Arrighi & Kirch (No 2)
[2025] FedCFamC1F 334
•19 May 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Arrighi & Kirch (No 2) [2025] FedCFamC1F 334
File number: SYC 138 of 2020 Judgment of: KARI J Date of judgment: 19 May 2025 Catchwords: FAMILY LAW – COSTS – Where both parties seek costs – Where final orders for property settlement were made –Where the de facto wife maintained an entirely optimistic position throughout the proceedings and trial – Where the de facto wife only made one written offer early in the proceedings – Where the de facto wife changed her position during closing submissions on the final day of trial – Where the de facto wife ought have given consideration to the offer of settlement made by the de facto husband after the first part of the final hearing – Where costs of concluding the trial could have been avoided – Costs order made fixed in the sum of $30,000 payable by the de facto wife to the de facto husband. Legislation: Evidence Act 1995 (Cth) s 131
Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Sch 3, r 12.13 and r 12.17
Cases cited: Arrighi & Kirch [2025] FedCFamC1F 145
Cross & Beaumont (2009) 39 Fam LR 389
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123
I & I (No 2) (1995) FLC 92-625
Lenova & Lenova (Costs) (2011) FLC 93-467
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Metwally v University of Wollongong (1985) 158 CLR 447
Penfold v Penfold (1980) 144 CLR 311
Robinson & Higginbotham (1991) FLC 92-209
Division: Division 1 First Instance Number of paragraphs: 61 Date of hearing: 14 May 2025 Place: Adelaide via Webex Solicitor for the Applicant: Mr Anderson of Biddulph & Salenger Counsel for the Respondent: Mr Lonergan Solicitor for the Respondent: Zanier Legal Services ORDERS
SYC 138 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ARRIGHI
Applicant
AND: MS KIRCH
Respondent
ORDER MADE BY:
KARI J
DATE OF ORDER:
19 MAY 2025
THE COURT ORDERS THAT:
1.The respondent do pay the applicant the fixed sum of $30,000 by way of costs.
2.That in satisfaction of Order 1 herein, the monies presently held in the respondent’s solicitors’ trust account pursuant to Order 1 made 14 May 2025 be disbursed as follows:
(a)The sum of $30,000 to the applicant; and
(b)The balance remaining to the respondent.
3.The parties’ competing applications for costs do otherwise stand dismissed.
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 the pseudonym Arrighi & Kirch has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These proceedings relate to competing applications for costs made by parties to financial proceedings arising from the breakdown of their de facto relationship, and following orders for property settlement between them made by the Court on 17 March 2025 (“the final orders”) following a final hearing in the proceedings (Arrighi & Kirch [2025] FedCFamC1F 145).
The applicant shall be referred to in these reasons as the de facto husband, and the respondent shall be referred to in these reasons as the de facto wife.
For the reasons that follow, an order for costs in the amount of $30,000 payable by the de facto wife to the de facto husband shall be made.
BACKGROUND
The final orders made in these proceedings on 17 March 2025 effected a 52/48 percent division of property between the parties in favour of the de facto husband.
In summary the orders provided for:
(a)The de facto husband to retain the former matrimonial home;
(b)The de facto husband to make a payment to the de facto wife in the amount of $745,069;
(c)Superannuation splitting orders providing for the sum of $217,649 as a base amount to be split to the de facto wife; and
(d)The parties to each otherwise retain those assets and liabilities in their sole possession, name and/or control.
THE COMPETING COSTS APPLICATIONS
Following the delivery of reasons, and in accordance with r 12.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) the de facto husband made an application for costs within 28 days, the same made by filing an Application in a Proceeding on 11 April 2025, which was sealed on 2 May 2025.
By that application, the de facto husband sought the following orders:
1.That the Respondent pay the Applicant’s costs fixed in the sum of $100,000 (one hundred thousand dollars).
2.In the alternative to a fixed sum for costs and if Order 1 above is not made, that the Respondent pay the applicant’s costs referrable to the portion of these proceedings that dealt with interim and final property adjustment (including superannuation splitting) and interim child support departure:
a. As assessed on a party and party basis; or
b. As assessed in accordance with Schedule 3 of the Family Law Rules.
3.With respect to Order 1 of the Final Orders:
a. That the Applicant pay the Respondent $645,069 (six hundred and forty five thousand and sixty nine dollars) on the Due Date specified in the Final Orders; and
b. The Applicant’s obligation to pay the Respondent the balance of the Principal Sum is stayed pending the determination of this costs application.
