Dawson & Dawson (No 3)
[2022] FedCFamC1F 791
•18 October 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Dawson & Dawson (No 3) [2022] FedCFamC1F 791
File number(s): SYC 7812 of 2018 Judgment of: SCHONELL J Date of judgment: 18 October 2022 Catchwords: FAMILY LAW – COSTS – Where both parties sought a costs order – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where the husband’s conduct warranted a costs order being made – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) s 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248; [1993] FCA 801
Dawson & Dawson (No 2) [2022] FedCFamC1F 533
Harris and Harris (1991) FLC 92-254; [1991] FamCA 124
Kohan & Kohan (1993) FLC 92-340; [1992] FamCA 116
Pascoe & Larsen (No 2) [2022] FedCFamC1A 126
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123; [2005] FamCA 158
Penfold and Penfold (1980) 144 CLR 311; [1980] HCA 4
Pennisi v Pennisi (1997) FLC 92-774; [1997] FamCA 39
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029; [2000] FamCA 681
Division: Division 1 First Instance Number of paragraphs: 56 Date of last submissions: 7 October 2022 Place: Wollongong Solicitor for the Applicant: Sexton Family Law Solicitor for the Respondent: Fox & Staniland Lawyers ORDERS
SYC 7812 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DAWSON
Applicant
AND: MR DAWSON
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
18 OCTOBER 2022
THE COURT ORDERS THAT:
1.The respondent husband pay the applicant wife’s costs assessed in the sum of $35,000, with such sum to be paid within 60 days of the date of the making of this order.
2.Each party pay their own costs of the application.
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 Dawson & Dawson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By way of Application in a Proceeding filed 22 August 2022, the respondent husband (“the husband”) seeks an order that the applicant wife (“the wife”) pay his costs on various bases, initially on an indemnity costs basis fixed in the sum of $163,557, alternatively as agreed or assessed, or then on a party/party basis in a fixed sum of $100,000.
The wife, for her part, also by way of Application in a Proceeding filed 23 August 2022, seeks costs on an indemnity basis in the amount of $153,919.51 and alternatively on a party/party basis in a fixed sum of $115,000.
Some background to the application is necessary to put in context some of the submissions that are made by each of the parties. In that respect, these reasons should be read in conjunction with my reasons delivered in Dawson & Dawson (No 2) [2022] FedCFamC1F 533.
The husband relied upon the following documents:
(1)Application in a Proceeding filed 22 August 2022;
(2)Affidavit of husband filed 22 August 2022;
(3)Reasons for decisions and final orders delivered 26 July 2022;
(4)Written submissions; and
(5)Written submissions in reply.
The wife relied upon the following documents:
(1)Application in a Proceeding filed 23 August 2022;
(2)Affidavit of wife filed 23 August 2022;
(3)Affidavit of Ms W filed 31 August 2022; and
(4)Written submissions.
I note that I recorded the following in my judgment of Dawson & Dawson (No 2) [2022] FedCFamC1F 533:
1.These are financial proceedings between the applicant wife (“the wife”) and the respondent husband (“the husband”) pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) arising out of the breakdown of their marriage. The wife’s parents are the second and third named respondents who sought orders to recover various loans, including a loan of $1,000,000 advanced to the wife on 31 October 2013, a balance of $50,000 from an initial advance of $500,000 advanced on 31 March 2009 to the husband and wife and a company controlled by them, as well as other advances made by them to the wife post-separation.
…
3.The wife sought orders that would see the property of the parties, after repayment of the various loans, divided as 55% to the wife and 45% to the husband. At final submissions, the wife’s orders were said to effect a 58% split of the parties’ assets in the wife’s favour. Enquiries made with the wife’s counsel indicated that in the event that the Court did not find that the loans advanced by the wife’s parents were required to be repaid, then the wife sought a financial adjustment in her favour as to 65% of the pool of assets.
4.The husband for his part initially contended that the monies advanced by the wife’s parents were gifts and consequentially there was no obligation for them to be repaid. He contended that the parties’ assets should be divided as to 60% in his favour and 40% in favour of the wife. In final submissions, his senior counsel urged that I not be distracted by percentages and contended that a just and equitable outcome was that the husband retain the home, the wife retain the shares, and the husband pay the wife, at some undetermined time, the funds necessary to comply with the child support orders. No attempt, despite my valiant entreaty, was made by his senior counsel to convert such proposal into a percentage.
…
49.In relation to all of the advances to the wife, both the wife and her parents contend that these monies were loans that are repayable. In relation to the monies advanced to the husband and the wife, being the Education Loan (Item 28), again the wife and her parents contend that it was a loan repayable on demand.
