Suzanne Marian Ferris v Stephen Lance Winslade No. Sc 472 of 1996 [1998] ACTSC 215 (15 May 1998)

  
  
  
  

  
   

  

   IN THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

   COOPER J

  

  

   Costs - Costs in property
adjustment proceedings under the Domestic
Relationships Act 1994 - whether costs follow the event - relevance of
"Calderbank" offer - whether appropriate to award indemnity costs - conduct of
parties
before and during hearing - whether unsuccessful party acted
reasonably in not accepting pre-trial offer of settlement.

  

   Domestic
Relations Act 1994 (ACT)

   Supreme Court Act 1933 (ACT)

   Supreme Court Rules (ACT)

  

   Emanuele v Australian Securities Commission [1997] HCA 20;  (1997) 188 CLR 114

   Oshlack- v Richmond River Council (unreported  [1998] HCA 11 at 9)

   Latoudis v Casey [1990] HCA 59;  (1990) 170 CLR 534

   Cachia v Hanes [1994] HCA 14;  (1994) 179 CLR 403

   Hughes v Western Australian Cricket Association Inc [1986] ATPR 40-749

   Queensland Wire Industries Pty
Ltd v Broken Hill co Pty Ltd (1987) 17 FCR
211

   Trade Practices Commission v Nichols Enterprises Pty Ltd (No 3) (1979) 42
FLR
213

   Ritter v Godfrey [1920] 2 KB 47

   Sheehy v Mitchell Lane Hire Pty Ltd [1991] ACTSC 25;  (1991) 102 ACTR 1

   Cummings v Lewis (1993) 41 FCR 559

   Watt v Watt [1988] 12 FamLR 589

   Harris v Schembri (Bryson J, unreported,
7 November 1995: CLS 1995 NSWSC EQ
271

   Messiter v Hutchinson (1987) 10 NSWLR 525

   Penfold v Penfold [1980] HCA 4;  (1980) 144 CLR 311

   Mallet v Mallet [1984] HCA 21;  (1984) 156 CLR 605

   Keene v Harkness (1997) DFC 95-179

   Re Elgindata Ltd (No 2) [1992] 1 WLR 1207

   Wright v Fowler (1996)
DFC 95-174

   Cretazzo v Lombardi (1975) 13 SASR 4

   Quirk v Bawden [1992] ACTSC 118;  (1992) 111 FLR 115

   Humphries v TWT Ltd [1993] ACTSC 24;  (1993) 113 FLR 402

   Kosev v GIO General Limited (unreported, SC 553 of 1996, 18 November 1997)

   Multicon Engineering Pty
Limited v Federal Airports Corporation (1996) 138
ALR 425

   MGICA (1992) Pty Ltd v Kenny & Good Ply Ltd (1996) 70 FCR 236

  

  

   BRISBANE, 15 May 1998 (hearing and decision)

   #DATE 15:5:1998

  

   Appearances

  

   Counsel for the plaintiff:
Mr J Brewster

  

   Solicitors for the plaintiff. Clayton Utz

  

   Counsel for the defendant: Ms T Hanna

  

   Solicitors
for the defendant: Sneddon Hall & Gallop

  

  

   THE COURT ORDERS THAT:

  

   1. The defendant pay the plaintiff's costs
of and incidental to the
proceedings, including reserved costs, if any, to be taxed if not agreed.

  

   2. The plaintiff's costs
of and incidental to the proceedings, up to and
including 2 June 1997 be assessed on a party and party basis and thereafter
her said
costs of and incidental to the proceedings be assessed on a solicitor
and own client basis.

  

  

   COOPER J

  

   1. On 13
March 1998 I made orders under s 15 of the Domestic Relations Act
1994 (ACT) ("the Act") adjusting the parties' interest in their
joint
property. No order as to costs was made on that occasion and the parties were
directed to make written submissions on the issue
of costs, which each has
done.

  

   2. The position taken by each of the parties as to whether, and on what
basis, costs are available
under the Act generally, and in this case in
particular, is fundamentally opposed to the position taken by the other. In
consequence
it has been necessary to resolve the competing contentions
contained in the written submissions of each.

  

   3 . The power of
the Supreme Court of the Australian Capital Territory to
award costs is found in s23 of the Supreme Court Act 1933 (ACT) ("the Supreme
Court Act"). That section provides :-

  

  

   "23(1) The Court shall have jurisdiction to award costs in all matters
brought before the
Court, including matters dismissed for want of
jurisdiction.