4.That the Respondent pay the Applicant’s costs of this costs application.
(As per the original)
Orders were made by the Court in chambers on 2 May 2025 listing the application for costs to a hearing on 14 May 2025, together with orders for the filing of documents. Relevantly, the de facto wife was ordered to file a Response and supporting affidavit by 9 May 2025.
In compliance with those orders, on 9 May 2025 the de facto wife filed a Response to the said application, and sought the following orders:
NOTATION
The Respondent objects to the application to stay the operation of the Final Orders on 17 March 2025 (“The Final Orders”) and seeks that the Applicant be held to his obligation to pay the Respondent the Amount Of $745,069 to the Respondent pursuant to Order 1 of the Orders.
Should the Applicant fail to comply with Order 1 of the Final Orders, the Respondent intends to enforce Order 2 of the Final Orders immediately.
ORDERS
1. That this Application be struck out.
That the Applicant pay the costs of this costs application either on a party and party basis or as assessed in accordance with Schedule 3 of the Family Law Rules.
That the Applicant Father pay the Respondent Mother’s costs of the proceeding incurred from 6 Paril 2020 to the conclusion of the proceedings on an indemnity basis.
(As per the original)
During the course of the hearing, the de facto husband varied the quantum of costs he sought, such that any order for costs be as agreed or as assessed pursuant to the scale set out in Schedule 3 of the Rules.
The de facto wife similarly during the hearing identified that the quantum of costs sought by her was to be as assessed following a taxation pursuant to the scale.
In addition, and during the hearing, the de facto husband, at the suggestion of the Court, abandoned his application for a stay of Order 1 made 17 March 2025, to hold back $100,000 of the settlement sum to be paid to the de facto wife. This concession was made, on the basis of an order made by consent at the hearing on 14 May 2025 in the following terms:
1.Upon the respondent’s solicitors receiving payment of the principal sum provided for in Order 1 made on 17 March 2025 (minus any monies paid to the respondent’s former solicitors pursuant to any irrevocable authority), the sum of $100,000.00 shall be quarantined in the respondent’s solicitor’s trust account pending determination of the parties’ competing costs application.
THE LEGAL PRINCIPLES
The starting point for considering any costs application is s 117 of the Family Law Act 1975 (Cth) (“the Act”). In that regard:
(a)Each party to proceedings is to bear their own costs unless there are circumstances which, in the opinion of the Court, justify the making of a costs order (s 117) (see Penfold v Penfold (1980) 144 CLR 311 at 315-316).
(b)In considering whether there are circumstances justifying the making of a cost order, the Court must have regard to the factors set out in s 117(2A).
(c)When considering justifying circumstances, the Court has broad discretion as to the weight to be given to those factors set out in s 117(2A) (see, for example: I & I (No 2) (1995) FLC 92-625 and Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93‑664 at [24]).
(d)There is nothing to prevent one factor being the sole foundation for an order for costs (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at [41]).
The Rules provide further assistance when considering the making of an order for costs. In particular, r 12.17(1) provides the method for the calculation of costs:
12.17 Method of calculation of costs
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
In addition, r 12.17(3) sets out the matters that may be considered in the calculation of costs:
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre-action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
DISCUSSION
Before turning to consider the parties’ competing applications for costs, the Court notes that, through his solicitor, the de facto husband objected to the de facto wife’s application for costs being heard in circumstances where he says it was filled out of time and not in accordance with r 12.13.
It is correct that the de facto wife did not file her own interlocutory application seeking costs within 28 days of the making of the final order. She, however, complied with the orders made on 2 May 2025 and by her Response sought that the de facto husband’s application for costs be dismissed and that an order for costs be made in her favour. The Court has the power to dispense with the requirements of the Rules (pursuant to r 1.31), and I consider it appropriate to exercise that discretion for present purposes.
Throughout the balance of these reasons I shall consider the competing costs applications of the parties collectively.
I shall deal with each of the relevant considerations prescribed by s 117(2A).
The financial circumstances of each of the parties to the proceedings
I have had regard to the reasons for judgment delivered on 17 March 2025 so far as the parties’ financial circumstances are concerned, together with regard to the effect of the final orders.
Neither of the parties filed a financial statement in support of their respective application for costs, nor were detailed submissions made during the hearing regarding the same.
Both parties directed the Court to the costs notices that they each filed on 13 May 2025 for the Court to have an understanding of the costs incurred by each of them. Such regard has been had.
