Giunta and Giunta (No. 4)

[2021] FamCA 554

Family Court of Australia

Giunta & Giunta (No. 4) [2021] FamCA 554

File number(s):

SYC 3842 of 2018

Judgment of:

MCCLELLAND DCJ

Date of judgment:

29 July 2021

Catchwords:

FAMILY LAW – COSTS – Where the wife seeks the husband pay her costs of the substantive proceedings for parenting and property orders on an indemnity basis – Where conduct of the husband in the proceedings is a relevant consideration – Where a genuine dispute existed in respect to the parenting aspect of the proceedings – Where the formal written offer of settlement from the wife justifies making of orders for costs in respect to the property dispute – Consideration of calculation of costs – Where conduct of the husband does not justify orders for costs on an indemnity basis – Where no evidence of the nature of work for which the wife has incurred legal costs – Where parenting and property aspects of the proceedings were intertwined – Where the Court is unable to determine fair and reasonable estimate of costs relating to property dispute – Order made for the husband to pay 50 per cent of costs on party/party basis incurred by the wife from date of settlement offer as agreed or assessed.

Legislation:

Family Law Act 1975 (Cth) ss 114, 117, 117C

Family Law Rules 2004 (Cth) rr 1.04, 1.08, 19.18, Sch 1 Pt 1

Federal Circuit Court Rules 2001 (Cth) r 1.03

Federal Court of Australia Act 1976 (Cth) ss 37M, 37N

Family Court of Australia and Federal Circuit Court of Australia, Joint Practice Direction 1 of 2020 – Core Principles in the Case Management of Family Law Matters, 28 January 2020

Cases cited:

Byrnes v Brisconnections Management Company Limited (No. 2) [2009] FCA 1432

Cabasso & Cabasso [2007] FamCA 511

Camm v Linke Nominees Pty Ltd (No. 4) [2013] FCA 223

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123

Giunta & Giunta (No. 3) [2021] FamCA 272

I and I (No 2) (1995) FLC 92-625

Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23

Kennon v Kennon (1997) FLC 92-757

Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664

Modra v Victoria (2012) 205 FCR 445

Parke & The Estate of the Late A Parke (2016) FLC 93-748

Penfold v Penfold (1980) 144 CLR 311

Pierson & Romilly (2020) FLC 93–959

Ryan v Primesafe (2015) 323 ALR 107

Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No. 4) (2012) ATPR 42–403

Specsavers Pty Ltd v The Optical Superstore Pty Ltd (2012) 208 FCR 78

Stoian & Fiening (Costs) [2014] FamCA 944

Superior IP International Pty Ltd v Ahearn Fox Patent and Trade Mark Attorneys [2012] FCA 282

Warbrick & Warbrick (No. 2) (2021) FLC 94-030

Wilson v Porada; The Estate of Peter Wolfgang Porada, late of Pericoe (No. 2) [2017] NSWSC 1362

Number of paragraphs:

73

Date of hearing:

26 July 2021

Place:

Sydney by web conference

Counsel for the Applicant:

Mr O’Brien

Solicitor for the Applicant:

Russell Kennedy Aitken Lawyers

Counsel for the Respondent:

Mr Lloyd SC

Solicitor for the Respondent:

John R Quinn & Co

ORDERS

SYC 3842 of 2018

BETWEEN:

MS GIUNTA

Applicant

AND:

MR GIUNTA

Respondent

order made by:

MCCLELLAND DCJ

DATE OF ORDER:

29 July 2021

THE COURT ORDERS THAT:

1.        Mr Giunta (“the Husband”) pay 50 per cent of the costs incurred by Ms Giunta (“the Wife”), assessed on a party/party basis, in respect to the period subsequent to 14 November 2019, in relation to the Initiating Application filed by the Husband on 18 June 2018.

2.        The amount payable, pursuant to Order 1, is to be paid within 28 days of those costs being agreed or assessed.

3.        The Application in a Case filed 14 July 2021 by the Wife is dismissed.

4.        There be no orders as to costs in relation to the Wife’s Application in a Case filed 7 June 2021 and the Application in a Case filed 14 July 2021.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

REASONS FOR JUDGMENT

McClelland DCJ:

Introduction

This matter concerns the Applications in a Case filed by Ms Giunta (“the wife”) seeking orders requiring Mr Giunta (“the husband”) to pay her costs of and incidental to the substantive proceedings between the parties, commenced by the husband, for final parenting and property orders (“the substantive proceedings”) on an indemnity basis, in addition to orders retaining part of the proceeds of the sale of the parties’ former matrimonial home, pending the determination of the costs application.

