Clare and Chua

[2020] FamCA 661

FAMILY COURT OF AUSTRALIA

CLARE & CHUA [2020] FamCA 661

FAMILY LAW – COSTS – Circumstances justifying order for costs where the applicant seeks his costs on an indemnity basis and the respondent seeks no order for costs – consideration of the relevant provisions of the Family Law Act 1975 and authorities – order made for respondent to pay the applicant’s party/party costs

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 r 19.08

In the Marriage of I & I (No 2) (1995) 22 Fam LR 557;
Wooton and Hillier [2016] FamCA 965;
Worth & Worth (No.2) [2019] FamCAFC 126;
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248

APPLICANT: Mr Clare

RESPONDENT: Mr Chua

FILE NUMBER: MLC 13274 of 2017

DATE DELIVERED: 13 August 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Williams J

HEARING DATE: Written Submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Written Submissions

SOLICITOR FOR THE APPLICANT: Mathews Family Law

COUNSEL FOR THE RESPONDENT: Written Submissions

SOLICITOR FOR THE RESPONDENT: Beswick Foulkes Family Law

Orders

1. The respondent pay the applicant’s party/party costs and disbursements of and incidental to:           

   (a)       the threshold proceeding which commenced on 18 December 2017;

   (b)       the Application in a Case filed 9 December 2019; and

   (c)       preparation of the costs submissions

   as agreed, and in default of agreement, to be taxed.

2. The payment referred to in order (1) hereof be made within 30 days of agreement as to quantum, or failing agreement within 30 days of the determination of the taxed costs.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Clare & Chua has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 13274  of 2017

Mr Clare

Applicant

And

Mr Chua

Respondent

REASONS FOR JUDGMENT

Introduction

Background

1. On 18 December 2017, the applicant commenced proceedings in the Federal Circuit Court seeking, inter alia, a declaration pursuant to s.90 RD of the Family Law Act 1975 (“the Act”), a de facto relationship existed between the parties from February 2004 until September 2016 (“the threshold issue”). He also sought orders for a property settlement (“the substantive proceedings).

2. On 12 January 2018, the respondent filed a Response seeking that the application be dismissed.

3. On 12 June 2018, Judge Curtain transferred the proceeding to the Family Court. On 3 June 2019, the trial of the threshold issue commenced and concluded on 26 July 2019. Orders were made on 26 July 2019 pursuant to s90RD of the Act declaring a de facto relationship existed between the parties from February 2004 until September 2016.

4. Paragraph 13 of the July 2019 orders provided:

   The question of the applicant’s costs of the proceedings and hearing to this date be reserved for determination at trial before Her Honour Justice Williams.

5. The trial of the substantive proceedings was listed for 15 January 2020. On that day the matter was resolved by consent and orders were made in accordance with the agreement reached between the parties.

6. Counsel for the applicant sought to pursue an application for costs, and accordingly the following procedural orders were made:

   i)         The applicant file and serve any cost submissions within 28 days.

   ii)The Respondent file and serve any response to the Applicant’s cost submissions within 28 days of receipt of the applicant’s submissions.

   iii)In the event that either party seeks to list the matter in court, any such request to the Associate to Justice Williams be made within 14 days of filing of the Respondent’s submissions in response.

7. On 12 February 2020, the applicant filed his costs submissions and on 9 March 2020, the Respondent filed his costs submissions. Regrettably neither party advised my Chambers that the submissions had been filed. I first became aware submissions had been filed on 17 June 2020.

Synopsis

1. After considering the submissions of the parties, I have determined:

   a)the respondent should pay the applicant’s party/party costs and disbursements of and incidental to the threshold proceeding, the Application in a Case filed 9 December 2019, and preparation of the costs submissions, as agreed, and in default of agreement, to be taxed;

   b)the payment referred to in the previous paragraph is to be made within 30 days of agreement as to quantum ,or if there is no agreement, within 30 days of the determination of the taxed costs.

2. The reasons for my determination follow.

Costs Application

1. The applicant seeks the following orders:

   a)within 7 days the respondent pay his costs of $134,356.78 calculated as follows:

   i)indemnity costs of $116,062.25 arising from the threshold proceedings;

   ii)indemnity costs of $10,056.08 arising from the Application in a Case filed 6 December 2019;

   iii)costs of $8,238.45 for drafting and settling the written cost submissions;

   b)alternatively, the respondent pay the applicant’s costs referable to subparagraphs i, ii, and iii, of the preceding paragraph, on a party/party basis, as agreed and failing agreement to be taxed.