  

   (2) Subject to any other law of the Territory (including Rules
of Court),
the Court may determine -

  

   (a) the amount of costs of and incidental to proceedings in the Court,
including the
administration of an estate or trust; and

  

   (b) by whom and to what extent such costs are to be paid.

  

   (3) Nothing in
this section shall alter the practice which would otherwise
be followed in any criminal cause or matter or in proceedings on the
Crown
side of the Court."

   4. By O 65 r 1 of the Supreme Court Rules (ACT) ("the Rules") the costs of
and incidental to all proceedings
in the court are in the discretion of the
court.

  

   5. An application under s 10 of the Act, by way of originating summons,
for
an order adjusting the interests in the property of either or both of the
parties to the domestic relationship, is a proceeding
in the court to which s
23 of the Supreme Court Act and O 65 r 1 of the Rules apply.

  

   6. There is nothing in the Act which deals with costs in proceedings
initiated for relief
under it. Nor do the Rules make any specific provision
for costs in proceedings under the Act (this is in contrast to the New South
Wales position: see Rule 24A of Pt 52 of the Supreme Court Rules (NSW)). In
these circumstances, it is inappropriate to read s 23
of the Supreme Court Act
or O 65 in such a way that the Court's jurisdiction or power to award costs is
subject to conditions or limitations not found in
the words used in s 23 and O
65 r 1: Emanuele v Australian Securities Commission [1997] HCA 20;  (1997) 188 CLR 114 at
136-137; Oshlack v Richmond River Council (unreported  [1998] HCA 11 at 9).

  

   7. The primary purpose of an award of costs is not to punish an
unsuccessful party; it is to indemnify the successful
party in respect of the
costs of bringing or defending the litigation: Latoudis v Casey [1990] HCA 59;  (1990) 170 CLR
534 at 543, 562 - 563, 566 - 567; Cachia v Hanes [1994] HCA 14;  (1994) 179 CLR 403 at 410.

  

   8. The discretion to award costs is unfettered, save that it must be
exercised judicially and
not capriciously or arbitrarily: Hughes v Western
Australian Cricket Association Inc [1986] ATPR 40-749 at 48, 136; Queensland
Wire
Industries Pty Ltd v Broken Hill Co Pty Ltd (1987) 17 FCR 211 at 222;
Trade Practices Commission v Nichols Enterprises Pty Ltd (No
3) (1979) 42 FLR
213 at 219; Latoudis at 557; Oshlack at 15, 27, 57.

  

   9. Because the discretion must be exercised judicially,
the cases give some
guidelines as to how the discretion may be exercised in different
circumstances. The guidelines are not to fetter
the discretion but to avoid
arbitrariness or inconsistency in the awarding of costs in like circumstances:
Oshlack at 27, 57; Latoudis
at 541, 558. The discretion must be exercised not
by reference to irrelevant or extraneous considerations, but upon facts
connected
with or leading up to the litigation: Oshlack at 15, 27, 57.

  

   10. Ordinarily, in civil proceedings, costs follow the event
and a
successful litigant receives Ms or her costs, absent special circumstances
justifying some other order: Ritter v Godfrey [1920]
2 KB 4 7; Hughes at 4
8,13 6; Sheehy v Mitchell Lane Hire Pty Ltd [1991] ACTSC 25;  (1991) 102 ACTR 1 at 10; Cummings
v Lewis (1993) 41 FCR 559 at 603; Oshlack at 1, 28, 57.

  

   11. In my view, unless the defendant
can establish special circumstances
justifying some other order, the plaintiff should receive her costs. The
plaintiff was obliged
to institute the proceedings seeking an adjustment of
property rights. She has obtained an order over the consistent opposition of
the defendant. She should be compensated in respect of the costs she has
incurred to obtain the order in her favour.

  

   12.
The defendant, in the written submissions of his legal advisers,
submitted that the ordinary situation, of costs following the event,
should
not apply to proceedings under the Act or in this case. The reasons advanced
in support of this submission were :-

  

 


   (a) The Act recognises that the position is different to ordinary civil
proceedings because the Act makes provision for mediation
and/or arbitration
and encourages resolution of proceedings by either mediation or arbitration.

  

   (b) The Supreme Court Act and Rules have no similar provisions for
mediation and/or arbitration in ordinary civil proceedings (save for
proceedings under the
Commercial Arbitration Act) to those which appear in the
Act.