In essence the position of the de facto wife is that despite the terms of the final order and the lump sum to be paid to her, in circumstances where she has the primary care of the two children of the relationship and due to her assertions as to child support amounts she says the de facto husband should have paid to her, she remains aggrieved. However, the question of child support, together with the general financial support paid by the de facto husband to the de facto wife in the post separation period was the subject of comment throughout the reasons for judgment (including at [31]-[33], [66]-[70], [84] and [110]).
Similarly, the de facto husband asserts that his financial circumstances are such that he can ill afford the legal fees that he has expended in these proceedings, together with the legal fees he expended defending criminal charges (for which he was ultimately acquitted).
Whatever the case may be regarding the parties’ respective financial circumstances however, impecuniosity is not a bar to the making of an order for costs (see, for example: Cross & Beaumont (2009) 39 Fam LR 389 and Lenova & Lenova (Costs) (2011) FLC 93-467).
Whether any party was in receipt of legal aid
Neither party is in receipt of a grant of legal aid.
The conduct of the parties in relation to the proceedings
Both parties assert that the conduct of the other in these proceedings is a relevant factor.
On the part of the de facto husband, his contention in this regard is grounded in his position, not unreasonably put, that the de facto wife pursued an entirely unrealistic application for property adjustment in the proceedings.
His submission in this regard has some merit, particularly in light of the comments found in the reasons for judgment (commencing at [3]):
3The parties are otherwise in dispute as to the manner in which their property should be divided; with the de facto husband seeking a 55 per cent division in his favour and the de facto wife seeking a 55 per cent division in her favour.
4However, this was not always the adjustment that had been sought by the de facto wife. Rather, at the commencement of the trial and indeed by her Case Outline filed 1 June 2024 and her Further Amended Response filed 2 December 2023 the de facto wife sought an 80 per cent adjustment in her favour. It was not until closing submissions that counsel for the de facto wife revealed a dramatically changed position; proposing that the adjustment between the parties be a more modest 55 per cent adjustment in favour of the de facto wife.
5Unsurprisingly, this late revelation of a changed position by the de facto wife caused some ire and comment from the de facto husband’s counsel.
6I comment that, in light of the findings that I have made throughout these reasons (many in part from concessions made by the de facto wife during her oral evidence), the initial adjustment sought by the de facto wife was entirely unrealistic and optimistic and quite possibly led to unnecessary litigation between these parties.
7Whilst it is difficult to be precise, because the parties engaged in litigation over the parenting arrangements for the children, their costs in these proceedings would have likely been impacted by the misconceived financial relief pursued by the de facto wife until the eleventh hour; which with reference to the most recently filed Costs Notices of the parties, the de facto wife’s legal costs are approximately $152,288 ($132,288 of which remained unpaid) and the de facto husband’s legal costs are $212,903 (of which only $120,125 appears to have been paid).
In addition, the de facto husband complains about the conduct of the de facto wife earlier in the financial proceedings particularly in relation to the question of child support given the orders, which was also the subject of comment in the reasons (particularly at [66]).
The de facto wife equally complains about the conduct of the de facto husband in the proceedings. In particular, she draws the Court’s attention to his breach of injunctions made 4 February 2020 restraining him from borrowing, mortgaging, refinancing or extending any further debt or encumbrance on the former matrimonial home. This topic was also the subject of comment in the reasons (at [69]).
In addition, the de facto wife complains, about the failure of the de facto husband to comply with his obligations as to discovery, with a significant amount of discovery being produced by him on the eve of the final hearing.
The de facto husband similarly complains about the lack of disclosure by the de facto wife as to her financial circumstances, and in particularly that the most recent discovery she made in the lead up to the final hearing that commenced on 3 June 2024 was in April 2024.
Ultimately however, both parties appear to have cause to complain about the conduct of the other of them in these proceedings, whilst equally needing to look at their own poor conduct and take some responsibility for the impact that had on the litigation.
Whether any party has been wholly unsuccessful
In Robinson & Higginbotham (1991) FLC 92-209 at 78,417, Nygh J stated that the concept of being wholly unsuccessful is “a situation in which the proceedings as a whole have been unsuccessful. In other words, in which an application which was without merit has been dismissed”.
I acknowledge that both parties pursued property adjustment orders, and that the Court ultimately considered it just and equitable to make an order adjusting the parties’ legal and equitable interests in their property.
In light of the orders made, it cannot be said that either party was wholly unsuccessful in these proceedings.
