Gordon & Gordon
[2017] FCCA 2899
•24 November 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| GORDON & GORDON | [2017] FCCA 2899 |
| Catchwords: FAMILY LAW – Costs – application for indemnity costs. |
| Legislation: Family Law Act 1975 (Cth), ss.117(1), 117(2), 117(2A) Federal Circuit Court of Australia Act 1999 (Cth), s.79 |
| Cases cited: Andrews v Barnes (1888) 39 Ch D 133 |
| Applicant: | MS GORDON |
| Respondent: | MR GORDON |
| File Number: | MLC 6075 of 2016 |
| Judgment of: | Judge Wilson |
| Hearing date: | On the papers |
| Date of Last Submission: | 11 October 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 24 November 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr P. Crofts |
| Solicitor for the Applicant: | Juliana Smith Barrister & Solicitor |
| Respondent in person |
ORDERS
The respondent pay the costs of the applicant fixed in the sum of $3,000.00.
IT IS NOTED that publication of this judgment under the pseudonym Gordon & Gordon is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 6075 of 2016
| MS GORDON |
Applicant
And
| MR GORDON |
Respondent
REASONS FOR JUDGMENT
Introduction
On 4 October 2017, I made orders for the division of property between the parties in this case. At the time, the respondent husband Mr Gordon, was not represented. The applicant wife Ms Gordon, was represented by Mr P. Crofts of counsel. When I pronounced orders, the parties said they did not require me to provide written reasons for my decision.
On the pressing by Mr Crofts, I gave the parties liberty to make such submissions as they wished in relation to costs. In response to that invitation, on 11 October 2017 Mr Crofts provided written submissions. The husband did not provide any written material.
The orders I made on 4 October 2017 represented an approximately equal division of assets between the parties.
On behalf of the wife, in his written submissions dated 11 October 2017, Mr Crofts contended that pursuant to s.117(2A) of the Family Law Act 1975 (Cth) (“the Act”) the wife was entitled to a costs order. Additionally, he submitted that the costs order should be made on an indemnity basis. He gave three reasons for that contention, namely –
a)the conduct of the husband during the course of this litigation;
b)alternatively, by reason of the fact that the wife had obtained orders more favourable than those recorded in offers in the nature of Calderbank v Calderbank[1] (“Calderbank”) offers made some time ago; or
c)according to principles of common law and equity that have considered the imposition of indemnity costs.
[1] [1975] 3 All ER 333.
Synopsis
For the reasons that follow, in my judgment the wife is entitled to an order for costs. However, in the exercise of my discretion, I decline to make an order that those costs be paid on an indemnity basis, despite the fact that the wife obtained orders more favourable than those recorded in offers in the nature of Calderbank offers.
A short factual narration
The correspondence comprising the relevant exchange of offers was exhibited to the affidavit of Juliana Mary Smith, the wife’s solicitor, sworn on 11 October 2017. Not all correspondence was included, especially a letter dated 5 April 2016 from the husband’s solicitors to the wife’s solicitors. Be that as it may, for the purposes of these reasons it is necessary to trace the evolution of proposals and counter-proposals as recorded in the correspondence between the solicitors.
On 14 December 2015 the husband’s solicitors wrote to the wife’s solicitors in which the first relevant proposal was put. It was in the following terms –
Our client seeks to finalise this matter, on the following basis:
1. That our client retains the Property A property to the exclusion of your client;
2. That after the payment of the costs and commissions of the sale, that the proceeds of the Property B property be divided as follows:
a. $600,000.00 to your client; and
b. the remainder of same to our client.
3. That your client retains the business known as “(omitted)”;
4. That the household chattels at the Property A property be divided equally between the parties;
5. That each party be responsible for any liability held in that party’s sole name, and that that party indemnify the other with respect to same; and
6. That each party otherwise retain any other asset currently in their care, control or possession.[2]
[2] Exhibit “JMS-1” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
By way of response, on 16 December 2015 Ms Smith responded with her client’s version of the asset pool.[3] In that letter she requested further information from the husband’s solicitors about the liabilities associated with the sale of Property B and the value of the (omitted) business along with the sale of (omitted).
[3] Exhibit “JMS-2” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
It seems the husband’s solicitor responded by letter dated 5 April 2016. However, that letter was not among the material exhibited to Ms Smith’s affidavit.
