However as there had been no submissions on costs he indicated the parties would have an opportunity to make submissions.
10 Paragraph 80 of the Master's reasons indicated three different available ways of adjusting property interests to bring about the result which the Master had decided was appropriate. This was resolved by orders which the Master made on 9 November 2004 when the Master made the following orders:-
"(1) Defendant to pay the plaintiff the sum of $281,441, such payment to be made by the defendant to the plaintiff within thirty days from the date hereof.
(2) Simultaneously with the payment to the plaintiff in order (a) the plaintiff to provide to the defendant a signed transfer in registrable form whereby she transferred to the defendant all her right title and interest in the property situated and known as 112 View Street, Annandale (the property); and (b) the defendant to provide to the defendant a discharge in registrable form of the mortgage to the Commonwealth Bank secured over the property.
(3). The interlocutory order of Burchett AJ dated 17 June 2002 be discharged.
(4). The plaintiff to be at liberty to uplift from the property by prior arrangement with the defendant on the giving of seven days notice in writing those terms of property identify in Annexure A to these orders and to be declared the sole legal and beneficial owner of all of such items from the date hereof.
(5). Liberty to apply on seven days written notice in relation to the implementation of these orders".
11 Annexure A to the minute of orders of 9 November 2004 contained a list of items of personal property. The personal property and references to it in the Offer of Compromise has not given rise to any particular consideration in relation to the application for leave to appeal and I act on the view (which appears to be justified) that if regard were had to personal property it would not disturb the conclusions about the effects of the offer of compromise and its non acceptance which otherwise appear.
12 The Master was told that there was an application for costs by the plaintiff Dr Whicker based on an Offer of Compromise which had been made on the first day of the hearing but had not been made known to the Master. The offer of compromise was made before the parties agreed on the value of the View Street house.
13 The Offer of Compromise was in these words:-
1. The plaintiff offers to compromise this claim on the following terms, (1) an order that the plaintiff pay to the defendant the sum of $460,000 within forty two days from the date of making these orders.
2. That in consideration of the payment of the amount referred to in order one the defendant shall do all acts and things and sign all such documents as are necessary. 2(a) Facilitate the discharge by the defendant of the mortgage with the Commonwealth Bank with respect to the property located at 112 View Street, Annandale, New South Wales currently registered in the names of the plaintiff and the defendant ("the property") and (b) transfer to the plaintiff all of her right, title and interest in the property.
3. That the defendant forthwith make available for collection by the plaintiff the following (a) three pottery chimneys, (b) three cockatoos, (c) one tea pot, (d) one Shaker wall lamp shelf,(e) one set of cutlery from Thailand, crockery, platters and glasses, (f) a selection of CD records, (g) Tapes and drawers, (h)a selection of prints and pictures, (i) copies of personal photographs, (j) TV video, cameras lenses, (k) small Olympus camera, small television and Swatch watch, (l) Kava bowl, (m) wooden bird box, (n) sanders and circular saw, (o) one line basket, (p) personal belongings, including books, jewellery, clothes, shoes and papers.
4. Save as otherwise provided in these Orders the plaintiff and the defendant are each declared as against the other to be entitled to retain for her benefit absolutely such property and financial resources as are presently in her name, possession and control.
This offer is made in accordance with Order 22 of the Supreme Court Rules .
14 I particularly emphasise paragraph 2.
15 The Master heard the costs application on 9 November and 3 December 2004 and published reasons [2004] NSW SC 1257 for disposition of the costs application on 22 December 2004. The terms of the application required the Master to address a claim by the plaintiff Dr Whicker to an entitlement to an order for costs conferred by Pt 52A r 22 (4) on the footing that Dr Whicker had obtained a judgment no less favourable to her than the terms of the offer. There cannot be an exact comparison between the offer and the order made because the defendant Ms Pettiford had elected for an order in which she took title to the View Street house property (and could continue to reside there) and paid out the plaintiff Dr Whicker; whereas the offer of compromise provided for the reverse process in which the plaintiff Dr Whicker would pay $460,000 to Ms Pettiford and Ms Pettiford would transfer title to Dr Whicker. The Master correctly decided (at 20) that in considering whether the ultimate result has been no less favourable to the plaintiff than the terms of the Offer of Compromise the Court should look to the substance of that result, rather than to the form of the order by which effect was given that result.
16 The Master's ground of disposition appears clearly from paragraphs 21 and 22:-
21. By the offer of compromise the defendant would have received 67.4 percent of the value of the View Street property. By the order ultimately made after a contested hearing occupying three days (after which each party lodged written submissions) the defendant received sixty percent of the value of the View Street property.
22. I am satisfied that the result was no less favourable to the plaintiff than the terms to the offer of compromise.
17 The Master's reference is to 67.4% of the value of property can be understood by taking $802,500 as the agreed value of the property, deducting the agreed mortgage debt of $120,659.15, dividing $460,000 by the balance and taking a percentage. When judgment was given on 27 August 2004 the mortgage debt had fallen to $98,896.00.
