Antonescu & Antonescu (No 3)
[2024] FedCFamC1F 809
•28 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Antonescu & Antonescu (No 3) [2024] FedCFamC1F 809
File number: SYC 1697 of 2023 Judgment of: CAMPTON J Date of judgment: 28 November 2024 Catchwords: FAMILY LAW – COSTS – Where the wife seeks indemnity costs pursuant to s 117 of the Family Law Act 1975 (Cth) of the substantive s 79 proceedings – Where the husband opposes the making of a costs order, or in the alternative, costs be in accordance with the scale in the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) – Where the husband failed to comply with his disclosure obligations as codified in the Rules, filing undertakings as to disclosure knowing them to be false – Where the costs of the wife in the litigation were enlarged due to the husband’s disclosure failures – Consideration of the failures of the husband to accept offers of settlement contended to be more favourable to him than the outcome reached at trial – Where a circumstance distinct from a failure to accept a well-cast offer of settlement is the withdrawal by the husband from an executed agreement recorded in writing as proposed consent orders achieved with the benefit of his lawyers at mediation – Where the legally facilitated written agreement reneged upon by the husband was materially more favourable to him than the outcome achieved at trial – Husband ordered to pay the wife’s costs of the substantive proceedings on an indemnity basis from the date of the mediation, discounted taking into account matters unsuccessfully pursued by the wife, in a fixed sum – Husband ordered to pay the wife’s costs of the costs application in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117(1), 117(2), 117(2A)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ch 7, r 12.17(a)
Cases cited: Antonescu & Antonescu (No 2) [2024] FedCFamC1F 596
Antonescu & Antonescu [2024] FedCFamC1F 468
Browne & Green [2002] FLC 93-115; [2002] FamCA 791
Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Gilmour & Hofte (No 2) [2024] FedCFamC1A 9
Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116
Murray & Murray [1990] FLC 92-173
Oriolo v Oriolo (1985) FLC 91-653; [1985] FamCA 54
Penfold v Penfold (1980) FLC 90-800; [1980] HCA 4
Pennisi & Pennisi (1997) FLC 92-774; [1997] FamCA 39
Sfakianakis & Sfakianakis (2019) 59 Fam LR 419; [2019] FamCAFC 54
Division: Division 1 First Instance Number of paragraphs: 50 Date of hearing: 18 November 2024 Place: Sydney Counsel for the Applicant: Mr Othen SC Solicitor for the Applicant: Long Saad Woodbridge Lawyers Counsel for the Respondent: Mr Harper Solicitor for the Respondent: King Cain Solicitors ORDERS
SYC 1697 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ANTONESCU
Applicant
AND: MR ANTONESCU
Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
28 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Within 90 days of the date of this order the husband pay the wife’s costs fixed in the sum of $450,500.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
These reasons determine an Application in a Proceeding filed on 8 October 2024 by Ms Antonescu (“the wife”) for costs after the conclusion of proceedings for the adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) between she and Mr Antonescu (“the husband”) determined by reasons for judgment published, and orders made, on 6 September 2024.
For the reasons that follow, the husband is ordered to pay the wife’s costs of $450,500 within 90 days.
THE COMPETING RELIEF SOUGHT AS TO COSTS
Pursuant to Order 25 made on 6 September 2024, the wife filed an Application in a Proceeding on 8 October 2024 seeking:
1.That within 90 days, the Husband pay the Wife’s costs of an incidental to proceedings SYC1697/2023 on an indemnity basis.
2.In the alternative to Order 1, that within 90 days the Husband pay the Wife’s costs of and incidental to proceedings SYC1697/2023 on a solicitor/client basis.
3.In the alternative to Orders 1 and 2, that within 90 days from assessment, the Husband pay the Wife’s costs of an incidental to proceedings SYC1697/2023 as assessed on a party/party basis.
4.The Husband pay to the Wife interest upon her costs calculated in accordance with the Federal Circuit and Family Court of Australia Rules 2021, Rule 10.17, from the date of Order 1 if made, or Order 2 if made, or Order 3 if made, as and until the date of payment.
