Farnell & Farnell (No 2)
[2024] FedCFamC2F 1417
•22 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Farnell & Farnell (No 2) [2024] FedCFamC2F 1417
File number(s): PAC 5064 of 2020 Judgment of: JUDGE MYERS Date of judgment: 22 October 2024 Catchwords: FAMILY LAW - Costs. Legislation: Family Law Act 1975 (Cth) ss 79, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 192
Civil Procedure Act 2005 (NSW) s 98
Cases cited: Black v Kellner (1992) FLC 92-2872;
Brown & Brown (1998) FLC 92-822, 85,347;
Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 801;
Duncan & Duncan (No.3) [2015] FCCA 945, [25]-[28];
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another [2005] FamCA 158;
Hamod v State of NSW [2011] NSWCA 375, [813];
I and I [1995] FamCA 80, [5];
In the Marriage of Jensen (1982) 8 Fam 594, 595;
Oshlack v Richmond River Council (1998) 193 CLR 72;
Soglia and Soglia [2020] FamCAFC 122, [37];
Tritton & Ducatti [2020] FamCA 392, [24].
Division: Division 2 Family Law Number of paragraphs: 115 Date of last submission/s: 6 August 2024 Date of hearing: 6 August 2024 Counsel for the Applicant: Mr Fermanis Solicitor for the Applicant: Family Focus Legal Pty Ltd Counsel for the Respondent: Mr Bennett Solicitor for the Respondent: Clear Lawyers ORDERS
PAC 5064 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR FARNELL
Applicant
AND: MS FARNELL
Respondent
ORDER MADE BY:
JUDGE MYERS
DATE OF ORDER:
22 OCTOBER 2024
THE COURT ORDERS THAT:
1.The Respondent Wife pay to the Applicant Husband costs assessed in the sum of $56,973.76 (being the combined total of $51,617.76 and $5,356) within 28 days of these Orders.
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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MYERS:
This is a decision in relation to an Application for Costs made following the delivery of a final property decision in the matter of Farnell & Farnell on 2 May 2024.
The Applicant Husband, Mr Farnell (‘the Husband’) seeks costs against the Respondent Wife, Mrs Farnell (‘the Wife’) as set out in his Application in a Proceeding filed on 29 May 2024 (under date headings) that provides:
Hearing of 22 May 2023
1. The Respondent pay the Applicant’s costs of and incidental to the Respondent’s Application in a Proceeding filed 5 May 2023 fixed in the amount of $4,889.50
2. In the alternative to Order 1 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
Hearing of 30 May 2023
3. The Respondent pay the Applicant’s costs of and incidental fixed in the amount of $24,007.50.
4. In the alternative to Order 3 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
Hearing of 23 August 2023
5. The Respondent pay the Applicant’s costs of and incidental to the Respondent’s Application in a Proceeding filed 15 August 2023 fixed in the amount of $7,906.25.
6. In the alternative to Order 5 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
Costs of the Proceedings
7. The Respondent pay the Applicant’s costs of and incidental to the proceedings from 30 August 2021 fixed in the amount of $149,963.77.
8. In the alternative to Order 7 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on an indemnity basis (or in the alternative on a party/party basis).
Costs of this Application
9. The Respondent pay the Applicant’s costs and incidental to this application.
The Court listed the Husband’s Application for Directions Hearing on 13 June 2024. On that date the Court made the following orders:
1.The Respondent wife is to file and serve a Response and an Affidavit in support of the orders sought by her by no later than 4:00pm on 28 June 2024.
2.The parties are to file and serve any written submissions they seek to rely upon together with a short tender bundle, not less than three (3) business days prior to the Interim Hearing.
3.The parties’ costs of today’s proceedings are hereby reserved.
4.The parties are granted liberty to provide Final Terms to Chambers with respect to the issue of costs, and upon receipt of such, the next return date will be vacated.
5.The matter is adjourned for Interim Hearing on 6 August 2024 at 10:00am with respect to the Application for costs (by way of submission only). The matter will proceed in person at the Parramatta Registry.
The Wife filed her Response to the Husband’s Application on 29 July 2024 in which she sought orders that the Husband’s Application for Costs be dismissed and that the Husband pay her costs of the Application.
The costs hearing proceeded by way of submissions in person on 6 August 2024 where the Husband was represented by Mr Fermanis of Counsel, and the Wife was represented by Mr Bennett of Counsel.
The Court considered the oral submissions made by Counsel, the parties’ written submissions and the documents that formed Exhibits ‘A’, ‘B’ and ‘C’ in the cost proceedings.
In many civil jurisdictions cost follow the event. The laws that provide for that position are found within:
1.The Civil Procedure Act 2005, which authorises the making of orders with respect to costs: s 98, including gross sum costs orders: section 98(4)(c), capped costs orders: section 98(4)(d), and costs orders against legal practitioners: section 99, Civil Procedure Act.
2.Rule 42.1, Uniform Civil Procedure Rules 2005 (“UCPR”), which establish the general rule that costs “follow the event”.
3.The Legal Profession Uniform Law Application Act 2014 and Legal Profession Uniform Law, or (for proceedings which commenced before 1 July 2015), the (now repealed) Legal Profession Act 2004.
The Civil Procedure Act 2005 (NSW) (‘Civil Procedure Act’) is the primary source of most civil courts’ powers to award costs and confers on those courts “full power” to determine by whom, to whom and to what extent costs are to be paid, on what basis, and at any stage of proceedings, unless there are statutory provisions to the contrary (see s 98 Civil Procedure Act). Courts may exercise that power where the circumstances warrant such, having regard to the scope and purpose of the said Act (see s 98 and Oshlack v Richmond River Council (1998) 193 CLR 72; Hamod v State of NSW [2011] NSWCA 375 at [813]). However, the powers conferred at s 98 of the Civil Procedure Act are expressed to be subject to “any other Act”.
Unlike many civil jurisdictions, proceedings under the Family Law Act 1975 (Cth) (‘the Act’) are not proceedings where costs follow the event. The specific power of the Federal Circuit and Family Court of Australia (Division 2) to award costs in proceedings is found at s 192 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) where s 192(4)(d) and (e) provide:
(4) In particular, the Federal Circuit and Family Court of Australia (Division 2) or Judge may do any of the following:
(d) award costs against a party;
(e) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise.
When determining what order for costs should be made, if any, the Court must have regard to s 117 of the Act that provides:
(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.
(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.
For reasons that are unnecessary to discuss, the provisions of subsection 102QAB(6) and ss 117AA and 117AC are not relevant to the determination of the Application for costs made in these proceedings.
