Paysen & Laukien

[2020] FamCAFC 101

FAMILY COURT OF AUSTRALIA

PAYSEN & LAUKIEN [2020] FamCAFC 101

FAMILY LAW – APPEAL – COSTS AT FIRST INSTANCE – Where each party sought an order for costs following parenting and property proceedings including a trial to determine their property settlement dispute – Where the husband made an offer to the wife more favourable to her than the ultimate division of assets – Where the wife’s late introduction of a claim pursuant to the principles in Kennon v Kennon (1997) FLC 92-757 required an adjournment of the trial – Where the wife sought costs on the basis of the husband’s conduct of the proceedings – Where the husband failed to comply with his obligations of full and frank disclosure – Where the trial judge found there were circumstances justifying an order for costs in favour of each party – Where the trial judge considered and applied, in turn, each of the statutory considerations prescribed in s 117(2A) of the Family Law Act 1975 (Cth) relevant to the applications and identified and applied relevant principles – Where the majority of the husband’s challenges on appeal are as to the weight attributed by the trial judge to relevant factors – Where it is only in the rarest of cases that the Full Court should interfere with a costs order – Where the trial judge was not bound, in the exercise of his discretion, to attach determinative weight to the husband’s offer in all the circumstances of this case – Appeal dismissed – Costs of and incidental to the appeal ordered in favour of the wife.

Family Law Act 1975 (Cth) s 117

Browne v Green (2002) FLC 93-115; [2002] FamCA 791
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Harris and Harris (1991) FLC 92-254; [1991] FamCA 124
House v The King (1936) 55 CLR 499; [1936] HCA 40
Kennon v Kennon (1997) FLC 92-757; [1997] FamCA 27
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25
Paysen & Laukien [2017] FCWAM 185
Paysen & Laukien [2018] FCWA 228
Paysen & Laukien [2019] FCWA 107
Robinson and Higginbotham (1991) FLC 92-209; [1991] FamCA 4

APPELLANT: Mr Paysen

RESPONDENT: Ms Laukien

FILE NUMBER: PTW 3869 Of 2016

APPEAL NUMBER: WEA 41 Of 2019

DATE DELIVERED: 1 May 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Perth

JUDGMENT OF: Strickland, Kent & Austin JJ (all by video link)

HEARING DATE: 31 March 2020

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 19 September 2019

LOWER COURT MNC: [2019] FCWA 209

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Berry SC

SOLICITOR FOR THE APPELLANT: Calverley Johnston

COUNSEL FOR THE RESPONDENT: Mr Beckerling

SOLICITOR FOR THE RESPONDENT: Bannerman Solicitors

Orders

1. The appeal be dismissed.

2. The appellant husband pay the respondent wife’s costs of and incidental to the appeal in the fixed sum of $10,000.

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 Paysen & Laukien 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 FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WEA 41 of 2019
File Number: PTW 3869 of 2016

Mr Paysen

Appellant

And

Ms Laukien

Respondent

REASONS FOR JUDGMENT

1. On 19 September 2019, a judge of the Family Court of Western Australia determined the competing applications of Mr Paysen (“the husband”) and Ms Laukien (“the wife”) for costs. Those applications arose in the context of the parties having spent a combined total of approximately $700,000 in legal fees in litigating a parenting dispute, which eventually resolved by consent, and the division of their property interests, worth about $2.9 million, following a trial. Notably, the trial judge found that the parties’ combined level of expenditure on legal fees was disproportionate to the issues in dispute (at [106] and [107]).

2. The trial judge resolved the competing applications by making the following order as to costs:

   1.Within 14 days from the date hereof, the wife, [MS LAUKIEN], pay a contribution towards the costs of the husband, [MR PAYSEN], fixed in the sum of $5,000.

   …

   (As per the original)

3. That order related to the need to adjourn an earlier trial date by reason of the “inexcusably late” introduction by the wife of a change to her case.

