PATINOS & PATINOS

[2019] FCCA 1479

FEDERAL CIRCUIT COURT OF AUSTRALIA

PATINOS & PATINOS [2019] FCCA 1479

Catchwords:
FAMILY LAW – Application for costs following the resolution of property proceedings by consent – basis of Application was that an offer had been made by the Husband after the conciliation conference – Wife legally aided – Wife has sole care of the youngest child of the long relationship – considerations regarding justice and equity – Application dismissed – no Orders as to costs other than each party is to pay his and her own costs.

Legislation:

Family Law Act 1975, ss.117(1), 117(2A)(a) & (b)

Federal Circuit Court Rules 2001

Cases cited:

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Stephens v Stephens (2011) 44 Fam LR 117

Applicant: MR PATINOS

Respondent: MS PATINOS

File Number: CAC 96 of 2017

Judgment of: Judge Neville

Hearing date: Written Submissions

Date of Last Submission: 26 March 2019

Delivered at: Canberra

Delivered on: 31 May 2019

REPRESENTATION

Solicitors for the Applicant: Farrar Gesini Dunn

Solicitors for the Respondent: Legal Aid NSW

ORDERS

1. The Respondent Husband’s Application in a Case, filed on 21^st December 2018, and the Applicant Wife’s Response to the Husband’s Application in a Case filed on 1^st March 2019, be dismissed.

2. The parties are to bear their own costs of, and incidental to, these proceedings.

3. All extant Applications be dismissed, the matter is now finalised and will be removed immediately from the docket.

IT IS NOTED that publication of this judgment under the pseudonym Patinos & Patinos is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 96 of 2017

MR PATINOS

Applicant

And

MS PATINOS

Respondent

REASONS FOR JUDGMENT

Introduction

1. This property matter was resolved on 30^th November 2018 pursuant to terms of settlement being entered into by the parties and Orders being made in consequence of them.

2. In general terms, the property pool was quite modest.  The relationship between the parties, which began when the Applicant Wife was aged 16 years and the Respondent Husband was aged 21 years, was approximately 21 years duration.  There were 3 children of the relationship.

3. For part of the parties’ relationship, the Wife was the Husband’s carer.  The parties are now aged, 42 and 46 years respectively.  The Wife is an Aboriginal woman from the … people.

4. The Wife’s sole income is from Centrelink benefits, as is the Husband’s.  He receives a Newstart allowance.  The Wife has the sole care of the parties’ third child (aged almost 14 years).  That child spends no time with the Husband.  The elder two children are both over 18 years.

5. Due to various medical conditions, which I need not detail here, the Husband has little or no capacity to work.  He has a very young child (aged approximately just over 1 year) with his new partner.

6. The principal asset of the relationship was a house (“the Property A property”) which was purchased for $260,000.

7. In the Wife’s Initiating Application, no Order was sought for costs.  In the Husband’s Response, filed 24^th May 2017, Order 10 stated/sought: “… each party to these proceedings remain responsible for their own legal costs.”

8. The Final Orders made by consent on 30^th November 2018 made no mention or provision for any Orders in relation to costs.

9. On 21^st December 2018, the Respondent Husband filed an Application in a Case in which he sought an Order that the Wife pay his costs “from 6^th November 2017 until the conclusion of the matter, such costs to be calculated in accordance with the Federal Circuit Court Rules 2001.”

10. By a Response filed on 1^st March 2019, the Wife sought Orders that the Husband’s Application in a Case should be dismissed, and an Order that he pay her costs of that Application.

11. It was agreed, and noted in Orders made on 4^th March 2019, that the matter be dealt with by way of written submissions.  Those submissions are set out later in these reasons.

12. The gravamen of the Husband’s Application was founded on an offer of settlement which followed a conciliation conference held on 31^st October 2017.  Following that conference, the Husband’s lawyers wrote to the Wife’s lawyers on 6^th November 2017 to which the Wife’s lawyers responded by letter dated 16^th November 2017.  Copies of those letters were annexed to an Affidavit, filed 21^st December 2018, by the Husband’s lawyer.  Other correspondence is annexed to the Wife’s Affidavit, filed 1^st March 2019, which included correspondence that related to the Husband seeking an extension of time in making payment to the Wife, pursuant to the November 2018 Terms of Settlement, until after his costs Application had been determined.  I understand that the Husband has secured a loan out of which he would make payment to the Wife of the agreed settlement sum of $39,670.00.