Importantly, s 117 essentially provides for a two-step test where the starting position is that each party to proceedings under the Act must bear the party's own costs. Where the Court considers making an order for costs, firstly, it is necessary that the Court be of the opinion that there are circumstances that justify it in making a cost order, and secondly, when making a cost order the Court must make an order that the Court considers just.
Helpfully the Legislature have provided a non-exhaustive list of matters the court shall have regard to at s 117(2A) of the Act, as set out above, when determining whether the court is of the opinion that it is justified in making a cost order that it considers just.
At various times the High Court, the Full Court and first instance trial judges (of what is now Division 1 and Division 2 of the Court) have sought to consider and provide guidance in relation to the exercise of the Court’s discretion when determining an application for costs pursuant to s 117 of the Act.
In Duncan & Duncan (No.3) [2015] FCCA 945 at [25]-[28] Judge O’Sullivan summarised a number of decisions dealing with the court’s consideration of costs and the factors found at s 117(2A) setting out:
25. The High Court in Penfold (supra) has said that the wording of that section does not create an onus on either of the parties and that it is a matter for the Court in each case to consider, having regard to the matters in section 117(2A) of the Act, whether in a particular case to exercise discretion to order costs or not to order costs.
26. The authorities also make it clear that an order for costs is compensatory in the sense that it is awarded to indemnify the successful party against expense to which he or she has been put by reason of the legal proceedings (see Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534; Cassidy v Murray [1995] FamCA 91; (1995) FLC 92-633)……
28. Finally s.117(2) of the Act requires a finding of justifying circumstances as an essential preliminary to the making of an order for costs.
While in In the Marriage of Jensen (1982) 8 Fam 594 at 595 Nygh J noted circumstances in which the court might award costs when considering s 117(2A)(c) stating:
It refers to the manner in which each of the parties conducted the proceedings and if as a result of non co-operation, obstructiveness or otherwise, one of the parties causes the conduct of the proceedings to be unduly prolonged or made unduly expensive to the other side, clearly an order for costs would be warranted.
Similarly, Kay J in Brown & Brown (1998) FLC 92-822 at 85,347 held that:
In many cases there will be an outstanding feature of the case that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other s 117(2A) considerations.
While Henderson J in the decision of Tritton & Ducatti [2020] FamCA 392 at [24] considered the court’s discretion to award costs and observed that:
The power to award costs involves a wide exercise of discretion and the breath of that discretion is not limited as was recognised in a matter of Penfold & Penfold. The Court need not be satisfied that all the factors under section 117(2)(A) have occurred before making a costs order, rather the Court is required to find a justifying circumstances or circumstances as an essential preliminary step before making any costs Order.
While in I and I (1995) 22 Fam LR 557; [1995] FamCA 80 (11 August 1995) at [5]-[6] the Full Court comprising Nicholson CJ, Ellis and Buckley JJ looked at the Court’s broad discretion and held that:
5….However, whether such matters exist or not, the other relevant matters referred to 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. The financial circumstances of the parties is but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties.
6. s.117 confers upon the Court a broad discretion in relation to costs. That discretion is one which the Court should not seek to fetter. As was pointed out by the High Court in Penfold v. Penfold [1980] HCA 4; (1980) FLC 90-80t at page 75,053:-
"It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec. (1) expressed to be subject to subsec. (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs. Subsection (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs."
In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another [2005] FamCA 158; (2005) 33 Fam LR 123 at [41] the Full Court comprising Kay, Warnick and Boland JJ warned against the court needing to find that more than one factor found at s 117(2A) were present in order to award costs, stating:
... A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. 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.
While the Full Court in Soglia and Soglia [2020] FamCAFC 122 at [37] comprising Strickland, Ainslie-Wallace & Aldridge JJ were clear that each factor at s 117(2A) need not be present nor of comparative weight when making a cost order setting out:
Further, there is clear authority that the Court does not need to be satisfied of each and every factor under s 117(2A) of the Act, nor does the Court need to give comparative weight to each of the factors, before making an order for costs. Any factor under s 117(2A) may be the sole foundation for an order for costs (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish and Anor [2005] FamCA 158; (2005) 33 Fam LR 123 at 130).
The Court considers those common factors at s 117(2A) that relate to the Husband’s various claims for costs being firstly, the financial circumstances of each of the parties to the proceedings.
In the Court’s decision delivered on 2 May 2024 the Court found that the Husband earns a significantly greater income than that of the Wife, where at paragraph 69 of the decision the court set out:
…the Husband disclosed an income from [C Pty Ltd] of $2,833 per week. The Court finds that [C Pty Ltd] has provided the Husband with a good source of income and fringe benefits beyond those available to the Wife since separation through her employment as an [administrative assistant] earning some $76,000 per year as disclosed in her Financial Statement filed 25 July 2023. There appears little argument beyond speculation that the contract [C Pty Ltd] has with [F Company] might not be renewed and as such it is the view of the Court that the Husband’s income and the fringe benefits he receives will continue.
The Court further found that the Wife has the care of the parties’ son, and that the Wife was overall entitled to receive assets set out at paragraphs 110 of the Court’s decision as follows:
Of the amount of $678,314.63 the Wife is to receive 57.5% and the Husband 42.5% as follows:
•Wife 57.5% of $678,314.63 = $390,030.91
•Husband 42.5% of $678,314.63 = $288,283.72
The Court additionally found that although the Husband’s company C Pty Ltd has a nil value it is a financial resource of the Husband, and further that the Husband remains liable to the Wife for child support in respect of their son.
While the Court accepts that the Husband has financial resources greater than those of the Wife, there is nothing about the financial circumstances of each of the parties to the proceedings that is persuasive or influential in the court forming an opinion that it is justified in making or not making an order for costs in these proceedings.
Neither the Husband nor the Wife were in receipt of assistance by way of legal aid in the proceedings. Ultimately, these proceedings related to the parties seeking a division of their assets pursuant to s 79 of the Act. Where neither party was legally aided, each of the parties (as do most other parties in property proceedings, except in circumstances where a party is engaging in an abuse of process) approached these proceedings on the basis that they expended monies on legal fees to obtain a financial return. Essentially, the Husband and the Wife engaged in financial risk verses financial reward litigation. The Court importantly notes that while the Husband framed each claim for costs in the alternate where costs be paid in a fixed sum, or on an indemnity basis, or on a party/party basis, the Husband did not initially seek costs be paid in accordance with the scale. In proceedings before this Division 2 court, the scale of costs are set out in Schedule 1 to the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 or in Schedule 3 to the Family Law Rules 2021.