2. The quantum of indemnity costs has been calculated in accordance with a costs agreement between the applicant and his lawyers, which is annexed to his costs submissions.

3. The respondent seeks the following orders:

   i)the respondent should not be liable for the applicant’s costs;

   ii)in the event the applicant is unsuccessful, the applicant pay the respondent’s costs of the costs submissions fixed at $8,000.

Legal principles

1. Section 117(1) of the Family Law Act 1975 (“the Act”), states, subject to the provisions of s.117(2), that the general rule in proceedings in this court, is that each party to proceedings, shall each bear his or her own costs.

2. Section 117(2) of the Act provides as follows:

   If, in proceedings under this act, the court is of the opinion that there are circumstances that justify it in doing so, the court may subject to subsections (2A), (4), (4A) and (5) 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.

3. Section 117(2A) of the Act provides, that in considering what order (if any) should be made for the payment of costs, the court shall have regard to the following matters:

   (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.

4. In the Marriage of  I & I (No 2) (1995) 22 Fam LR 557, the Full Court said that the relevant matters in s.117(2A):

   “…must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”

Costs orders following the making of consent orders

1. The making of costs orders following consent orders was considered by Watts J in Wooton & Hillier [2016] FamCA 965.

2. At paragraphs 28 and 29, His Honour said:

   [28] Speaking generally of civil cases in other jurisdictions McHugh J in Re Minister of Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624 states:

   In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

   In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

   (footnotes omitted)

[29] McHugh J relied in part on statements made by Hill J in Australian Securities Commission v Aust-Home Investments Ltd and Others (1993) 116 ALR 523 at 530 where having referred to previous cases Hill J set out a number of propositions which included:

(2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial: Stratford [J T Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547]. This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.

(3) In determining the question of costs it would be appropriate, however, for the court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them (SEQEB) [South East Queensland Electricity Board v Australian Telecommunication [1989] FCA 15].

1. At paragraph 30, His Honour further said:

   [30] In this case there had been a trial on the merits which had almost concluded. There is no issue of trying a hypothetical action between parties. Complex factual issues and the parties’ credit had been the subject of intense examination. The merits of the respective positions of the parties had been examined by the reading of their written evidence (after objections had been taken to that written evidence) and the hearing of in excess of five days of oral evidence. In the circumstances of this case, the court is entitled to consider making an order for costs notwithstanding that the matter ultimately resolved by way of consent orders and without any determination on the merits, as:

   30.1     The first of the wife’s two contentions was ultimately conceded by the husband; and

   30.2 In respect of the wife’s second contention, as I discuss below, the preponderance of the evidence at the time the consent orders were made, on balance, supported a successful outcome for the wife under s 90K of the Act, if the matter proceeded to a final determination.

2. His Honour ultimately made a costs orders in favour of the wife.

3. This proceeding is almost identical to the proceeding described by His Honour in the preceding paragraph. Prior to the consent orders, the trial of this matter had proceeded for four hearing days and there had been extensive, forceful and penetrating cross-examination, including issues of credit, of all witnesses for both the applicant and the respondent. The merits of the respective cases had also been examined at that stage of the proceedings. The only difference, which mitigates in the applicant’s favour, is that the respondent conceded to the one and only contention at the subject of the dispute, namely whether a de facto relationship existed between the parties.

4. In my view, there is no impediment to the consideration of an application for costs in this proceeding. There was no issue of trying a hypothetical action between parties. Furthermore, in weighing up whether the applicant acted reasonably in commencing the proceedings and the respondent acted reasonably in opposing the proceedings that is self-evident from the respondent’s eventual concession. I intend to address the relevant statutory criteria in order to decide whether an order for costs should be made.

Section 117(2A)(a) the financial circumstances of each of the parties

1. The respective income of the parties is as follows:

2. The applicant:

   a)in his affidavit filed 10 January 2020, deposes to an income of approximately $45,000 gross per annum.

3. The respondent:

   a)in his most recently filed Financial Statement of 9 August 2019, deposes to an income of $4,635 gross per week, which is equivalent to $241,020 gross per annum;

   b)in his cost submissions, refers to his income as $12,000 per month subject to interest commitments of $11,000 per month, which impact on his disposable monthly income;

   c)deposes that his employment will end in December 2020. This is disputed by the applicant, as he submits that discoverable documents produced by the respondent indicate that his implement will continue beyond that date;

   d)submits that as he is 57 years old and has worked for the same company for 23 years, given his age, future employment at the same level will not be easy to secure.