4. The husband appeals from the costs order on the grounds, in summary and paraphrased form, that the trial judge gave insufficient weight to an offer of settlement made by the husband to the wife; that his Honour erred in law in finding that the wife’s failure in a particular interim application in the course of the proceedings did not fall within s 117(2A)(e) of the Family Law Act 1975 (Cth) (“the Act”) (party wholly unsuccessful in the proceedings); and that his Honour erred in determining that there was nothing in the conduct of the wife’s “Kennon” claim (relying upon Kennon v Kennon (1997) FLC

   
   

   92-757 (“Kennon”)) to justify the order for costs.

5. On appeal, the husband seeks that the costs order made by the trial judge be set aside and that this Court re-exercise the discretion and order the wife to pay him $150,000 for costs, as he sought before the trial judge. The wife seeks that the appeal be dismissed. For the reasons which follow, the appeal should be dismissed with costs.

Background

1. The trial judge delivered reasons for judgment in the substantive property dispute on 17 May 2019 (Paysen & Laukien [2019] FCWA 107) (“the property reasons”). Necessarily, the trial judge incorporated some references to the property reasons in subsequently determining the costs dispute in reasons for judgment delivered on 19 September 2019 (“the costs reasons”). The following background is extracted from either or both of the property reasons and the costs reasons.

2. Each party was born in 1976 and are now aged 43 years. The husband is self-employed as a medical specialist and his Financial Statement filed on 14 June 2019 sets out his weekly income of $24,852 and weekly expenses of $24,225. The wife is a medical specialist and her Financial Statement discloses her weekly income of $7,040 and expenses of $7,159.

3. The parties married in 2003. The marriage produced one child born in 2012. The parties separated in November 2015. Following separation, the husband re-partnered and has two children of that relationship.

4. The husband instituted parenting proceedings on 30 June 2016 which were ultimately finalised by consent orders made on 26 March 2018. The wife’s initial response to those proceedings filed on 19 August 2016 instituted property proceedings.

5. An event which assumed significance in the costs determination and on this appeal is an interim application the wife made in the course of the proceedings. The wife made an interim application for the provision of funds, conveniently referred to as the “interim costs application”. That application was heard by a Magistrate of the Family Court of Western Australia on 1 February 2017 and was dismissed (Paysen & Laukien [2017] FCWAM 185) with costs reserved to the trial.

6. The property proceedings were originally listed for trial to commence on 2 May 2018 but that trial could not go ahead due to the failure of both parties to comply with orders to ready the matter for a final hearing. The matter was, again, listed for trial to commence on 22 October 2018. However, that trial was vacated, this time due to the wife amending her case very late to include what is commonly known as a “Kennon” claim. The husband sought an adjournment due to that amendment and, whilst the wife consented to such an adjournment, the trial judge recorded that even without the wife’s consent, the trial would have needed to be adjourned (Paysen & Laukien [2018] FCWA 228).

7. The trial proceeded before the trial judge commencing on 8 April 2019 for several days and, as earlier noted, the trial judge delivered the property reasons on 17 May 2019 (Paysen & Laukien [2019] FCWA 107). At trial, the parties agreed on equality of contributions and both agreed on which property was to be retained by each party. The first day of trial on 8 April 2019 was taken up solely by the wife’s argument for a Kennon claim, which claim was rejected by the trial judge.

8. In the property proceedings, the wife originally sought orders that would see her retain 75 per cent of the net property pool although she did not wish to receive any of that entitlement via any splitting of superannuation. Her proposal required the husband to pay her a cash sum of $1,150,000 to effect the division she sought, noting the property each party was otherwise to retain. By the time of the wife’s closing submissions, the wife sought a division of 70 per cent/30 per cent in her favour.

9. The property pool included the following real property:

   a)A property referred to as “the B property” found to be worth $2,700,000 to be retained by the husband; and

   b)A property referred to as “the C property” to be retained by the wife worth $1,195,000.

10. For his part, the husband sought orders which would see the parties receive an equal division of property, with any necessary payment by him to be made in the form of a superannuation split.