Rule 4.01(1) of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 provides:
4.01 Costs in family law and child support matters
(1) In applying Chapter 12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 in relation to family law or child support proceedings, the Court may apply the scale of costs in Schedule 3 to those Rules or the scale of costs in Schedule 1 to these Rules.
It is widely accepted that the Court may depart from either scale.
On this topic Counsel for the Husband adopted, in the view of the court, an appropriate position in effect abandoning an application for indemnity costs and submitted:
MR FERMANIS: Under (2A). Yes. It’s a consideration, but not a bar. 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.
(Transcript 6 August 2024, page 5, lines 41-47)
The concession made by Counsel for the Husband was, in the view of the Court, wholly reasonable particularly where the court would not have awarded costs on an indemnity basis in any case. This is particularly so having regard to the decision in Colgate Palmolive Co v Cussons Pty Ltd [1993] FCA 801 at [5] in which Shepherd J described the circumstances (absent in this case) in which an application of indemnity costs may apply, including where:
1.Allegations of fraud, knowing them to be false or irrelevant are made;
2.Evidence of particular misconduct which causes a loss of time to the court and to other parties;
3.A party commenced or continued proceedings for an ulterior motive or wilfully disregarded the known facts;
4.Groundless contentions prolonged litigation or where allegations were made that never should have been made;
5.There was an imprudent refusal of an offer to compromise; and/or
6.A party is in contempt of court.
The Court turns to the Husband’s various claims under date heading considering those factors at s 117(2A).
Hearing of 22 May 2023
The Husband seeks the following orders in respect of the Hearing on 22 May 2023:
1. The Respondent pay the Applicant’s costs of and incidental to the Respondent’s Application in a Proceeding filed 5 May 2023 fixed in the amount of $4,889.50
2. In the alternative to Order 1 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
The matter was listed before the Court on 22 May 2023 as a result of the Wife having filed an Application in a Proceeding on 5 May 2023 in which she sought orders that included inter alia:
·The final hearing dates on 30 May, 31 May and 1 June 2023 be vacated;
·That Dr P be appointed to prepare a “Single Expert Valuation Report” in respect of C Pty Ltd; and
·The Wife receive the sum of $268,000 as either an “interim distribution”, or “interim spousal maintenance in a lump sum” relying on sections 72, 74, 80 and 117 of the Family Law Act.
When the Wife’s application came before the court on 22 May 2023 the Court made the following orders:
1.By Consent, the timetable for the filing of the wife’s consolidated trial affidavit is hereby extended to 26 May 2023 at 4:00pm.
2.The Application in a Proceeding filed 5 May 2023 is otherwise withdrawn and dismissed.
3.The Husbands costs of today’s proceedings are hereby reserved.
4.The Court confirms the matter remains listed for Final Hearing commencing on 30 May 2023 at 10:00am, allocating three (3) days.
The Husband’s Counsel submitted that the Wife:
·Was wholly unsuccessful and her withdrawal of the Application in a Proceeding amounted to a complete capitulation.
·Should never have brought the application.
·Made an application that was unmeritorious, and which substantially sought the appointment of an adversarial expert and vacation of the trial dates despite the Wife’s acquiescence vis-à-vis the trial directions.
·Brought the application due to forensic choices made by her when the Court allocated the trial dates.
The Husband’s Counsel further submitted that:
·It cannot be said that the Husband engaged in any course of conduct which gave rise to the application.
The Wife’s Counsel submitted:
In respect of the hearing of 22 May 2023, being a day on which orders were made about the Wife’s application concerning business valuation and an interim distribution. That it was withdrawn and dismissed does not mean the Wife was not entitled to file the application, particularly considering the evidence as it fell about the business of the husband being a financial resource and her urgent need for an interim distribution to fund her legal fees (noting the Court ordered an interim distribution to pay legal fees on 30 May 2023). For what it is worth, the brief Court attendance was used also to regularise timetabling orders, and confirm the hearing dates, and the entire occupation of court time ran from 11:32 am to 11:41 am according to the face of the transcript.
The Court considers that neither parties’ conduct was such that it caused the Court to form the opinion that it was justified in making an order for costs against the Wife. The Court finds that the proceedings were not necessitated by the failure of the Husband or the Wife to comply with previous orders of the court.
The Court finds that the Wife’s Application filed on 5 May 2023 was wholly unsuccessful where the Application was withdrawn and dismissed. It is notable that Order 3 of the Orders made on 22 May 2023 specifically provides that the Husband’s costs of the proceedings be reserved. In other words, the Court, and particular the Wife, was on notice that the issue of costs would be revisited in the future.
There was no suggestion made within either parties’ submissions to the effect that an offer in writing to the other party had been made to settle the proceedings.
The Court is of the opinion that there are no other matters it considers relevant to the determination of the Application for costs made by the Husband in respect of the Hearing of 22 May 2023.
The wording at s 117(2A)(e) requiring the Court to consider what is termed as “wholly unsuccessful” creates a higher bar than had the section provided for a consideration of a party being ‘wholly successful’. It is important to note that in most cases before the Court parties to proceedings under the Act are rarely wholly unsuccessful. In most, but not all cases, parties seeking parenting or property orders receive something. Applications that give rise to parties being wholly unsuccessful in property and or parenting proceedings can include Rice v Asplund type applications made pursuant to s 65DAAA; parenting applications seeking orders for no time; applications made pursuant to s 79A; applications contesting jurisdiction on the basis of the existence or non-existence of a De Facto relationship as defined at s 4AA of the Act; applications seeking to enforce or set aside Financial Agreements pursuant to s 90G of the Act and, as in this case, proceedings in which an application is made and then withdrawn and dismissed. The Court is of the opinion that the circumstances of the Wife’s wholly unsuccessful application justify the Court making an order for costs as against the Wife.
The next question for the court is what order would be just. While the court notes the submission made by Counsel for the Wife that “the entire occupation of court time ran from 11:32 am to 11:41 am according to the face of the transcript” the court also notes that the Husband went to the effort of filing an Affidavit and Outline of Case in response to the Wife’s application and causing his solicitors on the record to instruct Mr Fermanis of Counsel to appear on the Husband’s behalf. Given that the vacation/confirmation of hearing dates were at stake and that the Wife sought a significant sum of money be paid to her being $268,000 it was appropriate that the Husband was represented at the hearing of the Wife’s application on 22 May 2023. The Court is of the view that it is just that the Wife pay the Husband’s costs to be determined later in this decision. Noting the Court will consider the Husband’s other various applications in respect of costs, the Court will defer making an order for costs arising out of the hearing on 22 May 2023 until all other cost applications have been considered.