50.The husband contends that all monies provided by the wife’s parents were gifts and that no debt obligation arises. In that respect, he says the following in his trial affidavit:
71. I am satisfied, after reviewing the financial disclosure, that [Ms Dawson’s] parents gave [Ms Dawson] $1,750,000 throughout the course of the relationship. [Ms Dawson’s] parents also gifted $500,000 to be used for the children’s school fees. …
…
52.A gift is a gratuitous transfer of property from one to another without obligation. In Commissioner of Taxation (Cth) v McPhail (1968) 117 CLR 111 at 116, Owen J in the High Court held that:
… to constitute a “gift”, it must appear that the property transferred was transferred voluntarily and not as the result of a contractual obligation to transfer it and that no advantage of a material character was received by the transferor by way of return. …
53.The loan agreements entered into by the wife and the parties are clearly inconsistent with such definition.
54.The wife’s parents became the second and third respondents. They initially sought recovery from the husband and the wife of the sum of $500,000 pursuant to the Education Loan, the sum of $1,000,000 pursuant to the loan to the wife in September 2013, and other post-separation loans to the wife totalling $3,292,733.70 (Second and Third Respondents Further Amended Response filed 2 February 2022).
…
58.Consequent upon the wife’s evidence, counsel for the second and third respondents indicated that they would only be pursuing the husband and wife as to $50,000, being the balance outstanding under the Education Loan. The remaining relief was still pressed, including judgment for the post-separation advances to the wife of nearly of $3.3 million.
…
69.The Education Loan was recorded in a Deed as a loan. It was signed by the husband in his personal capacity and in his capacity as a Director of the Trustee Company. The Deed clearly states it is a loan. The husband provided no credible explanation as to why he would sign a loan document if he thought what was being provided was a gift. The husband did not seek in re-examination to address this issue.
…
74.In the search to resolve the conflict in the evidence, I place more weight on contemporaneous documents that support a party’s assertions than I do on assertions of conversations many years ago based solely on memory. I prefer the evidence of the wife and her father to that of the husband. The husband’s evidence as to the conversation is inconsistent with the signing of a deed. It is inconsistent with his own evidence at paragraph 88. The loan for $500,000 is consistent with all of the earlier prior dealings as to money provided by the wife’s father as loans as evidenced by each of the loan agreements signed at the time of the advance of the funds.
75.I do not accept the husband’s evidence that these moneys, when advanced, were a gift by the wife’s parents. I accept that they were described as a loan.
…
80.I am of the view that, notwithstanding the recording of each of these advances as loans, a proper construction of the circumstances subsequent to their advance leads to the conclusion that the moneys were only sought to be recovered because of the separation of the parties and that if I left the responsibility for payment to the wife, her parents would not seek to recover it from her.
…
129.I will order the wife to receive 52% of the net proceeds of sale of the home.
130.From the husband’s share of the balance, there shall be paid to the wife $140,855, being the husband’s half share of the agreed lump sum child support.
131.The wife is to receive 52% of the remaining assets in Pool A, excluding the home. These total $2,215,952 of which 52% totals $1,152,295. The wife has property in Pool A, having a value of $554,295. Therefore, from the husband’s share of the proceeds of sale of the home, there will be paid to the wife $598,000.
In relation to the application for costs, the husband submits that the wife should pay the husband’s costs as a consequence of her conduct in the proceedings in seeking disingenuously (he asserts) the repayment of various loans by her parents, which added significantly to the costs of the husband. The husband also relied upon an offer of settlement made by him which was rejected by the wife. The husband submits that if the offer had been accepted then a considerable cost saving would have been occasioned to each of the parties but more particularly the husband. The husband contends that his offer of settlement was in line with or better than the ultimate orders made by the Court. The husband submits that the wife was unwilling to compromise and that of itself would be sufficient to warrant an order for costs.
The wife for her part contends that an agreement was reached at a Dispute Resolution Conference, which she sought to hold the husband to and then subsequently in writing in May 2021. She says that the husband rejected her offer and that had her offer been accepted, then significant cost savings would have been occasioned. The wife also points to conduct of the husband during the proceedings, particularly in relation to the parenting aspect of the proceedings, including where he failed to attend upon a psychiatrist in accordance with a Court order and his failure to attend upon various hearings before the Court on 22 November 2021, 10 December 2021 and 4 February 2022. The wife contends that such conduct is relevant to an application for costs.
Indemnity costs
Both parties seeks orders for indemnity costs.
