PARADIN & PARADIN

[2020] FamCAFC 245

FAMILY COURT OF AUSTRALIA

PARADIN & PARADIN [2020] FamCAFC 245

FAMILY LAW – APPEAL – COSTS – Where the respondent made a Calderbank offer – Where the appellant asserts that he could not have accepted the offer put by the respondent because it was ambiguous and did not mention spousal maintenance or child support – Where the issue of child support was vitally important to the appellant as to whether or not he could accept the offer made by the respondent and with that issue unresolved he could not be sure that he could afford to make the payment to the respondent which the offer required – Where the primary judge did not take into account all of the relevant circumstances in play in relation to the offer – Where it is critical to consider the context in which an offer is made – Where there is merit in five of the grounds of appeal – Appeal allowed – Orders made be set aside.

FAMILY LAW – COSTS – Where both parties sought that costs certificates issue pursuant to the provisions of the Federal Proceedings (Costs) Act 1981 (Cth) – Where the appeal is being allowed on a question of law and no order for costs is being made – Costs certificates ordered as sought.

Family Law Act 1975 (Cth)
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9

Aljade and MKIC v OCBC [2004] VSC 351
Carr v Finance Corporation of Australia Ltd (No. 1) (1981) 147 CLR 246; [1981] HCA 20
Cross v Beaumont (2008) 39 Fam LR 389; [2008] FamCAFC 68
Farmer & Panshin (2014) FLC 93-587; [2014] FamCAFC 78
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Harris and Harris (1987) FLC 91-822; 11 Fam LR 629; [1987] FamCA 7
Harris and Harris (1991) FLC 92-254; [1991] FamCA 124
Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority(No 2) (2005) 13 VR 435; [2005] VSCA 298
House v The King (1936) 55 CLR 499; [1936] HCA 40
Johnston and Johnston (2004) FLC 93-189; [2004] FamCA 556
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Pennisi v Pennisi (1997) FLC 92-774; [1997] FamCA 39
Robinson and Higginbotham (1991) FLC 92-209; [1991] FamCA 5

APPELLANT: Mr Paradin

RESPONDENT: Ms Paradin

FILE NUMBER: MLC 11110 of 2017

APPEAL NUMBER: SOA 56 of 2019

DATE DELIVERED: 7 October 2020

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide via video-link

JUDGMENT OF: Strickland J

HEARING DATE: 8 April 2020

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 11 September 2019

LOWER COURT MNC: [2019] FCCA 3415

REPRESENTATION

COUNSEL FOR THE APPELLANT: Ms Swann

SOLICITOR FOR THE APPELLANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Ms Tulloch

SOLICITOR FOR THE RESPONDENT: Jane Curtis & Associates

Orders

1. The appeal be allowed.

2. The orders made on 6 September 2019 be set aside and the respondent wife’s Application filed on 26 July 2019 and her Amended Application filed on 3 September 2019 be dismissed.

3. The Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by him in relation to the appeal.

4. The Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.

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

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

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 r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT
 ADELAIDE

Appeal Number: SOA 56 of 2019
File Number: MLC 11110 of 2017

Mr Paradin

Appellant

And

Ms Paradin

Respondent

REASONS FOR JUDGMENT

Introduction

1. By Amended Notice of Appeal filed on 24 February 2020, Mr Paradin (“the husband”) appeals against orders for costs made by a judge of the Federal Circuit Court of Australia on 11 September 2019.

2. Ms Paradin (“the wife”) opposes the appeal.

3. The orders appealed against provide as follows:

   1.The Husband pay the Wife’s costs of the proceedings fixed in the sum of $62,000.00 (“the costs payment”) with a stay of 90 days with respect to the payment, PROVIDED ALWAYS THAT the Husband offers security for the costs payment of the costs in similar terms to order 5, 6, 7 and 8 of the orders made 17 July 2019.

   2.Liberty is reserved to each of the parties to apply with respect to the security for the costs payment.

4. Unfortunately, there was no order made on 17 July 2019, and although that appears to be the correct date for the delivery of the reasons for judgment, the formal order is dated 19 July 2019. There is no explanation for this error. In any event, paragraphs 5, 6, 7 and 8 of the order made do not relate to security for costs, and thus, it is impossible to discern to what her Honour was referring. In any event, the challenges are to the order for costs per se, and not to any order, or provision for security for costs.