Hearing of 30 May 2023
The Husband seeks the following orders in respect of the hearing on 30 May 2023:
3. The Respondent pay the Applicant’s costs of and incidental fixed in the amount of $24,007.50.
4. In the alternative to Order 3 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
On 30 May 2023 this matter came before the court for Final Hearing having been listed for three days on 30, 31 May and 1 June 2023. Unfortunately, as is the usual listing practice before Division 2, the matter was over-listed against another matter where neither matter had priority over the other. While this matter could not proceed where the Wife’s legal representatives withdrew, the court date of 30 May 2023 was not wasted where the parties negotiated and entered into final parenting orders. The matter was then allocated a further two final hearing dates on 3 August and 7 September 2023.
The matter which this matter was listed against proceeded and ran across each of 30, 31 May and 1 June, did not conclude and was then listed part-heard for a further day of final hearing and a timetable set for the provision of written submissions. In reality, this matter would not have been given priority over the matter it had been listed against where the other matter was that of a more urgent difficult parenting matter. In those circumstances there is no consideration found at s 117(2A) that would see the court form the opinion that it was justified in making an order for costs relating to the hearing commencing on 3 May 2023.
Hearing of 23 August 2023
The Husband seeks the following orders in respect of the hearing on 23 August 2023:
5. The Respondent pay the Applicant’s costs of and incidental to the Respondent’s Application in a Proceeding filed 15 August 2023 fixed in the amount of $7,906.25.
6. In the alternative to Order 5 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on the indemnity basis (or in the alternative on a party/party basis).
On 3 August 2023, Mr Nicholas Seow of Counsel appeared on behalf of the Respondent Wife. On that same day, Mr Seow commenced cross-examination of the Applicant Husband.
On 11 August 2023, the Court confirmed that the matter would proceed on 7 September 2023 and allocated a further hearing date being 21 September 2023.
On 14 August 2023, the Respondent filed an Application in a Proceeding seeking the following relief:
The Court orders that cross-examination of the Husband be permitted to continue on 7 September 2023 by counsel other than Mr Seow.
The evidence in support of the Wife’s application was deposed to by the Wife’s solicitor. The critical part of this evidence is found in paragraphs 11 and 12 of his Affidavit that provides:
11. [Ms Farnell] said to me that she was concerned that the barrister she had retained and who had prepared for the final hearing was then unable to appear on Day 1.
12. At the conclusion of Day 1, [Ms Farnell] said to me that she wanted Mr Bennett to appear for her on Day 2, whenever that was to be because Mr Bennett was more experienced and had prepared for the trial himself. [Ms Farnell] continues to have that wish.
Counsel for the Husband made the following written submissions as to why the Court should award costs against the Wife being:
31….the Respondent brought the application due to forensic choices made by her when the Court allocated the further trial dates. It cannot be said that the Applicant engaged in any course of conduct which gave rise to the application.
32. This was an indulgence of the Court precipitated by the Respondent.
33. The Respondent should pay the Applicant’s costs fixed in the amount of $7,906.25 or as agreed or assessed on the indemnity basis. This is a matter which justifies a departure from the ordinary practice. The Respondent made a forensic decision of which the Applicant was put to the expense and time. The relief sought in the application was inherently unfair to the Applicant and, but for the Court’s intervention with the mechanism to protect the integrity of the trial, the Court would never have made the orders sought by her.
The court does not accept that the parties were unable to reach a reasonable agreement on terms allowing the Wife to instruct Counsel other than Mr Seow to conclude the hearing. While it might have been a forensic choice made by the Wife to bring the application, it was in turn a forensic decision made by the Husband to oppose the application. As such there is no conduct of the parties to the proceedings that would justify the Court making an order for costs against the Wife.
Further, the proceedings were not necessitated by the failure of a party to the proceedings to comply with previous orders of the court. Neither party to the application was wholly unsuccessful in the proceedings where the Wife was allowed to change Counsel, and the Husband received the benefit of orders that protected his position or in his Counsel’s words “protect the integrity of the trial”. As far as the court is aware neither party to the proceedings made an offer in writing to the other party to the proceedings to settle the application. Where there are no other matters as the court considers relevant, the court is not justified in making an order for costs against the Wife arising out of her application filed on 15 August 2023 and determined on 23 August 2023. The Husband’s application for costs in respect of the hearing of 23 August 2023 is refused.
Costs of the Proceedings
The Husband seeks costs in respect of the whole of the substantive proceedings as follows:
7. The Respondent pay the Applicant’s costs of and incidental to the proceedings from 30 August 2021 fixed in the amount of $149,963.77.
8. In the alternative to Order 7 hereof, the Respondent pay the Applicant’s costs as agreed or assessed on an indemnity basis (or in the alternative on a party/party basis).
The Court considers that neither party’s conduct in the proceedings was such that it caused the Court to form the opinion that it was justified in making an order for costs against the Wife. The Court finds that the proceedings were not necessitated by the failure of the Husband or the Wife to comply with previous orders of the court.
Neither party was wholly unsuccessful in their respective applications seeking a division of assets pursuant to s 79 of the Act where both parties received an award of property by way of final orders.
In order to persuade the Court’s opinion that there are circumstances that justify it in making an order for costs against the Wife, Counsel for the Husband relied upon a series of offers made by the Husband to settle the proceedings on the following dates:
·30 August 2021;
·10 March 2022;
·8 August 2022;
·13 March 2023.
Counsel for the Husband also seeks to rely on offers made by the Wife dated 22 July 2022 and 27 February 2023.
The Court notes that in submissions made on behalf the parties, little attention was given to the effect of the orders made by the Court with respect to what actual sum was to be distributed to the parties from the monies held in trust being the proceeds of sale of the Suburb G property. The Court’s calculations that gave rise to the amount each party was ordered to receive from the proceeds of sale held in trust are found at paragraphs 107-112 of the reasons for the final decision. These calculations took into account the property held by the parties (other than superannuation) and interim distribution of monies that the parties had received during the course of the proceedings from the proceeds of sale of Suburb G totalling $177,000 each. It is important to note what balances existed at what times in respect of the sale proceeds where there were three payments made from the sale proceeds that totalled the sum of $177,000 each and is found at paragraph 56-58 of the Court’s reasons for final decision as follows:
56. On 11 March 2021 the Court made orders that provided:
4. That within seven (7) days from the settlement of the former matrimonial home, the parties authorise [Q Firm] (the conveyancers) to release the amount of $20,000 from the sale proceeds to each party by way of an interim property distribution.
