Farnell & Farnell
[2025] FedCFamC1A 73
•30 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Farnell & Farnell [2025] FedCFamC1A 73
Appeal from: Farnell & Farnell (No 2) [2024] FedCFamC2F 1417 Appeal number(s): NAA 311 of 2024 File number(s): PAC 5064 of 2020 Judgment of: CHRISTIE J Date of judgment: 30 April 2025 Catchwords: FAMILY LAW – APPEAL – COSTS – Where the wife appeals against a fixed costs order made after a contested final hearing – Where it is argued that the parties were not afforded procedural fairness – Where parties were not aware a fixed costs order was in contemplation – Where parties were therefore not able to make submissions regarding a fixed costs order – Appeal allowed and matter re-determined. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119
Boensch v Pascoe (2019) 268 CLR 593
Bolitho and Cohen (2005) FLC 93-224
Concrete Pty Ltd v Parramatta Design (2006) 229 CLR 577
Farnell & Farnell (No 2) [2024] FedCFamC2F 1417
Farnell & Farnell [2024] FedCFamC2F 222
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123
Graham & Squibb (2019) FLC 93-892
Harris v Harris (1991) FLC 92-254
Kioa v West (1985) 159 CLR 550
Lenova & Lenova (2011) FLC 93-467
Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664
Robertson & Sento [2009] FamCAFC 49
Robinson v Higginbotham (1991) FLC 92-209
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128
Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51
U v U (2002) 211 CLR 238
Number of paragraphs: 82 Date of hearing: 25 March 2025 Place: Sydney Counsel for the Appellant: Ms Tabbernor Solicitor for the Appellant: Clear Lawyers Counsel for the Respondent: Mr Fermanis Solicitor for the Respondent: Family Focus Legal Pty Ltd ORDERS
NAA 311 of 2024
PAC 5064 of 2020FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS FARNELL
Appellant
AND: MR FARNELL
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
30 APRIL 2025
THE COURT ORDERS THAT:
1.The Appeal be allowed.
2.Order 1 of the Orders of 22 October 2024 be set aside.
3.The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to this appeal.
4.The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to this appeal.
5.The wife pay to the husband the costs of the financial proceedings from 8 August 2022 to 25 May 2023 (excluding the application in a proceeding filed 5 May 2023) on a party/party basis as agreed or assessed.
6.The wife pay to the husband the costs of the Application in a Proceeding filed 29 May 2024 at the scale in Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Farnell & Farnell has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an appeal against a costs order made by a judge of the Federal Circuit and Family Court of Australia (Division 2) following a contested final hearing concerning property adjustment which resulted in the making of final property orders on 2 May 2024. Costs orders were made on 22 October 2024, following a hearing on 6 August 2024.
The parties entered into final consent orders relating to parenting matters on 30 May 2023.
It is well settled that the Full Court should be reluctant to interfere with the decision of trial judges relating to costs (see Robinson v Higginbotham (1991) FLC 92-209; Harris v Harris (1991) FLC 92-254.
Before the primary judge the husband sought costs in specific fixed sums (calculated on an indemnity basis) relating to individual Court events and then globally.
In this case the primary judge fixed the sum of costs payable by the appellant wife (“the wife”) to the respondent husband (“the husband”). Where the Court orders costs in a fixed sum it should be “fixed broadly having regard to the information before the Court”: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119.
Rule 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) enables the Court to order costs in a specific amount. The authorities provide that such an approach is to avoid the expense, delay and aggravation involved in protracted litigation arising out of an assessment of costs (Graham & Squibb (2019) FLC 93-892 at [92]).
THE TRIAL
At the August 2024 hearing before the primary judge the husband sought costs of specific Court events as follows:
(a)$4,889.50 in respect of Application in a Proceeding filed 5 May 2023;
(b)$24,007.50 in respect of a hearing 30 May 2023;
(c)$7,906.25 in respect of hearing 23 August 2023;
(d)$149,63.77 being costs of the proceedings from 30 August 2021;
(e)Costs of the costs application.
In each of (a) – (d) the respondent sought the costs in the alternative “as agreed or assessed on the indemnity basis” or in the alternative on a party/party basis.