Inferentially, the proposal in the 5 April 2016 correspondence was unacceptable because by letter dated 26 April 2016, the wife’s solicitor responded on a without prejudice basis, save as to costs, with a rejection of the 5 April 2016 proposal and a counter-proposal as recorded in the body of the 26 April 2016 letter. The relevant portion of the letter was as follows –
OFFER TO SETTLE
Based upon the above, our client is prepared to offer to settle this matter on the following basis:
(a)The funds held in trust on behalf of the party’s (sic) by Schembri & Co Lawyers be divided by way of the sum of $800,000 to the wife and the remaining funds to the husband within 14 days;
(b) the Husband would otherwise retain sole right and title to:
a. Property A including all stock, plant and equipment.
(c)Each party otherwise retain motor vehicles and bank accounts in their respective names.
(d)House hold goods and chattels at Property A be divided equally.
Accordingly, the Husband would retain $1,295,500 of the $2,162,500 asset pool.
This is 60% of the pool.
Accordingly, the Wife would retain 40% of the pool.[4]
[4] Exhibit “JMS-3” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
Importantly for present purposes, that letter contained a statement indicating that the proposal was put under principles well-known following the decisions in Calderbank and Cutts v Head.[5] By expressing the proposal on the basis that it was underpinned by those cases, from that date the proposal put the husband at risk of an adverse costs order being made against him.
[5] [1984] 1 All ER 597.
From the correspondence it appeared that various exchanges took place between the wife’s solicitor and new solicitors retained by the husband, Palmer, Stevens & Rennick in the period from 26 April 2016 to 22 March 2017. On 22 March 2017 the husband’s new solicitors wrote to Ms Smith referring to recent correspondence in relation to their offer dated 20 February 2017 (not included among the exhibited correspondence) and to the fact that the husband appeared to have been under a “clear understanding” that the wife was agreeable to settle on the terms recorded in the 20 February 2017 letter.[6] Unfortunately, without having seen that letter it was not possible to make any observations about its terms or the legal import of the exchange.
[6] Exhibit “JMS-4” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
However, in the 22 March 2017 letter from the husband’s solicitors to Ms Smith, the husband proposed an offer to settle the litigation on three grounds. They were –
1. payment to the wife in the sum of $650,000.00 with an indemnity for any taxation liability in respect of the capital gain on the sale of the Property B property.
2. the wife to transfer all her right title and interest in “(omitted)” to the husband; and
3. the parties to otherwise retain what is currently in their possession power or control including the proceeds of any bank accounts.[7]
[7] Exhibit “JMS-4” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
At the foot of the letter the husband’s solicitors incorporated a provision indicating that the husband relied on the observations in Calderbank and that he put the wife on notice that if she failed to accept the proposal recorded in that letter, then the wife was exposed to the cost consequences enumerated in that case on and from 22 March 2017.
By that stage it was plain enough that the parties were advancing proposals each required the other to take seriously and that if the proposal advanced by the offeror was not accepted according to its terms, then the offeror intended to visit upon the offeree an application for indemnity costs in the terms espoused in Calderbank.
On behalf of the wife, by letter dated 30 March 2017 Ms Smith rejected the husband’s proposal made 22 March 2017. In her correspondence of 30 March 2017, on behalf of the wife Ms Smith confirmed a proposal in the following terms –
We confirm our client is prepared to settle this matter on the following basis: -
1. The funds held in trust on behalf of the parties by Palmer Stevens & Rennick Solicitors in the (omitted) Bank Account be paid to the Wife (approximate sum of $867,675);
2. The Husband would otherwise retain sole right and title to: -
(a) Property A, including all stock, plant and equipment;
3. Each party otherwise retain motor vehicles and bank accounts in their respective names;
4. Household goods and chattels at Property A be divided equally;
5. The Husband indemnify the Wife with respect to all liabilities associated with the sale of the Property B property, including but not limited to Capital Gains Tax; and
6. The Husband indemnify the Wife with respect to all liabilities associated with the Property A.
Accordingly, the Husband would retain $1,234,804 of the $2,156,404 asset pool (note this does not include the value of the cows and calves on the farm or the debts paid by our client on behalf of your client).