…
7.That the Husband pay the Wife’s costs of and incidental to this application in a fixed sum of $18,500.
…
In his Response to an Application in a Proceeding filed on 31 October 2024, the husband sought:
1. That the wife’s application be dismissed.
Or in the alternative:
2.That the husband pay the wife’s costs of the Final Hearing from 26 August 2024 – 29 August 2024 calculated in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
In her written submissions the wife amended her relief sought, to seek a fixed lump sum of approximately $540,000 for the substantive proceedings and continued to seek for the husband to pay her costs of the costs application fixed in the sum of $18,500. In his written submissions the husband also amended his alternative relief, that if an order for costs is made, it should be made in a fixed sum of $125,000.
Each party relied upon the primary reasons for judgment (Antonescu & Antonescu (No 2) [2024] FedCFamC1F 596). These reasons assume familiarity with it.
Background
The husband and the wife commenced cohabitation in mid-1985 and married in 1986. They have two children, both of whom are now adults. The parties separated between October 2014 and upon the husband vacating home in June 2015.
The wife commenced the s 79 proceeding in the Federal Circuit and Family Court (Division 2) on 13 March 2023. The parties attended a mediation on 21 November 2023. The matter compromised in writing executed by the parties. Six days later the husband withdrew his agreement to enter consent orders in the terms of the written agreement. On 7 December 2023 the proceeding were transferred to the Federal Circuit and Family Court (Division 1) and were placed in the Major Complex Financial Proceedings list. The trial was heard over four days from 26 to 29 August 2024, with the matter relisted for short submissions on 30 August 2024.
THE LAW
The relevant principles as to costs are well settled. While the starting position established by s 117(1) of the Act is that each party pays their own costs, s 117(2) allows the Court to make such orders as to costs as it considers just if there are circumstances which justify it doing so. In considering what order for costs, if any, should be made, the Court is required to have regard to the matters set out in s 117(2A) of the Act and give weight as it considers appropriate to any relevant factor. It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied. Rather, any one factor may be sufficient.
The wife bears the onus to establish circumstances which justify departing from the position that each party pay their own costs, for the making of a costs order in her favour. If the wife establishes there are circumstances justifying a costs order, the next consideration is on what basis should costs be paid.
The Full Court has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. I shall refer to such s 117(2A) matters as are relevant and engaged here.
CONSIDERATION
After the s 79 determination, each party has the benefit of significant property. The wife received 47.5 per cent of the property of the parties, being $12,301,872, and the husband received 52.5 per cent of that property, being $13,596,805. Their financial circumstances do not militate against the making of a costs order and are a factor to be given some weight.
Findings were made as to the husband providing multiple undertakings as to disclosure at times when he was informed by his legal representatives as to the nature and content of those undertakings, that the undertakings as filed were knowingly false, being given while he was aware that the wife would rely on their integrity (at [99]). The wife’s submissions echo from the findings made in the primary reasons, especially as identified in bold:
100 At 2.41 pm on the last business day before the commencement of the trial the husband served the wife with a proof of evidence (Exhibit 12) disclosing that on 22 August 2022 he exchanged contracts to purchase “off the plan” the [AJ Street] property for [over $6 million]. The purchase is scheduled to complete in late 2025 or early 2026. He said that his plan was to “on sell” the [AJ Street] property prior to the scheduled settlement.
101 The husband said in the proof of evidence: “I have not applied any funds to the purchase of this property. The deposit was funded by way of a Bank Guarantee.” He then went on to say:
6. I did not understand that I needed to disclose the existence of this purchase where no money had exchanged hands and settlement would not be occurring until at least late 2025. I only told my solicitor about this purchase on the week beginning 19 August 2024 and provided him with a copy of the contract and bank guarantee on 23 August 2024.
7. A copy of the contract and guarantee bond was disclosed to [the wife’s] solicitor on 23 August 2024.
102 The husband did not record his interest by way of a chose of action in either of his financial statements. He made no reference to it in his trial affidavit.