4. Unfortunately, there were is no up-to-date evidence about the respective current income of the parties.

5. In terms of the relative capital position of each party, pursuant to the final consent orders made on 15 January 2020:

   a)the applicant retained/received assets to the value of a $1,279,764 and superannuation to the value of $623,024;

   b)the respondent retained assets to the value of $2,986,118 and superannuation to the value of $734,152.

6. There were no other submissions about the parties’ financial circumstances.

Discussion

1. Having considered the respective submissions, there is no doubt that the respondent’s current asset position is superior to that of the applicant, although the applicant is financially comfortable. The respondent has the capacity to meet an order for costs from the division of the assets which were the subject of the consent orders.

Section 117(2A)(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

1. This is not a relevant consideration, as neither party is in receipt of legal assistance.

Section 117(2A)(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

1. The submissions on behalf of the applicant address the following conduct of the respondent:

   a)his conduct significantly increased the length and complexity of the proceedings and the costs incurred;

   b)agreement was reached at a mediation which occurred on 20 April 2018, however the respondent reneged on that agreement which necessitated a final hearing;

   c)the Response which was filed on 12 January 2018 was not made in good faith, in the context of the respondent conceding on 26 July 2019 that a 12 year de facto relationship had existed between the parties;

   d)to refute the respondent’s denial of the existence of the defacto relationship, the applicant was required to produce a very large volume of documents, 33 exhibits including bundles of documents and to call six additional witnesses;

   e)the respondent presented as an unreliable witness as set out in paragraphs 15(a)(i) – (xiii) of the applicant’s costs submissions;

   f)the respondent presented as an uncooperative witness as set out in paragraphs 15(b)(i) – (v) of the applicant’s cost submissions;

   g)calling three witnesses, in addition to himself whose evidence was vague unreliable and at times contradicted his own evidence.

2. In relation to the claim for costs of and incidental to the Application in a Case filed 6 December 2019, the applicant asserts that the respondent:

   a)failed to respond to a letter from the applicant’s solicitors dated 26 November 2019 enquiring whether the matter had settled;

   b)failed to respond to a letter dated 28 November 2019, which necessitated the filing of the relevant Application in a Case;

   c)instructed his solicitors to write to the applicant solicitors on 3 December 2019 advising that the matter had not settled and that he would not agree to pay any sum to the applicant by way of partial property settlement;

   d)filed responding material on 12 December 2019 at 4:36 PM, including an affidavit where he deposed to having no capacity to make the payment sought by the applicant;

   e)instructed his solicitors to respond to the applicant solicitors at 4:47 PM  on 12 December 2019 advising that the respondent would pay $60,000 to the applicant, providing it was advanced as a loan secured by caveat over the applicant’s property;

   f)on 13 December 2019, consented to an order to pay the applicant the sum of $60,000 within seven days;

   g)instructed his solicitors to write to the applicant solicitors on the 17 December 2019 to advise that the payment would be made “after Christmas”, which was in breach of the orders and which necessitated further correspondence from the applicant’s solicitors.

3. The respondent submits:

   a)each party was entitled to put the case before the court to be determined according to law and being afforded natural justice;

   b)he was not responsible for delays or matters that caused the threshold proceedings to be unduly prolonged or expensive;

   c)his assessment of the case prior to commencement was that he had an arguable case and in the circumstances it was not unreasonable to put the applicant to his proofs;

   d)at no time did the respondent consider that according to law he was making a spurious denial of the existence of a de facto  relationship;

   e)he had every right to contest the evidence appropriately, to assess the case as it proceeded and to enter into a consent arrangement, and by doing so he saved the court from having to make formal findings and deliver reasons;

   f)the hearing was not prolonged and there was nothing out of the ordinary in terms of running time;

   g)he refutes the assertion that he was an unreliable witness and addresses each of the contentions in the applicant’s costs submissions;

   h)he refutes the assertion that he was an uncooperative witness and his conduct in the witness box over a three day period of cross-examination was not inappropriate so as to warrant a cost a consideration;

   i)an agreement was reached in principle at the mediation on 19 November 2019, however it was subject to a condition precedent in relation to the liquidation of a company. The liquidator of the company did not provide a response which satisfied outstanding queries;

   j)the delay in fixing the date for mediation was because the applicant required a sworn valuation of all properties a short time prior to the initially scheduled mediation date.