This is 57% of the pool.
Accordingly, the Wife should retain 43% of the pool.[8]
[8] Exhibit “JMS-5” to the affidavit of Juliana Mary Smith sworn on 11 October 2017.
At the foot of that letter Ms Smith incorporated the usual notation making the offer as one taken to be made pursuant to the principles espoused in Calderbank.
That offer either lapsed or it was rejected but it was not accepted.
The parties proceeded to trial against that backdrop of proposals and counter-proposals.
My orders made on 4 October conferred on the wife a position more advantageous than was the last proposal she made. In other words, the eventual outcome of this litigation was more advantageous to her than she had proposed by way of settlement offer with the consequence that the principles of Calderbank were amenable to invocation.
Of course, the making of a costs order could not have been gainsaid by the wife. Ordinarily, pursuant to s.117(1) of the Act each party is required to bear his and her own costs.
Before turning to the circumstances of this case that enlivened a deviation from the ordinary regime of each party bearing his or her own costs, it is necessary to say something about the statutory basis for an award of costs beyond the ordinary regime addressed by s.117(1) of the Act.
Sections 79(2) and (3) of the Federal Circuit Court of Australia Act1999 (Cth) confer power on a judge of this court to make an order in respect of costs. Those sections provide as follows –
(2)The Federal Circuit Court of Australia or a Judge has jurisdiction to award costs in all proceedings before the Federal Circuit Court of Australia (including proceedings dismissed for want of jurisdiction) other than proceedings in respect of which any other Act provides that costs must not be awarded.
(3)Except as provided by the Rules of Court or any other Act, the award of costs is in the discretion of the Federal Circuit Court of Australia or Judge.
In addition, r.21.02 of the Federal Circuit Court Rules 2001 (Cth) confers power on the judge to make an order for costs, including the amount of those costs or setting a method by which costs are calculated. Under r.21.03 of the rules, the court has power to specify the maximum costs that may be recovered.
Section 117(1) of the Act represents something of a qualification of the general power to make an order in respect of costs. The starting point is the presumption that costs are to be borne by each party. Yet a specific costs order may be made against a party in the circumstances contemplated by s.117(2A) of the Act. In addressing that section, it is necessary for the judge who makes the costs order to have regard to the specific elements set out in that subsection. Section 117(2A) is in the following terms –
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.
On behalf of the wife, Mr Crofts asserted that the conduct of the husband in relation to the proceeding generally was such as to attract the operation of s.117(2A)(c) with the consequence that an order for costs should be made against the husband. In essence, Mr Crofts contended that the wife had made early and reasonable offers that the husband did not consider in a timely manner all of which, unreasonably, he rejected. Further, Mr Crofts contended that the husband failed to file trial material and that he failed to comply with orders for the obtaining of a joint valuation in respect of the farm.
Under s.117(2) of the Act, if satisfied about the matters in s.117(2A)(c), then pursuant to s.117(2) of the Act the court may make such order as to costs as the court considers just. To my mind, the generality of that provision is sufficiently broad as to enable the court, under s.117(2) of the Act, to make an order for indemnity costs.
Before turning to the rule relating to indemnity costs based on the husband’s failure to accept a Calderbank offer, it is necessary to examine each offer in detail.
The 14 December 2015 offer from the husband’s solicitors to the wife’s solicitors was not an offer that attracted principles relevant to Calderbank. That letter did not incorporate a form of words that made reference to the consequences of an unreasonable rejection of the offer contained in that letter. That is not to say that for a Calderbank offer to be valid, some prescribed form of wording must be used. So much was held by the Court of Appeal of the Supreme Court of New South Wales in Elite Protective Personnel v Salmon[9] and by the New South Wales Court of Appeal in Trustee for the Salvation Army (NSW) Property Trust t/as Salvation Army v Becker (No 2).[10]
[9] [2007] NSWCA 322.
[10] [2007] NSWCA 194.