5. The husband sought leave to appeal in the Amended Notice of Appeal, but that was unnecessary; the relevant order made finally determined the rights of the parties, and thus the order was not interlocutory (Carr v Finance Corporation of Australia Ltd (No. 1) (1981) 147 CLR 246).

6. This issue was raised by this Court at the directions hearing on 10 February 2020, and leave was given to the husband to amend the initial Notice of Appeal filed on 9 October 2019, to delete the application for leave. However, that was not done in the Amended Notice of Appeal filed on 24 February 2020.

Relevant Background

1. On 26 October 2017, the wife instituted proceedings seeking “an adjustment of property and financial resources as is deemed just and equitable”.

2. On 30 November 2017, the husband filed a Response setting out precisely the orders that he sought by way of property settlement.

3. On 11 April 2018, two things occurred, namely:

   a)The wife filed an Amended Initiating Application, having served an unsealed copy on the husband’s solicitors on 6 April 2018. In that application the order sought for property settlement was no better identified, but the application included an order for departure from a child support assessment made in 2018, seeking $200 per week for each of the three children, and an interim order for the payment of $40,000. It was not specified what source of power was relied on to make the latter order, but the wife also sought interim spousal maintenance of $600 per week.

   b)The wife made a Calderbank offer to the husband. The letter containing that offer was annexure “A” to the wife’s solicitor’s affidavit filed on 26 July 2019 and reads as follows:

   …

   Re:  Paradin property maters.

   We advise that we have been instructed by our client to make the offer set out hereunder. The terms of the offer are as follows:

   1.That our client relinquish any entitlement she may have in the properties situate and known as Property B and Property C and your client assume liability for any encumbrance whatsoever pertaining to these properties and refinance the mortgages over the said properties into his name absolutely;

   2.That your client transfer to ours his interest in the property situate and known as Property E, refinance into his name solely the mortgage for this property and assume liability for any rates taxes and other outgoings pertaining to the property whatsoever up until the time of transfer to our client;

   3.That your client pay to ours the sum of $40,000.00 within 60 days of orders being made;

   4.That our client relinquish any entitlement she may have in any of the assets, whatsoever, of X and your client indemnify our client in relation to the past and future liabilities of the business;

   5.That your client return and transfer to ours the 2010 motor vehicle, and the tractor which was at the former matrimonial home at separation, both which are to be in good working order;

   6.That the parties otherwise retain all personal property, including vehicles currently in their possession and their own superannuation entitlements.

   We advise that this is a “Calderbank offer” (Calderbank and Calderbank 1975 3 ALL ER 333) and is open to be accepted for a period of 14 days.

   In the event that the offer contained herein is not accepted then this letter may be tendered to the Court upon the question of costs.

   …

4. Notably, there was no indication in that letter to what the offer pertained, save and except that the subject of the letter is “Re: Paradin property matters”.

5. On 23 April 2018, the husband rejected this offer, and put a counter offer, also described as a Calderbank offer. The letter containing that counter offer is annexure “B” to the wife’s solicitor’s affidavit filed on 26 July 2020, and reads as follows:

   …

   Paradin – Family Law Matters

   We refer to the above matter and to your letter dated 11 April 2018 (your client’s Calderbank offer).

   As you may already know, the parties have had some direct settlement discussions over the last few days.

   We are instructed to clarify our client’s position. His counter proposal is as follows:

   1.        Your client’s Calderbank Offer is rejected.

   2.That our client pay to your client the sum of $40,000 in 4 monthly instalments of $10,000 (the first instalment being payable within seven (7) days of the date of the Orders);

   3.        Your client retain Property E and to facilitate that –

   a.Our client has five (5) years from the date of the Orders to discharge the mortgage;

   b.The title is transferred to your client upon discharge of the mortgage;

   c.Our client meets the loan repayments until the discharge of the mortgage (and there otherwise be no spousal maintenance payable to your client and she meet all other outgoings of or with respect to Property E, including but not limited to rates, insurances and utilities);

   4.        Your client shall retain the motor vehicles in her possession;

   5.        Your client shall retain the contents of Property E;

   6.        Your client retains the hay bales;

   7.Our client have 28 days from the date of the Orders to collect the bridge timber (subject to weather);

   8.        Your client relinquish all right title and interest in –

   a.        [Property B];

   b.        [Property C];

   c.        X (including plant and equipment)

   This letter constitutes a Calderbank offer pursuant to the principles in Calderbank & Calderbank (1975) 3 ALL ER 333 and is open for acceptance until 4pm on Friday 27 April 2018 at which time the offer will lapse. This letter may be produced to the court as to the question of costs.

