Lundquist & Lundquist (No 2)

[2024] FedCFamC1A 235

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Lundquist & Lundquist (No 2) [2024] FedCFamC1A 235

Appeal from:

Lundquist & Lundquist (No 2) [2024] FedCFamC2F 1002

Appeal number:

NAA 195 of 2024

File number:

SYC 7577 of 2022

Judgment of:

RIETHMULLER J

Date of judgment:

12 December 2024

Catchwords:

FAMILY LAW – APPEAL – COSTS – Appellant wholly unsuccessful – Respondent seeking indemnity costs – Where the respondent is relying on an offer – Whether the offer constitutes a genuine attempt to compromise – Appellant to pay the respondent’s costs in a fixed sum.   

Legislation:

Family Law Act 1975 (Cth) s 117

Cases cited:

Adamo & Vinci (No 5) [2024] FedCFamC1F 172

Bakshi & Mahanta (No 2) [2022] FedCFamC1A 90

Colgate-Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248; [1993] FCA 801

Falk and Falk (1977) FLC 90-247; [1977] FamCA 46

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2005] FamCA 158

Leichhardt Municipal Council v Green [2004] NSWCA 341

Lundquist & Lundquist [2024] FedCFamC1A 219

Lundquist & Lundquist(No 3) [2024] FedCFamC2F 1556

RAF & MMF [2005] FamCA 497

Roydon & Roydon [2024] FedCFamC1A 105

SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323

Westbury Holdings Kiama Pty Ltd v ASIC [2007] NSWSC 1064

Number of paragraphs:

14

Date of hearing:

6 December 2024

Place:

Parramatta

The Appellant:

Litigant in person

Solicitor for the Respondent:

Cominos Family Lawyers

ORDERS

NAA 195 of 2024
SYC 7577 of 2022

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MS LUNDQUIST

Appellant

AND:

MR LUNDQUIST

Respondent

ORDER MADE BY:	RIETHMULLER J
DATE OF ORDER:	12 DECEMBER 2024

THE COURT ORDERS THAT:

1.That the appellant pay the respondent’s costs of and incidental to the appeal in the sum of $12,000.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lundquist & Lundquist has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

RIETHMULLER J:

INTRODUCTION

1. The appellant appealed against a Divorce Order made in late June 2024. The appeal was dismissed: see Lundquist & Lundquist [2024] FedCFamC1A 219. The respondent sought costs orders, however, submissions as to costs could not be made in advance of the appeal judgment as it transpires that the respondent had made an offer to settle the appeal.

2. The appellant was unrepresented on the appeal and the costs application.  The respondent was represented throughout the proceedings.

   THE COSTS APPLICATION

3. The respondent sought a lump sum costs order. In support of the application the respondent filed schedules estimating his costs at $18,295 (if assessed on an indemnity basis) or $9,012.29 (if assessed in accordance with Schedule 3). Schedule 3 provides for various costs items, including an hourly rate of $276.33 per hour for a solicitor and $317.26–$452.51 per hour for counsel. The respondent had engaged a lawyer charging $495 per hour and a counsel who charged $600 per hour (together with GST), nearly double the scale fees. It is difficult to understand why lawyers of sufficient standing to justify such fees were engaged in a case that was seen by the respondent as so simple that the respondent’s Summary of Argument on the appeal was only three lines long.

4. Section 117 of the Family Law Act 1975 (Cth) provides that “each party to proceedings … must bear the party’s own costs” unless “the court is of opinion that there are circumstances that justify it in doing so, the court may… make such order as to costs … as the court considers just.” Section 117(2A) of the Act sets out a number of matters that “the court shall have regard to” when considering whether to make a costs order. Importantly, no one fact is determinative and the court may give such weight as it considers relevant to any factor: Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123 at 130.

5. The parties are in a strong financial position as a result of their assets, although neither party is working. The parties’ property settlement orders made on 8 November 2024 settled approximately $5.7 million of the parties’ assets on the appellant and $11.8 million on the respondent: see Lundquist & Lundquist (No 3) [2024] FedCFamC2F 1556.