The underlying rule in relation to Calderbank offers and the costs consequences that follow from a deviation of the public policy associated with the encouragement of settlements was explained in Commonwealth of Australia v Gretton[11] in the following terms by Hodgson JA –
In my opinion, underlying both the general rule that costs follow the event, and the qualifications to that rule, is the idea that costs should be paid in a way that is fair, having regard to what the court considers to be the responsibility of each party for the incurring of the costs. Costs follow the event generally because, if a plaintiff wins, the incurring of costs was the defendant’s responsibility because the plaintiff was caused to incur costs by the defendant’s failure otherwise to accord to the plaintiff that to which the plaintiff was entitled; while if a defendant wins, the defendant was caused to incur costs in resisting a claim for something to which the plaintiff was not entitled (footnote omitted). Departures from the general rule that costs follow the event are broadly based on a similar approach.[12]
[11] [2008] NSWCA 117.
[12] [2008] NSWCA 117 at [121].
In slightly different terms, Beazley JA in Monie v Commonwealth of Australia (No 2)[13] said the following –
… there is both a private interest and a public policy in the encouragement of settlements. One of the reasons these proceedings have not been finalised and are now to be the subject of at least a sixth judicial determination, is because the Commonwealth did not accede to an offer which has been exceeded by the Court’s determination of damages in respect of two of the appellants.[14]
[13] [2008] NSWCA 15.
[14] [2008] NSWCA 15 at [29].
No two offers will be the same. However, for this area of the law the offer must be a genuine offer of compromise, as was held in Leichhardt Municipal Council v Green.[15] It falls to the court assessing the compromise proposal to ascertain whether a particular offer represented a genuine attempt to reach a negotiated settlement rather than it being merely a trigger to any cost sanctions, as Santow JA held in that case.[16]
[15] [2004] NSWCA 341.
[16] [2004] NSWCA 341 at [39].
At all events, while the 14 December 2015 letter from the husband’s solicitors to the wife’s solicitors was a proposal, it was not expressed in terms that attracted the operation of Calderbank principles.
Mr Crofts complained that the husband “sat on his hands”[17] when responding to proposals. The same could not be said of the wife’s solicitors. Two days after the husband’s solicitors wrote on
14 December 2015, Ms Smith replied on 16 December 2015. Yet that letter was more in the nature of a request for information than it was an offer, a proposal or a counter-proposal.
[17] Applicant wife’s submissions for costs dated 11 October 2017 at [9].
It seemed that a proposal taking the form of a Calderbank offer was conveyed by the husband’s solicitors to the wife’s solicitors on
5 April 2016. I say “it seemed” because the letter was not exhibited. At any event, in response the wife’s solicitors wrote to the husband’s solicitors on 26 April 2016. That letter introduced wording that unmistakably cast it as a Calderbank offer.
Mr Crofts relied on the 26 April 2016 letter as the basis for his contentions that indemnity costs were to be calculated from that date, namely 26 April 2016.
I do not agree. Subsequent to 26 April 2016, other offers (said to have been Calderbank offers) passed between the parties. Some of those other offers that passed between the parties were not exhibited to Ms Smith’s affidavit. For example, an offer made by the husband on 20 February 2017 was not exhibited. The offer made on 22 March 2017 by the husband was rejected. An offer made on 8 December 2016 by the wife was not exhibited yet by letter dated 30 March 2017 the wife’s solicitors put an offer (said to be in the 8 December 2016 offer) that represented a proposal for the husband to receive 57% of the asset pool and the wife to retain 43% of the asset pool. To my mind, that was the operative offer for the purposes of this costs application. It was the proposal that was last made and which was not accepted.
The question for me was whether the orders made on 4 October 2017 represented a division of property in favour of the wife that was more favourable than was the proposal for her to retain 43% of the asset pool canvassed in the 30 March 2017 letter.
Applying the figures canvassed on 4 October 2017, Mr Crofts said the asset pool was $2,100,244.92. The orders I made had the effect of dividing that sum in such manner that –
a)a tax liability of $143,173.07 was paid from money held in trust;
b)the balance was released from trust equally to the husband and the wife;
c)other funds went to the wife;
d)real estate in Property A was sold and the net proceeds divided equally; and
e)money in the (omitted) business account was to be retained by the wife.
That was to be contrasted with the husband’s position at trial. He proposed that an asset pool of $1.2 million was to be divided equally, both parties receiving $600,000.00. Aside from the fact that the orders made on 4 October 2017 bettered the husband’s proposal, the orders made were more advantageous to the wife than was the 30 March 2017 proposal by the wife pursuant to which she said she would accept 43% of the asset pool. The orders made on 4 October 2017 represented a division of assets in the wife’s favour in the vicinity of 50% or more.
