FULLGRABE and FULLGRABE

[2015] FCWA 72

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: FULLGRABE and FULLGRABE [2015] FCWA 72

CORAM: WALTERS J

HEARD: BY WRITTEN SUBMISSIONS

DELIVERED : 28 AUGUST 2015

FILE NO/S: PTW 5532 of 2013

BETWEEN: MR FULLGRABE

Applicant

AND

MS FULLGRABE
Respondent

Catchwords:

FAMILY LAW - Costs - Where one party wholly unsuccessful - Where proceedings involved a significant parenting dispute, as well as a dispute regarding alteration of property interests - Where husband ordered to pay wife's costs on a party/party basis

Legislation:

Family Law Act 1975 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant: Ms Auburn

Respondent: Ms T Farmer

Solicitors:

Applicant: Robertson Hayles

Respondent: Bowen Buchbinder & Vilensky

Case(s) referred to in judgment(s):

Bele & Vaughan (Costs) [2012] FamCAFC 198

Braithwaite [2007] FamCA 468

Browne & Green (2002) FLC 93-115

Colgate-Palmolive Company and Anor. v. Cussons Pty. Limited (1993) 46 FCR 22

Eades & Wrensted [2014] FCWA 64

Fullgrabe & Fullgrabe [2015] FCWA 9

Hawkins & Roe (2012) 47 Fam LR 526

Kohan and Kohan (1993) FLC 92-340

Kowalski & Kowalski (1994) FLC 92-501

Lenova & Lenova (Costs) [2011] FamCAFC 141

Munday v Bowman (1997) FLC 92-784

Murray & Murray (1990) FLC 92-173

NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77

Pennisi & Pennisi (1997) FLC 92-774

Prantage & Prantage [2013] FamCAFC 105

Re David Costs (1998) FLC 92-809

Redmond & Redmond (Costs) [2014] FamCAFC 55

Robinson & Higginbotham (1991) FLC 92-209

Steel & Steel (1992) FLC 92-306

Yunghanns v Yunghanns (2000) FLC 93-029

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

Introduction

1This is an application for costs made by Ms Fullgrabe ("the wife") arising out of proceedings in which she was involved with her former husband, Mr Fullgrabe ("the husband").

2On 21 January 2015, I published my Reasons for Judgment: see Fullgrabe & Fullgrabe [2015] FCWA 9 ("the Judgment").

3Final orders were made – pursuant to the Judgment – on the same day, 21 January 2015 ("the final orders"). The final orders were in a form to which the parties agreed, but they were not made by consent. Further orders, in relation to superannuation, were made on 16 March 2015.

4Pursuant to paragraphs 22 to 23 of the final orders, directions were made regarding the filing of submissions in relation to the issue of costs. Those paragraphs are as follows:

22)The wife have leave to apply for costs in the following manner:

a)the wife must file and serve a Minute of Orders Sought (in relation to the issue of costs), and written submissions in support of her application for costs, within 28 days:

b)the husband must file and serve a Minute of Orders Sought (in relation to the issue of costs) and written submissions in support within 28 days of the receipt of the wife's documents referred to in (a) above; and

c)the wife have leave to file a brief response to the husband's submissions (limited to a maximum of 5 pages) within 14 days of receiving the husband's documents referred to in (b) above.

23)The issue of costs otherwise be determined by the trial judge in chambers.

Application for costs

5In these Reasons, and unless otherwise indicated:

a)all statements of fact comprise findings of fact;

b)I have referred to the parties in the manner that I have (and I mean them no disrespect by doing so) – because it is less confusing than referring to them in other terms;

c)I have referred to all affidavits filed by or on behalf of the parties as being "sworn", even if they were affirmed by their deponents (and I note that, in a slightly different context, s 5 of the Interpretation Act 1984 (WA) provides, among other things, that "to swear" includes "to affirm"); and

d)references to legislation are references to the Family Law Act 1975 (Cth) – although, when necessary, I have referred to this enactment as "the Act" or the "FLA".

6The wife filed written submissions in relation to costs on 19 February 2015. No minute of orders sought was filed and the submissions themselves were one day late. On 9 April 2015, the Court received correspondence from the solicitors for the wife requesting that, notwithstanding the late filing and failure to provide a minute of orders sought, the issue of costs be determined in chambers on the basis of the material provided.

7The Court replied by way of letter dated 14 April 2015, to the effect that it would proceed to determine the costs issue on the basis of the material filed, provided the husband had no objection. In order to give the husband sufficient time to object should he wish to do so, however, consideration of the wife's application for costs was delayed until close of Registry business on 20 April 2015.