13. The sum sought for the Husband’s costs is $37,683.  In the alternative, he seeks an Order for costs in the sum of $19,670.  The magnitude of the sums sought and their likely impact is obvious.  This is in circumstances where the Husband has retained the Property A property, and his total legal costs amount to $44,212.  For reasons not immediately evident, he was denied a grant of legal aid.  The Wife was supported by a grant of legal aid for the proceedings and deposed in her most recent affidavit (pars.41 & 42) that she will be required to make a contribution upon Legal Aid NSW “costing” her matter after the settlement was reached.

14. The parties each filed Affidavits in support of their respective Applications: the Husband on 20^th February 2019, and (as already noted) the Wife on 1^st March 2019.

15. For the reasons that follow, pursuant to s.117(1) of the Family Law Act 1975, the more “usual order” of each party pay their own costs should, and will, be the only Order made regarding costs. The Husband’s Application for costs should be dismissed, as should the Wife’s.

Orders Sought by the Applicant

1. The Applicant’s Orders Sought with respect to the discrete issue of costs were contained in his Application in a Case filed on 21^st December 2018. They were as follows:

   Orders Sought

   1)   That the Wife pay the Husband’s costs from 6 November 2017 until the conclusion of the matter, such costs to be calculated in accordance with the Federal Circuit Rules 2001.

Orders Sought by the Respondent

1. The Respondent’s Orders Sought were outlined in her Response to the Applicant’s Application in a Case filed on 1^st March 2019.  They were as follows:

   Orders Sought

   1)   The Applicant Husband’s Application in a Case filed 21 December 2018 be dismissed.

   2) Pursuant to s117(2) of the Family Law Act the Applicant Husband pay the Respondent Wife’s costs from 21 December 2018 until the conclusion of the matter.

Submissions on behalf of the Applicant Husband

1. The Applicant’s Outline of Submissions, filed 12^th March 2019, were as follows (internal citations and substantive emphasis, other than headings, omitted):

   Applicant’s Outline of Submissions Addressing s117(2A) Factors and Quantum of Costs Order

   1)   On Monday, 4 March 2019 the parties’ were ordered to file an Outline of Submissions in relation to the Father’s Application for Costs (“the Costs Application”). These are those Submissions.

   a)   the financial circumstances of each of the parties to the proceedings

   2)   The parties both filed financial statements on 31 October 2018. Their respective financial position has not materially changed since filing their financial statements. It is submitted nothing in the financial position of either party (as compared to the other) would be a factor in favour of or against the making of a costs order.

   3)   What is relevant though is that the pool here is very modest which means the parties ought to have made all reasonable attempts to settle the matter prior to final hearing.  The Wife made no such attempts. 

   4)   The Wife was able to commence proceedings with the benefit of a Grant from Legal Aid while the Husband incurred the cost of funding his own litigation. The Husband has not been employed throughout these proceedings and receives a disability pension of only $236 per week The Wife receives more than the Husband as she receives $511 per week but was still able to obtain Legal Aid.

   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

   5)   The Wife is in receipt of a grant from Legal Aid. The Husband is not.  The Wife has not put any evidence as to the terms of her grant of Legal Aid before the Court.  It is open to the Court to infer such evidence would have been adverse to her in this application.

   6)   The Husband was refused a grant of Legal Aid, despite being in equally if not more-dire financial circumstances than the Wife, and despite litigating over the same property pool.  Subsequent to the Husband being refused a grant of Legal Aid, he incurred costs of $44,212.  He funded those costs privately and the Wife was funded by the public purse (and did not incur costs herself).  That is a factor that supports the making of a costs order in the Husband’s favour.

   c)     the conduct of the parties to the proceedings 

   7)  

   The Wife’s Initiating Application did not set out the Orders she sought.  The Wife never filed an Amended Initiating Application.  On 27 November 2017 the matter was listed for final hearing on

   
   

   21 November 2018.  The Wife filed a Case Outline Document on 19 November 2018 in which, for the first time, she particularised the Orders she sought.

