New South Wales Supreme Court CITATION : Sharpless v McKibbin (Costs) [2007] NSWSC 1520 HEARING DATE(S) : 30 December 2007 JURISDICTION : Equity Division JUDGMENT OF : Brereton J EX TEMPORE JUDGMENT DATE : 30 December 2007 DECISION : No order as to costs. CATCHWORDS : FAMILY LAW – de facto relationship – costs – whether costs should follow the event – relevant considerations – substantial success – adjustive order below jurisdictional limit of Local Court. - COSTS – proceedings under Property (Relationships) Act 1984 – whether costs should follow the event – relevant considerations – substantial success– adjustive order below the jurisdictional limit of Local Court. (NSW) Civil Procedure Act 2005, s 98(1), LEGISLATION CITED : (NSW) Property (Relationships) Act 1984, ss 8, 20 (NSW) Uniform Civil Procedure Rules, rr 42.1, 42.30 Dunstan v Rickwood (No 2) [2007] NSWCA 266 CASES CITED : Kardos v Sarbutt (No 2) [2006] NSWCA 206 P J and R M Farnell (1995) 128 FLR 374; (1996) 20 Fam LR 513) Sharpless v McKibbin [2007] NSWSC 1498 PARTIES : Paul Anthony Sharpless (plaintiff) Paul Ellis McKibbin (defendant) FILE NUMBER(S) : SC 5396/05 COUNSEL : Mr Reeve (sol) (plaintiff) Ms Stubbs (defendant) SOLICITORS : Marsdens Law Group (plaintiff) Cunningham Legal Pty Limited (defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BRERETON J Thursday 20 December 2007 5396/05 Paul Sharpless v Paul McKibbin JUDGMENT (ex tempore – costs) 1 HIS HONOUR: On 14 December 2007 I published reasons for judgment [Sharpless v McKibbin [2007] NSWSC 1498] and made orders by way of adjustment of settlement of property interests under (NSW) Property (Relationships) Act 1984, s 20, as follows (at [104]): Subject to any submissions which may be made as to their form, my order is: 1. Order by way of adjustment and settlement of property interests pursuant to Property (Relationships) Act, s 20, that: 1.1 the defendant transfer to the plaintiff all his right title and interest in and to the Mazda 323 motor vehicle in the name of the plaintiff; 1.2 the defendant transfer to the plaintiff all his right title and interest in and to the Trendwest time share in the joint names of the parties; 1.3 the defendant within 60 days pay to the plaintiff the sum of $20,000; 1.4 each of the parties otherwise respectively retain for his own use and benefit absolutely all other property now in such party's possession or name. 2 As I explained in paragraph 93, that result reflected a total entitlement of $60,000 (or approximately 4 per cent) of a total pool of about $1.5 million. As Mr Sharpless already had the benefit of the Mazda motor vehicle worth $5000, furniture fittings and effects worth $5000, and his own paid legal costs of $4459, the value of the adjustment worked by the order was approximately $46,000. 3 For Mr Sharpless, Mr Reeve submits that there should be an order that the defendant Mr McKibbin pay his costs. For Mr McKibbin, Ms Stubbs submits that there should be no order as to costs, to the intent that each party bear its own costs. 4 At the time the proceedings were commenced in the District Court at Campbelltown by Mr Sharpless, the jurisdictional limit of the Local Court in its General Division was $60,000. The proceedings were removed from the District Court into this Court on the application of Mr Sharpless, who contended that the matter was beyond the jurisdiction of the District Court. In his Statement of Claim, he sought an adjustive property order of $300,000; his final submissions, after a hearing of some seven days in all in this Court, proposed that he receive 25 per cent of the pool (which would have been about $375,000). 5 (NSW) Civil Procedure Act 2005, s 98(1), provides that subject to the rules of Court, and that or any other Act, costs are in the discretion of the Court. Uniform Civil Procedure Rules ("UCPR"), r 42.1, provides that costs should follow the event, unless it appears to the Court that some other order should be made as to the whole or any part of the costs. UCPR, r 42.30, which applies to proceedings in which the plaintiff claims relief under the Property (Relationships) Act, where the Court declares a right or adjusts an interest of a value or amount that does not exceed the jurisdictional limit of a Local Court sitting in its General Division, as the limit was when the proceedings were commenced, provides that in such a proceeding the plaintiff is not entitled to payment of his or her costs of the proceedings unless the Court orders otherwise. 