My Reasons for Judgment in respect to the substantive proceedings were delivered on 7 May 2021 (“the primary judgment”) (see [2021] FamCA 272). In respect to the parenting issues subject of the substantive proceedings, the primary judgment sets out my reasons for the orders I made providing that the two children of the parties’ marriage live with the wife and spend five (5) nights per fortnight with the husband. That decision, as it relates to the property dispute between the parties, sets out my reasons for determining that a distribution of 55 per cent in favour of the wife was an appropriate, just and equitable adjustment of the matrimonial property pool. It also explains why I made orders requiring the parties to sell the former matrimonial home and to distribute the net sale proceeds in accordance with that adjustment.

Applications

The wife seeks orders be made in accordance with her Application in a Case filed 7 June 2021 and sealed 16 July 2021 (“the Application for costs”), as follows:

1. That pursuant to section 117 of the Family Law Act 1975 (Cth) the husband, Mr Giunta, pay to the wife, Ms Giunta, for the wife's costs of and incidental to the Initiating Application filed by Mr Giunta on 18 June 2018 on an indemnity basis such costs to be paid as follows:

(a)       In first priority by way of a lump sum in the amount of $411,782.49.

(b)       In the event the Court is not minded to make Order (a) then in the alternative the husband pay the wife's costs on an indemnity basis as assessed and the husband shall be solely liable for all costs of the assessment;

2.        That the husband shall pay the costs of and incidental to filing this application.

In addition, the wife also seeks orders be made in accordance further Application in a Case filed 14 July 2021 and sealed 16 July 2021 (“the Application for retention of sale proceeds”), as follows:

1.        That the matter be listed on an urgent basis and leave be granted for short service of this Application.

2.        The parties do all acts and things and sign all documents forthwith upon the making of this Order to direct the conveyancer and/or real estate agent engaged to sell the property situated at and known as C Street, Suburb D (“Suburb D property”) to divide the proceeds of sale due to be paid to the husband pursuant to the final orders of this Court made 7 May 2021 as follows:

a.         The first $411,782 to be paid to the Russell Kennedy Lawyers trust account to be held pursuant to these Orders, pending further order;

b.        The balance of the proceeds due to the husband pursuant to the final orders made 7 May 2021 to be paid as the husband directs.

3.        The wife be at liberty to provide a copy of these orders to the conveyancer and the real estate agent instructed to act on the sale of the Suburb D property.

4.        Any and all amounts held in the Russell Kennedy Lawyers controlled monies Account pursuant to Order 2 hereof be invested in an investment account and all income earned on the deposit be retained in the controlled monies account pending finalisation of the wife’s costs application filed 4 June 2021.

5.        That the respondent husband pay the costs of and incidental to this application.

The husband, by way of his Response to an Application in a Case filed 14 July 2021 and further Response to an Application in a Case filed 19 July 2021 respectively, seeks that the Application for costs and Application for retention of sale proceeds (collectively, “the wife’s Applications”) be dismissed. He also seeks orders for the wife to pay his costs of and incidental to the wife’s Applications.

Evidence

The wife relies upon the following documents:

(a)       Application in a Case filed 7 June 2021 and sealed 16 July 2021;

(b)       Application in a Case filed 14 July 2021 and sealed 16 July 2021;

(c)       Affidavit of the wife filed 7 June 2021, with annexures; and

(d)      Affidavit of the wife filed 14 July 2021.

The husband relies upon the following documents:

(a)       Response to an Application in a Case filed 14 July 2021;

(b)       Response to an Application in a Case filed 19 July 2021;

(c)       Affidavit of the husband filed 14 July 2021, with annexures; and

(d)      Affidavit of the husband filed 19 July 2021, with annexures.

Relevant background

In essence, as apparent by paragraph 11 of her Affidavit filed 7 June 2021, the wife effectively seeks to recover of the totality of her legal costs of the substantive proceedings from the net proceeds of the sale of the former matrimonial home.

The substantive proceedings were finalised by orders I made on 7 May 2021 (“the final orders”). Those orders were extensive, in excess of 41 paragraphs, and covered a number of different subject matters. By way of summary, the final orders provided, relevantly for the purpose of this decision, that:

•         The wife have sole parental responsibility for major long-term decisions concerning the parties’ two children, X, born in 2011 and Y, born in 2013 (collectively, “the children”), on the condition that she consult with the husband prior to making any such decisions;

•         The children live with the wife and spend time with the husband on alternate weekends for five (5) nights during school terms, and otherwise spend half of their school holidays with each of the parties;

•         The husband pay to the wife a sum of $107,684;

•         The parties sell the former matrimonial home located at C Street, Suburb D in New South Wales (“the former matrimonial home” or “the Suburb D property”), and the net proceeds of that sale be distributed to the parties in the division of 55 per cent to the wife and 45 per cent to the husband; and

•         The parties’ total superannuation entitlements be split in accordance with the division of 55 per cent to the wife and 45 per cent to the husband, in circumstances where the husband’s superannuation entitlements exceeded the wife’s entitlements by almost $600,000.

