Bidwell & Bidwell (No 2)
[2022] FedCFamC1F 953
Federal Circuit and Family Court of Australia
(DIVISION 1)
Bidwell & Bidwell (No 2) [2022] FedCFamC1F 953
File number(s): SYC 4814 of 2020 Judgment of: MCNAB J Date of judgment: 6 December 2022 Catchwords: FAMILY LAW – COSTS – Application for Indemnity costs - Where the applicant made a settlement offer before the first trial proceeded — Assessment of legal principles applicable to Calderbank offers – Impermissible use of “without prejudice” communication between counsel Legislation: Evidence Act 1995 (Cth) s131 (1)
Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17 (1)(b)
Legal Profession Uniform Conduct (Barristers) Rules2015 (NSW) r 122
Good Conduct Guide: Professional Standards for Australian Barristers
Cases cited: Bidwell & Bidwell [2022] FedCFamC1A 154
Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; Combined Projects (Arncliffe) Pty Ltd (No 3) [2021] NSWSC 1537
Calderbank v Calderbank [1975] 3 All ER 333
Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FLR 225
Danks & McCabe (2017) FLC 93-767
Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298
McCarthy v Camil Holdings Pty Ltd [2016] VSCA 235
MCG Group Pty Ltd v Ftrus Pty Ltd (Formerly Fortrus Pty Ltd) [2017] FCA 359.
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Munday v Bowman (1997) FLC 92-784,
Walker v Wilsher (1889) 23 QBD 335 at [337]
Warbrick & Warbrick (No. 2) [2021] FamCAFC 101
Division: Division 1 First Instance Number of paragraphs: 25 Date of hearing: On the papers Place: Melbourne Solicitor for the Applicant: Buckley Lawyers Pty Ltd Solicitor for the Respondent: David H Cohen & Co ORDERS
SYC 4814 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BIDWELL
Applicant
AND: MR BIDWELL
Respondent
order made by:
MCNAB J
DATE OF ORDER:
6 DECEMBER 2022
THE COURT ORDERS THAT:
1.Within twenty eight (28) days of the date of this order, the respondent pay the applicant a lump sum of costs fixed at THIRTY THOUSAND DOLLARS ($30,000).
2.That the wife’s application that the husband pay costs on an indemnity basis is 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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Bidwell & Bidwell has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J:
These reasons relate to an application for costs by the applicant wife, Ms Bidwell, following final orders made on 11 May 2022. The wife seeks her costs incurred from 16 March 2021 to the conclusion of the matter, on an indemnity basis. This application was dealt with on the papers, by submissions filed by both parties, with an affidavit in support.
jUDGMENT OF 11 MAY 2022
This matter was listed for final hearing on 18 October 2021, and returned part heard on 25 November 2021. I handed down judgement in this matter on 11 May 2022 which had the effect of distributing the matrimonial asset pool 55/45 in favour of the wife, with the wife to receive a total of $797,869 by way of a cash payment from the husband of $505,364 and retaining her superannuation of $292,505. In the event the husband could not pay this sum within 30 days, I made an order for the sale of the matrimonial property. These orders were made in circumstances where both parties sought 70% of the asset pool in their favour. On 18 October 2021, I made orders that the husband pay the applicant wife’s costs thrown away by reasons of the orders made on 18 October 2021 with the quantum of those costs reserved to trial.
application for costs
The wife seeks an order that the husband pay her costs of $45,705, being costs incurred from 16 March 2021 to date, excluding costs relating to this application. She filed submissions and an affidavit in support detailing how relevant costs were incurred.
In her submissions, she provides a brief outline of the matter, including details of Calderbank offers exchanged during settlement discussions. She submits that following a conciliation conference on 2 March 2021, the parties were ordered to exchange offers, which the wife details as follows:
(1)On 3 March 2021, the husband proposed he pay the wife $230,000 and she transfer her interest in the property into his name, in addition to a superannuation split of $87,654. That offer represented a split of assets 60/40 in favour of the husband.