6 Mr Reeve has argued that the effect of my judgment is to declare a right of $60,000 or more. With respect, I do not agree. In this case no relief under Property (Relationships) Act, s 8, which provides for declarations as to rights, was sought nor granted. Insofar as UCPR, r 42.30, refers to the court "declaring a right", it is concerned with relief. Under Property (Relationships) Act, s 8 – which confers on the Court jurisdiction to declare the (existing) title or rights of either party to property. It is to be distinguished from an order adjusting interests under s 20. The judgment contains no declaration of right at all. The only order made was an adjustive property order under s 20, the effect of which was to work an adjustment worth $46,000. 7 The fact that, as a step to reaching that result, I concluded that out of a total pool, some of which was already in Mr Sharpless' possession, he was entitled to $60,000, does not mean that the Court has declared a right of $60,000 or more. Such a finding, as a step in the exercise of jurisdiction under Property (Relationships) Act, s 20, is not a declaration of right under s 8. 8 Accordingly, the starting point in this case is provided by UCPR, r 42.30: Mr Sharpless is not entitled to costs unless the Court otherwise orders. 9 I bear in mind that the Court is not authorised to confine the discretion conferred by Civil Procedure Act, s 98(1), by any notion that in proceedings under the Property (Relationships) Act, the starting point should be that each party bear its own costs [Dunstan v Rickwood (No 2) [2007] NSWCA 266, disapproving Kardos v Sarbutt (No 2) [2006] NSWCA 206]. Nonetheless, the observations in Kardos v Sarbutt (No 2) at paragraphs 28 and 29, which I do not understand to have been the subject of disapproval in Dunstan, remain pertinent considerations in deciding how the costs discretion should be exercised in cases of this type. It also needs to be borne in mind that, in calculating the divisible pool of property, I have added back paid costs, in accordance with the approach usually adopted in the Family Court [see, for example, In the marriage of P J and R M Farnell (1995) 128 FLR 374; (1996) 20 Fam LR 513]. 10 As was said in Kardos v Sarbutt (No 2), in a passage which was not criticised in Dunstan, substantial success is not to be judged merely by the circumstance that a plaintiff obtains an adjustment in his or her favour, but requires an evaluation of the outcome, in the light of the forensic and negotiating position of the parties, so that it can be said that one party has been clearly more successful than the other and that the costs of the proceedings are attributable to the unsuccessful party's opposition - rather than to, for example, the necessity for both parties that their property interests be separated upon the failure without attributable blame of a domestic partnership, and the failure of both parties to adopt a realistic position. 11 I have already outlined the plaintiff's forensic position, as articulated in the Statement of Claim and in his final submissions. The plaintiff's negotiating position was, for a short time (in May 2006), to offer to accept $100,000 inclusive of costs; but subsequently, by November 2006, it appears to have returned to the sum of $300,000 claimed in the Statement of Claim. 12 The defendant's position, both forensically and in negotiations, appears always to have been, in substance, that the plaintiff could retain what he had – in particular, the Mazda motor vehicle - and no more, and pay the defendant's costs. 13 The ultimate result falls somewhere between the negotiating positions of both parties, and a long way below the forensic position adopted by the plaintiff, and much closer to, but somewhat above, the position adopted by the defendant. I do not think this is a case which it could sensibly be said that the costs of the proceedings should be seen as attributable primarily to the defendant's opposition to the relief sought by the plaintiff. 14 In my view, there are insufficient reasons, if any, to depart from the starting point prescribed by UCPR, r 42.30 that there should be no order as to the plaintiff's costs. There will be no order as to the costs of the proceedings to the intent that each party bear his own costs. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.