103 Senior counsel for the husband, on instructions, put to the wife in cross-examination that she had been informed as to the fact of the exchanged contract at a court event in February 2024. The wife denied the contention. On the following day of the trial, the husband, by way of his senior counsel, withdrew any contention as to the wife being aware of his exchanged contract to purchase the [AJ Street] property until 2.41 pm on the last business day before the commencement of the trial.
104 During the husband’s cross-examination later that day, he cast aside the concession made by his senior counsel earlier that morning, insisting the wife was aware of the exchanged contract sometime in earlier 2024. After a short adjournment, senior counsel confirmed the accuracy of the concession made that morning and requested that any oral evidence of the husband contrary to the concession be disregarded. The husband’s reckless conduct on this subject matter did him little credit.
…
110 Following that exchange, and in response to a proposition that he had made disclosures in these proceedings based on his judgment of what he considers to be relevant, he said “[y]es, that’s correct”. I find this response demonstrates, as amplified later in these reasons, the husband’s attitude to disclosure in this litigation. Senior counsel for the husband submitted that this approach to disclosure may have been the husband’s “emotional position”, conceding it is not the “legal position”. It is reflective of the cavalier attitude of the husband to adherence with his obligations codified in ch 6 of the Rules as a litigant in s 79 proceedings.
111 I find that the husband has exhibited business and commercial experience over many years. He is not an unsophisticated litigant, having the benefit of accredited family law specialist solicitors acting for him in the litigation. I find the husband attempted to minimise the fact and import of his disclosure failure as to his interest in the exchanged contract in his proof of evidence, that he considers this chose in action to be a valuable resource, and that by way of his lack of timely disclosure, he made a calculated decision to secrete from the wife and the Court a relevant part of his current financial circumstances. He deprived the wife of the opportunity to inform herself of the potential value of this chose in action, or to adequately consider and engage with his financial conduct on this subject matter. I find that he misled the wife and the Court by omission in his financial statement and affidavit, and as to this item, that his first undertaking of disclosure was corrupted. This disclosure failure will be considered in the adjustment to the contribution findings in circumstances where the value of this interest cannot be the subject of determination and hence cannot form a potential item identified in the balance sheet.
…
124I find that the husband has not complied with his positive obligation to disclose material facts, information, and documents to provide a clear and comprehensive understanding of his relevant financial conduct as to the value of funds that he contributed, and that [Ms KK] contributed, to the acquisition cost of the [Suburb CC] property. I find that he misled the wife and the Court by omission in his affidavit on this subject matter, and that as to this matter, each of his undertakings of disclosure as filed cannot be accepted.
…
129I find that the husband knew, or ought to have known, that each of the lump sum mortgage repayments for the [Suburb CC] property were important facts going to an issue in the proceeding. I find that the husband’s trial affidavit was misleading by calculated omission as to these facts to achieve a perceived forensic advantage in the proceeding. I find these omissions further erode the integrity of his disclosure undertakings as filed. I do not accept the tenor of his case as to the wife having responsibility to wade through huge volumes of source documents to achieve an accurate understanding as to his financial circumstances. It is not for her to find the needles in the haystack. The husband has the positive obligation to disclose relevant facts, documents, and information to give an accurate portrait of his financial circumstances.
(Emphasis added)
Additionally, the primary reasons record:
130This is not a case where credit in and of itself assumes substantial significance. The issue is more complex than simply whether the husband and [Ms KK] endeavoured to be truthful. The real issue is whether the husband’s evidence discharges his disclosure obligations. It is in this context that the reliability of his evidence and the evidence he adduced from [Ms KK] assumes importance. I find that absent verification, caution ought to shadow the reliability of evidence adduced by the husband as to his post-separation financial conduct. This is relevant when dealing with various items on the balance sheet and impacts on findings made as to contributions and adjustments thereto. Some of his property and resources have not been identified in the balance sheet. As to subject matters recorded in these reasons, where I have identified disclosure failures on the part of the husband, I need not be unduly cautious in making findings on those topics in favour of the wife. I find that $500,000 of the property of the parties, deposited by the husband into the [Suburb CC] mortgage in 2019 and withdrawn by him in 2021, is not reflected in an item in the balance sheet because of the husband’s disclosure failures. It will be considered in the adjustment to the contribution findings.