8On 17 April 2015, the Court received a letter from the husband, dated 16 April 2015, in which he objected to the wife's costs submissions being accepted. Consequently, I directed the solicitors for the wife to make a formal application for extension of time within which to file their submissions.

9The wife's application for extension of time was filed on 17 June 2015, by way of an application in a case. The application was listed for hearing on 17 July 2015.

10By letter dated 1 July 2015, the husband set out both his objections to the granting of an extension of time and his objections more generally to any award of costs in the wife's favour.

11The wife's application for extension of time was heard on 17 July 2015. Mr Spashett appeared for the wife. The husband represented himself, via telephone.

12At the conclusion of the hearing on 17 July 2015, I granted the extension of time that had been sought. Relevantly, I ordered that the time in which the wife was to file and serve written submissions in support of her application for costs be extended to close of Registry business on 19 February 2015.

13I gave the husband an opportunity to file further submissions (beyond those contained in his letter of 1 July 2015) if he was minded to do so. He indicated that he was not minded to accept the Court's offer in that regard, and that he was of the view that the submissions contained in his letter of 1 July 2015 were an adequate response to the application for costs. I then ordered that the letter be deemed to comprise the husband's submissions in response to the wife's application for costs.

14Although the wife failed to file a Minute of Orders Sought, it appears from her written submissions that she is seeking costs fixed in the sum of just under $110,000.

15It also appears from the wife's submissions that she may be seeking costs on an indemnity basis. Since there is no clear application for costs on an indemnity basis, I do not propose to consider the issue in detail.

16The husband opposes the making of any order for costs.

Background

17The background to the parties' dispute is set out in detail in the Judgment at [12] to [77]. It is unnecessary to repeat those paragraphs, although I will record that the husband and the wife were born in 1968 and 1969 respectively. They commenced cohabitation in 1994 and were married [in] December 1999. They separated on a final basis in May 2013, but are not yet divorced. There are three children of the marriage: [Child C] (born [in] 1998), [Child A] (born [in] 2008) and [Child B] (born [in] 2010).

The Law

18I discussed the law relating to costs in family law matters in Eades & Wrensted [2014] FCWA 64 at [12] to [58]. I need not repeat the entirety of that discussion in these Reasons.

19The question of costs in family law proceedings is dealt with in s 117. A trial judge has a very broad discretion in costs matters.

20It is not the law that a costs order can only be made in what has been described as "a clear case". Although a finding of justifying circumstances is an essential preliminary to the making of a costs order, there is no additional or special onus on an applicant for an order for costs. The general rule is that each party shall bear his or her own costs, but that rule is expressed to be subject to s 117(2), and it must yield whenever a judicial officer finds that there are circumstances which justify the making of a costs order.

21Section 117(2) provides as follows:

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) … and the applicable Rules of Court, make such order as to costs … as the court considers just.

22Section 117(2A) provides as follows:

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, discover, 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.

23The weight to be given to the various factors referred to in s 117(2A) is a matter for the trial judge. All the factors, however, must be taken into account and balanced when considering whether the overall circumstances justify the making of a costs order. On the other hand, there is nothing to prevent any one of the factors being the sole foundation for an order for costs.

24A disparity in financial resources between parties to family law litigation can sometimes justify an order for costs in favour of the party with fewer financial resources. At the same time, the apparent inability of a party to pay costs is not a bar to a costs order being made in circumstances where – for example – that party's conduct as a litigant warrants such an order.

25There is nothing in the provisions of s 117 to justify any difference in approach to the question of costs in parenting cases. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a "live with" order which does not even establish a prima facie case, the withholding of evidence (and like matters), are common bases for such an order, but they are not necessarily prerequisites. Whether or not such factors exist, all relevant matters referred to in s 117(2A) must be taken into account – as in any application for costs: see I & I (No 2) (supra) and Re David Costs (1998) FLC 92-809; see also Braithwaite [2007] FamCA 468 at [115].

26The majority of the Full Court in Hawkins & Roe (2012) 47 Fam LR 526 (May and Ainslie-Wallace JJ) said at [147]:

Whilst the categories of occasions when costs may be ordered is not limited, the occasions on which such an order should be made in a parenting dispute should have some particular features. Where there is a complete absence of preparedness to compromise in the face of unambiguous expert evidence, where false allegations are made, or where one party is clearly motivated by self interest rather than the best interests of a child, then a judge may well conclude that there are circumstances justifying an order for costs. (Emphasis added.)