The primary judge did not order indemnity costs, noting the application had been effectively abandoned.
The primary judge dismissed the application in respect of the sums claimed for hearings on 30 May 2023 and 23 August 2023.
The primary judge ordered that in respect of the “costs of the proceedings” from 30 August 2021 and the costs of the application filed 5 May 2023 the husband should receive a sum calculated by reference to one third of his total costs. He also made an order that the husband receive his costs of the costs application.
THE APPEAL
It is necessary to deal with the ground which asserts a denial of procedural fairness at the outset: (Concrete Pty Ltd v Parramatta Design (2006) 229 CLR 577 at 581, 611–612; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]–[10]).
Ground 2. His Honour failed to afford the parties procedural fairness in the making of a fixed costs order when such an order was not sought by any party or canvassed at the hearing.
As indicated, the husband initially sought costs on an indemnity basis. Those costs were enumerated by references to invoices which were in evidence and set out in the application itself. When the application for indemnity costs was abandoned, the husband’s costs application effectively became “as agreed or assessed on a party/party basis”. It follows that the respondent was not asking the Court to fix the costs. Since the appellant was seeking that the costs application be dismissed, she was also not seeking that the primary judge fix costs.
Accordingly, the matter proceeded on the understanding that the parameters of the dispute as established by the parties was, on the one hand, that the costs of various applications and more generally should be ordered “as agreed or assessed on a party/party basis” or on the other hand, that the application for costs should be dismissed.
The wife does not contend that it was in error for the primary judge to take a different approach to that contended for by the parties but rather that the interchanges between the primary judge and the parties confirmed that his Honour did not intend to take the approach which he ultimately did, namely, to fix costs.
The following exchange took place between the primary judge and counsel who appeared for the respondent:
COUNSEL: There are a couple of matters which I do have to accept that have been raised. My client’s primary application in terms of the proceedings, the whole, that he seeks it on an indemnity basis. I accept that it’s a matter which probably wouldn’t warrant the making of an indemnity costs order, but nevertheless, it certainly wouldn’t be a bar to a party/party or scale.
HIS HONOUR: Party/party costs order or a scale costs order.
COUNSEL: Scale. And we’ve outlined in our submissions there are a number of offers from which your Honour could make those – and we make those costs orders. We accept one of the difficulties in this case is that – and why it be assessed as an agreed or assessed basis may be the preferable – is because your Honour would be acutely aware that in a lot of the – some of the costs have been devoted towards the parenting aspect of the case and the property aspect of the case, and it would make it somewhat difficult to - - -
HIS HONOUR: You would need a costs assessor to have a look at it. As agreed or assessed.
COUNSEL: Yes. That would make the task for your Honour somewhat difficult.
HIS HONOUR: Yes. Yes.
The above passage coupled with the respondent’s application before the primary judge effectively signalled that no participant, including the primary judge, was contemplating making an order for a sum certain. The respondent submitted that the expression “may be preferable” as opposed to “must be preferable” left open the possibility that the primary judge would order costs in a fixed sum. However, that ignores the fact that the primary judge’s comment: “[y]ou would need a costs assessor to have a look at it. As agreed or assessed” was an unequivocal endorsement of the approach in the respondent’s application.
While it is accepted that the primary judge was not bound by the parties’ proposals or approaches (U v U (2002) 211 CLR 238 at [80]) it will be an error if a judge makes a representation to the effect that a certain order is not in contemplation but then proceeds to make such an order: Bolitho and Cohen (2005) FLC 93-224 at [85]; Lenova & Lenova (2011) FLC 93-467 at [55]; Robertson & Sento [2009] FamCAFC 49 at [138]. The procedural unfairness arises as a consequence of the parties being deprived of the opportunity of making submissions about the outcome, as occurred here.
It is more than just academic, since it deprived the appellant of the opportunity to present a case: Kioa v West (1985) 159 CLR 550 at 582. Here the appellant was not given the opportunity to address the inappropriateness of a sum certain and/or the quantum of such a sum. That was significant in circumstances where the invoices upon which the calculation was undertaken by the primary judge included legal fees relating to the parenting aspect of the matter (resolved by consent), legal fees predating the date from which costs were sought and legal fees relating to the costs of the costs application itself (which were also ordered).