A significant issue in the substantive proceedings were the wife’s contentions of conduct by the husband towards her that would constitute family violence. At [167]–[252] of the primary judgment, I set out in detail my reasons for finding that the wife’s allegations were of substance, which, as I stated in that decision, was a significant consideration in making the final orders (at [4]).

In the primary judgment, I determined that the matrimonial property pool, save for those property interests that the parties agreed should be included or acknowledged as each possessing, did not include those add backs, liabilities and financial resources that each party submitted should form part of the pool. Having regard to the totality of the parties’ contributions and the impact of family violence on the wife’s ability to make relevant contributions, as earlier noted, I determined that an appropriate adjustment of the parties’ net property pool was a 55 per cent distribution to the wife and a 45 per cent distribution to the husband.

It seems that the parties agree that, shortly after listing the Suburb D property on the market, both parties accepted an offer of $1,900,000 prior to the auction of the property. The parties also agree that, on 21 June 2021, contracted were exchanged for the sale of the Suburb D property, and further that settlement is due to take place on 2 August 2021.

There also appears to be no dispute that, after the mortgage secured on the property is discharged and the relevant conveyancing and real estate costs are met, the net proceeds of the sale will be approximately $1,105,000.

Costs

The law – concepts and principles

Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the basis upon which the Court is empowered to award costs. That section relevantly provides:

(1)       Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her 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.

Of further relevance is s 117C of the Act, which provides that:

(1)       This section applies to proceedings under this Act other than the following proceedings:

(a)       proceedings under Part VI;

(b)       proceedings under Division 6, 9 or 13 of Part VII;

(c)       proceedings to enforce a decree or injunction made under Division 6, 9 or 13 of Part VII.

(2)       If:

(a)       a party to proceedings to which this section applies makes an offer to the other party to the proceedings to settle the proceedings; and

(b)       the offer is made in accordance with any applicable Rules of Court;

the terms of the offer must not be disclosed to the court in which the proceedings are being heard except for the purposes of the consideration by the court of whether it should make an order as to costs under subsection 117(2) and the terms of any such order.

Those provisions make clear that the general rule in family law proceedings, other than those excluded from the operation of s 117(1) of the Act, is that each party bears his or her own costs. The court, however, may order a party to pay the costs of another where there are circumstances justifying the making of such an order.

The considerations set out in s 117(2A) of the Act must be taken into account in deciding whether or not to order a party to pay the costs of another. The Full Court has held, in I and I (No. 2) (1995) FLC 92-625 at 82,277, that the relevant matters in s 117(2A) of the Act “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”.

No one factor under s 117(2A) prevails over any other factor. It is a matter of weight that is accorded to each of the relevant factors in the trial judge’s discretion: Medlon & Medlon (No. 6) (Indemnity Costs) (2015) FLC 93-664 at [24] per Strickland J.

As such, a litigant seeking a costs order must establish that the justice of the case requires an order for costs, by reference to the non-exhaustive list of statutory considerations set out in s 117(2A) of the Act, before such an order is made. Although the applicant for costs must establish circumstances which would justify such an order, it is not the case that a costs order can only be made in what has been described as “a clear case”: see Penfold v Penfold (1980) 144 CLR 311 at 315.

In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123, the Full Court confirmed that it was not necessary for each of the factors listed in s 117(2A) to be met in order for the Court to make a costs order. Accordingly, as further stated by the Full Court per Kay, Warnick and Boland JJ at [41], there is “nothing to prevent any factor being the sole foundation for an order for costs” being made.

Consideration

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

In this matter, the wife has failed to provide details as to how the amount of costs sought in the Application for costs, being the sum of $411,782.49, has been assessed. Senior counsel for the husband argued that, as a consequence of this failure, the Court is unable to determine the amount of costs that would ultimately be paid by the husband, in the event of a costs order being made against him. In those circumstances, it was contended, the Court is unable to make a determination in respect to s 117(2A)(a) of the Act because the potential quantum of the costs cannot be determined and, thus, it would not be possible to consider the impact on each of the parties, having regard to their financial circumstances.

For reasons which I set out below, I am satisfied that the wife’s failure to present evidence enabling the Court to make a determination, in respect to the fairness and reasonableness of the wife’s costs, presents a difficulty for the Court to make an order for costs of a lump sum amount. In those circumstances, I propose making an order for costs on the basis of those costs being agreed or assessed.