6. Unsurprisingly, given their respective assets, neither party is in receipt of legal aid assistance.

7. It is not suggested that either party engaged in conduct relevant to s 117(2A)(c) of the Act, nor that the proceedings were necessitated by the failure of a party to comply with previous orders: see s 117(2A)(d).

8. The appellant was wholly unsuccessful on the appeal following a reasoned judgment at first instance: s 117(2A)(e) of the Act.

9. The appeal was filed on 25 July 2024 and by 11 September 2024 the Appeal Book had been filed.  On 19 September 2024, the respondent made an offer to the appellant to settle the appeal in the following terms:

   We refer to the above matter and in our view your appeal lacks merit and will likely be dismissed. That being the case, we invite you to withdraw the appeal within 7 days and we will not press costs.

   Please note that should you fail to accept our offer and proceed with the appeal, we put you on notice that we will rely upon this letter in an application for indemnity costs.

   This offer is made in accordance with the principles of Calderbank & Calderbank will remain open for a period of 7 Days from the date of the offer.

10. The respondent relied upon the well-known passage from Colgate-Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248. As I have noted previously in Roydon & Roydon [2024] FedCFamC1A 105 at [106] to [108]:

    106.  The matters identified by Sheppard J in Colgate Palmolive as justifying indemnity costs orders all involve significant misconduct in litigation, not simply a party litigating a marginal or speculative case.   

    107.  The remarks of Sheppard J with respect to offers must be seen in context. The proceedings before Sheppard J concerned commercial litigation where, unlike family law proceedings, costs ordinarily follow the event. In family law cases, ordinarily there are no orders for costs. This practical difference between costs rules for commercial litigation compared to family litigation is particularly important when considering whether a failure to accept an offer is “imprudent”, and thereby justifying an indemnity costs order, rather than a situation where it was not reasonable to have rejected an offer (leading to a party and party costs order): Badawi & Badawi (Costs) [2017] FamCAFC 196 at [27]–[29]. As was said by Murphy J in Prantage & Prantage (2013) FLC 93-544 at [152]:

    Indemnity costs are confined to “an exceedingly rare situation” … in jurisdictions where “the usual rule” is that a successful party receives an order for costs (i.e. “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)).

    108.  Thus, in Warbrick & Warbrick (No. 2) [2021] FamCAFC 101, the Full Court said that:

    12       … 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.

11. The significance of an offer must be considered in light of the surrounding circumstances.  Put simply, “[i]n the end the question is whether the offeree’s failure to accept the offer, in all the circumstances, warrants departure from the ordinary rule as to costs, and that the offeree ends up worse off than if the offer had been accepted does not of itself warrant departure”: see SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], cited with approval in Westbury Holdings Kiama Pty Ltd v ASIC [2007] NSWSC 1064. Circumstances that are often significant are whether the offer constitutes a genuine attempt to compromise (Leichhardt Municipal Council v Green [2004] NSWCA 341 and Adamo & Vinci (No 5) [2024] FedCFamC1F 172 at [19]) and the timing of the offer. The offer did not propose a compromise on the substantive issues, beyond forgoing costs incurred to the date of the offer, however, there was still some element of compromise.

12. The respondent never engaged with what appeared to be the primary concern of the appellant in the appeal, that a divorce before property settlement orders would expose her to taxation consequences in the United Kingdom. I also note that the conduct of the appellant was also consistent with a distressed spouse resisting the formal end of a long relationship by divorce. 

13. Neither party appears to have identified that there was no discretion to refuse to grant a divorce once the statutory criteria are established: see Falk and Falk (1977) FLC 90-247; RAF & MMF [2005] FamCA 497 at [50]; Bakshi & Mahanta (No 2) [2022] FedCFamC1A 90 at [42]-[43].

    CONCLUSION

14. Taking all of these factors into account I am persuaded that the appellant should pay the respondent’s costs in the sum of $12,000.

I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller.

Associate:

Dated:       12 December 2024