It was not disputed that the 30 March 2017 offer was not accepted by the date stipulated, namely 26 April 2017.
The next issue was whether the husband’s rejection of the offer was unreasonable. In my view it was. There having been several exchanges leading up to the 30 March 2017 proposal, in my view it could not be said that the husband had insufficient time to consider the offer or that he was bereft of information to enable him to consider the offer or that conditions attached to the offer may have not been reasonable conditions.
In Stewart v Atco controls Pty Ltd (in liq) (No 2)[18] (“Atco”), the High Court of Australia held that the non-acceptance of a Calderbank offer is a factor, and often a strong factor, to be taken into account on an application for indemnity costs. The court did not decide whether reasonableness or otherwise in refusing to accept a Calderbank offer is the touchstone of liability for indemnity costs. Assuming, as I do, that the reasonableness or otherwise of the rejection of the 30 March 2017 Calderbank offer is in fact relevant, as the learning that preceded the specific idiosyncratic facts of Atco stated, it was relevant for me to examine the reasonableness of the husband’s position in not accepting the 30 March 2017 proposal. He gave no evidence or information on point despite my inviting him to do so. It seemed that he was immovable in the position he described to me on 4 October 2017, namely, that each of the wife and he should receive half of $1.2 million. In my view that was an unrealistic an unreasonable position to adopt. It failed to recognise the totality of the asset pool and instead treated the asset pool as being limited to $1.2 million to be divided in half. Under the husband’s proposal, the parties were to content themselves with a full resolution of their division of property based on but one of the assets and that such distribution was to be on a 50% basis. That was erroneous.
[18] (2014) 252 CLR 331.
Indemnity costs
When addressing applications for indemnity costs, some judges proceed – erroneously in my view – on the basis that the legal analysis begins and ends with the decision of Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd[19] (“Colgate-Palmolive”). There can be no doubt that his Honour’s examination of the subject was extraordinarily helpful, drawing together a collection of authorities and then arranging them into six propositions to which I avert below.
[19] (1993) 46 FCR 225.
But it is wrong to proceed on the basis that statements of law did not precede Sheppard J’s distillation, especially concerning the circumstances in which it was open to the court to depart from the more conventional costs consequences in adversarial litigation than costs ordered on a party and party basis. In fact, those statements of legal principle can be traced to the 19th century where Baron Branwell said the following in Harold v Smith[20] -
Costs as between party and party are given by the law as an indemnity to the person entitled to them; they are not imposed as a punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained. Of course, I do not say that there are not exceptional cases in which certain arbitrary rules of taxation have been laid down, but as a general rule costs are an indemnity, and the principle is this, find out the damnification, and then you find out the costs which should be allowed.[21]
[20] (1860) 157 ER 1229.
[21] (1860) 157 ER 1229, 1231.
In the 19th century, common law courts took the view that the only permissible costs order was one as between party and party. The classic formulation emerged from the decision of the Court of Appeal in Mordue v Palmer.[22] Conversely, the Court of Chancery took the view that costs could be awarded on a variety of bases and on an equally varied measure of estimation, as was held in Andrews v Barnes[23] (Cotton, Fry and Lopes LJJ). Other statements to like effect were found in Howes v Barber[24] and Garnett v Bradley.[25]
[22] (1870) LR6ChApp 22, 32.
[23] (1888) 39 Ch D 133.
[24] (1852) 18 QB 588.
[25] (1878) 3 App Cas 944.
Over 100 years earlier, two 18th century decisions made similar pronouncements. They were Jones v Coxeter[26] and Corporation of Burford v Lenthall.[27]
[26] (1742) 26 ER 642a.
[27] (1743) 26 ER 731.
Almost from inception, indemnity costs were ordered where a party made allegations of fraud that were not sustained. The decisions in Forester v Read[28] and Christie v Christie[29] stand for that proposition. But indemnity costs have never included compensation for time spent by a lay litigant in preparing and conducting his own case, as was held from as early as 1833 and a line of cases that included Leaver v Whalley,[30] Parsloe v Foy[31] and London Scottish Benefit Society v Chorley.[32] Some, but not all those authorities were picked up by Sheppard J in Colgate-Palmolive.