Having determined that the appellant has established that the procedure miscarried, the appeal must succeed on this basis. In those circumstances it is necessary to consider whether I ought to deal with the remaining grounds in circumstances where both parties agreed that if the appeal were to be allowed they asked that I re-exercise the Court’s discretion. I am persuaded for reasons of judicial economy (see Boensch v Pascoe (2019) 268 CLR 593 at [7] – [8], together with a consideration of the objects of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”), including s 5 as it deals with efficient delivery of justice and the overarching purpose which includes timely resolution of disputes (s 67), it is appropriate to proceed to re- determine the matter without considering the remaining grounds.
RE-EXERCISE
Both parties requested, in the event the appeal was allowed, that I proceed to re-exercise the discretion in respect of costs. I do so without the benefit of having been the trial judge. I am also confined by the material which the parties put before me on the costs application.
I am conscious of the approach endorsed by the Full Court in Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 (“Trevi”) at [20] citing Allesch and Maunz (2000) 203 CLR 172:
Once error is established “an appellate Court can substitute its own decision based on the facts and the law as they then stand”. The Court’s power to do so is statutory. Section 94(2) provides, relevantly, that this Court may “make such decree or decision as in the opinion of the court, ought to have been made in the first instance”.
(Emphasis in original, footnotes omitted)
The power is now found in s 36(1) of the FCFCOA Act (as opposed to s 94(2)) and is expressed as permitting the Court to:
(a) affirm, reverse or vary the judgment appealed from; or
(b) give such judgment or make such order as, in all the circumstances, it thinks fit, or refuse to make an order; or
(c) set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit; or
(d) award execution from the Court or, in the case of an appeal from another court, award execution from the Court or remit the cause to that other court, or to a court from which a previous appeal was brought, for the execution of the judgment of the Court.
Given the scope of the dispute, relating to costs of completed proceedings, neither party sought to lead further evidence.
Section 35(b) of the FCFCOA Act deals with evidence on appeal and provides:
In an appeal, the Federal Circuit and Family Court of Australia (Division 1):
(a) must have regard to the evidence given in the proceedings out of which the appeal arose; and
(b) has the power to draw inferences of fact and, in its discretion, to receive further evidence, which evidence may be given:
(i) as provided for in Division 2 of Part XI of the Family Law Act 1975; or
(ii) by oral examination before the Court or a Judge; or
(iii) otherwise in accordance with section 73 of this Act.
I have had the opportunity to read and consider the reasons for judgement (Farnell & Farnell [2024] FedCFamC2F 222, Farnell & Farnell (No 2) [2024] FedCFamC2F 1417), the Application for costs filed 29 May 2024 and affidavits in support, the Response filed 29 July 2024 and affidavit in support, the exhibits, the written submissions which were before the primary judge, the summaries of argument on appeal and the oral submissions at the hearing of the appeal.
THE LAW
The general rule is that each party pays his or her own costs.
The husband seeks a departure from the usual rule.
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which the Court is empowered to award costs. The relevant subsections provide:
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party’s 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.
Those provisions make clear that, while the general rule in family law proceedings is that each party bears his or her own costs, the Court may order a party to pay the costs of another where there are circumstances justifying the making of such an order.
Regard must be had to the considerations set out in s 117(2A) of the Act in determining whether or not to order a party to pay the costs of another. For the husband to be successful in his costs application, he must establish that the justice of the case requires an order for costs, by reference to the non-exhaustive list of statutory considerations set out in s 117(2A) of the Act:
(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.
No one factor under s 117(2A) prevails over any of the other factors. It is a matter of weight that is accorded to each of the relevant factors in the judge’s discretion (Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 per Strickland J).
While there is “nothing to prevent any factor being the sole foundation for an order for costs” being made (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at [41]) the factor must constitute the justifying circumstances.
In some cases, the justifying circumstances may be the financial circumstances of each of the parties.