   8)   When the Husband made an offer of settlement, the Wife’s lawyer responded to it with irrelevant legal questions.  Annexures C and D to the Husband’s costs affidavit show the Husband made genuine attempts to settle the matter and the Wife, through her solicitor, obfuscated those attempts with disproportionate requests for particularisation.  The Husband’s offer was clear.

   9)   The Wife complains in her affidavit filed 1 March 2019 that the Husband didn’t deliver her personal effects.  She did not bring any application about that and the Husband has not given evidence about it.  The Court cannot make findings about that evidence and in any case should disregard that evidence in the costs application as it is irrelevant.

   10)    The Husband provided his disclosure to the Wife and he tried to resolve the matter by consent before incurring the cost of privately funding his legal representation by making the First Offer.

   11)    The Wife did not accept the First Offer of a $45,000 cash payment resulting in the Husband incurring $37,683 in legal fees for the parties to then resolve their matter by consent in November 2018 for the Wife to receive $39,670.

   e)     whether any party to the proceedings has been wholly unsuccessful in the proceedings

   12)    The matter settled by way of Consent Order dated 30 November 2018 (“the Final Orders”).  In those circumstances this factor has limited weight.  To the extent it is relevant, the Husband submits the major issue was the Husband’s retention of the jointly owned property.  Ultimately the Husband retained the property.  The Wife was wholly unsuccessful in seeking the sale and she did not obtain 50% of the sale proceeds (as she sought) or anything close to that.

   f)   whether either party to the proceedings has made an offer in writing and the terms of any such offer

   13)    This is the major, but not only, factor in support of a costs order being made in the Husband’s favour.  The Husband made an Offer of Settlement on 6 November 2017 (“the First Offer”) which provided for the Wife to receive $45,000 and for her to transfer her interest in the Property A Property to the Husband.

   14)    The Wife did not accept the Husband’s First Offer nor did she make any Offer in reply.

   15)    The Husband then made a further Offer of Settlement on 26 November 2018 (“the Second Offer”) which provided for the Wife to receive $40,000 and for the Wife to transfer to the Husband her interest in the Property A Property. The Wife did not accept the Second Offer.

   16)    The Husband submits the Wife did not make an Offer of Settlement at any stage to the Husband in these proceedings and the matter resolved at Court on the day of the Final Hearing.

   17)    The First Offer was more favourable to the Wife than the outcome she achieved on a final basis in every way.  The Wife will say the Orders made on a final basis provided for a self-executing provision for sale if the Husband failed to make the payment, and for her to retain more than the amount of the Payment had the property in fact been sold.  Those matters are irrelevant because the Husband’s evidence and position was, consistently, that he could afford to make a payment to the Wife.  That turned out to be the case.  Had the Wife accepted the Husband’s First Offer, she would have received a higher settlement sum and the Husband would not have incurred approximately $37,683 of the legal fees he did.

   Quantum of Costs Order

   18)    The Husband seeks for the costs he has incurred since the First Offer to be paid by the Wife, being $37,683.

   19)    In the alternative, the Husband seeks for an Order of Costs to be made in his favour fixed in the amount of $19,670.  The Court was informed on 4 March 2019 that the parties had agreed that sum would be withheld in the Wife’s lawyers’ trust account pending resolution of the costs application.

Submissions on behalf of the Respondent Wife

1. The Respondent’s written submissions, filed 21^st March 2019, were as follows:

RESPONDENT’S WRITTEN SUBMISSIONS

1)   These submissions are in response to the applicant’s submissions filed on 11 March 2019. Whilst it is accepted that a costs application can be made when parties reach agreement, such an outcome should be rare. The husband gave no notice prior to settlement on 30 November 2018 that he intended to make an application for costs. That would certainly have affected the negotiations. Potential problems may arise with future settlement discussions if there is a prospect of a costs application to follow.