In having regard to the financial circumstances of the parties, I note that, during the course of the next week, settlement on the sale of the former matrimonial home will occur, which will result in net sale proceeds of approximately $1,105,000. I accept that the employment of both parties has been adversely impacted by the COVID-19 pandemic, however, having regard to the percentage adjustment of the parties’ property pool made in the primary judgment which I have earlier set out, I am satisfied that each party is capable of satisfying an order for costs relating to the substantive proceedings.

Accordingly, this consideration has not influenced the order that I make for the husband to pay a portion of the costs incurred by the wife.

Section 117(2A)(b) – whether any party to the proceedings is in receipt of assistance by way of legal aid

Neither party was legally aided and, accordingly, s 117(2A)(b) of the Act is not a relevant consideration.

Section 117(2A)(c) – the conduct of the parties to the proceedings in relation to the proceedings

The wife contends that the manner in which the husband conducted the substantive proceedings has significantly added to the legal costs she has incurred. For reasons which I set out as follows, I have found that there is substance to the wife’s submission in respect to the husband’s conduct after the proceedings were commenced.

Pre-action protocols do not apply to proceedings commenced in the Federal Circuit Court

At paragraph 15 of her Affidavit filed 7 June 2021, the wife attests that, prior to commencing the substantive proceedings, the husband did not make an offer of settlement or exchange any financial disclosure. The husband appears to agree with this contention at paragraph 78 of his Affidavit filed 14 July 2021, however, he contends that:

On 18 June 2018 my solicitor filed for urgent proceedings on my behalf in the Federal Circuit Court, where pre action procedures are not required. I was acting on my solicitors advice.

The husband is correct to assert that undertaking the pre-action procedures set out in Sch 1 Pt 1 of the Family Law Rules 2004 (Cth) (“the FL Rules”) was not required, in circumstances where he commenced the proceedings in the Federal Circuit Court of Australia.

Accordingly, I have not taken into consideration, as a relevant factor in my decision to make an order for costs, the fact that the husband did not attempt to resolve the issues in dispute prior to commencing the substantive proceedings.

The duty of parties after commencement of proceedings

The obligation to act reasonably and, specifically, to explore potential settlement options continues after proceedings are commenced.

These proceedings, as earlier noted, were commenced in the Federal Circuit Court of Australia and, accordingly, the Federal Circuit Court Rules 2001 (Cth) (“the FCC Rules”) applied to the proceedings until an order was made, on 16 December 2019, transferring the proceedings to the Family Court of Australia. In that respect, r 1.03 of the FCC Rules relevantly provides:

(1)       The object of these Rules is to assist the just, efficient and economical resolution of proceedings.

…

(3)       The Court will apply the Rules in accordance with their objects.

(4)       To assist the Court, the parties must:

avoid undue delay, expense and technicality

consider options for primary dispute resolution as early as possible.

Similarly, in respect to this Court, r 1.04 of the FL Rules specifies that the main purpose of the FL Rules is to “ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case”. That rule, and the FL Rules more generally, applied to these proceedings from 16 December 2019, when the proceedings were transferred to this Court.

Further, Principles 2 and 7 of the Family Court of Australia and Federal Circuit Court of Australia, Joint Practice Direction 1 of 2020 – Core Principles in the Case Management of Family Law Matters, 28 January 2020 (“JPD1 of 2020”), states that:

2.        The overarching purpose to be achieved is to ensure the just, safe, efficient and timely resolution of matters at a cost to the parties that is reasonable and proportionate in all the circumstances of the case, having regard to the significant impact of family law disputes on children and families.

…

7.        Parties and their lawyers are expected to take a sensible and pragmatic approach to litigation, and to incur costs only as are fair, reasonable and proportionate to the issues that are genuinely in dispute. …

Furthermore, r 1.08 of the FL Rules relevantly provides that parties and their lawyers “have a responsibility to promote and achieve the main purpose”, including:

(1)       …

(g)       assisting the just, timely and cost-effective disposal of cases;

…

(k)       being aware of, and abiding by, the requirements of any practice direction or guideline published by the court; and

(l)        complying with these Rules and any orders.

Of further relevance is cl 6 of Sch 1 Pt 1 of the FL Rules, which provides that:

(6)       At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:

…

(d)      the best way of exploring options for settlement, identifying the issues as soon as possible, and seeking resolution of them;

(e)      the need to avoid protracted, unnecessary, hostile and inflammatory exchanges

(f)      the impact of correspondence on the intended reader (in particular, on the parties); …

(Emphasis added)

In addition to that duty, pursuant to cl 7(b) of Sch 1 Pt 1, parties must not “in correspondence, raise irrelevant issues or issues that may cause the other party to adopt an entrenched, polarised or hostile position”.