The authorities make it plain that an order for indemnity costs is not one that is made lightly and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis. In Kohan & Kohan (1993) FLC 92-340, their Honours in the Full Court observed at 79,614:
The intent of s117(1) and 117(2) is that in this jurisdiction costs should not follow the event as a matter of course. However, where the justice of the matter so requires, the Court may make such order as the Court considers just. As we have pointed out, the Court may depart from the scale of costs prescribed under the rules. However, the purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges. By O. 38 r. 2, the provisions of O. 38 apply to costs ordered to be paid or taxed, and costs payable or to be taxed between solicitor and client. O. 38 r. 7 makes provision for the allowance of additional amounts for complexity, difficulty or novelty and special skill, knowledge or responsibility. Consequently, the Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind. See Degmam v. Wright (No.2) “(supra); Wentworth v. Rogers (No. 5) (1986) 6 NSWLR 534; Hobartville Stud v. Union Insurance Co. (1991) 25 NSWLR at 368 to 370.
Indemnity costs orders are still an exception in this and other jurisdictions. …
Justice Sheppard in Colgate Palmolive Company & Anor v Cusson Pty Ltd (1993) 118 ALR 248 observed as follows at 256–257:
It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:
1. The problem arises in adversary litigation, ie litigation as between parties at arm’s length. Different considerations apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg a government agency or statutory authority.
2. The ordinary rule is that, where the court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis. In this court the provisions of O 62, rr 12 and 19, and the Second Schedule to the rules will apply to the taxation. In many cases the result will be that the amount recovered by the successful party under the Order will fall short of (in many cases well short of) a complete indemnity.
3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of court) or a decision of an intermediate Court of Appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v British Transport Commission and Handley JA in Cachia v Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
4.In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client 88as and when the justice of the case might so require’’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo “the categories in which the discretion may be exercised are not closed’’. Davies J expressed (at 6) similar views in Ragata.
5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.
The category of cases in which a court may make an indemnity costs order are not limited to those identified by Shepard J. In Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471, the Full Court said:
… It will suffice to say that the categories of circumstances which enliven the discretion to award indemnity costs are not closed, and that it is not a condition precedent to the exercise of the discretion that some collateral purpose or species of fraud be established against the party against whom such an order is sought. All that is required is that the Court asked to exercise the discretion be satisfied that some '”particular facts and circumstances of the case in question warrant the making of an order for the payment of costs other than on a party and party basis”: per Shepherd J in Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233.
There was nothing exceptional about the circumstances of this matter, particularly when seen against my overall findings and aspects of the case brought by each of the parties in which they were unsuccessful. I am not satisfied this unexceptional case warrants an order for indemnity costs.
An application for costs is governed by the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”), which provides a general rule that each party to the proceedings should bear their own costs.
Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).
In Penfold and Penfold (1980) 144 CLR 311, the plurality in the High Court determined that to make an order under s 117(2), the Court needs to make a finding of justifying circumstances as a preliminary prerequisite to the making of an order. Their Honours also observed that terms such as an exceptional case, special circumstances or a clear case are not necessary determiners of whether or not an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 Fam LR 123, the Full Court observed:
41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs
Dealing now with the relative subsections in s 117(2A).
(a) The financial circumstances of each party to the proceedings
The financial position of each party is set out in my judgment. The consequence of the litigation has impacted considerably on each of the parties. Whilst neither party could contend to be impecunious, neither are they exceptionally wealthy. This is not a relevant consideration in my determination either in favour of or against a costs order.
(b) Whether the parties are in receipt of legal aid
Not relevant.
(c) The conduct of the parties to the proceedings
Each party contends that the other party’s conduct is relevant to the granting of a costs order.
What is relevant is conduct of a party, which in some way or other leads to an increase in costs by the other party. Such factors may include uncooperative behaviour, obstruction, prolonging litigation or the bringing of unreasonable or unmeritorious applications. It may include non-disclosure or a failure to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) in relation to disclosure.
I have had regard to the conduct of both parties and in particular, that each made contentions that were ultimately unsuccessful at the hearing. In that respect, whilst the wife was supportive of her parents’ application, which was ultimately unsuccessful, I note that the husband also argued that the monies that were clearly loans should be categorised as gifts. In that respect, the husband was also unsuccessful.
The wife also contends that the husband’s conduct is relevant in that there were certain applications brought on which he did not appear. It is not apparent, however, from the wife’s submissions or the wife’s affidavit that the husband’s failure to appear led to any increase in the wife’s costs.
There is no matter of conduct that is relevant to a costs order.
(d) Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court
The financial proceedings required a hearing and judgment. It could not be said that the proceedings were necessitated by a failure to comply with a court order. They were necessitated by the parties’ failure to reach agreement. Whilst the wife points to various orders that were made by the Court which she contends the husband did not comply with, they of themselves did not necessitate the bringing of the proceedings.