[28] (1870) LR6ChApp 40.
[29] (1873) LR8ChApp 499.
[30] (1833) 2 Dowl 80.
[31] (1833) 2 Dowl 181.
[32] (1884) 13 QBD 872.
In his written submissions in support of this application for indemnity costs, Mr Crofts did not refer to any of the authorities set out above. Instead, he took me to a decision of a single judge of the Family Court of Australia, the utility of which was so peripheral that I shall not even mention it and the decision of the Full Court of the Family Court of Australia in Pennisi & Pennisi.[33] The latter case made comments so general as to be of no utility whatsoever in any consideration of indemnity costs.
[33] (1997) 141 FLR 401.
In my view, the genesis of the modern formulation in any consideration for the imposition of indemnity costs is Sheppard J’s decision in Colgate-Palmolive. While his Honour stated six propositions, in the circumstances of this case they can be distilled into three notions, namely –
a)the application of the ordinary well-settled rule of costs being ordered on a party and party basis will result in the amount received by the successful party falling short of a complete indemnity;
b)some special or unusual feature of the case must, in the circumstances, warrant departure from the well-settled practice awarding costs on a party and party basis including an imprudent refusal of an offer of compromise; and
c)even if facts exist to justify the making of an indemnity costs order, such an order need not necessarily be made because costs are always in the discretion of the court.
Application of the law to the facts of this case
Mr Crofts urged me to order indemnity costs against the husband on the basis that –
a)the husband had behaved badly in the course of this litigation by refusing to properly and expeditiously consider settlement proposals; and
b)by operation of the principles in Calderbank, the wife had obtained an order in a greater amount than was the subject of the 30 March 2017 offer.
The second was true and the first may have been true. But ultimately, costs are in the discretion of the court. Whether I order costs at all is a matter for me and even if I do, the basis on which I order costs is also a matter wholly and solely for me.
In my view, in the family law jurisdiction, costs should not be treated in the same way as they might be in, say, a takeover case, a case about misleading and deceptive conduct or a case about trademark infringement. Much more than money or commercial manoeuvring is at stake and at play in a case in the family law jurisdiction. Emotions usually run hot in family law. Some parties are well represented, others are not while others again are not represented at all. Unsurprisingly, clinical and analytical detachment by litigants is rarely exhibited in the family law jurisdiction. The emotional element brought to bear by litigants often clouds their judgments. Calm, rational, level-headed decision-making is less than an everyday occurrence. In saying that, I should not be taken to be criticising parties in a family law dispute. To the contrary. While they are in their most vulnerable state, they are expected to behave as might a director of a public listed company when poised to launch a takeover bid. That is not reality in the family law jurisdiction. Concepts of commercial law that apply when assessing the reasonableness of the rejection of an offer of compromise have little parallel in the family law jurisdiction.
And while it may seem that at an objective level it was unreasonable to have rejected a particular offer, that rejection may have had its genesis in the emotional frailties associated with being embroiled in family law litigation. Among them are disbelief at the demise of the marriage, anger that the marriage is over, a desire to orchestrate revenge or a hope – desperate or otherwise – of reconciliation. It would be quite wrong in the circumstances of this case to visit the full impact of an order for indemnity costs upon the husband merely on account of his refusing an offer or because an order made under s.79 of the Act bettered an offer of compromise.
True, any costs order is discretionary. But as with the exercise of any discretion by the court, the discretion must be exercised judicially. That invokes the application of principles espoused by the High Court of Australia in such cases as House v R[34] and Norbis v Norbis.[35] In the exercise of the discretion reposed in me, in my judgment it is appropriate in the circumstances of this case that costs be ordered on a party and party basis (rather than on an indemnity basis) and for a fixed amount to be ordered rather than for costs to be assessed.
[34] [1936] HCA 40.
[35] (1986) 161 CLR 513.
Costs should not be ordered on an indemnity basis when by such an order, a crushing result would occur. It must not be forgotten that the husband represented himself at the trial on 4 October 2017. The position he adopted may not have been the most legally advantageous nor prudent. However, he did so without the benefit of legal advice.
In the circumstances, I order the husband to pay costs of $3,000.00.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of Judge Wilson
Date: 24 November 2017
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