   …

6. On 23 April 2018, the wife’s solicitor also enquired as to what the husband’s proposal was in relation to child support.

7. On 24 April 2018, the husband’s solicitor responded setting out the husband’s offer as to child support.

8. It seems that the husband’s counter offer, and offer as to child support, were rejected by the wife, but offers and counter offers continued to be made (affidavit of the husband filed 29 August 2019, paragraphs 36-38, 43 and 44).

9. On 31 May 2018, the wife filed a Further Amended Initiating Application, including a final order for the payment of $40,000 as spousal maintenance, or in the alternative, $500 per week, and a cash sum of $55,000.

10. On 8 June 2018, the husband filed an Amended Response, including that the wife’s Application for a child support departure order be dismissed.

11. The final hearing took place before the primary judge on 14, 15 and 19 June 2018, and her Honour made final orders and delivered her reasons for judgment on 17 July 2019, although the formal order issued by the Court is dated 19 July 2019.

12. In summary, by way of property settlement, the order provided as follows:

    a)Within 90 days the husband pay to the wife the sum of $146,672.

    b)The wife return to the husband two motor vehicles, and the husband transfer to the wife his interest in a property and discharge the mortgage secured over the title to that property.

    c)Other properties and plant and equipment were to be sold in default of payment of the said amount.

    d)The retention by the husband of a property, plant and equipment, a motor vehicle, all assets of his business, and any bank accounts in his name.

    e)The retention by the wife of all bank accounts in her name.

    f)The retention by each of the parties of all other assets currently in their respective possession or control.

13. Notably, in addition to the order for property settlement, her Honour dismissed the wife’s applications for spousal maintenance and for departure from the administrative assessment of child support.

14. On 26 July 2019, the wife filed an application seeking her costs on an indemnity basis, or in the alternative, on a party/party basis from the date that she made her Calderbank offer, namely on 11 April 2018.

15. The husband filed a response on 29 August 2019, seeking that the wife’s application be dismissed.

16. On 3 September 2019, the wife filed an Amended Application.

17. At the hearing before the primary judge on 6 September 2019, the application for indemnity costs was abandoned, and the wife pursued an application that the husband pay her costs according to scale.

18. On 11 September 2019, her Honour made the orders under appeal.

The Appeal

1. In the Amended Notice of Appeal, the wife left in Grounds 1-3 as they appeared in the initial Notice of Appeal, and added Grounds 4-10. At the hearing of the appeal, the wife’s counsel advised that the wife was not pursuing Grounds 1-3, and thus there are seven grounds of appeal to consider.

2. That said, Grounds 4-8 are repetitive; they each assert error by the primary judge in her treatment of the Calderbank offer of 11 April 2018. Thus, I propose to address these grounds of appeal together to avoid any overlap.

3. The final two grounds, namely Grounds 9 and 10, assert error by the primary judge in her assessment of the quantum of the costs ordered. I will address those two grounds discretely.

Ground 4 – Her Honour erred in finding that the result achieved by the Respondent was overall, more favourable to her than the letter that was forwarded to her solicitors on 11 April 2018 in that the letter did not encompass all of the applications that were before the Court, including the Respondent’s applications for spousal maintenance and child support in which the Respondent was wholly unsuccessful.

Ground 5 – Her Honour’s discretion miscarried in that she gave too much weight to the offer made by the Respondent on 11 April 2018, as the offer did not set out:

a.      The pool of assets, liabilities and financial resources available for division between the parties with particularity;

b.      The value ascribed by the Respondent to [sic] net matrimonial asset pool;

c.       What the proposed percentage division between the parties was;

d.      The proposed timeframe for the transfer to the Respondent of the property situated at Property E, and the refinance by the Appellant of the mortgage over that property into his sole name;

e.       Whether or not the offer was all inclusive of the maters in dispute, including property adjustment, spousal maintenance and a child support departure order;

f.       Why it was reasonable for the Appellant to accept the offer.