27With the greatest of respect to their Honours, these paragraphs appear to be unsupported by authority. Relevantly, decisions such as I & I (No 2) (supra) contradict them. Although the majority referred to I & I (No 2) (supra) in their judgment, the reference was in a different context: see [18]. Even if I am wrong in these observations, it is apparent that there is an internal inconsistency in the majority's approach: if the categories of occasions when costs may be ordered are unlimited, then it is clearly impermissible to attempt to limit them by suggesting that, before a costs order can be made in a parenting dispute, the case "should" have certain particular features.

28Earlier in their joint judgment, the majority had written at [14]:

In proceedings involving children's or parenting matters, the general rule (that each party should pay his/her own costs) is not often displaced. The rationale for this practice is that in such matters it is proper that parents are able to put their case in seeking orders which they believe to be in the best interests of their children. It hardly needs to be said that the nature of family court litigation in relation to children is quite different to a commercial dispute in the State or Federal courts.

29To the extent that the majority might be perceived to be suggesting – in the various passages referred to above – that the discretion of a judicial officer at first instance to order costs should be fettered by rules or guidelines such as those listed above, I would simply record that the exercise of such discretion cannot be so fettered.

30In his dissenting judgment in Hawkins & Roe (supra), Thackray J also had discomfort with the majority's approach in this regard. At [162], his Honour said:

I also respectfully agree with May and Ainslie-Wallace JJ that the "general rule" that each party will pay their own costs is not often displaced in parenting cases, and that the nature of such litigation is quite different to a commercial dispute in other courts. However, the statute itself does not differentiate between parenting and financial cases. The discretion given to a trial Judge to determine a costs dispute, even in a parenting case, is a very wide one, and I am not persuaded there is an adequate basis for overturning the order.

31As Thackray J implies, statements to the effect that the "default position" (that each party should pay his/her own costs) is not often displaced in parenting cases are simply statements of fact – or, perhaps, perceived fact. They cannot and do not mandate the setting of a higher standard or threshold test to be satisfied before a judicial officer at first instance can make an order for costs in parenting cases. Such an approach would be in direct conflict with the costs provisions of the FLA. Further, the relevance of an observation to the effect that family law litigation in relation to children is quite different to a commercial dispute in the State or Federal courts seems marginal. If a comparison must be made, then it should be between family law litigation in relation to children (on the one hand) and family law litigation in relation to property or other issues (on the other). The law and practice regarding costs in commercial disputes in State or Federal courts is very different to the law and practice regarding costs in family law proceedings.

32I would add that I concur with Thackray J's comment (in Hawkins & Roe (supra) at [161]) that "even a meritorious case can be 'unsuccessful' when the other case is found to have greater merit". Section 117(2A) requires the court to have regard to (among other things) whether a party has been "wholly unsuccessful in the proceedings". This factor clearly says nothing about the merits or otherwise of each party's case, and hence it is not an automatic defence (as it were) to an application for a costs order to argue that the case of a party who was wholly unsuccessful was "not without merit". Again, the breadth of the judicial officer's discretion in relation to costs allows for argument regarding the comparative merits of each party's case and the reasonableness of pursuing the same.

33It follows from the above that I propose to bear in mind that the general rule (to the effect that each party should bear his/her own costs) is not often displaced in parenting cases, and that I should be alert to the need to identify features which might justify a departure from the general rule. I recognise, of course, that some relevant factors might support an order for costs, while other relevant factors might not. At the end of the day, however, the balancing of such matters is a matter for the Court in the exercise of its discretion.

34The law relating to indemnity costs was reviewed by the Full Court in Prantage & Prantage [2013] FamCAFC 105 ("Prantage"). After observing that there is nothing in the FLA which inhibits the making of an order for indemnity costs and confirming that the law relating to such costs has been "well established in this jurisdiction for many years", the Full Court confirmed that the "usual rule" is that costs are awarded on a party/party basis and that an order for indemnity costs is "a very great departure from the normal standard": see Kohan and Kohan (1993) FLC 92-340 at p 79,605.

35In Redmond & Redmond (Costs) [2014] FamCAFC 55, the Full Court cited with approval the following extract from the decision of Strickland J in Bele & Vaughan (Costs) [2012] FamCAFC 198 (references omitted):

[27]The ordinary rule is that an order for costs is calculated on a party/party basis, and it emerges from the authorities … that to depart from that rule exceptional circumstances need to be demonstrated.