11. The final property settlement orders ultimately made on 13 August 2019 provided for, in summary:

    a)The husband to pay the wife a cash sum of $376,735;

    b)A splitting order of the husband’s superannuation in favour of the wife in the amount of $250,000;

    c)The wife to receive the totality of a Commonwealth Bank investment account; and

    d)The parties to otherwise retain the property in their possession or control.

12. That outcome saw the wife retain net assets worth $1,075,198 (including an

    
    

    add-back of notional property of $220,000) and superannuation worth $790,127. The husband retained net assets worth $805,356 and superannuation worth $438,194. That outcome represented, on a total property pool of $3,108,875 as found by the trial judge (including the add-back of notional property attributed to the wife), a division of 60 per cent/40 per cent in the wife’s favour. No appeal was filed from those orders.

The costs applications

1. The husband filed his application for costs on 14 June 2019. Whilst he originally sought that his costs be paid on an indemnity basis, that claim was amended to him seeking costs fixed in the sum of $150,000 when he filed his written submissions in support of his application on 13 August 2019.

2. The husband’s basis for seeking costs primarily centred upon two components, namely:

   a)Offers he had made to the wife; and

   b)The wife’s conduct of the proceedings.

3. By her response filed 14 July 2019, the wife sought an order for costs in her favour in the fixed amount of $105,000 (which included the costs of her costs application). Of that figure, $90,000 was referrable to the wife’s costs from the date of an offer she made on 10 October 2018 until judgment, $10,000 was referrable to the wife’s costs of and incidental to an Application in a Case she filed on 4 April 2018 seeking disclosure, and the final $5,000 being in relation to responding to the husband’s application for costs. The wife based her application on the husband’s conduct during the proceedings and on offers of settlement made by her.

4. The relevant offer for the purpose of this appeal was made by the husband on 17 August 2016, when the husband made an offer for the wife to receive 72 per cent of a nominated property pool made up of retaining the net sale proceeds of a particular property and a superannuation split. The husband made other offers, although none of these were relied upon by him for the purpose of this appeal.

Application for further evidence on appeal

1. On 10 December 2019, the wife filed an Application in an Appeal to adduce further evidence comprising exchanges of correspondence between the respective solicitors for the parties.

2. The further evidence was directed to dealing with a reference in the husband’s submissions before the trial judge to there having been a “formal valuation” of the B property in August 2016. The correspondence confirms, as acknowledged by both parties, that there was no such “formal valuation”. The application for further evidence was not opposed and we received it by consent, but the basis of that receipt needs to be explained.

3. Ground 1 of the appeal, discussed below, focuses upon the offer of settlement made by the husband on 17 August 2016.

4. At [64] of the costs reasons, in dealing with the husband’s offer of settlement dated 17 August 2016, the trial judge made reference to the valuation of the B property having increased by some $325,000 in the period between the date of the offer and the date of trial. By necessary inference, the trial judge must have relied upon the erroneous submission about the “valuation” of the B property at the time of the offer, in identifying the amount of increased value.

5. On the hearing of the appeal, counsel for the wife confirmed that the further evidence was not relied upon for a proposition to the effect that it could not be concluded by the trial judge that the subject offer was more favourable to the wife than the outcome she ultimately achieved. Counsel for the wife confirmed that the further evidence was limited to the purpose of correcting a factual error in the husband’s submissions.

6. However, counsel for the wife also initially submitted that the further evidence was relevant to the question of whether the wife had adequate knowledge to consider the offer, as was found by the trial judge (at [75]-[78]).

7. When it was pointed out that in relation to this, and other apparent challenges contained in the wife’s submissions on appeal, were advanced in circumstances where the wife had filed no cross-appeal nor any Notice of Contention, counsel for the wife acknowledged that this could only become relevant in the event of a re-exercise of discretion if the husband’s appeal were to succeed.

8. Thus, in the end result, both parties agreed that the further evidence was admitted into evidence by consent solely for the purpose of correcting the erroneous reference in the husband’s submissions to the trial judge, rather than in contending for any error on the part of the trial judge.