(2)The wife made a counter offer on 16 March 2021 that the husband pay her $300,000 and she transfer her interest in the house to him, and agreed to the super split of $87,654. The wife also proposed the sale of the former matrimonial home in default of the payment. That offer represented a split of assets 62.5/47.5 in favour of the wife.
The matter did not resolve through these offers, and was listed for a conciliation conference on 11 October 2021. This conference proceeded, but the matter did not settle.
Each of the offers exchanged were marked “without prejudice save as to costs”.
In her submissions, the wife sets out the relevant principles relating to a cost application, stating that an award for indemnity costs may be made per s 117 (2) of the Family Law Act 1975 (Cth) (“the Act”), and Rule 12.17 (1)(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”).
She submits that the court ought to consider awarding costs on an indemnity basis on the following grounds:
(1)The Calderbank offers I have detailed above, and the Court making orders in terms more favourable than the offer made by the wife;
(2)The husband earns approximately $140,000 per annum and has the means to satisfy a costs order against him;
(3)The husband’s conduct impacted the length of the hearing, in particular she refers to the husband’s refusal to re-engage the valuer when the previous valuation of the former matrimonial home was outdated, which resulted in the wife obtaining an updated valuation, and the court eventually ordering further joint valuations;
(4)The husband “refused to concede the issue was unreasonable” in parenting proceedings where he sought an order to prevent the wife from travelling to New Zealand with her son, where there was no evidence to suggest that she would fail to return the child; and
(5)The husband made claims for add backs for $114,000 redundancy payment and $45,930 he alleged the wife drew down, without a proper basis and the lack of merit in those claims was outlined.
In relation to indemnity costs, the wife refers to numerous cases, including Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FLR 225; Munday v Bowman (1997) FLC 92-784, and Danks & McCabe (2017) FLC 93-767, Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 and MCG Group Pty Ltd v Ftrus Pty Ltd (Formerly Fortrus Pty Ltd) [2017] FCA 359.
The wife filed an affidavit of her solicitor, Mr Matthew Buckley, who annexes all relevant cost agreements, disclosures, copies of correspondence containing Calderbank offers, and copies of their invoices to date. These form the basis for the wife’s particularisation of the amount sought. The Calderbank offers are:
(1)Offer from husband dated 3 March 2021;
(2)Offer from wife dated 16 March 2021.
The husband opposes the application on the basis that:
(1)His refusal to consent to an updated valuation was not unreasonable; and
(2)In the course of proceedings, approaches were made by counsel for the husband to counsel for the wife to try to settle the proceeding, and emails were exchanged. He made an additional offer to the wife.
In relation to his first ground, he quotes sections of the transcript relating to the valuation in which it is said that a joint statement has been received that the valuer adopts the value of $900,000 as the value of the former matrimonial home, but the wife refused to accept this evidence and requested a further valuation.
In relation to the second ground, he filed an affidavit of his solicitor which gives details of email communications between counsel relating to settlement, annexing copies of this correspondence, and a copy of a wife’s Calderbank offer dated 16 March 2021.
Consideration
Without Prejudice Communications
The husband sought to rely on evidence of communications by email between counsel dated 25 March 2021. The communications were marked “without prejudice”.
Section 131(1) of the Evidence Act 1995 (Cth) provides that evidence in proceedings is not to be adduced of communications between parties in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute or of a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute. There are a number of exceptions contained in ss (2), including ss 131(2)(h), where the communication or document is relevant to deciding liability for costs.
The making of a without prejudice offer to settle litigation which is rejected cannot be used at trial as evidence as an admission, or on the question of costs (Walker v Wilsher (1889) 23 QBD 335 at 337). Where a party has made an offer to settle “without prejudice save as to costs” the court may consider the letter on the issue of costs (see Calderbank v Calderbank [1975] 3 All ER 333). I am not prepared to receive the evidence of communications which are attached to exhibit B to the affidavit of David Cohen sworn 25 November 2022. None of those emails were marked “without prejudice save as to costs”, nor was there any other indication they would be relied on.