[28]As to what might constitute an exceptional circumstance, reference can be made to the oft-cited decision of Sheppard J in Colgate-Palmolive Co & Another v Cussons Pty Ltd where his Honour detailed circumstances that might qualify. Usefully, Holden J in Munday v Bowman (1997) FLC 92-784 … drew from the decision of Sheppard J the following examples:

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

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

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

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

e)An imprudent refusal of an offer to compromise.

36The approach described by Holden CJ in Munday & Bowman (supra) (relying, as it does, on Sheppard J's dicta in Colgate-Palmolive Company and Anor. v. Cussons Pty. Limited (1993) 46 FCR 22) remains good law. In Prantage, however, the Full Court emphasised that Sheppard J referred to an "imprudent refusal of an offer to compromise", and not to imprudence by a party in his or her general approach to the proceedings. The former may be sufficient to enliven the power to award indemnity costs; the latter is not.

37The Full Court in Prantage also emphasised that there is no rule to the effect that indemnity costs will be ordered "where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation" (see NMFM Property Pty Ltd v Citibank Ltd (No 2) (2001) 109 FCR 77). The conduct of a party that is relevant to the issue of indemnity costs is that party's conduct as a litigant.

38I would add that it is, of course, the relevant party's conduct as a litigant to which the reference to conduct in s 117(2A)(c) is directed, and not his or her conduct in other respects.

39Notwithstanding the matters discussed above, "the categories of circumstances which enliven the discretion to award indemnity costs are not closed…": see Yunghanns v Yunghanns (2000) FLC 93-029 at [31].

Section 117(2A) considerations

40I turn now to consider the various matters referred to in s 117(2A). Before doing so, however, I will again record that I accept that the general rule (that each party should pay his/her own costs) is not often displaced in proceedings involving children or parenting matters. I also accept that the determination of the parenting aspect of the substantive dispute – relating, as it did, to the best interests of the parties' children – was of very great importance to both parties. Further, I am aware that I must be satisfied that there are circumstances that justify the making of an order for costs before proceeding to make such an order. Although, for the reasons that I have indicated above, I am not persuaded that my discretion is fettered in any way simply because these proceedings included a dispute regarding parenting issues, in the course of exercising my discretion I am prepared to consider whether the case (or a significant part of it) might fall within or contain one or more of the "features" alluded to by the majority of the Full Court in Hawkins & Roe (supra).

41The headings I have used below are simply a "shorthand" way of referring to each relevant consideration in s 117(2A).

The parties' financial circumstances

42I discussed the parties' financial circumstances in detail in the Judgment. The effect of the final orders is summarised in the Judgment at [442].1 I do not intend to reproduce that paragraph here.

43The wife submits that the husband has sufficient funds to meet an order for costs. She also asserts that the husband has received an offer for the sale of the former matrimonial home at a value higher than that attributed to the property in the property schedule in the Judgment, but there is no evidence properly before me that such an offer has been formally presented. It follows that I am not persuaded – on the basis of this information alone – that the husband has the capacity to meet a costs order.

44Moreover, the husband submits that he has no ability to meet any order for costs. He says that he continues to suffer the effects of Ross River virus, which prevent him from working. He also says he is not in receipt of any form of insurance or worker's compensation and that he supports himself and Child C (who lives with him) from Centrelink payments – although he does not specify how much he receives.

45The husband added that "due to the nature of the Ross River Virus", he has applied for a disability pension. Approval of that application was "pending" as at 1 July 2015.

46The husband submits that he has extensive debts, including approximately $14,500 owing to his previous lawyers and $34,000.00 owing to his parents. He estimates his current level of debt at approximately $75,000. Indeed, he says that, should a costs order be made against him, his only option would be to declare bankruptcy.

47As I have indicated above, however, the husband's inability or apparent inability to meet an order for costs does not, in itself, prevent the making of a costs order. Still, there can be no doubt that it is a factor which the Court must take into account (along with all other relevant factors).

Whether any party was in receipt of legal aid

48Neither of the parties was in receipt of legal aid.

The conduct of the parties in relation to the proceedings

49I reiterate that this factor requires the Court to have regard to the parties' conduct as litigants.

50I have already made findings about the husband's conduct during the course of the trial. These can be found in the Judgment at [222] to [233]; see also [264] and [265]. While the husband was obdurate, and was in all respects a most unimpressive witness, his behaviour at trial is only marginally relevant to his conduct as a litigant as envisaged in s 117(2A)(c).

51The wife contends that the husband drew out proceedings unnecessarily by initially agreeing in July 2013 to the relocation of the wife and the two younger children to Perth, and then reneging. His earlier agreement to the proposed relocation never sat comfortably with his evidence at trial that it was almost inconceivable to him that such an arrangement could occur, and that it was beyond his ability to contemplate how it might operate in practice if the Court were minded to allow it.