The manner in which costs are to be assessed is dealt with in r 12.17(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("the Rules"), which provides:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount; or
(b) as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
Rule 12.17(3) sets out matters that may be considered in the determination of the quantum of costs, providing that:
(3) In making an order under subrule (1), the court may consider the following:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party's behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer's conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceedings, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
The provisions of the Act and the Rules confer a broad discretion on a judge hearing and determining a costs application.
CONSIDERATION
Noting that the husband did not revive his application for indemnity costs before me (and there was no cross-appeal filed), the husband’s application is limited to the following, adopting the paragraphs of the original application in a proceeding:
Hearing of 22 May 2023
…the [wife] pay the [husband’s] costs as agreed or assessed… on a party/party basis;
Costs of the proceedings
8. …the [wife] pay the [husband’s] costs as agreed or assessed… on a party/party basis;
Costs of this Application
9. The [wife] pay the [husband’s] costs of an incidental to this application.
For her part, the wife sought that the husband’s application be dismissed.
The are three distinct applications:
(1)The application for the costs of the 22 May 2023 hearing;
(2)The application for the “costs of the proceedings”; and
(3)The applications for the costs of the costs application.
Application for costs of 22 May 2023 hearing
The husband seeks a departure from the usual rule in respect of costs, in respect of costs incurred by the wife’s Application in a Proceeding filed 5 May 2023.
The application filed 5 May 2023 sought interim property orders, orders concerning expert evidence and vacation of the trial dates which had been allocated by the Court. That application was withdrawn and dismissed on 22 May 2023. On 30 May 2023 the parties agreed to interim property orders and final parenting orders.
The justifying circumstance, upon which the applicant relies to depart from the usual rule, is that the application was withdrawn and the wife was in, in those circumstances, wholly unsuccessful. It cannot be overlooked that the wife obtained some of the relief which she sought (interim property orders) 8 days later by consent and the parties were at Court for a brief period of time on 22 May 2023 during which their parenting consent orders were made.
The husband does not identify any other basis upon which the Court would find that the circumstances justify departure and I propose to dismiss the application.
Application for the “costs of the proceedings”
The application identifies that costs of the proceedings are sought from 30 August 2021. That date is the date the parties attended a conciliation conference. Following the conference a letter was sent by the husband’s lawyers to the wife’s lawyers by email.
The husband, in his outline of submissions, identified three bases upon which costs of the proceedings should be ordered:
(1)The wife’s “unsuccessful tryst in attacking the single expert report”;
(2)The fact that the wife abandoned her “addback” argument on the last day of the hearing;
(3)The offers made by the husband to settle the matter.
It is necessary to consider whether the three matters identified are matters which would be arise under s 117(2A) of the Act. The matters raised in (1) and (2) could only be relevant considerations under s117(2A)(c), or (g).
I have read the husband’s written submissions as they relate to (1) and (2) and I am not satisfied that the matters raised are properly characterised as arising under s 117(2A)(c) being concerned with the “conduct of a party to the proceedings as regards the proceedings”. In my view the section is concerned with more than a party being unsuccessful in establishing a contention at trial. I do not think that the matters which are outlined by the husband’s submissions are relevant considerations under the “catch all” sub-section either.
Section 117(2A)(c) reads: “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”. It is clear that it is a non-exhaustive list of the types of conduct which may attract the discretion to depart from the usual rule. The conduct the husband highlights on this costs application is really confined to the trial itself. In effect, the husband is saying that the wife ought to have known that her position would not be vindicated and should not have instructed her lawyers to pursue the issue.
Accordingly, it is necessary to determine whether the offers of settlement which were made are relevant to the determination.
The fact of offers of settlement having been made enlivens the discretion to consider whether that fact is a justifying circumstance such that it would be proper to depart from the usual rule.
The offer of 30 August 2021 was very close (in dollar terms) to the ultimate distribution of assets as between the parties pursuant to the orders of the primary judge. It is plain that had the wife accepted the offer then the parties would each have been in a better position financially because they would not have accrued further legal fees. There are two further issues which require consideration:
(a)The interaction between the offer concerning parenting and the offer relating to property;
(b)Whether the wife had sufficient disclosure to properly consider the husband’s offer at the time it was made.