Offers in writing
The affidavits filed in support of the parties’ respective costs applications annex various offers exchanged between the parties. In addition to those offers, the Court received as exhibits two further written offers made by the de facto husband. Regard has been had to all of the written offers put before the Court.
The de facto husband also deposed to negotiations which took place at a mediation which took place on January 2023 and a Conciliation Conference which took place in April 2024.
The de facto wife objected to the Court receiving this evidence, because it was not an offer in writing within the ambit of relevant factors prescribed by s 117(2A)(f) of the Act, and nor should the Court have regard to evidence of the settlement negotiations, with reference to s 131 of the Evidence Act 1995 (Cth) (“the Evidence Act”).
In that regard, the parties’ attention is also drawn to Part 6.27 of the Central Practice Direction: Family Law Case Management (“the CPD”), which confirms the confidentiality of negotiations during any dispute resolution event, subject to the specific exceptions provided for in s 131 of the Evidence Act. Relevantly, s 131(2)(h) of the Evidence Act carves out the admissibility of such communications when “determining liability for costs”. I therefore shall have regard to the offers exchanged during the mediation and Conciliation Conference as deposed by the de facto husband, which assertions went unanswered by the de facto wife. These offers are relevant pursuant to s 117(2A)(g) of the Act.
Of some import from the de facto husband’s perspective is that the de facto wife only made one written offer to settle these proceedings, and, as earlier commented upon, she thereafter maintained an entirely unrealistic position with respect to any settlement of the proceedings.
The only offer made by the de facto wife was one made by her early in the proceedings on 6 April 2020, and remained open for acceptance until 17 April 2020. That offer (whilst predicated on a different assessment of the balance sheet to that which was ultimately found by the Court, not least of which because of the value ascribed to the former matrimonial home), provided for the de facto husband to make a payment to the de facto wife in the amount of $774,541, on the basis that the former matrimonial home be sold.
So far as that offer is concerned, it is observed:
(a)That whilst the quantum proposed by the wife was only some $29,472 higher than the payment ultimately received by her, it was predicated on the sale of the former matrimonial home, an order which was ultimately not made, other than in the event that the de facto husband was unable to raise payment of the settlement sum.
(b)No superannuation splitting order was proposed in favour of the wife, whereas an order was made providing for the de facto wife to receive monies by way of a superannuation split.
(c)Presumably the offer was otherwise predicated on the parties each retaining those assets in their sole name, possession or control, albeit not expressed in those terms.
(d)The offer contends that it affected a 59% division in favour of the de facto wife; a percentage division which was not ultimately that ordered by the Court.
The two further offers made by the de facto wife as asserted by the de facto husband (which I accept were made by her for present purposes), were:
(a)An offer made at mediation in January 2023 which would have seen the de facto husband making a payment to the de facto wife in the amount of $1,100,000 together with a superannuation split to her in the amount of $250,000; and
(b)An offer made at the Conciliation Conference in April 2024 (just prior to the trial) which would have seen the de facto husband making a payment to the de facto wife in the amount of $1,200,000 together with a superannuation split to her in the amount of $305,000.
I observe that both of these oral offers made by the wife were optimistic in terms of their quantum and ultimately, given the balance sheet determined by the court, as against the outcome determined by the Court.
From the de facto husband’s perspective, he made numerous offers of compromise in the proceedings, which slowly increased over time. The best offer put by him was that made in writing on 4 October 2024 when the final hearing was part heard. By that offer, the de facto husband proposed that he make a payment to the de facto wife in the amount of $700,000, together with a superannuation split in the amount of $232,000.
So far as this offer is concerned, it is observed that:
(a)The de facto husband contended that this offer amounted to a 47.5% division in favour of the de facto wife.
(b)The cash amount to be paid to the de facto wife was $45,069 less than the amount ultimately ordered to be paid to her.
(c)The base amount for the proposed superannuation split was some $14,351 more than that ultimately ordered be split to the de facto wife.
When regard is had to all of the parties’ offers, it appears that:
(a)The de facto husband made multiple attempts to engage the de facto wife in settlement negotiations by making various settlement offers.
(b)Aside from her first written offer, the de facto wife did not appear willing to put any further written offer of settlement (a period in excess of four years), and as a result as and from 17 April 2020, her only position (outside the unrealistic oral offers made by her during the mediation and the conciliation conference) was the entirely optimistic one set out in her Further Amended Response filed 2 December 2023 in which she sought an 80 per cent adjustment in her favour, which unsurprisingly found no favour with the de facto husband.