52While the husband may have behaved unsatisfactorily in this respect, there is no evidence before me that he withdrew his original consent to the relocation in order to deliberately delay the proceedings. He is not to be penalised for, as it were, rethinking his position.

53It was also submitted on behalf the wife that counsel for the husband delayed proceedings by making an application – on the final day of the trial – to recall the wife and cross-examine her on the basis of documents which had not been disclosed previously. This resulted in a delay of approximately half a day.

54The documents which formed the basis of the application should have been disclosed at an earlier stage, and some time was lost in dealing with the subject, but I am not satisfied that the delay was substantial in the circumstances. It did not cause the trial to "roll" into an extra day.

55The wife submitted that the husband's emphasis was on the property aspects of the parties' dispute (and that less focus was directed to the parenting case). This led to the husband dwelling on issues relating to disclosure to an unwarranted extent – particularly when regard is had to the fact that the value of the parties' property was extremely modest.

56I am satisfied that the husband's determination to "chase every rabbit down its burrow" in relation to disclosure was unreasonable in the circumstances. Overall, however, I am not convinced that the husband's conduct as a litigant is a consideration to which significant weight should be given.

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

57This does not appear to be a relevant consideration, and neither of the parties suggests that it is.

Whether a party has been wholly unsuccessful

58The orders sought by the parties were summarised in the Judgment at [107] to [126]. It is clear that the husband was unsuccessful in obtaining the orders he sought – although I note that by the conclusion of the trial the husband had resolved to simply leave the disposition of the property aspect of the proceedings to the Court. The husband's closing submissions did not deal with the subject to any significant extent: see the Judgment at [114].

59The husband was wholly unsuccessful when it came to his attempt to restrain the wife from removing the children from [Coastal Town A]. I accept that the husband was entitled to oppose the relocation and to present his arguments in support of his case, but it is nonetheless the case that he was unsuccessful in convincing the Court that –

a)the relocation would assist the wife in her attempts to "adversely influence" his contact time with the children: see husband's trial affidavit at [12];

b)the children would struggle to adjust to living in Perth, and would find the relocation stressful; and

c)the wife had not properly thought through the ramifications of the proposed relocation, and had put her own interests before those of the children.

60Part of the husband's proposals was that Child A and Child B, who had never spent a night alone in his care, should commence a week about shared care arrangement (spending equal time with each of their parents). It was only in her closing address that Ms Auburn (for the husband) indicated that she would not press the issue of equal time.

61Ultimately, I was satisfied that it was in the children's best interests to allow the wife to relocate with them to Perth and that the relocation proposal was not motivated by a desire on the wife's part to impede or reduce the husband's contact or relationship with Child A and Child B: see the Judgment at [368]. I found that the husband's proposal for a week-about arrangement was ill-considered and misconceived, and commented on his unwillingness to compromise and his failure to suggest practical proposals regarding contact in the event of the Perth proposal being adopted: see, for example, the Judgment at [230].

62That the husband was wholly unsuccessful in relation to his claim regarding the relocation does not mean, of course, that the wife was wholly successful in obtaining the orders she sought. Indeed, she was not wholly successful in obtaining the orders she sought in relation to property (she sought orders pursuant to which she was to receive 75% of the parties' net assets and financial resources, but was awarded 67.5%). However, Parliament has directed the Court's attention to a party's lack of success in preference to a party's success in the proceedings. As Thackray J said in Hawkins & Roe (supra) at [161], "even a meritorious case can be 'unsuccessful' when the other case is found to have greater merit". In the current proceedings, I found that the wife's case had significantly greater merit than that of the husband. Indeed, "meritorious" is not an adjective that springs to mind when attempting to describe husband's case.

Whether an offer to settle was made

63It appears to be the husband's position (as expressed in his letter dated 16 April 2015) that the wife has acted unreasonably in refusing his offer to settle the financial proceedings and was unwilling to discuss the parenting aspect of the case with him. He says that, at one stage, he made an offer to the wife of a 60/40 property division. Regrettably, no further information was provided about the alleged offer, and it does not appear in any of the relevant correspondence. On the basis of the evidence before the Court, however, it appears that the wife was willing to negotiate with the husband regarding the parenting aspect of the proceedings. Among other things, she was prepared to delay the proposed relocation for up to two years – but she was not prepared to yield to the entirety of the husband's proposals.