The principles set out in JPD1 of 2020, as earlier noted, as well as r 1.04 and r 1.08 of the FL Rules, and Rule 1.03(1) of the FCC Rules are similar in their effect to s 37M and s 37N of the Federal Court of Australia Act 1976 (Cth). In Modra v Victoria (2012) 205 FCR 445 (“Modra”) at [31], Gray J stated that “the impact of those sections on the obligations of legal practitioners practising in this Court is significant”. Referring with approval to those comments of Gray J in Modra, in Camm v Linke Nominees Pty Ltd (No 4) [2013] FCA 223 at [52], Tracey J stated further that “the same may be said about their impact on the obligations of litigants”.

It is also observed that the notation to r 1.08 of the FL Rules relevantly provides that:

The court may take into account a failure to comply with this rule when considering costs (see subrule 19.10(1) and subclause 6.10(1) of Schedule 6).

In Ryan v Primesafe (2015) 323 ALR 107 at [92], Mortimer J said that “there is a clear link, in terms of legislative policy, between ss 37M and 37N, and [the Federal Court’s costs power]” and that those provisions were:

… designed to empower the Court to sheet home responsibility to legal practitioners, where appropriate, to bear personally the liability to make compensation for parties’ legal costs.

In Specsavers Pty Ltd v The Optical Superstore Pty Ltd (No. 4) (2012) ATPR 42–403, Katzmann J reduced a successful party’s entitlement to costs to 65 per cent as a result of the manner in which that party had conducted the litigation. The Full Court of the Federal Court of Australia in Specsavers Pty Ltd v The Optical Superstore Pty Ltd (2012) 208 FCR 78 at [57], in dismissing the appeal from her Honour’s orders, described the case management provisions as constituting “a powerful mechanism to encourage compliance” with those duties, to which I have referred.

An example, from another jurisdiction, where a party engaging in inflammatory conduct has impacted upon costs orders, is Wilson v Porada; The Estate of Peter Wolfgang Porada, late of Pericoe (No. 2) [2017] NSWSC 1362. In that case, Slattery J used powers to cap legal fees in respect to estate litigation, where, in doing so, his Honour noted at [37]:

The Court of Appeal has upheld such orders in family provision cases: Nudd v Mannix [2009] NSWCA 327. As Palmer J explained in respect of an earlier iteration of this rule, its purpose is to act as a “brake on intemperate and disproportionately expensive conduct of proceedings”: Re Sherborne Estate (No 2); Vanvalen v Neaves (2005) 65 NSWLR 268

In the primary judgement in this matter, I expressed concern regarding the volume and nature of the correspondence sent by the husband to the wife’s solicitors ([2021] FamCA 272 at [108], [115] and [118]). Examples of that correspondence are set out in the primary judgement, at [113]–[114] and [228]. I am satisfied that the volume of unnecessary and inflammatory correspondence engaged in by the husband with the solicitors for the wife both unnecessarily increased the legal costs incurred by the wife, and impeded the ability of the parties to constructively engage in productive settlement negotiations. Accordingly, this is a matter that I have considered to be relevant in making a costs order against the husband.

Section 117(2A)(d) – whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court

Counsel for the wife submitted that this is a relevant consideration, as a result of what the wife contends to be a situation where the husband did not comply with the spirit and intention of the interim parenting orders made on 29 August 2018 by Judge Monahan. In my assessment, there was, however, a legitimate dispute between the parties, concerning how the parenting arrangements, which were the subject of orders made by Judge Monahan, interacted with time that the husband was to spend with his son of his earlier marriage, the children’s half-brother. In particular, the husband sought to clarify that the time the children spent with him would overlap with the time the husband spends with their half-brother, so that they could spend time together.

More generally, I am satisfied that there was a genuine dispute between the parties in respect to parenting matters. In that context, I note that the position taken by the husband was consistent with the Report of the Single Expert, and his position was supported by the Independent Children’s Lawyer, in the proceedings.

Accordingly, in those circumstances, the order for costs which I make in this matter will be in respect to only a portion of the costs actually incurred by the wife, rather than the totality of the costs that she has incurred, being that portion which relates to the property aspect of the substantive proceedings. In the absence of an ability to precisely delineate which of those costs were incurred in respect to the parenting aspect, as against costs relating to the property aspect, of the proceedings, I have determined that the husband should pay 50 per cent of the wife’s costs, assessed on a party/party basis in respect to the period subsequent to 14 November 2019. I will subsequently explain the significance of that date, being the date that the wife sent a formal written offer of settlement to the husband. 