The wife also seeks to rely upon various matters arising out of the parenting proceedings. In that respect, I note they were resolved and there was no cross-examination on her assertions. The findings she urges are thus unable to be made.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application (see Bant & Clayton (Costs) (2016) 56 Fam LR 31). Neither party was wholly unsuccessful.
(f) Whether any party has made an offer in writing
Each party contends that they made various offers in writing that should be considered in the context overall of the proceedings.
In that respect, the Full Court in Pennisi v Pennisi (1997) FLC 92-774 (“Pennisi”) held at 84,547:
We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree’s knowledge of the parties’ financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties’ financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer.
In Harris and Harris (1991) FLC 92-254, the then Family Court of Australia awarded the wife exactly the amount which she had been offered to settle for. The Full Court agreed that the trial judge was within the limits of the proper exercise of his jurisdiction to order costs.
Each parties submissions proceeds, in my view, upon the mistaken assumption of having regard to the overall outcome in a percentage terms and then contending that the outcome of the proceedings is relevant comparatively to the particular offer they made at an earlier point in time. In my view, that approach is erroneous as it is not a comparison of like events or for that matter a comparison of similar pools of assets. It is more pertinent to have regard to what the effect of the proposals of each of the parties was in relation to the asset categories at play.
Each of the proposals involved the wife retaining the property she bought post-separation and that wife’s parents not being repaid. What was at play was the percentage division of the home and the husband’s share portfolio.
The parties attended a Dispute Resolution Conference on 15 April 2021. The wife contends that an agreement was reached that the share portfolio of the husband would be divided equally and that their home would be sold and the proceeds divided as to 52.5 per cent to the wife and 47.5 per cent to the husband. There were to be no orders in relation to the loans owed to the wife’s parents and the wife was to retain her home purchased post-separation. The husband does not contend in his written submissions that the effect of the agreement at the Dispute Resolution Conference was otherwise.
The wife says that she was prepared to implement such an agreement. She deposes to difficulties in having the husband commit to the agreement reached at the Dispute Resolution Conference. The husband’s submissions do not put this fact in issue. They are indeed deafeningly silent as to why he resiled from that agreement.
By letter dated 4 May 2021, the wife repeated the proposal made at the Dispute Resolution Conference. That offer of settlement saw that the share portfolio divided equally between the parties, that the former matrimonial home at Suburb M be sold and the proceeds divided as to 52.5 per cent to the wife and the balance to the husband. It provided that the second and third respondents release the parties from any claims relating to monies allegedly advanced by them. In relation to the division of the share portfolio, the wife provided an alternative arrangement that would have seen a payment of $790,000 to her that was said to be equal in value to half the share portfolio.
It is significant to note that the offer provided for the wife to receive 52.5 per cent of the proceeds of sale and $790,000 while the final orders provided for the wife to received 52 per cent of the proceeds of sale and a cash payment totalling $738,000. In the context of what the parties must have ultimately thereafter spent and the overall outcome, the difference is de minimis.
There was no response from the husband to the wife’s letter.
On 14 May 2021, the wife’s solicitor wrote:
Our client’s position as set out in our correspondence of 4 May 2021 has not changed. If we do not receive a response from your client by 19 May 2021, it will be apparent that your client does not wish to resolve the financial issues in dispute and that the matter will need to proceed to a final hearing for resolution.
(Wife’s affidavit, Annexure K)
The husband by letter dated 18 May 2021 responded seeking that the parties’ assets be divided equally. This proposal amounted to a clear renunciation of the agreement reached at the Dispute Resolution Conference and a rejection of the offer made by the wife in the correspondence of 4 May 2021 and repeated on 14 May 2021.
It was an inopportune rejection of the wife’s offer and the agreement reached at the Dispute Resolution Conference. As much is made clear by the husband’s subsequent actions.
On 19 May 2021, the wife rejected the husband’s offer.
By return mail the same day, the husband made an offer that was effectively in the same terms as the wife’s offer with some amendments made to the form of order that was attached to the wife’s offer of settlement contained in her letter dated 4 May 2021. The differences were that rather than transferring half the shares, the husband proposed a cash payment of $790,000. He proposed other very minor inconsequential orders. The differences in my view were matters of form not substance. Notwithstanding the husband’s submissions, I fail to understand why the husband did not accept the wife’s offer.
By letter dated 21 May 2021, the wife rejected the husband’s proposal but confirmed that she was prepared to enter into consent orders in the terms of her prior position. No response was received to her letter dated 21 May 2021.