57. On 22 December 2021 the Court made orders that provided:
1. From the funds held in the trust account of the wife’s legal representative, being the proceeds of sale of the former matrimonial home, $7,000 is to be distributed to each party by way of interim property distribution.
57. On 30 May 2023 the Court made orders that provided:
1. Within seven (7) days, the parties do all things necessary and sign all documents to cause the firm trading as [Q Firm] (the Firm) to release funds held in their trust account by way of interim property distribution AND within seven (7) days, the Firm shall release those funds as follows: -
a. $150,000 to the Wife’s solicitor Clear Lawyers on behalf of the Wife; and
b. $150,000 to the Husband’s solicitors Family Focus Legal on behalf of the Husband.
As at the date of the Final Hearing the Court found that the proceeds of sale of Suburb G held in trust available for division amounted to some $296,080.92.
In making its final calculation as to what sum each party would receive from the proceeds of sale the court took into account the property that the parties held or had been distributed where the court found at paragraph 59 of its reasons for final decision:
59. Noting the joint position of the parties and the decision in Omacini & Omacini (discussed above) the Court will add-back those funds that were paid to the parties in the sum of $177,000 each.
Ultimately, the court determined that of the remaining sum held in trust from the proceeds of sale of the Suburb G property in the sum of $296,080.92 be distributed $198,530.91 to the Wife and $97,550.01 to the Husband. This represented a split of proceeds of sale as to 67% to the Wife and 33% to the Husband.
The division of the proceeds of sale as to 67% to the Wife and 33% to the Husband were made at the time of hearing where the parties had both received $177,000 each and had other property that had been assigned a value by the Court. In order to properly consider the offers it is not as simple as just looking at the split made at the Final Hearing or the overall split where the overall split needed to be applied to the then assets of the parties as at the time of each offer. This is no simple task where variables such as values of assets in the balance sheet would have changed and the distribution of monies to each party totalling $177,00 was paid at different times being $20,000 each on or about 11 March 2021, $7,000 each on or about 22 December 2021 and $150,000 each on 30 May 2023. The issue is further complicated where the offers made by the Husband and those by the Wife sought to settle the proceedings on the basis of a percentage division.
13 March 2023 Offer:
Counsel for the Husband set out the following at paragraph 40.10 of the Husband’s submissions:
40.10. On 13 March 2023, the Applicant repeated his offer made on 8 August 2022. This offer was open until 20 March 2023. The substantial terms of the offer were as follows:
1. That the joint credit card debt in the amount of $9,927.29 is paid from the sale proceeds held in your trust account;
2. That [Mr Farnell] receive an amount of $1200 for reimbursement of mediation costs;
3. That thereafter, the sale proceeds held in your trust account are divided on a 60/40% basis in favour of [Ms Farnell];
4. That the sale proceeds held in our trust account are divided on 60/40% basis in favour of [Ms Farnell] to be paid into each parties respective superannuation providers;
5. That thereafter, each party is to retain all assets and liabilities to the exclusion of the other.
The Husband’s offer dated 13 March 2023 was made at a time before the parties received the sum of $150,000 each. In effect the proceeds of sale would have been $596,080.92 at that time. In order to try and ascertain what the actual proposed division in the Husband’s offer dated 13 March 2023 (found at annexure “HH” to the affidavit of Ms R affirmed on 27 May 2024 and filed on 29 May 2024) translated to in terms of the judgment made on 2 May 2024, it would be necessary to add back the sum of $300,000 to the net proceeds of sale that had been distributed equally between both parties and then calculate what a final division would have equated to at that time and further take into account other terms in the offer including the payment made from the proceeds that would affect the overall division such as the payment of a credit card.
As best as is possible the calculations provide:
Net proceeds at the time of hearing: $296,080.92
Less: Credit Card payment $9,927.29
Less: $1,200 payment to Husband for mediation $1,200
Total $284,953.63
Add back $300,000 not distributed as at 13 March ’23 $300,000
Total: $584,953.63
The offer in the letter of 13 March 2023 provided for the Wife to receive 60% and the Husband 40% of the then proceeds of sale that, as set out above, equated to $584,953.63 that results in a distribution as follows:
·Wife 60% of $584,953.63 = $350,972.18
·Husband 40% of $584,953.63 = $233,981.45
As set out above the remaining sum held in trust from the proceeds of sale of the Suburb G property at the time of the hearing was $296,080.92. That sum was distributed $198,530.91 to the Wife and $97,550.01 to the Husband. Each party had received the sum of $150,000.
The actual distribution to the parties, taking into account the Judgment amount and the interim distribution in the sum of $150,000 that both parties received equates to:
·Wife: $198,530.91 + $150,000 = $348,530.91
·Husband: $97,550.01 + $150,000 = $247,550.01
The terms of the Husband’s offer made on 13 March 2023 would have seen the Wife receive more than she was awarded, and the Husband receive less than he was awarded. In other words, the Husband’s offer beat the orders the Wife was able to achieve from the court in respect of the distribution of the proceeds of sale of the Suburb G property.
The terms of the offer in the letter of 13 March 2023 made in respect of superannuation provided:
That the sale proceeds held in our trust account are divided on 60/40% basis in favour of [Ms Farnell] to be paid into each parties (sic) respective superannuation providers.
The Court’s distribution of superannuation contained in the Judgment, while different in form as to that proposed in the Husband’s offer did, as best the court can ascertain, result in the Wife receiving a distribution of superannuation that was less than she would have received had she accepted the Husband’s offer.
The Court notes the offer made by the Husband on 13 March 2023 was not necessarily as straight forward as suggested by the Husband’s Counsel at paragraph 40.10 of the said submissions. While the letter of offer prepared and forwarded by the Husband’s solicitors, Family Focus Legal dated 13 March 2023 did provide the offer for settlement in the same terms as found at paragraph 40.10 of the Husband’s written submissions, it is important to understand and consider what the Husband’s submissions left out. The offer for settlement was not just an offer for property settlement but was also an offer to settle the parenting proceedings between the parties and importantly the offers were interlinked. This interlinking is clear where the letter sets out:
We are instructed to put forward one final all inclusive offer as follows:-
Property
1. That the joint credit card debt in the amount of $9,927.29 is paid from the sale proceeds held in your trust account;
2. That [Mr Farnell] receive an amount of $1200 for reimbursement of mediation costs;
3. That thereafter, the sale proceeds held in your trust account are divided on a 60/40% basis in favour of [Ms Farnell];
4. That the sale proceeds held in our trust account are divided on 60/40% basis in favour of [Ms Farnell] to be paid into each parties (sic) respective superannuation providers;
5. That thereafter, each party is to retain all assets and liabilities to the exclusion of the other.
Parenting
If the above is agreed, we also propose that [X] spend time with [Mr Farnell] each alternate weekend from the conclusion of school or 3:00pm on Thursday until 5:00pm on Sunday. We propose that an additional order is included allowing [Mr Farrell]’s time on Sunday to be extended to 8:30pm upon 48 hours notice.