  

   (c) Part II of the Act (mediation and arbitration) is similar to Part III
of the Family
Law Act 1974 (Cth) ("the Family Law Act") which latter Part
provides for counselling and lays down the duty of judges and legal
practitioners
to consider primary dispute resolution methods including
mediation and/or arbitration.

  

   (d) To establish a practice of costs
following the event would discourage a
party to a domestic relationship seeking mediation and/or arbitration prior to
the commencement
of proceedings in court.

  

   (e) In New South Wales, judges of the Supreme Court have not felt
constrained to make orders that
costs follow the event, notwithstanding Rule
11 of Pt 52 of the Supreme Court Rules (NSW) which provides, in a rule of
court, that
the ordinary situation is that costs follow the event.

  

   The plaintiff made unreasonable offers of settlement prior to the
trial and
refused reasonable settlement offers made by the defendant.

  

   (g) The plaintiff caused the hearing to be prolonged,
due to her reneging
on an agreed value of the property at Armidale, New South Wales, thereby
creating a need to call valuation evidence.
Further, witnesses from Melbourne
were not available at the court to give evidence when required to do so and
the proceedings were
thereby delayed.

  

   (h) The practice and procedure of the Family Law Act as to costs should be
used as a model in proceedings
under the Act. In the present case that would
result in each party paying his or her own costs of and incidental to the
proceedings.

   13. The matters raised in the defendant's grounds (a) to (c) inclusive only
demonstrate that the ACT legislature intended that
attempts be made to settle
disputes, arising out of domestic relationships with respect to property,
without recourse to formal curial
adjudication by a court. They demonstrate
that there are perceived advantages in terms of the saving of time and costs
and the avoidance
of emotional distress and aggravation in using alternative
dispute techniques. However, when the parties refuse to participate in
such
processes, or the processes fail to produce an agreed outcome for whatever
reason, the parties are left with ordinary civil
litigation as the means by
which their rights will be adjudicated upon and determined. Absent any special
provision in the Act, that
litigation is subject to all the relevant and
applicable rules and discretions contained in the Supreme Court Act, the Rules
and the established practice and procedure of the court.

  

   14. There is no foundation, in fact or reason, for the
assertion that
parties will avoid alternative dispute resolution if a regime of costs applies
to determinations under the Act. Rather,
I would have thought that the
existence of a regime of costs, where costs ordinarily follow the event, would
encourage parties to
embrace, rather than reject, mediation as a means of
resolving the dispute. Engaging in mediation would be an exercise in risk
aversion,
to attempt to avoid an adverse order for costs.

  

   15. The matters raised, by the defendant, in grounds (a) to (d) inclusive,
do not support a conclusion that the ACT legislature intended that the
ordinary rules as to costs in civil litigation in the court
were not to apply
to proceedings under the Act.

  

   16. The decisions of the Supreme Court of New South Wales to which
reference
was made by the defendant, in support of ground (e) above, were Watt
v Watt [1988] 12 FamLR 589 and Harris v Schembri (Bryson J,
unreported, 7
November 1995: CLS 1995 NSWSC EQ 271). An examination of those cases discloses
why, in some cases, the ordinary situation
that costs follow the event does
not prevail.

  

   17. In Watt, Powell I held that the existence of a "Calderbank" offer was a
relevant circumstance which could be taken into consideration by the court, on
the question of costs, in proceedings under the De
Facto Relationships Act
1984 (NSW) ("the NSW Act"). After referring to the reasons of Rogers J in
Messiter v Hutchinson (1987) 10
NSWLR 525 as to when "Calderbank" offers were
relevant to the question of costs, Powell J said (at 604)

  

  

   "This being a
case in which payment into court was not open to the
defendant; in which the 'open offer', although made late, was made in
sufficient
time to enable the plaintiff to accept it by no later than 12
September 1988; in which the offer was at least generous, in the light
of the
view which I have earlier recorded, overly so, I consider that as a matter of
principle the defendant ought to have his costs
as from that date.

  

   However, to require the preparation and taxation of two bills of costs, the
plaintiffs up to, and the
defendant's from, 12 September 1988 would, I
believe, result in imposing on the parties an unnecessary burden and subject
them to
further and, in my view, unnecessary costs; unnecessary, because I
believe that it would be at least likely that in the long run
the two would
balance out. In these circumstances, it seems to me that justice between the
parties would best be achieved if I made
no order as to costs."