1. In relation to the claim for costs arising from the Application in a Case filed on 6 December 2019:

   a)the applicant claimed that he was unable to borrow funds due to a caveat lodged against his Suburb B property, despite him never having requested the respondent to withdraw the caveat;

   b)the applicant had a redraw facility with his mortgage of approximately $57,000 and there was therefore no need for the respondent to advances such funds to the applicant, which the respondent ended up having to borrow from his brother;

   c)the respondent’s solicitors proposed a resolution of the application on 12 December 2019 and that there was no necessity for an appearance on 13 December 2019.

Discussion

1. I have considered the submissions of both parties and conclude that the conduct of the respondent in relation to both the application for a partial property settlement and the threshold issue was less than acceptable.

2. There can be no question that ultimately the respondent conceded and accepted that the parties had been in a de facto relationship for a twelve year period.

3. I agree with the submissions of the applicant that the response which was filed on 12 January 2018 was not made in good faith, when viewed in the context of the ultimate concession made by the respondent.

4. Furthermore, the respondent would have been well familiar with many of the voluminous exhibits and bundles of documents, including photographs, intimate cards, photographs and packaging of generous gifts such as brand watches and diamond rings, tendered by the applicant, and the evidence of the witnesses called on behalf of the applicant, who were either family members of the applicant or friends of the couple.

5. It is difficult to contemplate why the respondent sought to construct an artificial narrative of the nature of his relationship with the applicant, particularly when faced with the documentary evidence and oral evidence of the applicant’s witnesses. He presumably would have been acutely aware of the evidence of the couple’s friends as soon as affidavits were filed by the applicant. I accept that the respondent was entitled to test the evidence of the applicant and his witnesses, but that must be seen in the context of whether it was at all reasonable to deny the existence of the de facto relationship, when he ultimately conceded that issue.  

6. The respondent does not offer any reasonable explanation why the partial property application was initially resisted by him and then, very shortly thereafter, consented to by him.

Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court

1. Neither party submissions address this consideration.

Section 117(2A)(e) whether a party to the proceedings has been wholly unsuccessful

1. In relation to the claim for costs arising from the initiating application as to the question of whether the parties were in a de facto relationship, the applicant submits:

   i)the applicant has been entirely successful in a threshold proceedings and the respondent has been wholly unsuccessful;

   ii)the respondent had no option other than to take the course he did;

   iii)it is a factor which is fundamental to determine the basis on which an order for costs should be made.

2. In relation to the claim for costs arising from the Application in a Case, the applicant submits:

   i)the applicant has been entirely successful and the respondent wholly unsuccessful, as the application was resolved by consent for the respondent to pay the applicant $60,000;

   ii)the respondent had no option other than to take the course he did;

   iii)it is a factor which is fundamental to determine the basis of which an order for costs should be made.

3. The Respondent submits:

   i)He concedes that the applicant’s proceeding for a declaration of a de facto relationship was successful;

   ii)The respondent’s assessment of the evidence at the time the proceeding was resolved, together with legal advice moved him to that conciliatory position;

   iii)in doing so he saved the court having to make findings, further court time and over all legal costs;

   iv)this factor is not singularly determinative of whether a costs order should be made and must be seen in the context of a consideration of all the additional factors.

4. There were no submissions specifically addressing the success or otherwise of the Application in a Case.

Discussion

1. In relation to the threshold issue, this is not a matter where the parties could make submissions about the comparative relative success of each of their positions adopted a trial. The determination of a threshold issue is necessarily a matter where one party will either succeed or fail. In this case, the threshold issue was the existence of a de facto relationship, which the applicant asserted and which was denied by the respondent. There can be no question that the applicant was anything other than wholly successful in the threshold proceeding, and that the respondent conceded the existence of a de facto relationship spanning 12 years.

2. In relation to the Application in a Case, consent orders were made in the terms sought by the applicant, namely the respondent pay him $60,000 as a partial property settlement. It is an obvious conclusion that the applicant was wholly successful in that application.