OUTCOME BELOW WIFE’S LIKELY ENTITLEMENTS

2)   Prior to the consent orders being made Counsel for the wife, in explaining the justice and equity of the orders, pointed out that the orders were a pragmatic result notwithstanding that the outcome was less than the wife’s likely entitlements. These comments were not contradicted by Counsel for the husband. The comments were also consistent with the preliminary views that the Court had expressed on 21 November 2018 when the matter was not reached.

3)   One of the reasons for the pragmatic result was the state of the property that the husband was living in (and received as part of these orders). The evidence before the court was that the property had deteriorated especially as a result of the hoarding of the husband. As a result, a sale may have taken an extended period of time with a significant amount (in the context of these proceedings) having to be expended to clear the mess that arose from the husband’s hoarding.

4)   Effectively then, the wife was being pragmatic by accepting a lesser cash payment but also being generous to the husband by allowing him to retain the property when it was unlikely that he would have been able to retain the property if the matter had proceeded to trial and the wife had received her likely entitlements. The benefit to the wife was a certain amount quickly.

5)   The husband now seeks to take advantage of the wife’s generous acceptance of his below par offer because he had made previous below par offers. In circumstances where the wife is receiving such a small amount and substantially less than her likely entitlements the court should not make any order for costs.

WIFE SOUGHT CLARIFICATION OF SOURCE OF FUNDS

6)   The only reason for the wife to accept a below par offer could only be certainty and relative speed of receipt of any payment. The husband was unemployed and, on paper, had no other resources from which he could pay the wife any amount. As a result, the wife sought advice from the husband as to the source of funds whereby he would meet the offer.

7)   The husband responded to the first request but in an unhelpful way. He says, simply, that he would have raised the funds in the usual manner by obtaining a bank loan. In circumstances where he was asking the wife to accept less than her likely entitlements it was reasonable for the wife to be satisfied that the husband could in fact obtain the necessary funds. The husband did not respond to the 2^nd request on 29 November 2018.

8)   It is submitted that the wife should not be expected to have accepted an offer that was less than her likely entitlements on the basis of a vague possibility that the husband would in fact be able to comply with the orders when he had provided no evidence in support of the proposition that he had such capacity.

DIFFERENT OUTCOME IF PAYMENT NOT MADE

9)   The consent orders made on 30 November 2018 provide for the sale of the property if the husband defaults in relation to the payment made to the wife. The significance of the actual order made is that the default provision provides for the wife to receive 40% of the net proceeds of sale on default. The outcome of the orders on the basis of the payment being made is about 23.3%. That is, if the husband had been unable to make the payment then the wife was to receive a greater percentage outcome than the cash payment reflects.

10)    The terms of this default provision were not part of any offer made by the husband. In circumstances where his offers reflected a poor outcome for the wife with no certainty as to his ability to meet the payment being proffered, then this provision become significant. The significance of this clause was also pointed out to the court when counsel was addressing the justice and equity of the case.

RESPONSE TO HUSBAND’S SUBMISSIONS

11)    Para 5 – there is no basis for any inference about the terms of the wife’s grant of legal aid. The specific inference that is said to arise from a failure to provide evidence about this is not identified. An inference made relying on the decision of Jones v Dunkel is not simply a broad brush adverse inference. The terms of the wife’s grant of legal aid are, in any event, not relevant.

12)    Para 6 – this is not an application directly against Legal Aid New South Wales. The wife did not make any decisions, or influence any decisions, about the granting or refusal of aid to the husband.

13)    Para 15 – it is noted that the so-called 2^nd offer was made 4 days prior to the date of hearing. A response was sent on 28 November 2018 seeking advice about the husband’s capacity to borrow funds. An offer needs to be open for a substantial period for it to be relevant.

14)    Paras 18 & 19 - the husband seems to be seeking indemnity costs without identifying the factors that would justify such an order. Indeed, his application does not seek an order for indemnity costs. He should not be permitted to do so in his submissions. The wife’s material was prepared on the basis of the application actually made, not the application for indemnity costs that apparently is now made. The husband has not attempted to quantify the costs that would be payable pursuant to the scale of costs in the rules. This task has, apparently, been left to the court. In any event, no order for costs should be made.