64It is clear that the wife made a number of offers of settlement. The first appears to have been in mid-2013. By letter dated 9 July 2013, her solicitors made an offer to the husband in the following terms:

a)there be joint responsibility in relation to all decisions relating to the children;

b)the wife be permitted to relocate with the children to Perth within the next 14 days;

c)the husband spend overnight time with the children in Perth during his rostered time off, with dates and times to be agreed;

d)the parties communicate via telephone about matters pertaining to the children's health and welfare;

e)the former matrimonial home in Country Town A be sold and the proceeds be divided in such manner as to cause the wife to receive 75% of the net asset pool;

f)the parties' furniture and chattels be divided equally; and

g)each party otherwise retain the assets and liabilities in his/her name.

65This offer is similar to the orders sought by the wife at trial. The husband clearly rejected the offer.

66Despite the husband's claim that the wife refused to participate in mediation (see his letter to the Court of 1 July 2015), mediation did occur. Indeed, the mediation resulted in the agreement referred to earlier in these Reasons – which was signed by both parties and provided for:

a)the wife to move to Perth with Child A and Child B;

b)Child C to reside with the husband in Country Town A; and

c)the property proceedings to be settled on the basis of an equal division of the parties' property between them.

67The agreement was signed by both parties on 25 July 2013: see annexure B to the wife's costs submissions.

68Between the signing of the agreement and the filing of his Initiating Application a few months later, the husband obviously changed his mind.

69On 26 June 2014, the wife made an offer to the effect that she would transfer her interest in the formal matrimonial home to the husband in return for the payment of $50,000, plus $40,000 by way of a superannuation splitting order. The offer included a provision to the effect that the wife be permitted to relocate to Perth with Child A and Child B (with holidays to be split equally).

70The husband's counter-offer of the same date was to the effect that the wife's interest in the former matrimonial home should be transferred to him in return for a payment of $10,000, and that the wife should receive $50,000 by way of a superannuation splitting order.

71The wife rejected the husband's counter-offer, after which (according to the wife's costs submissions) he withdrew his consent to Child A and Child B moving to Perth with the wife.

72The wife made a further offer. It was dated 8 July 2014: see annexure C to the wife's costs submissions. Among other things, it proposed that –

a)the parties' net property should be divided on the basis of 65% to the wife and 35% to the husband; and

b)the husband should have the opportunity to retain the former matrimonial home.

73In essence, the proposal amounted to an indication that the wife was prepared to transfer her interest in the former matrimonial home to the husband in return for a payment of $50,000 in cash, plus a further $50,000 by way of a superannuation split.

74This proposal generated another counter-offer from the husband, pursuant to which the husband was to pay the wife a total of $50,000 (including $20,000 by way of superannuation split. The effect of the offer was that the wife was to receive approximately 44% of the parties' property. The wife rejected this counter-offer by letter dated 18 August 2014.

75On 6 November 2014, solicitors for the wife made a further offer to the husband. This offer provided that –

a)the parties' net property be divided between them on a 50/50 basis;

b)the wife would remain in Country Town A for a period of two years, with Child A and Child B to live with her and spend substantial and significant time with the husband; and

c)the wife be permitted to take the two younger children to [Queensland] for Christmas 2014.

76The husband rejected this offer (and advised the wife that he was now seeking shared care of Child A and Child B).

77The wife made further attempts to settle the proceedings before the trial commenced. They were unsuccessful.

78In her costs submissions at [38], the wife said:

The husband's position for trial was unclear and indeed shifted throughout the course of the trial. By his Minute filed for trial he sought that there should be a property division to the wife in an unspecified percentage but articulated as $30,000 from his superannuation and $20,000 cash (with him retaining the home). He also sought that the wife was retrained from moving the children to Perth until the youngest turned 12 years (or 2020), and that the live with he and the wife on a week about basis. See Husband's Minute of Orders Sought at Trial.

79I agree with and adopt the above submissions.

80There can be no doubt that s 117C(2A)(f) does not take priority over any of the other considerations referred to in s 117C(2A), and that the importance of an offer must be weighed in the light of all the circumstances of the case. Further, and as the Full Court said in Robinson & Higginbotham (1991) FLC 92-209 at [78,417]:

… when one looks at [s 117C(2A)(f)] it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and … that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition.

81In Pennisi & Pennisi (1997) FLC 92-774, the Full Court observed at [84,547]:

… [It] is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror – Harris and Harris (1991) FLC 92-254.

We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.