(Emphasis added)
The wife submitted that she was put to “significant cost of proving the underlying facts which justified the [disclosure] findings made by the Court in the preparation of the proceedings for trial and the conduct of it.”
The husband appropriately conceded that he does not seek to “hide from the reality of the powerful findings against him as to his conduct”. He submitted that nevertheless, costs proceedings are compensatory and not punitive. He said that “care must be taken to ensure”:
a) that any costs order relating to conduct not compensate the wife for matters already taken into account in determining both the composition of the asset pool and in particular the adjustment to contribution finding [at reasons 227],
b) that there is proportionality between the actual impact of the conduct on the wife’s legal fees the quantum of the order. In other words, not all costs expended by the wife on preparing for and running the trial came about as a result of the husband’s nondisclosure. A significant proportion of her costs must have been referable to preparing for and running arguments where she was not ultimately successful.
These submissions of the husband are not without force and attract consideration. The wife did not adduce evidence as to the scope or value of costs unnecessarily incurred in deciphering the husband’s relevant financial conduct by way of quantum or by way of a percentage of her total costs incurred.
The husband said in his costs affidavit: “I dispute [the wife’s] assertions that my failures resulted in her incurring greater legal costs” (at paragraph 48). I do not accept this part of the husband’s evidence. He also said in his affidavit that the wife did not disclose an inheritance she received from her father post-separation until less than two business days prior to the final hearing. That evidence is not accurate. Paragraph 168 of the wife’s trial affidavit disclosed the quantum and date of the inheritance, and that such funds were applied to the wife’s legal costs in the substantive proceedings.
I find that the litigation was enlarged and complicated by the wife receiving disclosure up until the last business day prior to the commencement of the trial.
Prior to the mediation on 21 November 2023 the husband and the wife agreed that the wife was to receive, by way of property adjustment, the unencumbered property she lived in at R Street, Suburb S, a motor vehicle, and half of their total superannuation interests, and that the husband was to pay the wife a lump sum payment. This formula was broadly reflective of the agreed relief of each at trial. The issue in dispute between them at the mediation and up to the conclusion of the trial was the value of that lump sum payment to be made by the husband to the wife. By way of the final orders, that amount was determined to be $6,434,600.
Both the husband and the wife made offers of settlement prior to, and during, the litigation. In her affidavit the wife included a table of offers of settlement made by each of the parties. The husband did not identify it as inaccurate, save that it is “inadvertently misleading for the wife to analyse the impact of those offers using the balance sheet adopted at the final hearing.” The table records:
Date of Offer Party Making Offer Summary of Terms of Offer Proportion of Net Asset Pool to be Retained by Each Party on Balance Sheet Adopted at Final Hearing 21 November 2023 Agreement reached at mediation Wife retain property at R Street, Suburb S, her share portfolio, her bank accounts, half of total superannuation and cash payment from Husband of $3,400,000 Wife to retain 36%
Husband to retain 64%
27 November 2023 Husband Same as mediation agreement of 21 November 2023, except cash payment from Husband of $2,000,000 Wife to retain 30%
Husband to retain 70%
29 November 2023 Wife Wife’s offer reinstated mediation agreement of 21 November 2023 Wife to retain 36%
Husband to retain 64%
2 February 2024 Wife Wife’s offer reinstated mediation agreement of 21 November 2023 Wife to retain 36%
Husband to retain 64%
31 May 2024 Husband Same as mediation agreement of 21 November 2023, except cash payment from Husband of $2,500,000 Wife to retain 32%
Husband to retain 68%
26 June 2024 Husband Husband’s offer of 31 May 2024 reinstated Wife to retain 32%
Husband to retain 68%
16 July 2024 Husband Husband’s offer of 31 May 2024 reinstated again Wife to retain 32%
Husband to retain 68%
18 July 2024 Wife Same as mediation agreement of 21 November 2023, except cash payment from husband of $4,400,000 Wife to retain 40%
Husband to retain 60%
12 August 2024 Wife Extending Wife’s offer of 18 July 2024 Wife to retain 40%
Husband to retain 60%