Grounds of appeal

1. The husband’s Notice of Appeal filed on 10 October 2019 contains three grounds of appeal. They are:

   1.In failing to make a costs order in respect of the proceedings from, or shortly after, the Husband’s written offer to settle made on 17 August 2016 the learned Trial Judge erred in law and in principle by:

   (a)giving insufficient weight to his Honour’s finding that the Wife had adequate overall knowledge to enable her to properly consider the Husband’s offer and that the Wife’s rejection of the offer is a matter which could justify an order for costs;

   (b)giving no weight to the fact that had the offer been accepted, the property proceedings would have been terminated;

   (c)took into account an irrelevant consideration, namely his Honour’s finding that he did not know what proportion of the legal fees spent by each party after the date of the offer related to the parenting proceedings;

   thereby causing the exercise of the discretion entrusted to him to miscarry.

   2.The learned Trial Judge erred in law, and in principle, by failing to find that the dismissal of the Wife’s interim application made on 22 December 2016 (as amended on 29 December 2016, and amended by Minute of Orders Sought on 11 January 2017, and further amended by Form 2A on 21 April 2017) and dismissed with costs reserved on 14 August 2017 was not a proceeding within the meaning of s 117(2A)(e) thereby causing the exercise of the discretion entrusted to him to miscarry.

   3.In determining that there was nothing in the conduct of the wife’s Kennon claim to justify an order for costs, the learned Trial Judge erred in law and in principle by failing to take into account relevant considerations, alternatively gave insufficient weight to, namely:

   (a)His Honour’s earlier reasons that the Wife’s Kennon claim was not reasonably open on the evidence and which lead to that aspect of the evidence being struck out;

   (b)that the determination of the Wife’s Kennon claim, dealt with as a preliminary issue, resulted in a day of hearing time being unnecessarily wasted; and

   (c) the terms of rule 15.13(2) of the Family Law Rules 2004 (Cth).

   thereby causing the exercise of the discretion entrusted to him to miscarry.

   (As per the original)

Approach of the trial judge – the challenges on appeal

1. It is readily apparent that the majority of the husband’s challenges on appeal are as to the weight attributed by the trial judge to relevant factors in the exercise of the subject discretion. The restraints upon appellate intervention with respect to weight challenges are well settled (see, House v The King (1936) 55 CLR 499 at 504-505; Norbis v Norbis (1986) 161 CLR 513 at 539; Gronow v Gronow (1979) 144 CLR 513 at 519).

2. It is also well settled that in the field of discretionary judgments a determination as to costs is a quintessentially discretionary exercise. In Harris and Harris (1991) FLC 92-254, the Full Court, at 78,711, described determinations as to costs as being “peculiarly” a matter within the discretion of the trial judge and that “it is only in the rarest of cases that the Full Court should interfere with a costs order”. In Robinson and Higginbotham (1991) FLC 92-209, Nygh J (with whom Simpson & Smithers JJ agreed) said, 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…

3. When it is recognised that s 117(2A) of the Act sets out a complex of discretionary considerations, at least some of which necessarily involve the making of value judgments, the reasons for appellate restraint in respect of a costs determination are obvious. All the more is that so when, as here, the subject costs determination is an overall determination in respect of protracted proceedings made by a trial judge with the advantage of having direct involvement in the proceedings as they unfold, in the lead up to, and at, a trial. Necessarily, that involvement affords a trial judge advantages not enjoyed by an appellate court.

4. It is with proper recognition of the advantage enjoyed by the trial judge that the approach taken by his Honour is placed into its proper context.

5. Moreover, it bears emphasis that the trial judge was called upon to consider competing applications by each party for costs of protracted proceedings after their conclusion. As will be seen, each party had legitimate cause for complaint about the conduct of the other party during such protracted proceedings, recognised by the trial judge as falling into the balancing exercise to be undertaken.

6. Taken from the costs reasons, after setting out the relevant background to the costs dispute and the detail of the competing applications for costs of each party, his Honour identified the relevant legal principles to be applied (at [10]-[15]). There is no complaint on appeal as to his Honour’s identification of principle.