Ground 6 – Her Honour failed to take into proper consideration and give appropriate weight to whether or not it was reasonable for the Appellant to reject the Respondent’s offer made on 11 April 2018 in light of the state of the evidence at that time, including what Her Honour referred to at paragraph 27 of the judgment as figures that were “a bit rubbery”.

Ground 7 – Her Honour failed to take into consideration the evidence of subsequent correspondence between the parties in which clarification of the offer made by the Respondent on 11 April 2018 was sought by the Appellant’s solicitors. It was apparent in such correspondence that the Respondent’s offer had not clearly and comprehensively addressed all issues in dispute between the parties, in particular the timeframe for refinancing the mortgage and child support.

Ground 8 – Her Honour erred in finding that no subsequent offers were made after the offer made on 11 April 2018 had expired and failed to consider the fact that further offers were made in correspondence between the parties’ solicitors, which were in evidence before the court.

1. It is apparent that the fact of the offer being made, and its comparison with the order ultimately made, was the only basis for the costs order that is the subject of the appeal. The primary, and the husband might say, the only focus, was that the offer provided for a payment of $40,000 within 60 days, yet the final order provided for a payment of $146,672 within 90 days.

2. Her Honour said this at [28]

   Save and except for a couple of motor vehicles which were returned to the Respondent, and some advantages to the Respondent that appear to be in the vicinity of somewhere between $10,000 to $20,000, the offer is similar to the letter that was forward that [sic] the Respondent, by virtue of the result achieved is at least $60,000 worse off at least than the offer that was proffered. That is a reasonably significant amount having regard to what the ongoing needs of the parties might be.

3. Understandably, in terms only of the amount to be paid by the husband to the wife, as a component of the order for property settlement, the husband would have been better off if he had accepted the offer. However, the submission of the husband is that the offer was not an offer that could reasonably be accepted by him at the time (Ground 6).

4. In the context of Ground 4, the husband argues that the offer was ambiguous; in particular, “[i]t did not specify that it was an offer made in full and final settlement of all applications before the court. It did not mention spousal maintenance, or child support” (husband’s summary of argument filed on 10 March 2020, paragraph 8).

5. Those applications of course were included in the Amended Initiating Application filed on the same date as the offer, but sent to the husband’s solicitors on 6 April 2018. Thus, the husband was aware of these claims being made by the wife, but it was not possible to read the offer as encompassing those matters. Indeed, that is borne out by the subsequent enquiry by the wife’s solicitor of the proposal the husband had to address child support.

6. There is ample authority to the effect that an offer must be expressed “with precision” and “in terms which are objectively capable of being clearly understood” (Harris and Harris (1987) FLC 91-822 at 76,187; also see Johnston and Johnston (2004) FLC 93-189 at [35]).

7. Further, there is “no obligation on the offeree to seek to clarify the terms” of an offer (Harris at 76,187).

8. Pausing there, in Ground 7, the complaint is made that her Honour failed to take into account the subsequent attempts by the husband to clarify the initial offer. However, first, I do not read any of the subsequent correspondence as doing that. There were offers and counter offers. Secondly, I fail to see how where there is no obligation to clarify an offer, the primary judge has erred in failing to take into account any so-called efforts in that regard. Thus, there is no merit in Ground 7.

1. To return to Ground 4, as submitted by the husband, the costs order made by her Honour was for the whole amount of the costs of the wife, subsequent to the offer made on 11 April 2018. No allowance was made for the fact that the issues of spousal maintenance and child support did not form any part of the offer, and although the wife continued her applications for orders in relation to these matters, those applications were dismissed by her Honour.

2. The issue of child support was vitally important to the husband as to whether he could accept the offer made by the wife. On his calculations, the child support sought by the wife totalled $105,000 for the period between the date of the offer, and when each child completed year 12. With that issue unresolved, his position was that he could not be sure that he could afford to make the payment to the wife that the offer required.

3. Thus, there is clearly merit in Ground 4.

4. With the complaint primarily asserted in Ground 6, that her Honour failed to address and/or take into account whether it was reasonable for the husband to reject the offer made on 11 April 2018, the primary issue there is the state of the evidence at the time.

