Beach Petroleum NL v Johnson

(a) The interaction between the offer concerning parenting and the offer relating to property;

(b) Whether the wife had sufficient disclosure to properly consider the husband's offer at the time it was made.

1. The offer of 30 August 2021 does not mention parenting matters and if accepted would have ended the financial proceedings.
2. The evidence does not assist me greatly to determine the issue of whether the disclosure was sufficient to assist the wife. The central issue relating to disclosure seems to relate to the husband's business. The offer said:

That the [sic] Mr. [Farnell] retain the business and all associated debts of the same to the exclusion of Ms. [Farnell];

1. The business would appear to be a company, C Pty Ltd. In Exhibit A the husband identified various assets as belonging to the "business": Motor Vehicle 2, Motor Vehicle 3, Motor Vehicle 4, Motor Vehicle 5, laptop & printer and bank accounts. Correspondingly, the husband also identified various debts as belonging to the business (e.g. a Motor Vehicle 3 lease). A balance sheet (Exhibit MSF #1) indicates that a joint valuation of the company as at May 2021 attributed a NIL value to the shares.
2. On 25 August 2021 the wife, through her lawyers, raised the husband's use of business funds to meet personal expenses, providing an excel spreadsheet in which she had identified expenses totalling $239,115.45 which she was querying as personal to the husband.
3. The primary judge referred to the evidence about this topic at [21] - [22] of the reasons for judgment in Farnell & Farnell [2024] FedCFamC2F 222.
4. On 26 August 2021 the wife's lawyers sent a disclosure request to the husband's lawyers requiring various bank statements, the husband's 2021 individual tax return, and various tax documents pertaining to C Pty Ltd.
5. On 30 Augst 2021 the wife's lawyer's correspondence said:

We note that your client has not complied with the Court Orders requiring the exchange of financial disclosure documents which was an impediment to the discussions had by the parties at the Conciliation Conference on 30 August 2021.