The offer of 30 August 2021 does not mention parenting matters and if accepted would have ended the financial proceedings.
The evidence does not assist me greatly to determine the issue of whether the disclosure was sufficient to assist the wife. The central issue relating to disclosure seems to relate to the husband’s business. The offer said:
That the [sic] Mr. [Farnell] retain the business and all associated debts of the same to the exclusion of Ms. [Farnell];
The business would appear to be a company, C Pty Ltd. In Exhibit A the husband identified various assets as belonging to the “business”: Motor Vehicle 2, Motor Vehicle 3, Motor Vehicle 4, Motor Vehicle 5, laptop & printer and bank accounts. Correspondingly, the husband also identified various debts as belonging to the business (e.g. a Motor Vehicle 3 lease). A balance sheet (Exhibit MSF #1) indicates that a joint valuation of the company as at May 2021 attributed a NIL value to the shares.
On 25 August 2021 the wife, through her lawyers, raised the husband’s use of business funds to meet personal expenses, providing an excel spreadsheet in which she had identified expenses totalling $239,115.45 which she was querying as personal to the husband.
The primary judge referred to the evidence about this topic at [21] – [22] of the reasons for judgment in Farnell & Farnell [2024] FedCFamC2F 222.
On 26 August 2021 the wife’s lawyers sent a disclosure request to the husband’s lawyers requiring various bank statements, the husband’s 2021 individual tax return, and various tax documents pertaining to C Pty Ltd.
On 30 Augst 2021 the wife’s lawyer’s correspondence said:
We note that your client has not complied with the Court Orders requiring the exchange of financial disclosure documents which was an impediment to the discussions had by the parties at the Conciliation Conference on 30 August 2021.
That correspondence specifically requested further disclosure within 7 days to assist in formulating an offer and to “properly consider your Offer of Settlement dated 30 August 2021…”
Exhibit A also contained a letter dated 15 December 2021 which asserted that there had been no response to the offer of 30 August 2021.
By letter dated 17 December 2021 the wife’s lawyers said: “As you are aware there are outstanding issues including disclosure and the business value that need to be addressed. Your client’s non-compliance with his duty of full and [sic] financial disclosure will be brought to the Court’s attention to explain why our client has not been in a position to progress the property matter.” The letter then listed the documents said to be outstanding (some of the documents related to the Company). That request was said to be outstanding as at 2 February 2022. On 8 March 2022 a further request for disclosure was made by the wife of the husband – specifying the documents said to be outstanding.
It should be noted that at the same time the husband was claiming that there were deficits in the disclosure which he had received from the wife but this is of lesser moment in the context of the costs dispute since she was a PAYG tax payer and the husband was not raising a lack of access to financial information as the basis of his having been unable to properly consider any offer made by the wife.
From the legal correspondence, it is clear that the wife raised concerns about access to information in the context of the offer which the husband made in circumstances where she had doubt about the conclusions of the joint expert report in valuing the shares in the company at NIL and concerns about the asserted utilisation by the husband of company funds to pay personal expenses.
Given the outstanding disclosure issues, I am not satisfied that the husband has persuaded me that he provided the wife with the documents necessary to evaluate the offer of settlement dated 30 August 2021.
I turn then to consider the offer of settlement which was next in time.
The husband made an offer of settlement following a conciliation conference on 10 March 2022. The offer of settlement was in respect of both financial and parenting matters but not expressly said to be a “package”.
That offer of settlement differed from the earlier offer in so far as the husband proposed that outstanding school fees for the parties’ child be paid from the monies held in trust before those funds were divided between the parties. He also sought that he receive $1,200 in respect of mediation fees. If both those amounts were deducted before the proceeds were divided, then the wife would have received slightly less than was awarded by the primary judge.
It should be noted that the parties would have been financially better off had the matter resolved on this basis as they would not have had to incur further legal fees (at least in respect of financial matters).