Section 117(2A)(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

1. The applicant submits in relation to the substantive proceedings:

   i)on 21 August 2017, the applicant’s solicitors wrote to the respondent solicitors seeking agreement as to the existence of a de facto relationship between the parties from early 2004 until September 2016 , and in the event no such agreement was reached, an application would be issued to the court and that letter would be tendered on the question of costs;

   ii)on 5 June 2019, the applicant’s solicitors wrote to the respondent’s solicitors referring to the final hearing which had commenced on 3 and 4 June 2019, again inviting the respondent to consent to a declaratory order as to the existence of a de facto relationship between the parties;

   iii)the letter of 5 June 2019 put the respondent on notice that if the applicant was successful in the threshold proceedings, then that letter would be produced to the court on the question of costs which would be sought on an indemnity basis.

2. There were no submissions on behalf of the respondent about any offers to settle the threshold proceedings.

3. The applicant submits in relation to the costs arising from the Application in a Case:

   i)on 28 November 2019, the applicant’s solicitors wrote to the respondent solicitors requesting confirmation whether the matter had settled and if not sought a payment of $60,000 by way of partial property settlement to enable the applicant to fund the proceedings;

   ii)that letter advised that if no response was received by 4 PM on 29 November 29, the applicant would issue an urgent application seeking orders in those terms and would produce the letter in support of an application for costs.

4. There were no submissions on behalf of the respondent about any offers to settle the Application in a Case.

Discussion

1. As a result of the correspondence between the solicitors for the applicant and the respondent, I have no doubt that the respondent was aware of the applicant’s intention to seek an order for costs, in the event he was successful in both the threshold proceedings and the application for a partial property settlement.

Section 117(2A)(g) any other matters the court considers relevant

1. The applicant did not make any submissions specific to this consideration.

2. The respondent submitted:

   i)there was no reason for costs to be reserved on 13 December 2019 and that an application should have been made leading up to the trial so that either party could have assessed their respective positions pending trial;

   ii)the applicant failed to apply for his costs in respect to either the threshold or partial property applications prior to the commencement of the threshold trial;

   iii)it is not a common practice adopted by the courts to make an application for costs following the making of consent orders;

   iv)such an application may cast doubt on the courts assessment as to whether the settlement reached was just and equitable;

   v)there was no indication to the court during the day that the applicant would be proceeding with a costs application and that did not become apparent until orders were made by consent to make a costs order subsequent to the proceedings would impact on the respondent’s overall property settlement.

Discussion

1. As previously referred to, the respondent was under no misapprehension that the applicant intended to seek an order for costs, in the event he was required to proceed with either the threshold application or the application for a partial property settlement.

2. On 13 December 2019, when orders were made by consent for a partial property settlement, an order was also made reserving costs as follows:

   The Applicant’s costs of the Application in a Case filed 9 December 2019 and the Respondent’s costs of attending the mention today are reserved.

3. The applicant was represented by experienced counsel and lawyers when that order was made.   

4. On 15 January 2020, when procedural orders were made for cost submissions, the respondent was represented by experienced counsel and lawyers, and it was agreed on his behalf that a timetable for costs submissions should be ordered to avoid further court time and costs of a further application.

5. The respondent would hardly have been surprised that the applicant would seek costs of both the Application in a Case and the threshold proceedings.

6. Additionally, Rule 19.08 of the Family Law Rules 2004 also provides for a party to seek an order for costs after a final order has been made. That rule provides as follows:

   Rule 19.08(1) A party may apply for an order that another person pay costs.

   Rule 19.08(2) An application for costs may be made:

   (a) at any stage during a case; or

   (b) by filing an Application in a Case within 28 days after the final order is made.

   Rule 19.08(3) A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

   Note 1: The court may make an order for costs on its own initiative (see rule 1.10).

   Note 2: A party may apply for an order for costs within 28 days after the filing of a notice of discontinuance by the other party (see subrule 10.11(4)).

   Note 3: A party may apply for an extension of time to make an application (see rule 1.14).

   Note 4: For costs orders related to appeals, see Part 22.10.

   Rule 19.08(4) In making an order for costs, the court may set a time for payment of the costs that may be before the case is finished.

7. In this matter, orders were specifically made to provide for the filing of costs submissions, to avoid the necessity for a further Application in a Case and further appearances.

8. Even if orders pertaining to costs submissions had not been made, the applicant could have availed himself of the procedure set out in the rule. There is no general principle, as the respondent attempts to infer, that there should not be costs considerations subsequent to the conclusion of proceedings.

