Van Zonneveld v Seaton [2005] NSWSC 175 | Case summary

1672/02 JOHN CORNELIUS JOSEPH VAN ZONNEVELD v BIRTHE KRISTINE ADSBOL SEATON JUDGMENT - Ex Tempore 1 HIS HONOUR: This is a matter in which I gave judgment on 17 December 2004: Van Zonneveld v Seaton [2004] NSWSC 1223. It involved an application under section 20 of the Property (Relationships) Act 1984. In the decision I gave on 17 December 2004 I ordered an adjustment of property interests in favour of the plaintiff in the sum of $51,000. Today the plaintiff applies for interest to be added to that $51,000 under section 94 Supreme Court Act 1970, and for an order for costs. Section 94 Interest 2 The plaintiff points to the fact that the date of separation was a considerable time before the date when the judgment was delivered, and that as well, valuations of the defendant's house were given as at dates, one of which was as early as March 2002. It was an important feature of the plaintiff's case, which I upheld to a certain extent, that he had improved the value of the real estate of the defendant. 3 Section 94 Supreme Court Act 1970 is a section which is designed to ensure that if there is delay between the time that a cause of action accrues and judgment is actually given on that cause of action a plaintiff is not out of pocket. The rate of interest which is awarded under section 94 recognises that sometimes a defendant, by defending proceedings, can keep the plaintiff out of money which is rightfully the plaintiff's. Furthermore, it is money which is rightfully the plaintiff's as at the time that the defendant is keeping the plaintiff out of it. 4 The situation in an application under the Property (Relationships) Act 1984 is different to this. The power of the Court under that Act is to make a discretionary re-allocation of property interests. The discretionary re-allocation takes place from the date of the Court's order. It is not a recognition of any pre-existing legal right of the plaintiff, beyond the right to make application for an order. The way in which the Court commonly proceeds in making such orders is to make them in the money of the day as at which the decision is handed down. 5 Furthermore, the discretion under the legislation is one which requires numerous factors to be balanced, and an ultimate judgment made as to the quantum of property adjustment which should be made. In the course of balancing those factors, the Court will commonly take into account the date at which benefits of a monetary or non-monetary kind were conferred by one party on the other. In the course of my reasons for judgment, I stated the dates as at which various events occurred which were taken into account in the ultimate discretionary decision about what quantum of property alteration to make. In that way, the differences in dates at which benefits were conferred by one party on another has already entered into the discretionary answer which has been arrived at. For that additional reason, it would not be appropriate to make an extra award of interest. I decline to do so. Costs 6 The plaintiff makes an application for costs. Both parties have put before me various settlement offers which were made. Prior to proceedings being commenced the plaintiff offered to settle for $120,000. The plaintiff did not make any settlement offers once proceedings were commenced. The defendant made 3 offers when the proceedings were on foot - the first that the parties should walk away, the second to settle for $20,000 inclusive of costs, the third (after the hearing had begun) to settle for $40,000 inclusive of costs. An offer inclusive of costs is not one which is in accordance with Part 22 Supreme Court Rules and so cannot trigger the costs consequences connected with an offer of compromise under Part 52A Rule 22. Nor is such an offer one which is suited to being an effective Calderbank offer, because it usually does not allow the Court to decide whether the verdict eventually given is one under which the offeree fares worse than he or she would have done if he or she had accepted the offer. 7 Notwithstanding his having offered to settle for $120,000, the plaintiff's claim started out, when proceedings were filed, as being a claim for 40 percent of the value of the house, which was then valued at around $1.7 million. At the commencement of the trial counsel for the plaintiff made clear that the principal claim which would be made would be for a monetary sum, not for a proportionate property interest. Comparatively late in the trial an amendment was filed which quantified this amount at $300,000. Thus, the plaintiff has fallen considerably short of the claim which he made, and likewise the defendant has lost, by the award, considerably more than she was ever prepared to offer. 8 At the time of commencement of these proceedings $40,000 was the limit of the jurisdiction of the Local Court. Thus, pursuant to Part 52A Rule 34 Supreme Court Rules if in these proceedings the plaintiff had recovered less than $40,000 the Court would need to make a special order if any costs were to be awarded to him. As he has recovered $51,000 that rule does not apply to him, notwithstanding that since the commencement of these proceedings the jurisdictional limit of the Local Court has been increased to $60,000. (That increase became effective on 1 January 2004: Schedule 6(1) of the Courts Legislation Amendment Act 2003 amending section 12 Local Court (Civil Claims) Act 1970 [proclaimed 20 November 2003 GG No 196 of 12 December 2003, p.11172 to commence on 1 January 2004].) 9 I am reminded that this is a case where the plaintiff always had some problems of credit, that it was clear that there would be allegations that he was exaggerating, and that there was some problems of his general credit arising from what he had told treating doctors on previous occasions. I have upheld those submissions concerning the plaintiff's credit to a certain extent, but not completely. 