In addition to the above we propose that all restrictive orders on [Mr Farrell]’s time with [X] in the interim's orders are discharged in that each party has the sole responsibility for the day to day arrangements for [X] whilst he is in either party's care.
In relation to child support, we propose to enter into a binding child support agreement whereby [Mr Farnell] pays all of [X]'s school fees moving forward until the conclusion of his secondary education. We propose that all periodic payments are managed through the child support agency.
If this is not agreed, we will engage our time and resources into preparation of the matter for trial. In this regard, please provide us with the disclosure requested from your client in our correspondence to you dated 23 August 2022, namely:
1. Copies of bank statements from March 2022 to date;
2. A screen shot of the current Mygov superannuation balance together with her most recent superannuation statement;
3. Centrelink Income Statement; and
4. Last three (3) payslips and copy of any new employment contracts signed since March 2022.
We are hopeful that this is not necessary, and the parties can come to an amicable resolution between them without the need for further excessive legal costs.
We confirm that we have briefed Mr. Fermanis of counsel to appear on [Mr Farrell]’s beha and we seek confirmation as to which counsel has been or will be engaged on [Ms Farrell]’s behalf for the upcoming final hearing.
We reserve the right to tender this correspondence in addition to all previous offers put forward in this matter in any application for costs in the future.
We look forward to hearing from you within seven (7) days.
The offer made by the Husband, as set out above was clear. The offer was an all-inclusive offer to settle the parenting and property proceedings. The offer did not allow the Wife any opportunity to settle the property proceedings alone. While it is important to consider this issue, the issue makes no difference to the Court’s consideration of costs where the Husband and Wife entered into final parenting orders by consent on 30 May 2023 that were in effect more generous with respect to the time X was to spend with the Husband. While the parties did not enter into a binding child support agreement, the Court gave the issue no weight where on the face of the offer the binding child support agreement appeared as an offer made by the Husband to entice the Wife to agree to the settlement. While not specifically outlined, the Court accepts that the terms of the letter implied that the offer put forward was made on the basis that each party would pay their own costs in respect of the proceedings.
8 August 2022 Offer
On 8 August 2022, the Husband caused to be sent a letter from his solicitors to the Wife’s solicitors that contained what is expressed as a “counter offer” that provided:
1.That the joint credit card debt in the amount of $9,927.29 is paid from the sale proceeds held in your trust account;
2.That [Mr Farnell] receive an amount of $1200 for reimbursement of mediation costs;
3.That thereafter, the sale proceeds held in your trust account are divided on a 60/40% basis in favour of [Ms Farnell];
4.That the sale proceeds held in our trust account are divided on 60/40% basis in favour of [Ms Farnell] to be paid into each parties (sic) respective superannuation providers;
5.That thereafter, each party is to retain all assets and liabilities to the exclusion of the other.
Helpfully, the letter dated 8 August 2022 (that is found at annexure “DD” to the Affidavit of Ms R affirmed on 27 May 2024) set out that the sale proceeds held in trust amount to $584,953.63 which is the same amount the Court used in its calculations when considering the offer made on 13 March 2023. The property offer was, in the view of the Court, a stand-alone offer and capable of acceptance without accepting the Husband’s parenting proposal that in any case was no better than that which he achieved by way of consent orders made by the court on 30 May 2023. For the same reasons and calculation as set out above in relation to the Court’s consideration of the 13 March 2023 offer, the court finds that the terms of the Husband’s offer made on 8 August 2022 would have seen the Wife receive more than she was awarded, and the Husband receive less than he was awarded. The Court accepts that the letter containing the offer implied that the offer was made on the basis that each party would pay their own costs.
10 March 2022 Offer
On 10 March 2022 (following an unsuccessful conciliation conference), the Husband made an offer in writing. The substantial terms of which were as follows:
1. That the [Mr Farnell] retain the business and all associated debts of the same to the exclusion of [Ms Farnell];
2. That [Ms Farnell] retain [Motor Vehicle 2];
3. That [Mr Farnell] retain [Motor Vehicle 1];
4. That each party retain all household contents and other items in their current possession including the […] lounge and fridge in [Ms Farnell]’s possession;
5. That the sale proceeds of the former matrimonial home are divided as follows: -
a. In payment of the joint credit card debt as owing at the date of separation, being 16 April 2020 and a total $9881.85;
b. Payment to [Mr Farnell] for [Ms Farnell]’s share of the mediation fees incurred in 2020, being a total of$1,200;
c. Payment of the current school fees owed to [X]'s school, being $8,000.30; and
d. That thereafter, [Ms Farnell] receives 60% of the balance and [Mr Farnell] receives 40% of the balance.
6. That [Ms Farnell] receive 60% of the funds from the SMSF and [Mr Farnell] receives 40% of the balance.
7. Thereafter, each party is to retain all other assets and liabilities to the exclusion of the other.
The real difference between the offer of 10 March 2022 and the offers made on 8 August 2022 and 11 March 2023 is the inclusion of the payment of school fees for X’s schooling in the sum of $8,000.30. If that sum was subtracted from the amount available for distribution, the following calculation would apply:
Net proceeds at the time of hearing: $296,080.92
Less: Credit Card payment $9881.85
Less: $1,200 payment to Husband for mediation $1,200
Less: $8000.30 School Fees $8000.30
Total $276,998.77
Add back $300,000 not distributed 13 March 2023 $300,000
Total: $576,998.77
The offer in the letter of 10 March 2022 provided for the Wife to receive 60% and the Husband 40% of the then proceeds of sale that, as set out above, equated to $576,953.33 that results in a distribution as follows:
·Wife 60% of $576,998.77 = $346,199.26
·Husband 40% of $576,998.77 = $230,799.51
As set out above the remaining sum held in trust from the proceeds of sale of the Suburb G property at the time of the hearing was $296,080.92. That sum was distributed $198,530.91 to the Wife and $97,550.01 to the Husband. Each party had received the sum of $150,000.