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

At the final hearing of this matter, neither party was wholly unsuccessful. Each party succeeded in respect to certain aspects of the case that they presented, and failed in other respects.

Section 117(2A)(f) – whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer

At paragraphs 5 through to 8 of her Affidavit filed 7 June 2021, the wife refers to various offers of settlement which she contends were made by herself to the husband. In this respect, the wife contends that, first, in October 2018, the parties attended a private mediation where they were able to reach an agreement, however, the husband refused to sign terms reflecting what was agreed. The husband disputes that contention and attests, at paragraphs 66 through to 70 of his Affidavit filed 14 July 2021, that the written terms of settlement provided to him did not reflect the agreement reached between the parties. It has not been possible to resolve that factual controversy in the context of this costs Application.

Further, even if the proposed consent orders are accepted to be, in itself, a written offer of settlement, the wife has not explained the basis upon which she asserts that the effect of those consent orders was that there would be a 50/50 division of the parties’ property.  This is in the context where it is not clear, on the face of the document, as to how that assessment was made by the wife and, while I invited it, I received no further explanation during the hearing of this costs Application.

I am, however, satisfied that by a letter dated 14 November 2019, which is attached at pages 44 to 48 to the wife’s Affidavit filed 7 June 2021 as Annexure ‘B’ (“the November 2019 letter”), the wife’s solicitors did make a formal written offer of settlement to the husband, which proposed an overall division of 55 per cent of the total net assets to the wife and 45 per cent of the total net assets to the husband (“the settlement offer”). The husband, however, contends that there were several errors contained in that letter, including an overestimate of the amount of inheritance he would receive. The husband further contends, at paragraph 72 of his Affidavit filed 14 July 2021, that there was inadequate disclosure by the wife, including as to the extent of her interest in a property located in the United Kingdom known as “F cottage”, as well as the distribution of the proceeds of sale of F cottage.

Indeed, it is noted that, at final hearing, the wife acknowledged that an error had been made in her report to the husband as to how a relatively small amount of the proceeds had been distributed to her brother. I accept that there may have been an error on the part of the wife, in anticipating the amount of inheritance that the husband would receive, and that there may have been a lack of clarity in respect to some aspects of the wife’s interest in the F cottage property. Nevertheless, the November 2019 letter clearly reflects an intention, on the part of the wife, to resolve the property dispute between the parties that would achieve an ultimate outcome constituting a property adjustment wherein she would obtain 55 per cent of the net property pool and the husband would obtain 45 per cent. This was, in fact, the outcome of the hearing of the substantive proceedings.

In Warbrick & Warbrick (No. 2) (2021) FLC 94-030 at [9] (“Warbick”), the Full Court held that circumstances where a party makes an offer to settle “on terms consistent with the outcome” of, in that case, an appeal, may justify an order for costs on that party’s favour. Specifically, in that case, the Full Court held that “the compatibility of [the wife’s] offers of settlement and the outcome of the appeal justifies an order for costs in her favour”.

In this matter, I acknowledge the argument, put by senior counsel for the husband, that the wife had not included, at the time she made the settlement offer on 14 November 2019, a component in respect to an adjustment in her favour, which I made in the primary judgement, arising from the application of the principles referred to in Kennon v Kennon (1997) FLC 92-757. Nonetheless, in my view, it is unnecessary for a formal written offer of settlement to precisely match or exceed the outcome achieved at final hearing, nor is it necessary that the offer address each matter that was ultimately determined by the Court at final hearing, to be relevant to the Court’s determination of an Application for costs.

Despite the lack of a precise coincidence in respect to each aspect of the settlement offer and the final orders, it remains a relevant consideration that the terms of that offer are comparable with the final outcome of the substantive proceedings. Having regard to that consideration, I respectfully apply similar reasoning to that applied by the Full Court in Warbrick, in determining that, in this matter, the comparability of the wife’s offer, as set out in the November 2019 letter, to the final outcome in the proceedings, to the extent that it concerns the parties’ property dispute, justifies an order for costs in her favour.

Section 117(2A)(g) – such other matters as the Court considers relevant

Counsel for the wife submitted that, in considering whether to make an order for costs in this matter, the Court should have regard to the number of court events, which she contends were substantially the result of Applications made by the husband in circumstances where he was not legally represented, and that the litigation resulting from those Applications significantly increased the costs which she incurred. In circumstances where, for reasons which I have earlier explained, I have found that there was a legitimate dispute between the parties regarding the parenting aspect of their dispute, I have not embarked upon the exercise of revisiting each of the parties’ respective interim Applications, with a view to determining whether those Applications were without merit.