(c)Implicit in the changed position of the de facto wife during her counsel’s closing submissions is that the de facto wife acknowledged that the adjustment she had pursued until the eleventh hour was optimistic and unrealistic. As a result, it is apparent that the de facto wife ought have engaged in meaningful negotiations much earlier in the proceedings and in addition, she ought have given consideration to the offer of settlement made by the de facto husband after the first part of the final hearing, as both parties would have avoided the costs of trial entirely and/or the costs of concluding the trial, together with the further costs of these costs applications.
The CPD, is again relevant. In particular:
(a)The purposes of the CPD make clear, amongst other things, that family law proceedings are to be litigated in a manner which reduces unnecessary cost and delay, ensures the safety of families and children and in a manner which achieves the overarching purpose of the Federal Circuit and Family Court of Australia Act (Cth), being “to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible” (Part 1.1). Relevantly for present purposes Part 1.4 provides that in everything a party or a practitioner does in proceedings they are expected to:
approach proceedings in a manner directed towards identifying the issues in dispute and ascertaining the most efficient, including cost efficient, method of resolution or determination. This includes giving proper consideration to identifying the issues in dispute, complying with their obligation to provide full and frank disclosure in a timely manner (see Part 6.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (the Family Law Rules)), engaging in productive and resolution-focused communication with other parties, making appropriate admissions and pressing only issues of genuine significance. Ambit claims should be avoided and aggressive and unnecessarily adversarial conduct will not be tolerated….
(b)Part 6.28 provides that “Parties will be expected to engage in good faith negotiations and make a genuine effort to resolve all issues in dispute at a Dispute Resolution event”.
(c)The Core Principles set out in Schedule A of the CPD relevantly sets out at Core Principle 5, aptly under the heading “Importance of Dispute Resolution”, the following:
b) After the commencement of an action, parties are expected to:
i)be proactive in identifying the appropriate time, and the appropriate way, in which they can participate in Dispute Resolution, either by agreement or by court order; and
ii) be prepared to make and consider reasonable offers of settlement at any stage of the proceedings. Failure to do so may have costs consequences.
When consideration is had to all of these matters, the CPD makes it clear that parties are expected to engage in good faith negotiations at all stages of the proceedings.
When regard is had to the manner in which the de facto wife approached settlement negotiations, it could not be said that as and from April 2020, she made any genuine efforts to resolve the litigation. This is a factor that weighs heavily.
Any other relevant matter
Both parties raise irrelevant matters which are not ones that the Court shall have regard to with respect to the present costs applications.
On the part of the de facto husband, he complains of the conduct of the de facto wife in the parenting proceedings. No regard has been had to these matters.
On the part of the de facto wife, she complains about the conduct of her legal representation and in particular that they did not follow her instructions in the proceedings. Whilst it is not known, but even assuming that the de facto wife has cause for legitimate complaint in that regard, she is however bound by the manner in which she conducted her case (Metwally v University of Wollongong (1985) 158 CLR 447). Importantly, the de facto husband should not be burdened by an order for costs against him grounded in those circumstances. Whatever the merit of such complaints by the de facto wife may be, if she wishes, she has recourse through the complaint mechanisms of the relevant legal practitioners regulatory body. Accordingly, no regard has been given to these complaints.
CONCLUSION
In light of all of these reasons:
(a)I do not consider that circumstances warrant the making of a costs order in favour of the de facto wife, and her application shall be dismissed.
(b)I do, however, consider that on balance the circumstances favour the making of a costs order in favour of the de facto husband.
However, the quantum of costs sought by the de facto husband is somewhat nebulous. This is because no itemised schedule of costs has been filed. In addition, during the hearing, his solicitor identified that the quantum of $100,000 initially sought was likely to have been calculated on an indemnity basis taking a broad brush assessment of the division of work between the parenting and the financial proceedings.
I am cognisant that the de facto husband asserted that an order for costs in his favour should be quantified by an assessment of costs.
I do not however agree, and nor do I consider that the parties’ financial circumstances warrant incurring further costs arising from the assessment process.
For all of these reasons, and doing the best that I can, I have determined that the wife ought pay costs fixed in the amount of $30,000.
Orders shall be made providing for the de facto wife’s solicitors to release the monies held in their trust account on the basis that the de facto wife receive $70,000 and the de facto husband receive $30,000 on account of his costs.
I certify that the preceding sixty-one (61) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 19 May 2025
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