   18. In Harris, Bryson J refused to make an order for costs in proceedings
under the NSW Act. In so doing,
his Honour, whilst acknowledging the
jurisdiction to award costs, was influenced by r 24(2) and r 24A of Pt 52 of
the Supreme Court
Rules (NSW). His Honour said:-

  

  

   "In my view the question of costs remains open to debate and consideration.
The application
was timely and the order has not been entered. The litigation
has achieved a result in that the parties were in a condition of stalemate
which but for the court's order would have continued indefinitely, with an
undesirable social situation in which each was an owner
of an interest in the
house at Berkeley Vale and they occupied different parts of it. There was a
real necessity to bring the litigation,
and to press on to judicial
resolution; the nature of the parties' relationship produced this result.
Success in litigation is itself
a ground in support of an order for costs.

  

   Two provisions of Pt 52 of the Rules of Court which do not literally apply
to
the present case have some bearing by analogy on the question of costs. The
effect of r 24(2) is that in proceedings commenced after
30 June 1993 (and
these proceedings were commenced on 26 November 1993) a plaintiff who recovers
not more than $75,000 is not ordinarily
entitled to payment of costs but may
be awarded costs for sufficient reasons. This rule does not literally apply to
proceedings in
the Equity Division or to claims for adjustment of interests in
property; see r 24(1)(a); but there are analogies with the present
proceedings. Rule 24A deals particularly with proceedings under the De Facto
Relationships Act and provides that a plaintiff is not
entitled to costs,
unless the court otherwise orders, where the proceedings are to declare a
right or adjust an interest in property
of a value which does not exceed
$40,000. Rule 24A does not literally apply because, although the adjustment in
favour of the plaintiff
was $31,500, the orders also dealt with Berkeley Vale
and that share is worth $111,000. Nonetheless this rule has some relevance
to
my decision. The award of costs as a matter of course in litigation under the
De Facto Relationships Act is not appropriate in
proceedings which result in a
substantial adjustment worth less than $40,000. Nonetheless there is
discretionary power to award costs,
which may and should be exercised where
appropriate grounds positively support it.

  

   Except in exceptional circumstances, adjustment
of property of parties to
marriages under the Family Law Act does not lead to orders for costs; see s
117.

  

   In my view there
are some significant considerations favouring an order for
costs but my conclusion on the whole, having regard to the nature of the
proceedings, the analogies to situations in which the rules of this Court
restrict recovery of costs and to proceedings under the
Family Law Act, and
the consideration that neither party achieved tile [sic] result which he or
she contended for lead me to the
view that I should adhere to the order for
costs pronounced on 11 August."

   19. His Honour's observation as to the requirements
of s 117 of the Family
Law Act overstates the test as to when costs are recoverable in that
jurisdiction: Penfold v Penfold [1980] HCA 4;  (1980) 144 CLR 311 at 315; Mallet v Mallet [1984] HCA 21; 
(1984) 156 CLR 605 at 631 - 632.

  

   20. The present case is unlike either Watt or Harris. As to the former, the
defendant
in the instant case made no offer to the plaintiff which equalled or
exceeded what she achieved after a contested trial. As to the
latter case, the
statutory provisions which influenced the decision of Bryson J have no
statutory analogue under the ACT legislation
or the Rules.

  

   21. Where Rule 24A of the Supreme Court Rules (NSW) does not apply, costs
in respect of proceedings under the
NSW Act fall to be considered on the basis
of ordinary civil litigation conducted in that court. Thus, in Keene v
Harkness (1997)
DFC 95-179, where a claim under the NSW Act was cross-vested
into the Supreme Court of New. South Wales from the Family Court of
Australia,
Cohen AJA (with whom Clarke JA and Giles AJA agreed) said, (at 77,556)

  

  

   ..."The proceedings therefore were
not brought in this Court and r 24A
could not apply to them. It could not be said that the plaintiff must have
anticipated that the
proceedings would be transferred to the Supreme Court,
because she was seeking orders in respect of the children which would not
in
normal circumstances be appropriate for the Supreme Court to consider. The
question of costs therefore was one which should have
been dealt with on the
usual principles, that is that costs should follow the event unless there were
special circumstances to suggest
otherwise."