5. The proceedings had only commenced on 26 October 2017, and the wife, both at that time, and when she filed her Amended Initiating Application at the same time as the offer, namely on 11 April 2018, was unable to identify for the court the order for property settlement she was seeking. Indeed, her Honour noted in [27] that at the time the offer was made, the figures “were a bit rubbery”.

6. In that context, it is also relevant to note that even at the time of the substantive trial, two months later, the figures were still “rubbery”, and there were real issues with the parties’ assets and liabilities. Her Honour said this at [88] of her reasons delivered on 17 July 2019:

   The presentation of the parties’ assets and liabilities was at times oblique and fraught with difficulty. There were numerous areas of agreement, but equally there were areas where the parties disagreed about how substantial sums of money (most significantly the overdraft attached to the business and credit card debt) were to be treated …

7. A particular issue was the state and value of the husband’s business assets; there were disagreements about this, and about how the court should treat other significant liabilities.

8. As the husband submits at paragraph 31 of his summary of argument filed on 10 March 2020:

   The Appellant may have been in a position to decide to pay the Respondent $40,000 (if he could raise the money in the timeframe proposed by her) for the purpose of saving the legal costs of going to trial. However, he was not in a position to assess the reasonableness of the offer on any other basis, when there were significant valuation disputes and matters that required judicial determination.

9. In Pennisi v Pennisi (1997) FLC 92-774, the Full Court said this, at 84,547:

   …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.

10. The question becomes whether what was known at the time of the offer as to the relevant financial circumstances in the context of what each party was seeking, was adequate such that it was unreasonable to reject the offer.

11. Further, to repeat, the issue of child support loomed large in the negotiations in that the husband’s position was that with that unresolved, he was not able to meet the commitments to the wife that accepting her offer would have entailed. And the fact of the matter is, that the wife maintained her claims for a child support departure order through to the trial, when it was dismissed by her Honour.

12. Despite her Honour describing the figures as “a bit rubbery”, and indicating that “there [was] some force in the argument put on behalf of the [husband], in terms of being able to assess offers” ([27]), her Honour seems to have dismissed these considerations on two bases, namely, that “once the asset pool was ascertained”, there was no position of compromise put by the husband, and secondly, that the husband would have been able “with the benefit of his very experienced legal practitioners” to assess the offer even if the figures were “a bit rubbery” ([27]).

13. As to the first basis, that simply cannot lead to a finding that it was unreasonable to reject the offer when made. The offer was only open for two weeks, and there is no suggestion that it remained open beyond that, or that it was subsequently resurrected by the wife. Indeed, what happened was that immediately after the offer was made, there was a counter offer, and then further toing and froing around the offer and the counter offer.

14. The only question for her Honour was, was it unreasonable to reject the offer at the time it was made.

15. As to the second basis, that is pure speculation on the part of her Honour. If the financial circumstances at the time were such that the offer could not be properly assessed, then it is difficult to see how even the most experienced lawyers could provide any worthwhile advice, or indeed would be prepared to.

16. Thus, there is also merit in this ground.

17. Ground 5 purports to be a weight challenge, and asserts that in the absence of specific detail in the offer, her Honour gave too much weight to it.

18. However, that assumes that it was necessary for that detail to be included. In that regard, the husband relies on the “requirements” of a Calderbank offer as interpreted by subsequent authorities. In short, “[i]t has been argued on occasion that the maker of a Calderbank offer should not be entitled to costs unless the offer sets out, with some reasonable specificity, the basis for the offeror’s contention that the offeree should accept the compromise” (Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority(No 2 ) (2005) 13 VR 435 at [26]). However, that proposition has not gained universal acceptance, and the better view is that it is “neither necessary nor desirable to lay down any general rule in this regard” (Hazeldene’s Chicken Farm Pty Ltd at [27]), and what needs to be put in the offer must depend upon a consideration of all of the circumstances existing at the time of the offer (Aljade and MKIC v OCBC [2004] VSC 351 per Redlich J at [87]).

19. Here, it seems to me, that given the uncertainty as to the assets and liabilities at the time, it was unnecessary, and perhaps even impossible, for the wife to set out all the matters identified in this ground of appeal. That also goes though, as referred to above, to whether it was reasonable for the husband to reject the offer.