COSTS OF THIS APPLICATION IF HUSBAND UNSUCCESSFUL

15)     If, as is submitted, no order for costs is made then the wife seeks costs of this application.  Given the very small amount that the wife receives pursuant to the orders and that the husband will have been wholly unsuccessful in those circumstances, there should be an order for costs made in favour of the wife.  On the basis of the Rules it is suggested that the amount for a costs order would be $2,242.

Submissions in reply on behalf of the Applicant

1. The Applicant’s solicitors filed Submissions in Reply on 26^th March 2019, which were as follows:

   Applicant’s Outline of Submissions in Reply – s117(2A) Factors and Quantum of Costs Order

   1)   Order 2 of the Orders made on 4 March 2019 required the Respondent to file and serve written submissions by 18 March 2019. The Respondent Wife filed her Submissions on 20 March 2019 and served them by electronic communication at 1:14pm on Thursday, 21 March 2019 (“the Wife’s Submissions”).  No explanation is provided as to the late filing of service and the Wife should not be permitted to rely on them in those circumstances.  The costs application should be determined on the Husband’s submissions alone.

   Notice of intention to make Costs Application

   2)   The Wife asserts the Husband gave no notice prior to settlement on 30 November 2018 that the Husband intended to make an application for costs. The Husband notified the Wife in his first Offer of Settlement that he intended to rely upon that letter on the issue of costs. The Husband notified the Wife in his Second Offer of Settlement on 26 November 2018 that if his Offer was not accepted and he obtained an equivalent or better outcome, he had provided his instructions to make an application for costs. The Husband submits the Wife did not accept his Offer and no order was made for costs in the Final Orders dated 30 November 2018 (“the Final Orders”).

   3)   The Husband does not accept he gave no notice prior to settlement that he intended to make an application for costs.

   Outcome below wife’s likely entitlement

   4)   The Wife’s Affidavit filed 1 March 2019 (“the Wife’s Affidavit”) states that the Final Orders are less than her likely entitlement. The Wife submits that by receiving substantially less than her likely entitlements the court should not make any order for costs.

   5)   The Wife provides no evidence in her Affidavit of what her likely entitlement would have been as at 30 November 2018.  In fact there is no evidence before the Court that would substantiate that submission.  The Husband does not accept that the Final Orders are less than her likely entitlement or substantially less than her likely entitlement.

   6)   As the Wife has not articulated what her likely entitlement would have been, the Husband submits this submission by the Wife is irrelevant and the Wife is not in a position to rely upon this submission without the parties’ evidence having been tested at a Final Hearing.

   Response to Husband’s Offers

   7)   The Wife submits the only reason for the wife to accept a below par offer could only be certainty and relative speed of receipt of any payment. That being put in issue as a relevant matter by the Wife, it is submitted that the Husband’s first Offer of Settlement was made much earlier. 

   8)   The Wife further submits that she should not be expected to have accepted an Offer that was less than her likely entitlement on the basis of a vague possibility that the husband would be able to comply with the orders without providing evidence in support of his capacity to make the Offer. The Husband submits this is not relevant to the Husband’s Costs Application as the Husband has complied with Order 1 and the wife has provided no evidence to assert that the Final Orders are less than, or substantially less than, her likely entitlement.

   Different outcome if payment not made

   9)   The Wife’s submission that there are orders for a sale of the Property A Property are not relevant to the Husband’s Cost Application as the Husband complied with Order 1 and the property will not be sold pursuant to Order 3 of the Final Orders.  It was always his position that he could raise the funds in any offer made by him and he ultimately was able to do so.

   Husband’s costs application

   10) The Wife submits the Husband should not be permitted to seek a fixed sum for his costs of either $37,683 or $19,670 on the basis that he has somehow changed his application in his submissions and the Wife’s material was prepared on the application actually made. With respect that submission is misguided. The Husband’s costs application was in the terms that the Husband sought costs ‘to be calculated in accordance with the Federal Circuit Court Rules 2001. The Husband relies upon Rule 21.02(2)(a) which allows the Court inter alia to set the amount of the costs or the method by which costs re to be calculated.