   22. In my view there is nothing in the decisions of the Supreme Court of
New South Wales which would cause this Court
to abandon the ordinary situation
in civil litigation that costs follow the event, unless there are special
circumstances which would
suggest otherwise. The existence of a "Calderbank"
offer is a matter which falls within the proviso, along with a raft of other
circumstances,
eg the conduct of a party prior to and during the trial (see
Latoudis at 544, 565; Re Elgindata Ltd (No 2) [1992] 1 WLR 1207 at 1214,
1217;
Cummings v Lewis at 603; Oshlack at 58 - 59), which may operate to displace
the ordinary situation. Subject to the operation
of r 24A of Pt 52, this is
the approach taken by the Supreme Court of New South Wales in respect of costs
in proceedings under the
NSW Act. The cases under the NSW Act where judges
have not made orders where costs follow the event, upon examination, disclose
circumstances
which the court treated as sufficiently special in the exercise
of a proper discretion to depart from the ordinary situation.

 


   23. The submission as to the reasonableness or unreasonableness of the
plaintiff in making claims originally which she did not
achieve on trial, and
the reasonableness of her refusal of the defendant's offer, gives no
recognition to the fact that the plaintiff
recovered a judgment significantly
beyond anything offered to her by the defendant. In those circumstances it
cannot be said that
the failure to accept any of the defendant's offers and to
go to trial was unreasonable. Nor does the fact that the plaintiff received
less than she offered to settle for, constitute an occasion for depriving her
of her costs, although it may be a circumstance telling
against the making of
a costs order on an indemnity basis: Wright v Fowler (1996) DFC 95-174 (CA
(NSW)) at 77,503. The submission
in paragraph (f) above does not assist the
defendant.

  

   24. The question of delay due to the conduct of the plaintiff, raised
by
the defendant in paragraph (g) above, involves two elements. The first was her
re-opening the issue of the value of the property
at Armidale, New South
Wales. The second concerns delay due to the unavailability of witnesses from
Victoria when Canberra Airport
was closed because of fog, preventing the plane
upon which they were travelling from landing.

  

   25. As to the first issue,
I am satisfied that the conduct of the
defendant, in refusing to allow inspection of the property with a view to a
sale in an amount
of $300,000 or thereabouts, played a material part in the
issue being re-opened. This property is the single most substantial asset
of
the parties. That it achieves, upon realisation, its optimum value has always
been in the interests of both parties, and in particular,
in the interest of
the plaintiff. The defendant, at and prior to trial, did not wish to sell the
property and wished to retain it
for his own use. It was in his own interests
to keep the value of the property down so as to reduce the cost to him to buy
out the
plaintiff's interest in it. In refusing to allow the market to be
tested, the defendant sowed the seeds of suspicion as to the real
value of the
property which led to the issue being re-opened. This is not a circumstance
which would cause me to refuse or limit
the plaintiff's recoverable costs.

  

   26. It was submitted by the defendant's solicitors that, during winter, fog
at Canberra
Airport is a factor which requires that potential witnesses from
outside the Territory be brought to Canberra prior to the day on
which they
are expected to give evidence, If that course had been followed, additional
costs of accommodation and sustenance would
have been incurred. In my view,
there is no general practice with respect to bringing witnesses to Canberra in
winter. Each case
depends upon its own circumstances and the costs involved.
In the present case the witnesses were delayed on the morning of Tuesday
22
July 1997. At most, up to half a day of court sitting time was lost. However,
that was made up later in the day and on the morning
of 23 July 1997. The
delay caused by fog did not result in the case proceeding to a third day when
otherwise it would have been completed
in two days. Consequently, it cannot be
demonstrated that any costs were thrown away by the delay incurred.

  

   27. The final
submission in paragraph (h) above, that the practice and
procedure of the Family Court of Australia as to costs in property disputes,
ought to be applied to proceedings under the Act generally, and in this case
in particular, seeks to bring into play the considerations
applicable to the
operation of s 117 of the Family Law Act. In particular, the submission seeks
to give effect to s 117(l) so far
as it states "each party to proceedings ...
shall bear his or her own costs."

  

   28. In my view, that submission should be rejected.
Section 117 is a
statutory provision inserted in the Family Law Act to operate in respect of
proceedings under that Act. The ACT
legislature had before it the Family Law
Act model and chose not to incorporate a provision to like or similar effect
in the Act
or in the Supreme Court Act. The ACT legislature has not departed
from the traditional costs formula and has left the question of costs to the
absolute discretion
of the court. Any attempt to import fetters on that
discretion not contained in the Act, the Rules, or the Supreme Court Act
should be rejected: Creiazzo v Lombardi (1975) 13 SASR 4 at 11; Oshlack at 9,
59.