10 The defendant submits that she really had no choice but to defend the proceedings, given the very large claim made against her, and the plaintiff's failure to make an offer once the proceedings were commenced. That is true, but not the whole truth. The defendant had it within her power to make an offer of a size that would have provided her with some protection against a costs order, and may have resulted in a partial costs order (for costs incurred after the making of the offer) in her favour. When a defendant is faced with a claim which she assesses will result in only a comparatively small award to a plaintiff, but where the costs of both sides are likely to the significantly greater than the amount of that award, it is often prudent to make an offer of an amount somewhat greater than the defendant's current estimate of the likely award, both as insurance against the estimate being incorrect, and for the sake of protection which such an offer can give against a costs order. If such an offer is made at a comparatively early stage of the proceedings, on a basis which is plus costs to the time of an acceptance of the offer, the defendant can end up out of pocket, even if the offer is accepted, by considerably less than she would be required to pay if she makes no offer, or a smaller offer, and the proceedings run to judgment. When the defendant had this means of protection available to her, but did not take it, I cannot place much weight on the fact that she had no choice but to defend the proceedings. 11 The starting point, in any proceedings, is that costs ought follow the event, unless the successful party has been guilty of some misconduct in relation to the proceedings or circumstances leading up to the proceedings: Oshlack v Richmond River Council (1998) 193 CLR 72 at 97, [69] - [70] (a statement not affected by McHugh J having dissented in the result). However, in proceedings under the Property (Relationships) Act 1984, there has been a disturbing tendency for the costs that are incurred to be out of all proportion to the amount that the Court ultimately awards. This case is no exception. Evidence given today shows the total costs and disbursements are of the order of $169,000 for the defendant, and $154,000 for the plaintiff. 12 In the present case, the affidavits took the form of giving the entire history of the relationship of the parties in the most minute detail. While there are sometimes events concerning which this degree of detail is important for the resolution of the case, very often it is not. The discretionary jurisdiction which the Court exercises in this type of case is not one which requires all the minutiae of the relationship to be gone into. In the present case large parts of the affidavit evidence were not cross-examined on and not referred to in either submissions or the judgment. 13 Judges of this Division have expressed concern about the way in which costs of applications under the Property (Relationships) Act 1984 and the Family Provisions Act 1982 are sometimes out of proportion to the amount which is ultimately awarded. In Harris v Schembri (7 November 1995 unreported) Bryson J took into account, as one factor leading him to make no order for costs where a plaintiff recovered $31,500 under the De Facto Relationships Act 1984 (as it then was), that section 117 Family Law Act 1975 had the effect that only in exceptional circumstances was an award of costs made when property interests were adjusted under that Act. 14 In Moore v Moore [2004] NSWSC 587 Young CJ in Eq suggested that ordinarily some special justification would need to be shown to warrant an order for more than $35,000 for the costs of a successful plaintiff in an application under the Family Provision Act 1982. There are close analogies between the powers of adjusting property interests which the court exercises under the Property (Relationships) Act and under the Family Provision Act, which makes guidelines for costs articulated under one of those Acts of some persuasive value concerning the other Act (though of course such guidelines are not a substitute for the exercise of a discretion bearing in mind all the facts of a particular case). In Carroll v Cowburn [2003] NSWSC 248 at Young CJ in Eq said at [36] that a guideline to apply concerning costs in claims under the Family Provision Act was that the plaintiff's costs be capped at an amount equal to the amount of extra provision that the Court ordered be made to the plaintiff. In Foster v Lisle [2003] NSWSC 1243 at [76] his Honour applied that guideline. In Deves v Porter [2003] NSWSC 878 I said it was a useful rule of thumb in proceedings from property adjustment under the Property (Relationships) Act 1984 that the costs awarded ought not exceed the amount recovered. 15 This is a case where it would not be appropriate to simply apply that rule of thumb. There were some questions of and valuation of building work, and valuation of the extent to which a property increased in value as a result of building work which were unusual for a case of this type. It is appropriate to make allowance for the existence of those complicating factors in the award of costs which is made. The fact that there were these building and valuation issues are the sort of thing which would reflect itself not only in the disbursements which were incurred, but in the legal costs which were incurred in dealing with that expert evidence. 16 There is another complicating factor in this case. The hearing went for a little over a day in February 2004, before it was adjourned by consent, because the parties had come to the view that it would be preferable to have some District Court litigation between them decided before the Court proceeded with the present case. I agreed that that was the appropriate course. The plaintiff submitted that each party should bear their own costs of those two days, and that seems to me to be appropriate. The hearing, when resumed, took another five days. 17 In the circumstances, it is appropriate to make an order that the plaintiff receive some costs, but not all his costs. 18 The order that I make is that the defendant pay the plaintiff's costs of these proceedings, not including the two days in February 2004, and provided that the total costs recovered shall not exceed $100,000. **********

Van Zonneveld v Seaton

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Judgment (11 paragraphs)

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