   11)    The Husband denies the Wife has not been provided with an opportunity to prepare her material on the basis of the application actually made as the Husband informs the Wife at paragraph 31 of his Affidavit that he seeks an Order for the Wife to pay his cost from 6 November 2017 until the conclusion of the matter and at paragraph 35 he sets out the costs he has incurred since
   6 November 2017.  There is no fundamental change to the application and if this submission is maintained it would appear that the Wife misread the application.

   12)    Further, or alternatively, the Wife should not be permitted to raise a complaint in her submissions that the Husband has somehow changed his application where she failed to respond to paragraph 31 and 35 of the Husband’s Affidavit.

   Matters not addressed by the Wife

   13)    The Wife does not address the Husband’s evidence and submissions that the Wife did not provide an Offer of Settlement in these proceedings. Nor do the Wife’s submissions or evidence provide an adequate explanation for failing to accept or respond to, in any substantive way, the Husband’s Offers.  In fact it was the Husband’s submission that the Wife (through her lawyer) obfuscated his attempts to settle the matter with disproportionate requests for particularisation in circumstances where his offer was clear.  No response is made to that submission.

   14)    The Wife by commencing these proceedings and declining to resolve the matter by consent prior to 30 November 2018 has caused for the Husband to incur significant legal costs as he was denied access to legal aid.

   15)    The Husband submits that the accumulative effect of the parties’ nominal income, the very modest property pool, the Wife’s failure to file an amended Initiating Application to inform the court of the Orders sought, the Wife’s failure to make an Offer of Settlement or accept one of the Husband’s Offers are circumstances that justify making of an Order as to Costs against the wife.

   16)    The Husband respectfully submits it is just for an Order as to Costs to be made against the Wife.

Outline of Principle

1. The statutory and jurisprudential considerations in relation to the making of (or not making) orders for costs are well known.  Although well known, it is sufficient to note the following from the Full Court decision in Stephens v Stephens.[1]  Beginning at [62], the Full Court said (emphasis added):

   [1] Stephens v Stephens (2011) 44 Fam LR 117

   [62] Section 117(1) of the Act provides: “[s]ubject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.” 

   [63] Section 117(2) of the Act provides that if, in proceedings under the Act, the court is of opinion that there are circumstances that justify it in doing so, it may, subject to sub-ss (2A), (4) and (5), and the applicable rules, make such order as to costs, whether by way of interlocutory order or otherwise, as it considers just.

   [64] Section 117(2A) of the Act provides that in considering what order (if any) should be made under s 117(2), the court shall have regard to the matters set out in paragraphs (a) to (g). In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 the Full Court (Kay, Warnick and Boland JJ), referring to s 117(2A), said at 130 [41] :

   A number of factors are then listed in the subparagraphs.  The financial circumstances of each of the parties to the proceedings is the first mentioned factor.  Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A).  As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.

   [65] As to the relationship between s 117(1) and s 117(2) of the Act in Penfold v Penfold (1980) 144 CLR 311, in joint reasons, Stephen, Mason, Aickin and Wilson JJ said at 315:

   It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2).  As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.  Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.  Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”. (emphasis added)

   [66] As to the nature of the hearing of an application pursuant to s 117 of the Act in Penfold their Honours said at 315-16:

   Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent [(1970) 92 W.N. (NSW) 503, at p. 505]). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.

   [67] We also observe that in Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219.  An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature.  Costs are not a penalty or damages: Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors (2001) 188 ALR 143 per Full Court of the Federal Court at [12] and Brott and Joachim (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.

2. In the same case, the Full Court commented summarily on the award of indemnity costs, which seem to be what the Applicant Husband is seeking to press here but without mention to relevant authority, relevantly at [73]:

   An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis.  For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 per Lindgren J at [53] to [90].

