Smith v Champion

Court of Appeal (ACT)|2009-10-19|Before: Higgins CJ, Besanko JJ, Connolly J, Rod J

2 The orders made by Connolly J on 6 July 2007 be set aside.

3 In lieu of the orders made by Connolly J on 6 July 2007, there be the following orders.

3.1.1 The property being Lot 1 in Deposited Plan 846623 at Hall, County of Murray in the State of New South Wales and known as "Dellwood" (Dellwood) be sold by auction in accordance with the following directions.

(b) That the parties shall forthwith take all such steps, sign all such documents and give all such directions as may be necessary to appoint Richard Munings of Elders Real Estate Dickson as auctioneer including the signing of any agency agreement;

(c) Upon appointment the agent shall arrange for an inventory of all fixtures and fittings that are to be included in the sale;

(d) That the parties shall to the extent necessary accept the advice of the said Richard Munings as to the most opportune marketing campaign including the timing of the said auction; and further they shall each contribute, within seven days of being called upon, one half of moneys required by the said Richard Munings to enable an appropriate advertising campaign to be put in place;

(e) That Rod Barnett of Rod J Barnett & Associates of Fyshwick, ACT, be appointed solicitors for the sale; and further the parties shall each contribute, within seven days of being called upon, one half of moneys required by the said Rod Barnett to enable the preparation of necessary contractual documentation; and further the parties shall within seven days sign a fees agreement and/or letter of engagement or such other document which may be required by the said Rod Barnett to enable him to carry out the said instructions;

(f) The parties shall, when called upon, whether by the said Richard Munings or the said Rod Barnett attend upon the said person for the purpose of signing any necessary documentation including the contract for sale and/or the Transfer;

(g) The parties or their agents, duly authorised in writing, will attend the auction sale and, in the event Dellwood is passed in at auction, negotiate with the highest bidder at the said auction and shall in the event of a dispute between the parties accept the advice of the said Richard Munings whose decision shall be final;

(h) In the event Dellwood fails to sell at auction, or to sell immediately following upon the auction, and failing a determination in that event of the said Richard Munings that Dellwood should be offered by sale by private treaty, the said Richard Munings shall relist Dellwood for a further auction at a reserve price as agreed or otherwise as determined by the said Richard Munings.

3.1.2 The respondent shall have sole occupation of Dellwood until settlement of the sale provided that the respondent shall pay an occupation fee from the date of entry of these orders until settlement, such fee to be determined by a single judge of the Supreme Court having regard to the cost of improvements effected by the respondent to the property during her occupation of it and in the absence of agreement either party may apply for such determination upon three days' notice to the other.

3.1.3 The respondent shall keep Dellwood in good order and condition in preparation for the sale.

3.1.4 Upon the sale of Dellwood the proceeds of sale shall be applied in the following manner and priority:

Payment of all funds necessary to discharge the mortgage to the National Australia Bank bearing registered number 2792770;
Payment of agent's commission and disbursements including if necessary any outstanding expenses not paid by the parties;

Payment of any moneys necessary to enable an adjustment of rates to the date of settlement;

Payment of all legal costs and disbursements of Rod Barnett;

AND the balance of the proceeds then remaining shall be divided between the parties in the following proportions:

3.1.5 In the event that either party within seven days of being called upon neglects or fails to sign any documents, or to execute any deed, instrument or writing necessary to give effect to these Orders, the Registrar of the Supreme Court of the Australian Capital Territory is hereby appointed pursuant to section 26 of the Domestic Relationships Act 1994 (ACT) to sign the relevant document in the name of the defaulting party, and the defaulting party shall be solely liable for all costs arising from the operation of this Order.

3.1.6 Pending completion of the sale of Dellwood, the parties hold their respective interests in the property upon trust pursuant to these orders and neither party shall:

(a) encumber the property without the consent in writing of the other party;

(b) remove, or cause to be removed from the property, any furniture, effects, appliances and chattels listed in the inventory.

3.2 The proceeds of the sale of the Camden property be divided between the parties in the proportion of 41 per cent to the plaintiff and 59 per cent to the defendant.

3.3 The interim distribution to the parties of $50,000.00 each from the proceeds of the sale of the Camden property is to be taken into account in part satisfaction of the foregoing orders.