The requirement to take account of certain types of offers is mandatory, providing of course the fact of those offers are in evidence. …

…

The plain words of [s 117C(2A)(f)] do not limit a Court's attention to offers which are greater than the amount awarded. Nor does the paragraph state what consequences flow from whether the offer is greater or lesser than the amount awarded, or how much that is the case. Words of limitation should not be imported into the provision and nor should it be read as though offers in proceedings under the [FLA] carry the same consequences as payments into Court in common law matters.

We do, however, consider that the closer the offer is to the award when the offer is under the amount awarded by the Court, the more weight that should be given to this factor in considering the question of costs. This principle must not, however, be rigidly applied. Offers must be seen in the context of the case and the extent of the offeree's knowledge of the parties' financial circumstances while the offer is live. In the family law jurisdiction, it is not uncommon to find relationships where one party, often the wife, has significantly less grasp of the parties' financial arrangements, or the financial circumstances are so complex that it would be premature to accept an offer. There are also cases where the contents of the offer are in themselves the subject of disputed value and legitimate subject matter for determination. These and other features of the context of offers must be taken into account when considering whether it was reasonable or not to accept an offer, no matter how close to the ultimate result the offer may be.

82In Browne & Green (2002) FLC 93-115 the Full Court said at [57]:

… The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties at the time the offer is made to give it a proper consideration, is something to which very significant weight indeed ought normally be given. …

83More recently, the Full Court dealt with the relevance of an offer to settle in Lenova & Lenova (Costs) [2011] FamCAFC 141. Their Honours said:

[10]In this jurisdiction, costs do not "follow the event"; the Act prescribes, relevantly, that "subject to subsection (2) … each party to proceedings under this Act shall bear his or her own costs" (s 117(1)). As a result, a litigant, or prospective litigant, cannot rely upon a costs order following upon success in the action as a means of dissuading the other party from pursuing unmeritorious litigation or as a means of seeking to persuade the other party from pursuing litigation.

[11]A timely offer in writing genuinely made might, then, be seen as an important part of a limited armoury available to prospective litigants seeking to avoid the costs of litigation. Conversely, where, consequent upon success in an action, a litigant can point to the making of a genuine and timely offer having been made, that offer might be seen as an important (albeit not the only) matter in the exercise of the discretion as to the ordering of costs.

[12]That consideration must, of course, be balanced against a litigant having a limited capacity to meet a costs order, as well as any other relevant considerations. But, a limited financial capacity to meet an order can not be determinative; if it were, a party would always be able to plead impecuniosity as a means of avoiding a costs order in circumstances where pursuit of the litigation has continued in the face of a reasonable offer to cease that litigation and the incurring of its attendant costs.

84Clearly, the Full Court has indicated that weight should be given to an offer to settle – but the offer must be genuine, timely and reasonable, and the person to whom it is made must have "adequate knowledge" to consider the offer. There is nothing wrong with an offer being "tactical", given that its purpose is to avoid the incurring of further costs by causing the other party to reconsider his or her determination to pursue litigation. Like the other matters in s 117(2A), however, a genuine, timely and reasonable offer made to a person equipped to give it adequate consideration is no more than one of a number of factors affecting the exercise of the Court's discretion as to the ordering of costs. It may or may not be decisive.

85All admissible offers, whether or not they are subsequently withdrawn, can be taken into account. This includes offers contained in correspondence in which it is stated that the letter in question will be used on the question of costs: see Murray & Murray , Kowalski & Kowalski and Steel & Steel ). The court's attention is not limited to offers which are greater than the amount awarded where the offeror is the payer, or less than the amount awarded when the offeror is the payee. Where a payer's offer is under the amount finally awarded, then the closer the offer is to the award, the more the weight that should be given to it as a relevant factor in relation to the question of costs. Similarly, and if a payee's offer is above the final award, then the closer the offer is to the final award, the more weight it is likely to carry.

86In all the circumstances of this case, the offers comprise a significant consideration. Had the husband accepted one of the wife's offers made in June, August or November 2014, he would have been in a substantially better position than that in which he found himself after the delivery of the Judgment.

87Moreover, although he is highly critical of the wife's failure to accept his offer, it is clear beyond doubt that she would have been substantially worse off if she had done so. In other words, the effect of the Judgment is that she clearly "beat" the husband's offers.

88Conversely, it is equally clear that the husband failed to "beat" a number of the wife's offers.

89In all the circumstances, this consideration weighs in favour of the making of an order for costs.

Other relevant matters

90I have already discussed the parties' conduct as litigants elsewhere in these Reasons, but to the extent that it is not relevant to the parties' conduct in this regard, I repeat the comments I made in the Judgment at [222] – [233] in relation to the husband's conduct as a witness, and attitude to the proceedings generally.