1. That correspondence specifically requested further disclosure within 7 days to assist in formulating an offer and to "properly consider your Offer of Settlement dated 30 August 2021..."
2. Exhibit A also contained a letter dated 15 December 2021 which asserted that there had been no response to the offer of 30 August 2021.
3. By letter dated 17 December 2021 the wife's lawyers said: "As you are aware there are outstanding issues including disclosure and the business value that need to be addressed. Your client's non-compliance with his duty of full and [sic] financial disclosure will be brought to the Court's attention to explain why our client has not been in a position to progress the property matter." The letter then listed the documents said to be outstanding (some of the documents related to the Company). That request was said to be outstanding as at 2 February 2022. On 8 March 2022 a further request for disclosure was made by the wife of the husband - specifying the documents said to be outstanding.
4. It should be noted that at the same time the husband was claiming that there were deficits in the disclosure which he had received from the wife but this is of lesser moment in the context of the costs dispute since she was a PAYG tax payer and the husband was not raising a lack of access to financial information as the basis of his having been unable to properly consider any offer made by the wife.
5. From the legal correspondence, it is clear that the wife raised concerns about access to information in the context of the offer which the husband made in circumstances where she had doubt about the conclusions of the joint expert report in valuing the shares in the company at NIL and concerns about the asserted utilisation by the husband of company funds to pay personal expenses.
6. Given the outstanding disclosure issues, I am not satisfied that the husband has persuaded me that he provided the wife with the documents necessary to evaluate the offer of settlement dated 30 August 2021.
7. I turn then to consider the offer of settlement which was next in time.
8. The husband made an offer of settlement following a conciliation conference on 10 March 2022. The offer of settlement was in respect of both financial and parenting matters but not expressly said to be a "package".
9. That offer of settlement differed from the earlier offer in so far as the husband proposed that outstanding school fees for the parties' child be paid from the monies held in trust before those funds were divided between the parties. He also sought that he receive $1,200 in respect of mediation fees. If both those amounts were deducted before the proceeds were divided, then the wife would have received slightly less than was awarded by the primary judge.
10. It should be noted that the parties would have been financially better off had the matter resolved on this basis as they would not have had to incur further legal fees (at least in respect of financial matters).
11. In rejecting the husband's proposal, the wife made a counter-proposal on 22 July 2022. The husband disputed the balance sheet upon which this proposal was made and rejected it both in respect of parenting and property. The husband's new proposal was dated 8 August 2022. In responding to that offer (on 10 October 2022) the wife's lawyers referred to outstanding disclosure requests dated 22 July 2022 and 2 September 2022 and sought that the documents be provided by 17 October 2022. It is not clear from the evidence before me whether the documents were provided as requested. If the wife had accepted the husband's 8 August 2022 offer then she would have received approximately the same amount as was ultimately ordered but would have been spared further legal fees.
12. The affidavit of Ms R says that the valuation of the husband's shares in the Company was raised at Court on 25 July 2022 at which time the primary judge was said to have raised the wife's entitlement to seek an alternate valuation. Ultimately this did not occur. Accordingly, the wife's conduct at this point indicated that she did not intend to challenge the single expert value. It is in that context that it is necessary to give consideration to her failure to accept the 8 August 2022 offer.
13. The husband made a further offer on 13 March 2023 in identical terms to the 8 August 2022 offer except it was described as "one final all inclusive offer" and dealt with parenting and property.
14. On 23 March 2023 the husband's lawyers followed up a response to the offer of 13 March 2023. On 25 May 2023 the wife instructed her lawyers to accept the offer, in respect of property, with parenting matters agreed subject to clarifying instructions. The offer was withdrawn after the wife had accepted it (even though it is not clear on the face of the offer that it was time limited). The effect was that the parties remained in dispute and the hearing proceeded. The husband made a new offer on 25 May 2023 which was less favourable to the wife (and sought to provide her with less than the primary judge ultimately ordered).
15. The matter was not reached on 30 May 2023, though the parties made final consent parenting orders on that day.
16. Had the husband allowed the wife's acceptance of his earlier offer as restated by her on 25 May 2023 each party would have received a more favourable outcome having regard to the legal fees expended.
17. I have had regard to the offers of settlement made by the parties as outlined in the evidence. I have taken into account the evidence which supports the submission that the wife was not provided with all the relevant documents about the value of the Company to the husband in a timely fashion, particularly in respect of the August 2021 offer.
18. It would appear as though both parties made good faith attempts to resolve the dispute between them. In hindsight, it is plain that they would have been financially advantaged had they been able to resolve the dispute on the terms the husband proposed from the outset.
19. It is important for parties to understand that the intention of the Act and the Rules as they relate to the offers of settlement and their costs consequences is to encourage offers of settlement, to encourage parties to take a commercial approach to the resolution of financial matters and to consider whether compromise may leave them in a stronger financial position overall.
20. While I find there are circumstances justifying a costs order, I am of the view that the wife squarely raised her need to be provided with relevant documents such that it would be appropriate to limit the scope of a costs order in the following manner:

(a) Costs should only be awarded from the date of the August 2022 offer of the husband;

(b) Costs should be on a party/party basis;

(c) Costs should not include any costs relating to the parenting aspect of the matter;

(d) Costs should not include any costs relating to the Application in a Proceeding filed 5 May 2023;

(e) Costs should not be awarded after 25 May 2023 being the date of the wife's attempt to accept the husband's offer;

(f) Costs should be as agreed or assessed.

1. The wife sought that the application for costs be dismissed. That has not occurred and in that regard, she has been wholly unsuccessful. I take into account the parties' respective financial position as set out in paragraphs [84] - [101] of the reasons for judgment in Farnell & Farnell [2024] FedCFamC2F 222, by which I conclude that the husband is in a stronger financial position than the wife. The husband offered to settle the costs application. I am unable to assess the appropriateness of his offer given the basis upon which I have awarded costs but do not anticipate that the agreed or assessed costs will be as high as $50,000. Doing the best I can I find that it is appropriate that the wife pay the husband's costs of the costs application at scale.

1. The appeal has succeeded as a consequence of an error of law. The applicant and respondent both sought that if the appeal were to be allowed on a question of law that they each be granted a certificate under the Federal Proceedings (Costs) Act 1981 (Cth).
2. I find that it is appropriate that the appellant and respondent receive the benefit of a costs certificate for the appeal and will so order.

I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie.