Kilich & Wood

This matter concerned an appeal from an order for costs made by a judge of the Family Court of Australia. The appeal was heard by Kay, Warnick and Waddy JJ of the Full Court of the Family Court of Australia.

The central legal issue before the Full Court was whether an informal, unwritten offer to settle, made orally by one party to the other, could be taken into account by the court when exercising its discretion to award costs under section 117(2A) of the *Family Law Act 1975* (Cth).

The Court examined the legislative history of section 117(2A), noting the Joint Select Committee's report which indicated the intention to provide more specific guidelines for cost orders, including consideration of settlement proposals. The Court also referred to *Transit Australia P/L v Crawford Australia P/L*, where Thomas J, in the context of arbitration costs, suggested that while formal offers of compromise are to be considered, the general discretion to consider informal offers is not necessarily limited. The Full Court adopted this reasoning, holding that the public policy favouring settlement encourages courts to consider all relevant offers, even those not made in a prescribed form, provided they can be adequately proved. The Court acknowledged that oral offers might face evidentiary challenges but affirmed that, in principle, they could be considered if proven.