91An award of costs is compensatory and not punitive: see Braithwaite (supra). Put another way, the Court is not concerned with "punishing" one party for bad behaviour or for being unsuccessful in the proceedings. The fact that the husband was unwilling to compromise, aggressive and, at times, unreasonable, may not be sufficient to warrant an order for costs, but it is not irrelevant to the exercise of the Court's discretion under s 117 either. As discussed above, the Court has a broad discretion in costs matters and the circumstances that justify it in making an order as to costs are not limited to those set out in s 117(2A)(a) to (f) – although, clearly, the circumstances taken into account must be relevant and the order as to costs must be just.

Conclusion

92The Court is obliged to consider whether there are circumstances that justify the making of an order for costs, and if so, what a just order as to costs might comprise. In my view there are circumstances which justify the making of an order for costs in the wife's favour. The most significant of those circumstances are –

a)that the husband was wholly unsuccessful in the proceedings; and

b)the husband's failure to accept the wife's offers to settle.

93In so finding, I have not ignored the husband's claims of penury and have given careful consideration (within the confines of the information available to me) to his apparent inability to meet a costs order. I accept that the husband's financial position is a factor that would mitigate against the making of an order for costs. At the end of the day, however, I am satisfied that the other relevant factors clearly outweigh it. In all the circumstances, it would be unjust and unfair for the Court to fail to make an order for costs in the wife's favour.

94However, I do not consider that the amount claimed by the wife, being just under $110,000, is an appropriate and just award of costs. It appears to reflect costs on an indemnity basis. As explained above, the "default" method for assessing costs is on a party/party basis. Although it is unusual for this Court to make orders on any other basis, it has power to do so. Still, a decision to award indemnity costs must be recognised as a very great departure from the usual basis upon which costs are assessed, and the Court must be satisfied that the circumstances justifying that departure are exceptional in nature.

95I am not satisfied that an order for indemnity costs is appropriate in the present case. Relevantly, I am not persuaded that the circumstances warrant the very great departure from the normal or "default" standard by which costs are assessed inherent within the exercise of the Court's discretion in such a way as to order indemnity costs. Although some elements of the manner in which the proceedings were conducted and some aspects of the husband's attitude to and dealings within them could arguably be regarded as falling within one or more of the examples referred to in (for example) Colgate- Palmolive Company and Anor. v. Cussons Pty. Limited (supra), those elements and aspects are not sufficiently exceptional to warrant the approach seemingly urged by or on behalf of the wife.

96I would add – bearing in mind the dicta in Hawkins & Roe (supra) – that this is a case in which adverse findings have been made about the husband's conduct, including the conduct of his case at trial. Further, I note the following:

a)Although no expert evidence was presented to the Court, the husband's general approach to the litigation revealed an absence of preparedness on his part to compromise.

b)The husband's case included a claim for equal shared care which was misconceived and never likely to succeed (and which was ultimately withdrawn).

c)The inclusion of the claim for equal shared care meant that the case was significantly more complex that it ought to have been.

d)In my opinion, and in relation to his opposition to the wife's proposal to relocate to Perth with Child A and Child B, the husband was motivated by self-interest rather than the interests of the boys. As the Judgment reveals, he was wholly unwilling to consider realistically or constructively the possibility of spending time in Perth if Child A and Child B were to live there. He even declined to consider the possibility of moving to Perth when Child C, who wishes to attend university in Perth, leaves Country Town A. Further, he made no attempt to suggest practical proposals regarding contact in the event of the Perth proposal being adopted. Unfortunately, his ill feeling and antagonistic attitude towards the wife guided and informed, and effectively tainted, his case.

97In all the circumstances, I am satisfied that I should not attempt to assess the quantum of costs in the present case. It is sufficient that I have determined that an order for costs on a party-party basis is appropriate. The quantum of costs can be assessed by a Registrar in the usual manner.

98In my opinion, it is just and appropriate that the husband should pay the wife's costs of and incidental to the proceedings in their entirety.

Orders

99The orders I propose to make are as follows:

(1)Subject to (2) below, the husband must pay the wife's costs of and incidental to the proceedings on a party/party basis ("the wife's costs").

(2)In the event of the parties failing or refusing to agree the quantum of the wife's costs within 28 days from the date of these orders, the wife's costs be assessed by a Registrar pursuant to Chapter 19 of the Family Law Rules 2004 (Cth).

I certify that the preceding [99] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate

28 August 2015

______________________________________

1 See also the Property Schedule attached to the Judgment.