26 August 2024 Husband Offer made orally at final hearing of same terms as mediation agreement of 21 November 2023, except cash payment to Wife of $3,000,000 Wife to retain 34%
Husband to retain 66%
26 August 2024 Wife Offer made orally at final hearing of same terms as mediation agreement of 21 November 2023, except cash payment to Wife of $5,500,000 Wife to retain 44%
Husband to retain 56%
28 August 2024 Husband Offer made orally at final hearing of same terms as mediation agreement of 21 November 2023, except cash payment to Wife of $3,700,000 Wife to retain 37%
Husband to retain 63%
28 August 2024 Wife Offer made orally at final hearing of same terms as mediation agreement of 21 November 2023, except cash payment to Wife of $4,900,000 Wife to retain 42%
Husband to retain 58%
28 August 2024 Husband Offer made orally at final hearing of same terms as mediation agreement of 21 November 2023, except cash payment to Wife of $4,000,000 Wife to retain 38%
Husband to retain 62%
The wife submitted that from 21 November 2023 until at least 2 February 2024, the husband had the opportunity to compromise the litigation on terms that were superior to him from that determined on judgment. She said that in percentage terms, and on the husband’s own balance sheet contended for at the mediation, he would have received a far greater percentage of the pool of the property of the parties than he did pursuant to the defended determination.
In developing from his earlier submission as to inadvertent analysis as to the evaluation of offers using the balance sheet at final hearing, the husband submitted that it was what was known to the parties at the time of each offer that must be considered in the evaluation of each offer, and that it is apparent from both parties’ evidence at trial that there were a series of unknown values which were not resolved.
Significant dispute existed throughout the conduct of the litigation as to the specie and value of the property of the parties, including:
(a)As to the value of the husband’s interests in F Pty Ltd, a corporation that operated a trading enterprise by way of a retail franchise and held passive real property interests. The husband disputed some of the integer’s grounding each of the opinions of the single expert appointed pursuant to ch 7 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) as to the value of his interests in the corporation, including as to the value of the goodwill of the enterprise (Antonescu & Antonescu [2024] FedCFamC1F 468). The parties compromised that value at trial.
(b)As to the value of real property in Town D held by the husband with his brother. The husband sought to adduce evidence from an expert other than a single expert of as to this value. The parties compromised this valuation dispute as recorded in an order made on 11 July 2024.
(c)As to the value of capital gains taxation imposts in the event of the sale of real property and the taxation payable on accessing the sale proceeds from corporations. The husband sought to adduce evidence from an expert other than a single expert on these subject matters. The wife later agreed with the value of these actual or contingent liabilities as opined by the husband’s expert.
(d)As to the extent and value of the husband’s interests in three real properties acquired post-separation with his new partner, Ms KK. These were determined in the judgment. The primary reasons record challenges encountered by the wife during the litigation as to the facts and circumstances of the husband’s disclosures grounding his 50 per cent interest in the two real properties (at [169] and [177]). A finding was made that the husband had an interest of greater than 50 per cent, and less than 100 per cent, in a property at Suburb CC (at [154]), he contending he had a 50 per cent interest in it. The finding identified above at [14] is relevant in part to his interest in the Suburb CC property.
The husband identified that at trial there were nine disputes as to the value of items of property which were resolved by the reasons for judgment, and that seven of those nine balance sheet items were resolved in his favour. He appropriately conceded that the issue “is obviously more complex than simply tallying wins versus losses, if for no other reason than the wife was successful as to the largest issue - the CGT”. The husband forcefully submitted that “as between the parties there were significant and real issues to be tried.”
The husband further identified that at trial the wife sought a contribution finding of equality. He sought a contribution finding of 70 per cent. The determined contribution finding was as to 60 per cent in favour of the husband.