On 28 May 2021, the wife’s solicitor sent a further email to the solicitors for the husband. No response was received to that email.
The wife in her affidavit says:
27. On 3 June 2021, I am informed and verily believe that my solicitors received an email from [Mr Dawson’s] solicitor which stated “I refer to your letter dated 21 May 2021 and confirm that I have been unable to obtain instructions from my client regarding your client’s settlement proposal.” In circumstances where [Mr Dawson] refused to respond to my counter-offer of 21 May 2021, it was apparent that the matter would not be able to be resolved. No further offers of settlement were ever made by [Mr Dawson] after 19 May 2021.
A reading of the various items of correspondence clearly reveal that the wife made an offer of settlement that was rejected by the husband but maintained the terms of that offer between the Dispute Resolution Conference and 3 June 2021 when ultimately she received no response.
The husband sought to try and resolve the matter initially by a lesser amount and when he was not successful sought to make an offer that essentially replicated the wife’s offer but changed some of the terms. As I said earlier, the changes were matters of form not substance.
There is no authority that says for an offer to be relevant it has to be more generous than the overall result. The Rules make no such provision. As the Full Court observed in Pennisi, offers need to be seen in the context of the case. The fact that an offer is either close to, less than or over the amount awarded, is but a factor in the consideration of the question of costs.
The husband has not adequately explained why it is that he did not comply with the agreement reached at the Dispute Resolution Conference or accept the proposals put by the wife. One is left with a suspicion that he was just attempting to negotiate an outcome where he had the last say rather than embrace what was a quite properly a sensible proposal consistent with an agreement earlier reached and put by the wife in an endeavour to resolve the proceedings more than twelve months before the final hearing. I do not accept the husband’s submission that the wife was unwilling to compromise. To compromise is to resolve by making concessions. Her offers make such position abundantly clear his did not.
I am satisfied that the offers of settlement and the actions of the wife in attempting to settle the matter were bona fide and made in an endeavour to try and compromise the proceedings. I am not satisfied that when looking at all of the positions of the parties over the period between the Dispute Resolution Conference and 28 May 2021 the same can be said about the attitude of the husband. In my view, this approach and the offers are matters that are relevant to a costs order in this matter.
(g) Any other matter the Court considers relevant
There is no other relevant matter.
Having regard to the above matter and the significant costs expended by the parties in these proceedings, the offers made by the wife referred to above are the relevant considerations in relation to the question of costs. It is apparent to me upon reading the correspondence in its entirety that the wife remained open to a settlement of the proceedings. She put an offer of settlement which the husband rejected. Clearly, having realised that that was a sensible offer he made an offer in similar terms. The wife indicated that she would settle upon the terms upon which she had earlier put, which were consistent with the agreement at the Dispute Resolution Conference. She pursued the issue with the husband’s solicitor to no avail. Whether it be gamesmanship or stubbornness on the part of the husband is not apparent nor relevant. His counter proposal just amply demonstrated the reasonableness of the wife’s earlier offer. He has not explained why he did not compromise and accept it. Had he done so both parties would have been better off financially.
The Rules and authorities make plain that I can fix an amount for costs. As McClelland DCJ observed in Pascoe & Larsen (No 2) [2022] FedCFamC1A 126:
27.Rule 12.17 of the Rules sets out the methods of calculating costs. These include the Court fixing a specific amount for costs (r 12.17(1)(a)) or an order for the costs to be assessed on a particular basis (r 12.17(1)(b)).
28.In Stoian v Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the principles for applying a rule equivalent to r 12.17 when referring to r 19.18 of the now repealed Family Law Rules 2004 (Cth) as adumbrated by Einstein J in Idoport Pty Limited v National Australia Bank Limited & Ors [2007] NSWSC 23 at [9]. Those principles include:
i.the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation;…
ii.the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable;…
iii.the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available;…
iv.a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place;…
iv.the gross sum “can only be fixed broadly having regard to the information before the Court”;…
(Citations omitted)
29.Consistent with those principles, it has been determined that where a Court orders a party to pay costs, it may be appropriate for the Court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Co Ltd (No 2) [2009] FCA 1432 at [51].
I am satisfied that it is just that an order for costs should be made but not in the quantum as sought by the wife. Each of the amounts that the parties seek as a fixed sum seem to be amounts that are purely compromised sums with no relation to an accurate determination. I am of the view that it would be just that an order for costs be made and I will order the husband to pay the wife’s costs assessed in the sum of $35,000. That amount is fair and reasonable.
I will order the husband to pay that sum within 60 days.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 18 October 2022
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