3.4 The plaintiff pay the defendant's costs of the trial to be assessed on a party and party basis.

4. The appellant pay the respondent 80 per cent of her costs of the appeal.

IN THE SUPREME COURT OF THE ) No. ACTCA 25 - 2007

ON APPEAL FROM A SINGLE JUDGE OF THE SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

1. The Court has already delivered its reasons for judgment in this appeal: Smith v Champion [2009] ACTCA 7 ("the principal reasons"). At the time the principal reasons were delivered, the parties were invited to submit draft minutes of order reflecting the conclusions of the Court and written submissions on the matters identified in the principal reasons at [77]. The parties have submitted draft orders and written submissions.

2. These reasons deal with the outstanding issues and should be read with the principal reasons.

(1) The orders which should be made in relation to the Dellwood property;

(2) The order which should be made as to the division of the relevant assets;

(3) The order which should be made as to the costs of the trial; and

(4) The order which should be made as to the costs of the appeal.

4. It is agreed between the parties that the Dellwood property must be sold. However, each party, in its draft minutes of order, seeks the opportunity to purchase the Dellwood property before it is put to auction.

5. The trial judge said in his reasons that he was disposed to give the respondent the opportunity to purchase the Dellwood property and require that it be put to auction only in the event that the respondent was unable to do so. However, the trial judge died before he was able to make final orders with respect to the Dellwood property. The reasons the trial judge was disposed to give the respondent the opportunity to purchase the Dellwood property were "the nature of the rural property and the plaintiff's strongly expressed wish" to purchase the property.

6. We see no convincing reason why either party should be given a preferential right to purchase the Dellwood property. The Dellwood property should be sold by auction and each party should be at liberty to bid at the auction. We note that the sale by auction of the Dellwood property will realise the current market value of the property.

7. In the court below, the value of the assets to be distributed between the parties was $756,000. That sum comprised the agreed value of the Dellwood property (that is, $460,000) and the proceeds from the sale of the Camden property (that is, $296,000). The trial judge held that the appellant was entitled to recognition of a contribution by him of $120,000 before the balance of the assets was distributed equally. On that assumption, the approach adopted by the trial judge resulted in an allowance of $438,000 to the appellant and an allowance of $318,000 to the respondent. That represented a proportional allocation of the pool of assets of 58 per cent to the appellant and 42 per cent to the respondent.

8. On appeal, this Court has concluded that the appellant was entitled to recognition of an additional contribution of $16,000 before the balance of the assets was distributed equally. That is to say, the sum of $16,000 was to be treated in the same way as the sum of $120,000. That does not mean that the sum of $16,000 is simply added to the appellant's allowance and a sum of $16,000 deducted from the respondent's allowance. The application of the approach adopted by the trial judge, which was not contested by either party and which we think is correct, results in the appellant receiving $136,000 and one-half of the balance (that is, $310,000) and the respondent receiving one-half of the balance, namely $310,000. These figures represent a proportional allocation of 59 per cent to the appellant and 41 per cent to the respondent. That is the appropriate apportionment between the parties.

9. Submissions were made by the parties to the trial judge on the appropriate order as to the costs of the trial. The trial judge died before he could make an order as to the costs of the trial.

10. In the principal reasons, we expressed some reservations about the Court's power to make an order as to the costs of the trial (at [76]). We have now considered the matter and we have had the benefit of submissions from the parties. We think this Court does have the power to make an order as to the costs of the trial. Section 37O(1)(b) of the Supreme Court Act 1933 (ACT) is the source of that power, and it provides that in relation to an order appealed from, this Court has the power "to give any order it considers appropriate".

11. The Court's judicial discretion to award costs is a very broad one and the Court is entitled to take into account a range of considerations. Ordinarily, a successful party will be awarded his or her costs. In a claim under the Property (Relationships) Act 1984 (NSW) it can sometimes be difficult to discern which party (if either) has been successful. In any particular case, it may be necessary to consider a range of matters, including any offers made before or during the proceeding. Of course, it may be that, in the particular circumstances of the case, an order that each party bear his or her own costs is appropriate.