The husband at the costs hearing correctly identified that aspects of the wife’s conduct in the litigation may have been unreasonable, cast against she not achieving the contributions finding she asserted (implicitly, such finding not being reasonably available on the most favourable consideration of her case) and on the determination of disputed balance sheet items. He further identified that the wife had not contributed to the costs of the ch 7 single forensic accounting expert.
The relevance and importance of offers in financial proceedings is self-evident. The Full Court has made it clear that a party cannot reject or ignore a reasonable offer seriously made except at his or her own peril as to costs (see Murray & Murray [1990] FLC 92-173). It has further identified the capacity of “parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge to the parties at the time of the offer is made to give it proper consideration, is something to which very significant weight indeed ought normally to be given” (Browne & Green [2002] FLC 93-115 at [57]).
The parties entered proposed consent orders at the conclusion of a lawyer-assisted mediation on 21 November 2023. That executed document provided for the agreed specie of property to be adjusted to the wife and a cash adjusting sum to be paid to her of $3.4 million. On withdrawing from the written agreement six days later, the husband proposed a reduced lump sum payment to the wife of $2 million. The husband submitted that by the time he “had reconsidered his position, he was clearly (and with the benefit of hindsight, correctly) of the view that to pay out the wife, he would need to sell a number of properties and would incur capital gains tax.” The gravamen of the husband’s submissions turned to the “reasonableness” of an offer and that any failure to accept is in part to be assessed by reference to a settled balance sheet and an objective assessment of the state of knowledge of the offeree at the time the offer was made (Pennisi & Pennisi (1997) FLC 92-774). The wife restated her agreement to the terms achieved at mediation again on 2 February 2024.
The wife submitted, and I accept, that “[i]t could not be said the husband had inadequate information to settle the case”, and that “the husband was found by the Court to have controlled the patrimony of the parties since separation”. Offers to compromise must be seen and considered in the context of this case and the husband’s knowledge of he and the wife’s financial circumstances.
At the costs hearing the wife submitted, and I accept, that irrespective of disputes as to values being in issue until trial, in the end, the compromise entered by the parties in writing at mediation, whether measured by way of a percentage of the property the husband then identified, or by way of the value of the cash adjusting payment he was to make, was materially less than what he achieved at trial.
The offer made by the wife on 18 July 2024, if accepted by the husband, would also have been superior for him to that determined at trial.
The husband did not acknowledge the fact or terms of the oral offers made on 26 and 28 August 2024 identified by the wife in her evidence. They were made during the trial, being later recorded in letters from her solicitors. There is no evidence of any response to the letters.
The husband’s submissions do not engage with the fact that if he did not withdraw from the agreement struck at mediation, he had the opportunity to compromise the case on far superior terms to those he achieved at trial. The Full Court recently said in Gilmour & Hofte (No 2) [2024] FedCFamC1A 9, being apposite to the circumstances in this case:
68When considering other matters relevant to the costs discretion (s 117(2A)(g) of the Act), regard should be had to s 67 and s 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) which require parties to conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose. The overarching purpose is set out in s 67 of the FCFCOA Act and includes facilitating “the just resolution of disputes ... as ...inexpensively ... as possible”, and includes the objective of “the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute”. These principles are particularly poignant in property settlement cases…
The husband in withdrawing from the agreement entered at mediation and by way of his disclosure failures, failed in his duty to act consistently with the overarching purpose of the Federal Circuit and Family Court of Australia Act 2021 (Cth). This is a relevant factor for consideration.
A consideration of all the factors identified establishes justifying circumstances to warrant an order for costs being made against the husband in the wife’s favour from 22 November 2023, being the day after the compromise in writing entered at the mediation.
The basis of costs
The wife’s evidence was that $618,943 would “cover the whole of the costs incurred by the wife from the commencement of the proceedings”, indemnifying her for all costs incurred in the litigation. She modified this sum sought by way of indemnity to $540,000.
The indemnity costs of the husband are $490,459. He appropriately conceded “it would not be unreasonable to compensate the wife for costs unnecessarily expended because of the husband’s nondisclosure and conduct of aspects of the litigation.”. The husband submitted that an order for he to pay the wife $125,000, being approximately 20 per cent of the wife’s costs of the substantive proceedings, would “be neither punitive to the husband nor represent a windfall to the wife”.
