] It is clear that the applicant has done worse than the offers.

[15] The respondent submits that he is therefore entitled to costs on an indemnity basis.  The basis of the respondent’s submission is that essentially the respondent’s initial offer was such that litigation should have been avoided by the applicant accepting the offer.

Section 341(4)(g) – any fact or circumstance the court considers the justice of the case requires be taken into account

[16] In this regard the respondent submits that the fact or circumstance which needs to be considered is the issue of the legal costs incurred which on the applicant’s part would seem to be in the order of $75,000.  The respondent essentially submits that the applicant in pursuing the litigation failed to appreciate that any “extra” award that might be gained might well be subsumed by the additional costs.  The respondent relies on the decision of LF v RA (No2)[3] to submit that because the applicant was offered more than she recovered, even taking into account her costs, she should pay the costs from the offer of settlement in July 2006 on an indemnity basis. 

[17] The applicant submits that the respondent’s actions, in changing law firms five times and representing himself at times, have caused delay in this matter and thus increased the applicant’s costs.  In response, the respondent submits that he acted reasonably at all times in the conduct of this matter and should not be penalised for the applicant’s decision to act on the advice given by her legal representatives.

[18] It is clear that s 341 of the Property Law Act 1974 provides for each party to a proceeding to bear his or her own costs in the absence of circumstances justifying a costs order.  Having considered the circumstances of this case I do not consider that there is sufficient reason to depart from the usual order that each party bear their own costs.  I do not consider that any of the circumstances referred to are such as to take them out of the ordinary circumstances which surround litigation of this nature.