1. The trial judge considered and applied, in turn, each of the statutory considerations prescribed in s 117(2A) of the Act relevant to the applications.

2. As to the financial circumstances of the parties (s 117(2A)(a)), the trial judge recorded findings as to the income and property of each party. His Honour concluded that consideration of this factor did not of itself justify an order for costs notwithstanding the superior financial position of the husband when compared to that of the wife, which superiority was to continue (at [26]).

3. Next, his Honour’s reasons reflect careful attention to the issues raised by each party about the conduct of the other party in the proceedings (s 117(2A)(c)).

4. In relation to conduct in litigation, and the principles guiding the exercise of discretion to order costs, the High Court of Australia stated in Northern Territory v Sangare (2019) 265 CLR 164 at [24]:

   24.It is well established that the power to award costs is a discretionary power, but that it is a power that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation. While the width of the discretion “cannot be narrowed by a legal rule devised by the court to control its exercise”, the formulation of principles according to which the discretion should be exercised does not “constitute a fetter upon the discretion not intended by the legislature”. Rather, the formulation of principles to guide the exercise of the discretion avoids arbitrariness and serves the need for consistency that is an essential aspect of the exercise of judicial power.

   (Footnotes omitted)

5. Then, at [25], the High Court referred to the relevance of conduct in relation to the litigation that might weigh in the exercise of discretion. It bears emphasis that in this jurisdiction, s 117(2A)(c) of the Act prescribes that conduct be considered against the background that s 117(1) directs the starting position that costs do not follow the event and usually each party to proceedings bears his or her own costs.

6. It is convenient in this context to deal with the husband’s contention in Ground 2 concerning the dismissal of the wife’s interim costs application heard on 1 February 2017 by a Magistrate, who reserved the costs of that application to the trial judge. His Honour recorded the following as to the Magistrate’s findings with respect to that application (at [34]-[38]):

   34.In response to the husband’s submissions regarding the interim costs application, the wife points to the findings made by Magistrate Monaghan as to the manner in which the husband had chosen to arrange his affairs, and in particular his Honour’s conclusion that it appeared that the husband “had access to an amount of almost $400,000 generated by his efforts in the financial year ending 30 June 2016 which he has chosen not to represent as income but as a Division 7A loan”. His Honour further concluded that the husband’s evidence as to his anticipated future earnings was “open to interpretation”.

   35.His Honour’s findings were made against the background of the husband’s then most recent Financial Statement, filed very shortly before the interim costs application was heard, disclosing gross income of $489,060 per annum. As it emerged at trial, the husband’s taxable income for the 2017 financial year was $1,333,759. The taxation documents confirming that position were only disclosed to the wife in May 2018, over a year after the interim costs application was heard. That hearing, of course, took place roughly halfway through the relevant financial year. The issue noted by Magistrate Monaghan in relation to the Division 7A loan would have led his Honour to a conclusion that the husband’s gross income at the relevant time was something in the vicinity of $890,000 per annum; in fact, it was roughly 50 per cent more than that.

   36.Even in his trial affidavit filed on 19 September 2017 (after the conclusion of the relevant financial year, and at a time when he said that he expected his relevant taxation return would be completed “within the next month”) the husband estimated his “current annual income” at approximately $450,000. The husband’s own evidence that his relevant taxation return was so close to being completed leads to a reasonable inference that he was, at the time of filing the trial affidavit, in a position to make a reasonably accurate estimate of his income had he chosen to do so.

   37.The 2016 tax return annexed to that affidavit showed a taxable income for the 2016 financial year of $668,237. Quite how that figure sat with his financial statement filed for the purposes of the interim costs application was not explored.

   38.Against that background, notwithstanding the outcome of the interim costs application, I reject the submission of the husband that the wife’s pursuit of it justifies the making of an order for costs in relation to that application in isolation, or more generally.

7. Plainly, the integrity of the interim costs application was compromised by fundamental omissions of the husband to fully and frankly disclose his financial circumstances, not the least being the feature that his taxable income was grossly understated seemingly by more than $500,000 per annum.