In an appropriate case the court has a discretion to order costs on an indemnity basis. The discretion to make such an order is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
The Full Court has often adopted the well-known passage of Sheppard J in Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 in that “there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice” (at [257]).
In other cases, even where there have been disclosure failures such that all of the property of the parties cannot be identified and valued, no more than party and party costs have been awarded (Penfold v Penfold (1980) FLC 90-800; Oriolo v Oriolo (1985) FLC 91-653)
The wife adduced into evidence the costs agreements entered with her solicitors and counsel, together with the itemised bills of costs received from her solicitors. I have broadly considered the amounts claimed by the wife by reference to those documents adduced and the basis for their calculation, compared to what would be the broadly applied scale for the items as prescribed in the Rules. Both the wife and the husband agreed that the quantum of any order for costs ought to be fixed to bring this subject-matter to finality (r 12.17(a)), accepting during the costs hearing that a consideration of the existing evidence enables an approach to the fixing of costs that is logical, fair, and reasonable.
During the costs hearing the wife said that about 10 per cent of her costs were incurred before the mediation. She submitted, absent contest, that an evaluation and analysis of her affidavit evidence, including the invoices attached to it, broadly establishes that from the time of the mediation her solicitors’ fees were in the range of $322,000, her barrister’s fees were $205,975 and her other disbursements were $24,475, achieving a total of $552,450. That said, her claim for indemnity costs of the substantive proceeding was fixed in the sum of $540,000.
The circumstances in this matter are distinct from an imprudent refusal of a well-cast offer of compromise. Here, the parties achieved a legally facilitated compromise by way of an agreement reduced to writing at the conclusion of the mediation. Costs from that time are compensatory, to ameliorate the expense of the wife created by the conduct of the proceedings after the husband reneged on the mediated agreement. From that time, the husband, was informed by way of his legal advisors. He had knowledge of the patrimony of the relationship. He was able to effectively assess the strength of his position in the litigation. This conduct was compounded by his false statements as to his relevant financial circumstances and his false undertakings as to disclosure. Each generated unnecessary costs by the wife. The consideration of the aggregate of these matters establishes the exceptional and special circumstances of this case to justify the departure from the normal approach as to the basis of the calculation of costs to justify an order for indemnity costs in favour of the wife from the day after the mediation, subject to a caveat for full indemnification.
As identified earlier in these reasons, several issues were unsuccessfully agitated by the wife during the litigation after the mediation. The costs incurred, by both parties, engaging in these issues were unnecessary. It would not be just to require the husband to meet those costs incurred in his own case on those subject matters, or to compensate the wife for the cost she incurred in prosecuting them. The words in s 117(2) of the Act, “such order as to costs… as the court considers just”, permits the fashioning of an order that is apt to the circumstances of the particular case (Sfakianakis & Sfakianakis (2019) 59 Fam LR 419).
Adopting a broad-brush approach, upon consideration of the subject matters unsuccessfully agitated by the wife and the content of itemised costs material exhibited to her affidavit, the value of the indemnity costs of the wife will be reduced by 20 per cent from $540,000, being $108,000, equating to a value of $432,000. Such order will be made.
The costs of the costs application
In the event the wife’s costs application was successful, she sought for the husband to pay her costs of that costs application fixed in the sum of $18,500. The husband in that circumstance did not resist such an order and did not take issue with the reasonableness of the quantum sought. Such order will be made.
Incorporating that value of $18,500 with the discounted indemnity costs value of $432,000, aggregates to a payment by the husband of $450,500.
Time to pay
The wife sought that the costs ordered be paid within 90 days. The husband did not contend that this period was unreasonable. The husband’s appeal from the primary orders is listed for hearing before the Full Court on 5 February 2025. The 90-day period to pay will be achieved well after the appeal is heard. The costs ordered will be paid within 90 days.
For all of the reasons as outlined above I make the orders as set out herein.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 28 November 2024
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