12. The appellant contended that he should have his costs on a party and party basis up to 14 April 2005 and on an indemnity basis thereafter. In relation to the costs after 14 April 2005, he relies on an offer he filed on 18 March 2005. The respondent contended that each party should bear his or her own costs of the trial.

13. In our opinion, the appellant should be awarded the costs of the trial to be assessed on a party and party basis. There are principally two matters which have led us to that conclusion.

14. First, at an early stage of the proceeding, the appellant made a reasonable offer to settle the proceeding. The respondent commenced this proceeding in the Supreme Court of New South Wales in February 2005. The proceeding was subsequently transferred to this Court pursuant to a cross-vesting order. On 18 March 2005, the appellant filed an offer in the Supreme Court of New South Wales whereby he offered to settle the proceeding on the basis of an agreed division of the assets comprising the two franchise businesses, and, after a payment of the sum of $100,000 to him, an equal division of the assets comprising the Camden property and the Dellwood property. The offer on costs was that the respondent pay the appellant's costs to the date of settlement on a party and party basis. The offer as a whole was said to be capable of acceptance within 28 days, otherwise it was withdrawn. The appellant made a similar offer to settle the proceeding by letter to the respondent dated 1 August 2005. The final paragraph of the letter stated:

Please note that this is a Calderbank offer and it remains open for acceptance until 5.00 pm on 22 August 2005, after which it is withdrawn and if our client subsequently receives a similar or better offer, we are instructed to rely upon this letter in an application for an order that the plaintiff pay the defendant's costs from the date of this letter on an indemnity basis.

15. On 31 May 2007, the respondent made an offer to the appellant in a letter and that offer was said to be a Calderbank offer. It is not necessary to set out the details of this offer. It was not suggested that it reflected the outcome of the trial and it was not the subject of submissions from the respondent.

16. The second reason we think it appropriate to award the costs of the trial to the appellant is that on the issues canvassed at the trial, he achieved a substantial measure of success. He succeeded in his claim that a capital contribution of $120,000 which he made should be recognised before an equal distribution of the assets. He succeeded in defending a claim by the respondent that a residential property at Palmerston in his name should form part of the joint assets to be distributed. He was unsuccessful in his claim that the respondent should account for the diminution in the value of the two franchise businesses and of the rural properties.

17. We do not think these two considerations are strong enough to justify an award of the costs of trial to the appellant on an indemnity basis, but they do support an award of the costs of trial in favour of the appellant on a party and party basis. In reaching these conclusions, we have had regard to the authorities to which we were referred by the parties and, in particular, to Kardos v Sarbutt (No 2) [2006] NSWCA 206 and Baker v Towle [2008] NSWCA 73; (2008) 39 Fam LR 323.

18. It can be seen from the principal reasons that there were five issues raised on the appeal, and that the appellant failed on four of them. The issue upon which he succeeded occupied only a small proportion of the hearing time and has resulted in only a small monetary adjustment of the trial judge's orders. As against that, the respondent has succeeded in defending submissions which would, had they been successful, have resulted in significant monetary adjustments of the trial judge's orders. In our opinion, it is fair to characterise the result of the appeal as one in which the respondent has had substantial success. In the circumstances, the appropriate order is that the appellant pay the respondent 80 per cent of her costs of the appeal.

2 The orders made by Connolly J on 6 July 2007 be set aside.

3 In lieu of the orders made by Connolly J on 6 July 2007, there be the following orders.

(a) The parties shall forthwith take all such steps, sign all such documents and give all such directions as may be necessary to cause Dellwood to be sold by auction with a reserve of $400,000.00 unless otherwise agreed between the parties;

(c) Upon appointment the agent shall arrange for an inventory of all fixtures and fittings that are to be included in the sale;

3.1.3 The respondent shall keep Dellwood in good order and condition in preparation for the sale.

3.1.4 Upon the sale of Dellwood the proceeds of sale shall be applied in the following manner and priority:

Payment of all funds necessary to discharge the mortgage to the National Australia Bank bearing registered number 2792770;
Payment of agent's commission and disbursements including if necessary any outstanding expenses not paid by the parties;

Payment of any moneys necessary to enable an adjustment of rates to the date of settlement;

Payment of all legal costs and disbursements of Rod Barnett;