20. Certainly it was essential to include the proposed time for the transfer of the property and the refinance of the mortgage, and to identify what matters in dispute the offer sought to settle, and the absence of these matters should have lessened the weight that her Honour gave to the offer, but again, it demonstrates why it was reasonable for the husband to reject the offer.

21. Plainly, her Honour failed to take into account all of the relevant circumstances that were in play in relation to the offer. For example, there were ongoing negotiations with a counter offer followed by another offer, and then further toing and froing between the solicitors. Yet, her Honour said at [14] that “[a]s far as I am aware there were no subsequent offers after the offer [of 11 April 2018] had expired”. This was of course the subject of Ground 8.

22. Finally, as to this ground, I am reminded again of what the Full Court said in Pennisi, namely, it is critical to consider the context in which an offer is made (as to this also see Farmer & Panshin (2014) FLC 93-587 at 79,220). And, as was said by the Full Court in Cross v Beaumont (2008) 39 Fam LR 389 at [51] that context can be that “[i]f the recipient of the offer is demonstrably unable to comply with his or her obligations under the proposed settlement, it is difficult to see how the offer could be relied upon in support of an application for costs”.

23. That could be said to be the case here.

24. This ground of appeal also has merit, and as can be seen, that too must be the case with Ground 8.

Ground 9 – When assessing the quantum of cost orders, Her Honour failed to take into consideration that considerable time at the final hearing was taken up with the Respondent’s wholly unsuccessful assertion that the Appellant was in a de facto relationship with his employee, Ms O.

1. This ground does not go directly to the issue of the offer, but, like the dismissal of the wife’s applications for spousal maintenance and child support, it goes to the amount of costs awarded. In other words, in allowing all of the costs sought by the wife, her Honour, despite referring to the pursuit of Ms O at [17], failed to take into account that considerable time was taken up unnecessarily in the trial with the fruitless cross-examination of Ms O.

2. However, the wife submits that this was not a matter which was raised before the primary judge, and thus it cannot be the subject of an appeal (Metwally v University of Wollongong (1985) 60 ALR 68).

3. It was conceded by the husband that this was not an argument that was put to her Honour, but it is suggested that because her Honour referred to the pursuit of Ms O in her reasons for judgment, and because there was some oblique reference by the husband’s counsel at the hearing to the extent of the costs sought by the wife (Transcript 6 September 2019, p.9 lines 24-27), and an indirect reference to this issue at paragraph 14 of the written submissions of the husband dated 6 September 2019, that this matter could be raised on the appeal.

4. Unfortunately, I do not agree with that submission. This precise argument was not raised before the primary judge, and that is conceded, and accordingly, it cannot be raised in this appeal, and this ground cannot succeed.

5. In any event, it matters not, because if it is found that her Honour should not have taken the offer into account at all, which is the subject of Grounds 4-8, then this ground of appeal becomes otiose.

Ground 10 – Insufficient weight was given by Her Honour to the husband’s ill health, his credit card liabilities and the risks attaching to the assets he is retaining when exercising her discretion to make a costs order in favour of the Respondent and the quantum of the costs ordered.

1. This ground does not challenge how her Honour treated the offer of settlement. It goes only to the issue of the amount of the costs awarded. However, it is a ground that has no merit.

2. The submission is again made that the need for her Honour to take these matters into account was not raised before her Honour, and thus, that cannot be raised on appeal.

3. Again, the fact of it not being raised before her Honour was conceded by the husband, but as will be seen shortly, here her Honour identified those factors as being relevant to her assessment of costs, and thus, it is arguable that how her Honour dealt with them can be the subject of the appeal. However, that also matters not, because I consider that the ground has no merit for another reason.

4. The ground challenges the weight attributed by the primary judge to relevant factors in the exercise of her discretion to order costs.

5. The hurdles in the path of appellate intervention with respect to weight challenges are well-known (see House v The King (1936) 55 CLR 499 at 504-505; Gronow v Gronow (1979) 144 CLR 513 at 519-520).

6. As emphasised by the wife, a determination as to costs is a quintessentially discretionary exercise. In Harris and Harris (1991) FLC 92-254, the Full Court, at 78,711 said this:

   Orders for costs are peculiarly a matter which are in the discretion of the trial judge and it is only in the rarest of cases that the Full Court should interfere with a costs order.