The actual distribution to the parties taking into the Judgment amount and $150,000 that had both received equates to:
·Wife: $198,530.91 + $150,000 = $348,530.91
·Husband: $97,550.01 + $150,000 = $247,550.01
The terms of the Husband’s offer made on 10 March 2022 would have seen the Wife receive $2,331.65 less than she was awarded, and the Husband receive less than he was awarded. The Court accepts that the Husband’s offer in respect of superannuation equalled or bettered the final orders the court made in respect of the superannuation distribution between the parties. The court accepts that the letter containing the offer implied the offer was made on the basis that each party pay their own costs. While the Husband’s offer did not beat the orders the Wife was able to achieve from the court in respect of the distribution of the proceeds of sale of the Suburb G property, the difference between the two figures was so small that the Court finds the offer cannot be ignored.
30 August 2021 Offer
On 30 August 2021 the Husband caused his solicitor to write to the Wife’s solicitors and make the following offer:
1.That the [Mr Farnell] retain the business and all associated debts of the same to the exclusion of [Ms Farnell];
2.That [Ms Farnell] retain [Motor Vehicle 2];
3.That [Mr Farnell] retain [Motor Vehicle 1];
4.That each party retain all household contents and other items in their current possession including the lounge and fridge in [Ms Farnell]’s possession;
5.That the sale proceeds of the former matrimonial home are divided as follows: -
a. In payment of the joint credit card debt as owing at the date of separation, being 16 April 2020 and a total $9881.85; and
b. That thereafter, [Ms Farnell] receives 60% of the balance and [Mr Farnell] receives 40% of the balance.
6. That [Ms Farnell] receive 60% of the funds from the SMSF and [Mr Farnell] receives 40% of the balance.
7. Thereafter, each party is to retain all other assets and liabilities to the exclusion of the other.
The offer contained within the letter of the Husband’s solicitors Family Focus Legal (that is found at annexure “AA” to the Affidavit of Ms R affirmed on 27 May 2024), while made at the same time as an offer to settle the parenting proceedings, was not drafted in a way that interlinked the parenting and property offers for settlement.
It will be necessary to undertake a calculation to determine the actual outcome of the offer made on 30 August 2021, where the offer was made at a time prior to the Court having made the order on 22 December 2021, that provided:
1. From the funds held in the trust account of the wife’s legal representative, being the proceeds of sale of the former matrimonial home, $7,000 is to be distributed to each party by way of interim property distribution.
The Court therefore undertakes the following calculations:
Net proceeds at the time of hearing: $296,080.92
Less: Credit Card payment $9,881.85
Total $286,199.07
Add back $300,000 not distributed 13 March 2023 $300,000
Add back $14,000 not distributed 22 December 2021 $14,000
Total: $600,199.07
The offer in the letter of 30 August 2021 provided for the Wife to receive 60% and the Husband 40% of the then proceeds of sale that, as set out above, equated to $600,199.07 that results in a distribution as follows:
·Wife 60% of $600,119.07 = $360,071.44
·Husband 40% of $600,199.07 = $240,047.63
As set out above the remaining sum held in trust from the proceeds of sale of the Suburb G property at the time of the hearing was $296,080.92. That sum was distributed $198,530.91 to the Wife and $97,550.01 to the Husband. Each party had received the sum of $150,000 and $7000.
The actual distribution to the parties taking into account the Judgment amount and the two interim distributions in the sum of $150,000 and $7000 that both parties had received equates to:
·Wife: $198,530.91 + $150,000 + $7000 = $349,230.91
·Husband: $97,550.01 + $150,000 +$7000 = $254,550.01
The terms of the Husband’s offer made on 30 August 2021 would have seen the Wife receive $10,840.53 more than she was awarded, and the Husband receive less than he was awarded. The Court accepts that the Husband’s offer in respect of superannuation equalled or bettered the final orders the court made in respect of the superannuation distribution between the parties. The Court accepts that the letter containing the offer implied the offer was made on the basis that each party pay their own costs.
The Court notes the submissions made on behalf of the Wife to the effect that the Wife was not in a position to accept the Husband’s offers where she was dissatisfied with the Husband’s disclosure in the proceedings. Firstly, where the Wife had herself made offers for settlement as will be discussed below and attempted to accept the Husband’s offer for settlement after the offer had expired the argument holds no weight. This is particularly so where the hearing was not run on the basis that the Husband had hidden, transferred, or otherwise improperly disposed of assets in a manner that was designed to put them out of the Wife’s reach or the reach of the Court. Further, although the Wife did advance an argument at the final hearing relying on the decision of the Full Court in Black v Kellner (1992) FLC 92-2872 it did not in any way affect the outcome in the proceedings.
Other Offers
The Court accepts that the Wife made offers to try and settle the proceedings on 22 July 2022 and 27 February 2023. Those offers provided for the Wife to receive a property settlement that exceeded the award made by the Court.
It is of significant note that on 25 May 2023 the Wife, via her solicitor’s email, attempted to accept the Husband’s offer dated 13 March 2023. That email provides:
Dear Colleagues,
Without Prejudice Save as to Costs
We are instructed to accept the offer outlined in your correspondence of 13 March 2023 as it relates to property We understand that the parenting aspect is also in agreement subject to our office clarifying some instructions. We are the process of drafting consent orders to reflect, at minimum, the agreement on property.
The Wife’s solicitor’s email of 25 May 2023 at 9.10AM was forwarded five days prior to the first day of the final hearing. The Court has set out the terms of the Husband’s offer dated 13 March 2023 earlier in this decision. The Court accepts that the offer required a response within seven days from the date of the letter. Instead of the Husband considering the email sent on behalf of the Wife on 25 May 2023 at 9.10AM and then accepting the Wife’s acceptance of the earlier offer he caused an email to be forwarded from his solicitors to the solicitors for the Wife the same day at 10.25AM as follows:
Without prejudice
Dear Colleagues,
As discussed earlier this morning this offer is no longer on the table in circumstances where we had to incur unnecessary fees to defend your application on Monday in addition to preparation and counsel fees already incurred due to your client's ongoing delay.
My client has also informed your client on his position well prior to her application in a case being filed that should the matter proceed and he incur counsel fees.
As such our position is 55% of sale proceeds to our client and 55% of super proceeds to your client. Arrangements for [X] - Fri Mon and additional two nights open to negotiation.
I don't have formal instructions but if your client can put forward 50/50 on sale proceeds I may be able to get this matter settled.
We are otherwise fully prepared to run on Tuesday and will be shortly forwarding the joint balance sheet for your completion.
Mr. Fermanis of counsel will be appearing next week.