Similarly, counsel for the wife referred to a specific instance wherein a Registrar of this Court specifically reserved the question of costs, in respect to a successful Application by the wife, to be granted access to court records relating to other family law proceedings involving the husband and his former wife. However, in that context, I respectfully agree with the submission of senior counsel for the husband that, without more information about those proceedings, including the position adopted by the husband and how the final outcome was achieved, I am unable to fairly determine, in this matter, whether an order for costs would or would not be justified in respect to those proceedings.

Accordingly, aside from those considerations set out in respect to s 117(2A)(c) and (f) of the Act, I have not had regard to any additional considerations as being relevant to the order for costs which I make in these proceedings.

Indemnity costs

In Warbrick at [11]–[12], the Full Court said:

11.      In Stasiuk & Guild [2021] FamCAFC 62 this Court said of indemnity costs:

8.        Central to both grounds of appeal is the unremarkable proposition that the approach to an application for indemnity costs made under the [Act] is well settled by the Full Court decision of Kohan and Kohan [1992] FamCA 116; (1993) FLC 92-340 (“Kohan”). The Full Court concluded that the costs power under s 117 of the Act includes the power to make orders for costs on an indemnity basis. The Full Court said at 76,614:

[T]he purpose of fixing a scale of costs must be understood to signify that they contain the normal rates of charges... [T]he Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.

Indemnity costs orders are still an exception in this and other jurisdictions[.]

(Citations omitted)

...

17.      Reference has already been made to Kohan and the principle that an order for indemnity costs in proceedings to which s 117 applies is exceptional. Kohan was cited in Prantage as, in effect, the cornerstone of well-established law in this jurisdiction [77], [147]. As Murphy J said in Prantage:

152. Section 117(1) is important in that respect. Indemnity costs are confined to “an exceedingly rare situation” (Callinan J quoted by Thackray and Ryan JJ at [42]) in jurisdictions where “the usual rule” is that a successful party receives an order for costs (ie “costs follow the event”). They might, then, be seen to be more so in this jurisdiction where the “usual rule” is that “each party ... shall bear his or her own costs” (s 117(1)). The comments by this Court in Kohan that indemnity costs are “a very great departure” from the “normal standard” should be seen in that context[.]

12.      Citing NMFM Property Pty Ltd and Ors v Citibank Ltd (No 2) [2011] FCA 480; (2001) 109 FCR 77 at [82], the wife contends that the husband’s “imprudent or plainly unreasonable” failure to accept the wife’s offer justifies an award of indemnity costs. Merely because an offer of settlement which is consistent or better than the outcome of the application or an appeal is rejected, does not establish that the rejection was imprudent or plainly unreasonable. Context is important and, contrary to the submission by the wife to the effect that the outcome of the appeal was a fait accompli, the appeal was not so devoid of merit that the husband’s decision to continue with it and to reject the wife’s offer was foolish or would justify an order for indemnity costs. Although, in the circumstances of this case, it justifies an award of costs, it does not bring the case into that exceptional category in which an order for indemnity costs would be appropriate.

I respectfully apply similar reasoning in the circumstances of this matter, in finding that the husband’s rejection of the wife’s written offer of settlement set out in the November 2019 letter justifies the making of an order for costs in favour of the wife, however, that order for costs should not be on an indemnity basis.

Counsel for the wife further argued that, in considering whether to make an order for indemnity costs, the Court should have regard to the husband’s conduct in the substantive proceedings, including requiring the wife to adduce evidence regarding circumstances in which the Court found that she had been subject to a pattern of abusive, coercive and controlling conduct. In that respect, I respectfully agree with the submission of senior counsel for the husband that, having regard to the presumption set out in s 117(1) of the Act that, in the normal course of family law proceedings, each party bears their own costs, the mere fact that a party has been unsuccessful in respect to their factual contentions does not, in itself, justify the Court in departing from the presumption.

In summary, the wife has not satisfied me that this case falls into the exceptional category of cases where it is appropriate for the Court to make an order for indemnity costs.

Lump sum costs

Rule 19.18 of the FL Rules provides methods of calculating costs. These include, in r 19.18(1)(a), the Court setting a specific amount for costs or, in r 19.18(1)(b), an order for costs to be assessed on a particular basis.