18 The proposed appeal would turn on what the Offer of Compromise means with respect to the burden of paying off the mortgage debt. The conclusion implied by the Master's reference to the defendant receiving 67.4% under the Offer of Compromise shows that the Master was of the view that under the Offer of Compromise it was for the plaintiff on acceptance of the Offer of Compromise to bear the whole burden of the mortgage debt and that it was not for the defendant to bear any part of it. If this view is correct the Master's conclusion appears to me to be justified, and this is so whether one takes the higher or the lower mortgage debt into account. In my view the appropriate amount is the higher amount; but that is of no consequence to the outcome. Whichever view of the appropriate mortgage debt is taken, the Master's conclusion about 67.4% is a broadly correct figure if the plaintiff Dr Whicker is to bear the whole burden of the mortgage debt under the Offer of Compromise, and mathematically wrong if the defendant Ms Pettiford is under an obligation to bear the whole of the mortgage debt. I do not think that further arithmetical exposition is required; the contrast is mathematically plain.
19 In approaching the meaning and effect of the Offer of Compromise it is I think necessary to take the document according to its own terms. Plainly it was open to the defendant Ms Pettiford to accept the Offer of Compromise and that would have given rise to an agreement which was wholly in writing. There is no room for reference to material outside the express terms of the document. In reaching a view about its construction the document cannot be supplemented by reference to the understanding of the plaintiff or those representing her and involved in drafting the document about what it provided for, in relation to the mortgage debt or otherwise. The incidence of the mortgage debt is a matter obviously central to any address to adjustment of property interests under s 20(1) of the Property (Relationships) Act or to any attempt to reach a compromise of the litigation. The View Street house was owned by the parties as joint tenants and it must be understood that they each incurred liability to the lending body for the whole of the mortgage debt and that unless and until the mortgage was discharged, which is hardly likely to happen without repayment of the mortgage debt, each would continue to be subject to that liability; simple transfer of title, for example, would do nothing to relieve the transferor from liability under the mortgage to the lending body.
20 In the reading put forward by counsel for the plaintiff, Dr Whicker, of the Offer of Compromise, what was contemplated was that the defendant would do mechanical things and attend to all documentation requirements; but in the reading put forward it was not contemplated that the defendant would actually have to make a payment of the whole or part of the mortgage debt to the lending body.
21 In my view, this reading is not the correct reading and is not the reading which appears from the terms of the document itself. At the most literal level, the document in par 2 provides that the defendant "shall do all acts and things and sign all such documents as are necessary [to]:…Facilitate the discharge by the defendant of the mortgage with the Commonwealth Bank ...". In these words it is the defendant who is to bring about the discharge of the mortgage and not the plaintiff. Not expressly referred to but necessarily involved in achieving that result is the payment of the mortgage debt.
22 To put things a little less literally for a moment, I go on to say that I see no expression in the Offer of Compromise from beginning to end of any idea that the plaintiff is to assume the burden of the mortgage debt. Taking the document as a whole, but particularly par 2, I am of the opinion that it is altogether clear that had the defendant Ms Pettiford accepted the Offer of Compromise she would have incurred a contractual obligation to the plaintiff Dr Whicker to take all necessary steps to bring about the discharge, and that that would have included paying the mortgage debt; there would have been a contractual obligation to pay it.
23 From this construction it follows arithmetically that the Master took a wrong view when coming to the conclusion that the result under his orders was no less favourable to the plaintiff Dr Whicker than the terms of the Offer of Compromise. The plain fact is that the defendant Ms Pettiford did better under the judgment than she would have done had she accepted the Offer of Compromise. Part 52A r 22(4) and (5) did not apply, and did not govern the Master's exercise of discretion, and as the error was basal for the Master's decision on costs, that decision should be set aside and the discretion as to costs should be exercised again without reference to Pt 52A r 22(4) or its successor provision.
24 The outcome of the proceedings was very little different to the outcome which would have been produced by an even division of the value of the View Street property net of the mortgage debt, otherwise leaving the interests of parties in property unadjusted: not exactly the same, but in the scale of values involved very little different. Next to nothing was achieved by the claim and cross-claim or by seeking adjustment of property interests under s 20(1) of the Property (Relationships) Act; the parties would have achieved much the same position had each taken away her own property and had they agreed to divide evenly the proceeds or the value of the jointly owned View Street property.
25 In my opinion, the appropriate discretionary conclusion on the general costs of the proceedings in the Equity Division is the conclusion which the Master first expressed, that is that each party should pay her own costs of those proceedings. The further costs orders made by the Master in para 2 of his orders of 22 December are not otherwise challenged and the order of the Court of Appeal should not alter order 2.
26 The observations I made earlier show that, in my view, this is an appropriate case for granting leave to appeal, having regard to the value of the interests involved and the nature of the error.
27 In my opinion the Court of Appeal should make the following orders:-