7. In that context, their Honours in that case referred to what was said by Nygh J, with whom Simpson and Smithers JJ agreed, in Robinson and Higginbotham (1991) FLC 92-209, at 78,417:

   As counsel for the husband rightly submitted, this Court should be very reluctant indeed to interfere with the exercise of discretion in respect of costs. Indeed, it may be fair to say that generally speaking this Court has been more reluctant to interfere in such determinations than it has even in respect of the exercise of discretion pursuant to section 79 [of the Act]. But that does not mean that this Court should never interfere with the exercise of that discretion.

   The same principles hold true and if the result is plainly unjust or if the discretion was exercised on wrong principles then this Court must interfere. …

8. The relevant factors identified as being those to which insufficient weight was given are the “husband’s ill health”, his “credit card liabilities”, and the “risks attaching to the assets he is retaining”.

9. As to the first and third factors, her Honour addressed them in her reasons for judgment as follows:

   29.When I assess other matters, I am very cognisant of the fact that the Respondent is taking on the business with his ill-health as an ongoing concern and that the Applicant is receiving assets that are more corporeal. For instance, the business that the Respondent is taking on has $783,000 of plant and equipment, and the various other plant and equipment that has been valued separately. He has an element of his costs added back, whereas the Applicant is essentially taking real property and a cash payment. 

   30.Much of the proceedings were devoted to giving the Respondent time to meet his obligations with running the business as an ongoing concern. I accept that any costs order that I make it will be difficult for the Respondent to get the money together to pay it, because he will have to pay his own legal fees (although he has paid some of them already) and will have to make the payment to the Applicant and whatever costs I order. For that reason, I have determined that the costs should be calculated on the Federal Circuit Court Rules 2001 scale rather than on the Family Law Rules 2004 scale. I cannot recall that there was any contention that quantum was in issue, and as such I calculate the costs at $61,886.

10. With the second factor her Honour addressed that when considering the financial circumstances of the parties, and said this:

    21.Accordingly, having determined that I should consider whether there should be a costs outcome for the Applicant, I now consider what order, if any, should be made in terms of costs. Pursuant to section 117(2A)(a) of the Act, I have regard to the financial circumstances of the parties. The asset pool, as revised by the Court, is set out at paragraph 181 of the reasons for judgment delivered on 19 July 2019. The asset pool available for division between the parties was calculated at just over $1,400,000. That figure, however, does ignore the fact that the Respondent has substantially more credit card debts which I declined to take into account; about 50 per cent of his stated credit card liabilities, which are set out at paragraph 35 of the reasons for judgment. I assessed his credit card liabilities for the purpose of division at $85,000, however his actual credit card debt was about double that. In taking that into account in considering his financial position now, I cannot ignore that he will have a liability for that amount and nor can I ignore that both of the parties will have significant legal expenses which they are required to be paid. 

11. Thus, it can be seen that her Honour was aware of those factors, and she took them into account, so where is the error in the exercise of discretion? There is no error of law or mistake of fact present, and it has not been demonstrated that her Honour has acted on a wrong principle, or has reached a conclusion which is plainly wrong. Thus, it can be nothing more than asking this Court to reach a different conclusion faced with the same material. That is not an approach open to this Court.

Conclusion

1. I have found merit in Grounds 4, 6 and 8, and to a certain extent in Ground 5, all of which challenge her Honour’s treatment of the offer of settlement. I have also found merit in Ground 9, which goes to the amount of costs awarded. Thus, the appeal must be allowed.

2. In that event, because the only basis for the costs order being made was the rejection by the husband of the offer of 11 April 2018, the husband seeks that the order made on 6 September 2019 be set aside. The wife agreed that that should be the outcome if the appeal is allowed on that basis. That is indeed the case, and thus that will be the order that I make. In addition though, it will be necessary to dismiss the applications that the wife made for costs.

Costs

1. In the event that the appeal was allowed, both parties sought that costs certificates be issued pursuant to the provisions of the Federal Proceedings (Costs) Act1981 (Cth).

2. Given that the appeal is being allowed on a question of law, and no order for costs is being made, it is appropriate for costs certificates to be issued as sought.

I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 7 October 2020.

Associate:  

Date:  7 October 2020