In rejecting the husband’s proposal, the wife made a counter-proposal on 22 July 2022. The husband disputed the balance sheet upon which this proposal was made and rejected it both in respect of parenting and property. The husband’s new proposal was dated 8 August 2022. In responding to that offer (on 10 October 2022) the wife’s lawyers referred to outstanding disclosure requests dated 22 July 2022 and 2 September 2022 and sought that the documents be provided by 17 October 2022. It is not clear from the evidence before me whether the documents were provided as requested. If the wife had accepted the husband’s 8 August 2022 offer then she would have received approximately the same amount as was ultimately ordered but would have been spared further legal fees.
The affidavit of Ms R says that the valuation of the husband’s shares in the Company was raised at Court on 25 July 2022 at which time the primary judge was said to have raised the wife’s entitlement to seek an alternate valuation. Ultimately this did not occur. Accordingly, the wife’s conduct at this point indicated that she did not intend to challenge the single expert value. It is in that context that it is necessary to give consideration to her failure to accept the 8 August 2022 offer.
The husband made a further offer on 13 March 2023 in identical terms to the 8 August 2022 offer except it was described as “one final all inclusive offer” and dealt with parenting and property.
On 23 March 2023 the husband’s lawyers followed up a response to the offer of 13 March 2023. On 25 May 2023 the wife instructed her lawyers to accept the offer, in respect of property, with parenting matters agreed subject to clarifying instructions. The offer was withdrawn after the wife had accepted it (even though it is not clear on the face of the offer that it was time limited). The effect was that the parties remained in dispute and the hearing proceeded. The husband made a new offer on 25 May 2023 which was less favourable to the wife (and sought to provide her with less than the primary judge ultimately ordered).
The matter was not reached on 30 May 2023, though the parties made final consent parenting orders on that day.
Had the husband allowed the wife’s acceptance of his earlier offer as restated by her on 25 May 2023 each party would have received a more favourable outcome having regard to the legal fees expended.
I have had regard to the offers of settlement made by the parties as outlined in the evidence. I have taken into account the evidence which supports the submission that the wife was not provided with all the relevant documents about the value of the Company to the husband in a timely fashion, particularly in respect of the August 2021 offer.
It would appear as though both parties made good faith attempts to resolve the dispute between them. In hindsight, it is plain that they would have been financially advantaged had they been able to resolve the dispute on the terms the husband proposed from the outset.
It is important for parties to understand that the intention of the Act and the Rules as they relate to the offers of settlement and their costs consequences is to encourage offers of settlement, to encourage parties to take a commercial approach to the resolution of financial matters and to consider whether compromise may leave them in a stronger financial position overall.
While I find there are circumstances justifying a costs order, I am of the view that the wife squarely raised her need to be provided with relevant documents such that it would be appropriate to limit the scope of a costs order in the following manner:
(a)Costs should only be awarded from the date of the August 2022 offer of the husband;
(b)Costs should be on a party/party basis;
(c)Costs should not include any costs relating to the parenting aspect of the matter;
(d)Costs should not include any costs relating to the Application in a Proceeding filed 5 May 2023;
(e)Costs should not be awarded after 25 May 2023 being the date of the wife’s attempt to accept the husband’s offer;
(f)Costs should be as agreed or assessed.
Costs of the costs application
The wife sought that the application for costs be dismissed. That has not occurred and in that regard, she has been wholly unsuccessful. I take into account the parties’ respective financial position as set out in paragraphs [84] – [101] of the reasons for judgment in Farnell & Farnell [2024] FedCFamC2F 222, by which I conclude that the husband is in a stronger financial position than the wife. The husband offered to settle the costs application. I am unable to assess the appropriateness of his offer given the basis upon which I have awarded costs but do not anticipate that the agreed or assessed costs will be as high as $50,000. Doing the best I can I find that it is appropriate that the wife pay the husband’s costs of the costs application at scale.
COSTS
The appeal has succeeded as a consequence of an error of law. The applicant and respondent both sought that if the appeal were to be allowed on a question of law that they each be granted a certificate under the Federal Proceedings (Costs) Act 1981 (Cth).
I find that it is appropriate that the appellant and respondent receive the benefit of a costs certificate for the appeal and will so order.
I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 30 April 2025
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