9. I do not accept the submission that any order for costs may cast doubt on the justice and equity of the settlement reached by the consent orders. The discretion in property proceedings is broad and not an exact science or calculation. There was no such objection raised by the respondent at the time both the consent orders and the procedural costs orders were made.

Conclusion

1. I have considered and taken into account all of the relevant matters in s.117(2A) of the Act and the submissions of both parties, and I am satisfied that there are justifying circumstances to depart from the general rule that each party shall bear his or her own costs.

2. I have also had regard to the respondent’s submission that an order for costs should rarely be made in circumstances where there has been no trial on the merits of the case. This has been addressed in these reasons under the heading ‘Costs orders following the making of consent orders’.

3. At the time of the commencement of the threshold trial, the respondent was clearly on notice, from at least 21 August 2017 and reiterated on 5 June 2019 that the applicant was seeking costs for the determination of the threshold issue. Likewise, as from 28 November 2019, the respondent was on notice that the applicant was seeking costs of the Application in a Case seeking a partial property distribution. 

4. The respondent’s decision to oppose both the application for a partial property settlement and the declaratory relief sought by the applicant and then embark on the threshold trial, was in the clear and unambiguous context that the applicant would pursue an applications for costs, if he were successful.

Indemnity Costs

1. As I am satisfied that there are justifying circumstances for an order for costs, the outstanding issues are whether costs should be ordered on the usual party/party basis, or the exceptional indemnity basis.

2. The principles as to the basis on which indemnity costs should be ordered is set out by the Full Court in Worth & Worth (No.2) [2019] FamCAFC 126, as follows:

   [9] The authorities are clear, that for the usual basis to be departed from, exceptional circumstances need to be demonstrated (see, eg, Limousin & Limousin (Costs) (2007) 38 FamLR 478). The categories of such circumstances are not closed (Yunghanns & Yunghanns (2000) FLC 93-029), but some examples are provided in the oft-quoted decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 (“Colgate-Palmolive Co”), and usefully, Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660, drew from his Honour’s decision the following:

   (a)      Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts.

   (b)      Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud.

   (c)      Evidence of particular misconduct causing loss of time to the court and to other parties.

   (d)      The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions.

   (e)      An imprudent refusal of an offer to compromise.

3. Relying on the principles stated in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248, the applicant submits an order for indemnity costs is appropriate because, there exists some “special or unusual feature in the case to justify the court in departing from the ordinary practice”.

4. The conduct of the respondent which the applicant relies upon is as follows:

   a)pursuing a position which was untenable until the conclusion of evidence and then consenting to a declaration after four days of hearing;

   b)pursuing a position contrary to facts within his knowledge and which he should have conceded, including:

   i)the parties had cohabited during the course of an intimate relationship;

   ii)had engaged in a sexual relationship;

   iii)had shared personal finances;

   iv)had made joint decisions about the purchase and sale of personal assets.

   c)presented as an unreliable and uncooperative witness;

   d)called witnesses whose evidence was intended to advance his case without proper regard to the factual circumstances of the parties relationship;

   e)discussed/continued to discuss his evidence with witnesses during the proceedings, despite warnings.

5. The applicant further submits, in circumstances where there was no likelihood of success of the respondent’s position, when considered together with his inconsistent evidence and uncooperative conduct, his refusal to accept two invitations to concede the existence of the relationship and his superior financial position, an order for indemnity costs is appropriate.

6. The respondent submits there should not be any order for costs, let alone indemnity costs. The respondent’s costs submission set out the law relevant to indemnity costs, but do not specially address the submissions of the applicant.

7. The conduct of the respondent is clearly unacceptable and in my view warrants an order for costs, when all of the relevant statutory considerations are addressed however, the appropriate costs remedy is to order costs on a party/party basis. I am not persuaded that the circumstances of this matter are so exceptional, as required by the authorities, that my discretion should be exercised to make an order for indemnity costs.

8. I intend to make orders for the respondent to pay the applicant’s costs of the threshold proceedings, the Application in a Case and the cost submissions.

9. There were no specific submissions made by either party in relation to the cost of preparation of the cost submissions, other than each party sought approximately $8,000 for the preparation costs of the cost submissions.

10. I am of the view that the unsuccessful party in the cost proceedings should pay the costs of preparations of the submissions of the successful party, which in fact reflects the position of each of the parties.

I certify that the preceding seventy seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Williams delivered on 13 August 2020.

Associate:

Date: 13 August 2020