  

   29. None of the matters relied upon by
the defendant in paragraphs (a) -
(b) above justify a refusal of the benefit of a costs order to the plaintiff.

  

   30. The plaintiff,
having succeeded in her action, which was properly
brought and necessarily prosecuted to a conclusion, is entitled to an order
for
costs. As Bryson J said in Harris :-

  

  

   "Success in litigation is itself a ground in support of an order for
costs.'

 
 31. The plaintiff has sought that such costs be assessed on an indemnity
basis. The justification for making such an order, it was
submitted, was the
refusal of the plaintiff's offers to settle the proceedings prior to trial and
the conduct of the defendant in
the litigation.

  

   32. In Quirk v Bawden [1992] ACTSC 118;  (1992) 111 FLR 115, a Full Court of this Court (Miles
CJ, Gallop and Higgins JJ) considered an appeal from the Master in respect
of
an award of costs on an indemnity basis, where a "Calderbank" letter had been
sent and the offer rejected. The lead judgment was
delivered by Higgins J and
agreed with by the other members of the court. His Honour, after reviewing the
authorities, said

   (at
120) :-

  

  

   "Accordingly, I believe that this Court should apply an appropriate costs
sanction where a party has declined
to accept or to make, as the case may be,
a reasonable offer of settlement. It may, in some cases, be sufficient to
deprive an otherwise
successful party of all or part of the costs that
otherwise would follow the event. In other cases, it may be appropriate to
award
some or all costs of an action on a more favourable than usual basis to
a party who has been put to the expense of continuing litigation
that ought
reasonably to have been earlier settled.

  

   Of course, there needs to be more than an offer of settlement made by
the
plaintiff and not accepted by a defendant which is exceeded by the judgment to
make it appropriate to order indemnity costs.
As Priestly JA noted in Moran v
McMahon (1985) 3 NSWLR 700, the assessment of non-economic loss in a personal
injuries claim involves
a judgment that is akin to a discretionary judgment.
That makes it difficult to suggest that the mere refusal of an offer which
happens
to be less than the sum ultimately awarded is to be characterised as
unreasonable.

  

   Of course, if there has been proper particularisation
by a plaintiff of his
or her claim, it is difficult to conceive of a case in which a defendant,
properly advised, could not tender
a realistic offer of settlement. It may be
enough to avoid an order for indemnity costs that the defendant has engaged,
reasonably,
in a proper attempt to settle the matter."

   33. His Honour was also of the opinion that there must be some real element
of "compromise"
in the offer to demonstrate the reasonableness of the offer
and the unreasonableness of its rejection (see at pp, 120-121). He concluded
(at 122)

  

  

   "In the end, the matter is one for the discretion of the trial judge. The
exercise of that discretion favourably
to a successful plaintiff may well,
prima facie, be indicated by a substantial difference between an offer made by
the plaintiff
and the verdict ultimately found. However, it must also appear
that the defendant had failed to act reasonably in declining to accept
the
plaintiff's final offer of compromise."

   34. The general approach adopted by the Full Court in Quirk v Bawden has
been applied
in this Court in, for example, Humphries v TWT Ltd [1993] ACTSC 24;  (1993) 113 FLR
402 at 426 - 427 and Kosev v GIO General Limited (unreported, SC 553 of 1996,
18 November 1997).

  

   35. It
was submitted on behalf of the plaintiff that there was a prima
facie presumption that an order for indemnity costs should be made
if an offer
of settlement is made, rejected and not bettered in litigation, unless the
party rejecting the offer establishes that
it was reasonable for it not to
accept the offer: per Rolfe J in Multicon Engineering Pty Limited v Federal
Airports Corporation
(1996) 138 ALR 425 at 440-441. It should, at the outset,
be recorded that Rolfe J qualified the presumption by observing that "[t]he
ultimate decision will depend on a consideration of the particular facts and
circumstances in each case." (at 441).

  

   36. The
approach taken by Rolfe J was not followed by Lindgren J in MGICA
(1992) Pty Ltd v Kenny & Good Pty Ltd (1996) 70 FCR 236 at
240-241. It is
unnecessary that I form any final view in this case as to whether the view of
Rolfe J ought to be given effect to
as a matter of general application.

  

   37. The question of indemnity costs can, in the instant case, be resolved
without the
need to apply any presumption of the type contended for by the
plaintiff.