The Husband via his solicitors walked away from their four previous 60/40 offers and instead made an offer well less than the Wife received at the final hearing. Had the Husband responded that he would accept the Wife’s acceptance but on the basis she pay his costs of preparing the proceedings from the date of the 13 March 2023 offer then such a position would have added weight to the Husband’s argument in respect of his claim for his costs in the proceedings.
To be clear, at this point in the decision the only other matter the court considers relevant when determining the application for costs made by the Husband against the Wife for the costs of the proceedings, beyond the parties’ written offers and the terms of those offers, is the Court’s determination that it should not award costs in respect of the hearings on 23 August 2023 and 30 May 2023 as discussed above.
While the Court accepts that the offers made on 30 August 2021, 10 March 2022, 8 August 2022 and 13 March 2023 cause the Court to be of the opinion that the Court is justified in making an order for the costs of the proceedings, the Court must make an order that it considers just. The Husband’s failure to accept the Wife’s acceptance of his out of time offer and his solicitor’s email offer in response is a significant factor in the Court’s determination of what order for costs the Court considers just. The Husband did not come even close to receiving an award from the Court where he received 45% of the superannuation and 55% of the proceeds of sale of the Suburb G property. While it is the view of the Court that in hindsight the Wife should have accepted the offers made on 30 August 2021, 10 March 2022, 8 August 2022 and 13 March 2023 the same cannot be said with respect to the Husband’s offer made on 25 May 2023.
It is not in the view of the Court sufficient for the Court to hypothesise that if the Wife had just accepted any of the offers of 30 August 2021, 10 March 2022 or 8 August 2022 then the parties would have never gone to the final hearing without looking at the fact that a substantial amount of costs were incurred by the parties following the Husband’s offer made on 25 May 2023 at 10.25AM.
The Court has considered the reasonableness of the costs sought by the Husband in respect of the hearing on 22 May 2023 in the sum of $4,889.50 and the costs of the proceedings in the sum of $149,693.77 having regard to both the costs the Husband actually paid, as set out at paragraph 59 and annexures “LL” and “MM” of the Affidavit of Ms R affirmed 27 May 2024, that look to amount to $170,954.52 and regard to the cost scale found at Schedule 1 to the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021. The Court determines it is appropriate to apply the above figures in its consideration of what order is just.
Giving weight to the offers made on 30 August 2021, 10 March 2022, 8 August 2022 and 13 March 2023, the Wife’s attempted acceptance of the offer of 13 March 2023 and of the Husband’s offer made on 25 May 2023 at 10.25AM (noting the Court’s determination that it should not award costs in respect of the hearings on 23 August 2023 and 30 May 2023 as discussed above) the Court considers that it is just that the Wife pay the Husband’s costs in respect of the hearing on 22 May 2023 and otherwise in respect of the proceedings fixed in the sum of $51,617.76 being one third of the combined costs sought by the Husband in respect of the hearing on 22 May 2023 in the sum of $4889.50 and the costs of the proceedings in the sum of $149,693.77 together totalling $154,853.27.
Costs in the Cost Proceedings
The Husband seeks an order that the Wife pay the costs of this application as follows:
The Respondent pay the Applicant’s costs of and incidental to this application.
The Court has had regard to the financial circumstances of each of the parties to the proceedings. The parties’ financial circumstances are well documented by the Court in its written reasons contained in the judgment. There is nothing about the parties’ financial circumstances that is persuasive in favour of or against the Court awarding costs against the Wife.
As far as the Court is aware neither party to the proceedings is in receipt of assistance by way of legal aid in respect of these proceedings.
There is nothing about the conduct of the Husband or Wife in relation to the proceedings including, without limiting the generality of the foregoing, conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters that would give rise to the Court considering it justified to make an order for costs against the Wife.
These proceedings were not necessitated by the failure of the parties to comply with previous orders of the Court.
Neither the Wife nor the Husband were wholly unsuccessful in these cost proceedings.
The Court considers 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.
Ms R deposed at paragraph 61 of her said Affidavit as to the following:
61. The Applicant Husband instructed me to make an offer to the Respondent Wife's solicitor relation to the payment of $50 000 of his costs to avoid a costs application having to be filed. response has been received to date. Annexed hereto and marked with the letter "OO" is a true copy of correspondence dated 20 May 2024.
The pertinent part of that offer dated 20 May 2024 found at Annexure “OO” provides:
In this regard and to avoid further legal costs for both parties having to proceed with a cost's application, [Mr Farnell] is willing to resolve the matter as follows: -
1. Within fourteen (14) days, your client shall pay our client the amount of $50,000 to be taken from her share of the sale proceeds held in the trust account of Family Focus Legal.
If this is not accepted, we put you on notice that this correspondence will be tendered in addition to all previous correspondences exchanged with offers to settle in any costs application that shall be filed in the future.
We confirm that our application for costs will be on an indemnity basis and will also include further legal costs in relation to the cost's application in itself.
We confirm that this offer is open for consideration for seven (7) days and after this time, should there be no resolution, we will be filing our costs application without further notice to you.
We look forward to hearing from you.
Yours faithfully,
In hindsight, the Wife should have accepted this offer. She did not, and the Husband’s award of costs, as set out above, was greater than that which he offered the Wife pay. The Court accepts that the offer made causes the Court to be of the opinion that the Court is justified in making an order for costs of the cost proceedings.
Where there are no other matters that the Court considers relevant the Court must now make an order that it considers just. The court considers that an order for costs payable by the Wife to the Husband in respect of these cost proceedings are costs payable in accordance with the scale found at Schedule 1 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021. Pursuant to the scale an assessment of costs would include:
1. Item 2 - Initiating or opposing an application that includes interim orders (other than procedural orders) up to the completion of the first court date Both:(a) $2,947 and (b) the daily hearing fee specified in item 13 that applies to the hearing.
2. Item 13 - Daily hearing fee (a) for a short mention---$321; or (b) for a half day hearing---$1,178; or (c) for a full day hearing---$2,357
3. Item 14 Advocacy loading 50% of the daily hearing fee specified in item 13 that applies to the hearing.; and
4. Item 10 Attendance at hearing to take judgment and explain orders Both:
(a) $321; and (b) the daily hearing fee specified in item 13 that applies to the hearing.
The Court Orders that the Wife pay the Husband’s costs in accordance with Rules based on the following calculation:
Item 2 $2,947
Item 13 (Half Day) $1,178
Item 14 $589
Item 10 $321
Item 10 – Item 13 Short Mention $321
Total $5,356
For the reasons set out above, the Court makes orders as contained at the beginning of this decision, as the court considers just.
I certify that the preceding one hundred and fifteen (115) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Myers. Associate:
Dated: 22 October 2024
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