3. The decision of Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd (noted by the Full Court) is a regularly cited authority for relevant principle regarding the awarding of indemnity costs.[2]  In that judgment, his Honour outlined the following principles, at pp.232 – 234, which I set out in full (emphasis added):

   [2] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225

   It seems to me that the following principles or guidelines can be distilled out of the authorities to which I have referred:-

   1. The problem arises in adversary litigation, i.e. litigation
   as between parties at arm's length. Different considerations
   apply where parties may be found to be entitled to the payment of their costs out of a fund or assets being administered by or under the control of a trustee, liquidator, receiver or person in a like position, eg. a government agency or statutory authority.
   
   
   2. The ordinary rule is that, where the Court orders the costs
   of one party to litigation to be paid by another party, the
   order is for payment of those costs on the party and party
   basis. In this Court the provisions of Order 62, rules 12 and
   19, and the Second Schedule to the Rules will apply to the
   taxation. In many cases the result will be that the amount
   recovered by the successful party under the Order will fall
   short of (in many cases well short of) a complete indemnity.
   
   
   3. This has been the settled practice for centuries in England. It is a practice which is entrenched in Australia. Either legislation (perhaps in the form of an amendment to rules of Court) or a decision of an intermediate court of appeal or of the High Court would be required to alter it. No doubt any consideration of whether there should be any change in the practice would require the resolution of the competing considerations mentioned by Devlin LJ in Berry v. British Transport Commission and Handley JA in Cachia v. Hanes on the one hand and by Rogers J in Qantas on the other. The relevant passages from the respective judgments have been earlier referred to.
   
   
   4. In consequence of the settled practice which exists, the
   Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England.  The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.
   
   
   5. Notwithstanding the fact that that is so, it is useful to
   note some of the circumstances which have been thought to
   warrant the exercise of the discretion. I instance the making
   of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by
   Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal)and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
   
   

   6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order.  The costs are always in the discretion of the trial judge.  Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice.

Consideration and Disposition

1. In the light of the principles I have outlined, the following matters, in my view, are sufficient to dispose of the Application as earlier indicated, namely, to dismiss both applications regarding costs and order that each party bear their own costs.

2. Perhaps the first, somewhat curious, thing to record is that, apart from a single reference to the well-known High Court authority of Jones v Dunkel (it is so well known I will here dispense with its regular citation) in the context of asking the Court to draw certain inferences from the evidence, neither party referred to any authority regarding costs.

3. Accepting that the Court is not formally required to make any findings, according to authority noted earlier in these reasons, it can hardly be disputed that neither party is well-off financially either in terms of assets or income, save that the Husband has the benefit of keeping the former marital residence. As noted earlier, both parties are in receipt of Centrelink benefits. The financial circumstances of the parties is a consideration under s.117(2A)(a).

4. It is also not disputed that both parties have children in their care.  In the Wife’s case, it is the third child of the relationship.  In the Husband’s case, it is a very young child from his new relationship, together with a number of his partner’s children.

5. To the degree that it is relevant, and accepting that it is by consent, the Husband has not paid the modest settlement moneys to the Wife, pending the resolution of the current Application.

6. I accept that the Husband made an offer to the Wife after the conciliation conference.  It is also not disputed that the terms of settlement make no mention of any costs Application.

7. It is also of some relevance that the Wife is in receipt of Legal Aid.  This too is a consideration under s.117(2A)(b).  I do not understand it to be doubted that, in accordance with usual practice, she will have to make some contribution to the Legal Aid office upon the final resolution of the proceedings between the parties.

8. I remind myself that the Full Court in Stephens (noted above) confirmed that pursuant to s.117, and its various parts, it was not a “weighing exercise”.  The Full Court also observed that one factor alone may be sufficient to make an Order for costs.  This must also include an Order that each party pay their own costs.

9. In any event, in my view, it is the care of the children in each household, but especially the child of the relationship in the Wife’s household, that is the deciding factor.  Further, the financial circumstances of the parties are poor.  Plus the Wife is in receipt of a grant of legal aid.  An adverse costs Order in the circumstances of the current matter would, in my view, not be just and equitable or otherwise appropriate.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Neville

Date: 31 May 2019