  

   38. In the present case, the position consistently
taken by the defendant
was that the property should be divided equally, with adjustments in his
favour for payments of joint liabilities
allegedly made by him since
termination of the relationship. The last such offer, prior to trial, of which
the court is aware, was
put on 30 May 1997 by letter from the defendant's
solicitors to the plaintiff's solicitors. The offer was to pay the plaintiff
$142,500
for her interest in the two real properties, and, subject to an
adjustment for some particular items of personal property, each party
to
retain, beneficially, the former joint property of which each stood possessed.
The position adopted on trial, by the defendant,
was that no adjustment in
favour of the plaintiff should be made and that the assets ought to be divided
equally between them. The
defendant would not concede to the plaintiff
anything other than her legal entitlement as a joint owner of the property in
issue.

  

   39. The plaintiff by letter of 2 June 1997 to the defendant's solicitors,
put a proposal that the Armidale property, together
with the plant, stock and
equipment be sold, and that the proceeds of sale be distributed sixty percent
to the plaintiff and forty
percent to the defendant and that the defendant pay
$24,000 to the plaintiff, being sixty percent of the parties' equity in the
Garran
property in exchange for the plaintiff transferring her interest in
that property to the defendant. She also proposed that each party
retain the
joint personal property of which each then stood possessed and that the
defendant pay the party and party costs of the
plaintiff. The letter noted
that if the Armidale property achieved $257,000 upon realisation, the Garran
property achieved $200,000
(producing net proceeds of $60,000 after discharge
of the mortgage) and the plant, equipment and stock at the Armidale property
achieved
approximately $6,000, the plaintiff would receive $193,700. The
letter also recorded that the plaintiff may have located a buyer
for the
Armidale property at $300,00. The letter was marked

  

  

   "Without Prejudice

  

   (Except as to costs)"

   40.
The defendant could not have been under any illusions that the offer
and his refusal of it would be irrelevant to the question of
costs and that
refusal of the offer may be used to support an application for indemnity
costs.

  

   41. In my view the offer put
by the plaintiff was a reasonable compromise
offer. It sought to achieve the best market value for the assets and
demonstrated that
the plaintiff was prepared, if necessary, to lower the
asking prices to the values contended for by the defendant, in order to
produce
a realisation which would return to her sixty percent of the
realisable value of the joint assets. It was also reasonable for the
plaintiff
to seek her party and party costs to that point, because it was necessary for
her to commence proceedings to both safeguard
her right to proceed under the
Act and to enlist the aid of the court if compromise could not be achieved.

  

   42. I am satisfied
that the defendant set his face against any course which
involved a sale of the Armidale property and was not prepared to move in
any
way to resolve the matter, on other than the basis of an equal division of the
assets at the values he contended for. Further,
the defendant, from 3 June
1997, consistently failed to comply with orders and directions, as to the
provision of statements and
information as to financial circumstances,
necessary to allow the plaintiff to properly prepare for trial. The complaints
of the
plaintiff are contained in her solicitor's letter to the defendant's
solicitors of 4 and 10 July 1997 and their letter to the Deputy
Registrar of
the Court dated 15 July 1997 and have not been traversed by the defendant in
the submission on costs.

  

   43. In
the result, the plaintiff obtained an order for payment to her of
$190,000 representing 63.13 percent of the value of the joint property,
which
in dollar terms was very close to what the plaintiff estimated would result
from a sale of the assets where the Armidale property
only achieved a sum
equal to the valuation contended for by the defendant.

  

   44. The failure of the defendant to agree to the
course proposed by the
plaintiff led to the final costs of preparation of the trial and the costs of
a three day trial itself being
incurred for no obvious advantage to the
defendant other than to vex the plaintiff and stifle a possible sale of the
Armidale property.
The offers to settle from the defendant were not genuine or
reasonable attempts to compromise the plaintiffs claim. The particular
circumstances of this case made it highly unlikely that no adjustment of
property rights would be made in favour of the plaintiff.
The conduct of the
defendant in refusing the plaintiff's offer of 2 June 1997 was unreasonable
and productive of additional costs
to the plaintiff, who, to the knowledge of
the defendant, was a social welfare recipient without means or meaningful
employment.
This is a case where the conduct of the defendant justifies an
order that as from 3 June 1997, the defendant should bear the costs
of the
plaintiff incurred thereafter on a solicitor and own client basis.