It is concerning that the husband by his legal representatives has put these communications before the court. To do so may be a breach of r 122 of the Legal Profession Uniform Conduct (Barristers) Rules2015 (NSW). See also the Good Conduct Guide: Professional Standards for Australian Barristers at page 118:
Communications between opposing counsel or solicitors should not be disclosed to the court, whether through the course of evidence or otherwise, unless:
•A) By consent;
•B) What was discussed resulted in the creation of some contract or other legal relationship or
•C) Expressly stated prior to the discussion that the communications should not be regarded as without prejudice or privileged from use or disclosure.
(See also Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd; Combined Projects (Arncliffe) Pty Ltd (No 3) [2021] NSWSC 1537 at [57]-[60]).
There is no presumption that a rejection of an offer will lead to indemnity costs, however indemnity costs may be ordered where the rejection was unreasonable in the circumstances (Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435; [2005] VSCA 298). Factors to be taken into account include:
(1)the stage of the proceeding at which the offer was received;
(2)the time allowed to the offeree to consider the offer;
(3)the extent of the compromise offered;
(4)the offeree’s prospects of success, assessed at the date of the offer;
(5)the clarity with which the terms of the offer were expressed; and
(6)whether the offer foreshadowed an application for indemnity costs in the event of the offeree’s rejecting it.
The Calderbank letter written on behalf of the wife dated 16 March 2021 is written in clear terms and explained in a rational way why the offer was made and directed the husband and his legal representatives to the relevant legal principles and authorities supporting the wife’s opinion of why her views would prevail. Those views were reflected in the judgment which was upheld on appeal (see Bidwell & Bidwell [2022] FedCFamC1A 154).
The offer did not make plain that the wife would be seeking indemnity costs in the event that the judgment of the court reflected the offer she had made or beat the offer made by the husband.
Section 117 of the Family Law Act provides:
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
Note 1:For other provisions about the award of costs by the Federal Circuit and Family Court of Australia (Division 1), see paragraphs 69(4)(d) and (e) of the Federal Circuit and Family Court of Australia Act 2021.
Note 2:For other provisions about the award of costs by the Federal Circuit and Family Court of Australia (Division 2), see paragraphs 192(4)(d) and (e) of the Federal Circuit and Family Court of Australia Act 2021.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
I will not make an order for indemnity costs in these proceedings. The conduct of the husband in refusing to agree to the offer is not such as to justify ordering indemnity costs in circumstances where the usual course as prescribed by s 117(1) is for each party to bear their own costs. Further the Calderbank offer did not put the husband on notice that indemnity costs would be sought.
The offer put by the wife was reasonable and the court orders reflected a better result for her than what she was prepared to accept by the terms of the offer. I find that it was unreasonable for the respondent not to have accepted that offer. In making that finding I have regard to s 117 (2A)(f) of the Act. As to the balance of the considerations set out under s 117 (2A), there is no submission made that the husband is impecunious to the extent that he cannot afford to pay a costs order.
I will make orders that the respondent pay the applicant’s costs fixed in the sum of $30,000 being the amounts that I assess as the party/party costs from the date of the offer. I have reviewed the costs notes rendered by the solicitor for the applicant together with counsel’s fees. The respondent submitted that the applicant has not provided properly quantified party/party costs. I adopt the approach taken by the full court in Warbrick & Warbrick (No. 2) [2021] FamCAFC 101 at [13] where when considering an application for costs in an appeal and where party/party costs were not properly quantified, the Full Court was not prepared to let the question of the quantification of costs become in effect satellite litigation. The Full Court had regard to the nature of the appeal and to the itemised account which identified the work undertaken and then made an assessment of appropriate costs on a party/party basis. This is the approach that I take to that assessment.
I will not make a separate order in relation to the costs thrown away by reason of the conduct of the respondent which was reflected in the order of 18 October 2021 as those costs (if any) are effectively subsumed into the costs awarded as a result of the failure on the part of the husband to accept the Calderbank offer in March 2021.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 6 December 2022
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