In Stoian & Fiening (Costs) [2014] FamCA 944 at [91], Kent J endorsed the applicable principles, albeit for an equivalent rule to r 19.18, as adumbrated by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23 (“Idoport”) at [9]. Those principles in part are:

i.        the purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation…;

ii.        the touchstone requires that the Court be confident that the approach taken to estimate costs is logical, fair and reasonable…;

iii.       the fairness parameter includes the Court having sufficient confidence in arriving at an appropriate sum on the materials available…;

iv.       a gross sum assessment, by its very nature, does not envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place…;

v.        the gross sum “can only be fixed broadly having regard to the information before the Court”

…

(References omitted)

Consistent with those principles, it has been determined that, where a court orders a party to pay costs, it may be appropriate for the court to fix a lump sum. By doing so, the Court can avoid further delay and inconvenience being occasioned by the requirement to tax a bill: Byrnes v Brisconnections Management Company Limited (No. 2) [2009] FCA 1432 at [51].

In Parke & The Estate of the Late A Parke (2016) FLC 93-748 at [130], Murphy J held, after referring to a number of authorities, that “if the court is to fix a sum [in respect to costs] it should be ‘fixed broadly having regard to the information before the Court’” and, in that respect, the process does not “by its very nature… envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place” (Citations omitted).

More recently, in Pierson & Romilly (2020) FLC 93–959 at [85], the Full Court said:

It is the policy of this Court to attempt to fix costs at the conclusion of the hearing in order to save the parties the cost, time and resources of a taxation, as well as to save the time of a Registrar in taxing the costs.

However, in this matter, the wife has failed to provide the Court with information that enables me to determine that the costs she is seeking, in whole or in part, are justified. In that respect, I note that, at the hearing of her Application for costs, I upheld an objection, by senior counsel for the husband, to the wife seeking to tender copies of accounts she had received from her solicitors, in circumstances where I was advised that those accounts recorded the amount that the wife was required to pay, in respect to the work undertaken by her solicitors, but did not otherwise detail the nature of that work. The absence of detail as to the nature of the work undertaken by her solicitors would not have assisted me in determining whether the amounts as itemised, either individually or globally, were, consistent with the principles stated in Idoport, “logical, fair and reasonable”.

Summary and conclusion in respect to the issue of costs

Having regard to the matters to which I have referred and, in particular, those considerations set out in s 117(2A)(c) and (f) of the Act, I have determined that it is just for the husband to be required to meet a portion of the costs incurred by the wife in respect to the substantive proceedings.

In terms of determining what portion should be paid, it is to be noted that the interaction between the property and the parenting aspects of the parties’ dispute are so intertwined that it cannot be considered practicable to require any assessing officer to differentiate between costs incurred in respect to the parenting aspect of the proceedings, and costs incurred in respect to the property aspects of the proceedings. In those circumstances, I therefore determine that it is just to make an order that the husband pay 50 per cent of the costs incurred by the wife, as from 14 November 2019, as agreed or assessed. I have identified that date, being 14 November 2019, as that is the date of the wife’s settlement offer to the husband, which correlates to the outcome that was achieved at final hearing.

In identifying that date, I note that I have referred to events that have occurred prior to that date as influencing my decision. This includes, most relevantly, what I have determined to be the volume and inflammatory nature of the correspondence sent by the husband to the wife’s solicitors, some of which predates 14 November 2019. Nevertheless, that formal written offer of settlement is the most significant factor that I have considered in determining that an order for costs should be made in this matter. Further, in circumstances where it is not possible to precisely identify that portion of the costs incurred by the wife which relate to property aspect of the proceedings as distinct from that part which relates to the parenting aspect, I am satisfied that, having regard to the totality of circumstances of this matter, an order requiring the husband to pay 50 per cent of the wife’s costs as from 14 November 2019 is appropriate.

For these reasons, I will make an order that the husband pay 50 per cent of the costs incurred by the wife, as from 14 November 2014, on a party/party basis, within 28 days of those costs being agreed or assessed.

Application for retention of sale proceeds

Counsel for the wife, appropriately, in my view, acknowledged that, in circumstances where the Court does not identify, in these proceedings, an actual amount of costs to be paid, it is difficult for the wife to sustain an argument that an amount should be withheld from the net proceeds of the sale of the former matrimonial home, when settlement occurs on 2 August 2021.

Save to the extent that it was submitted that such an order would be possible pursuant to s 114 of the Act, in the absence of being further addressed in respect to this issue, I will decline to make orders as sought by the wife in her Application for retention of sale proceeds, and that Application will be dismissed.

Costs of the Costs Application and Retention of Proceeds of Sale Application

In circumstances where the wife has been unsuccessful in respect to her Application for retention of sale proceeds filed 14 July 2021, but has been partially successful in respect to her Application for costs filed 7 June 2021, I am of the opinion that it is appropriate for the parties to each meet their own costs in respect to each of those respective Applications.

I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland.

Associate:

Dated: 29 July 2021