8. The trial judge was obviously correct in the conclusion his Honour expressed at [38]. The proposition that dismissal of the interim costs application in these circumstances could found a legitimate basis for an order for costs in the husband’s favour is entirely misconceived. The trial judge clearly had regard to the outcome of the application by reference to paragraph (g) of s 117(2A) (at [52]) and the contention that his Honour ought to have placed the outcome within paragraph (c) of s 117(2A) is sterile.

9. There is no merit in Ground 2.

10. It bears emphasis, given the husband’s focus upon the wife’s conduct in support of Ground 3, that the necessary consequence of aspects of the husband’s conduct, as found by the trial judge, obviously put the wife to unnecessary expense. Aside from the husband’s significant non-disclosure in respect of the interim costs application already discussed, at [33] the trial judge records, with respect to the wife’s interlocutory application for disclosure filed on 4 April 2018, that:

    …It was only after filing that application that she was provided with documents showing that just under $340,000 was owed to the husband’s business by various health insurance providers. The document was provided three weeks before the scheduled commencement of trial…

11. The trial judge recorded (at [39]), his acceptance of the wife’s submissions that the husband’s conduct in the proceedings concerning disclosure “warranted both her pursuit of further and better disclosure, and her reluctance to accept assurances or estimates not supported by documentary evidence”. His Honour recorded (at [45]) a finding that the husband’s conduct of the proceedings in relation to his disclosure was such as could justify a costs order against the husband.

12. Balanced against the matters of conduct of the husband referred to, the trial judge made findings as to the conduct of the wife including her late pursuit of the Kennon claim (at [40] and [41]), which his Honour found could justify an order for costs against the wife (at [45]). It bears emphasis that it was with respect to the vacation of the second trial date which arose on his Honour’s findings primarily because of the inexcusably late introduction by the wife of her Kennon claim, that the order was ultimately made in favour of the husband for costs (at [108]).

13. With respect to the Kennon claim itself, his Honour recorded this finding:

    44.In short, while the husband rightly observes that the claim was dismissed, that does not of itself justify an order for costs under the subsection presently being considered. There was nothing in the conduct of the Kennon claim, other than the unacceptably late amendment of the wife’s case, to justify an order for costs.

14. As was discussed at the hearing of the appeal, the so called “Kennon” claim was not a standalone proceeding but formed part of the overall proceedings. That a party fails on an issue raised within the broad context of property proceedings is not necessarily a matter dictating that an order for costs be made against that party. His Honour had to adjudicate the question of costs of the proceedings as a whole, not disparate parts of those proceedings although such disparate aspects could be relevant to the overall determination, as was the approach adopted by the trial judge.

15. It can thus be seen, when the costs reasons are read as a whole, that the trial judge made findings adverse to the husband which his Honour thought could justify an order for costs and likewise made findings adverse to the wife which could justify an order for costs by reference to her conduct. In relation to criticism of both parties about their conduct in terms of non-compliance with orders designed to ensure the readiness of the proceedings for trial, his Honour observed at

    
    

    [46]-[48] the following:

    46.Those findings must be considered in context. As I observed in my judgment when the first trial date was vacated, both parties were guilty of non-compliance with orders designed to ensure the readiness of the proceedings for trial, without reasonable excuse, and in circumstances which I described as “entirely unacceptable”. Neither had filed up-to­date Financial Statements when they were clearly required. Matters relating to disclosure remained unresolved two weeks before trial, and the wife’s claim remained undefined. The parties had also filed unnecessarily voluminous documents; by way of one example only, at the status hearing on 13 April 2018, counsel then appearing for the husband estimated that of the 368 pages of exhibits to his client’s trial affidavit only something in the order of 10 pages or thereabouts would need to be admitted into evidence.

    47.While the second allocated trial date was vacated because of the late amendment to the wife’s case, as already noted, even on that occasion there was non-compliance by both parties with various procedural orders I had made in an effort to ensure that the matter was ready for trial. In my judgment given that day, I felt “compelled to express my surprise and concern that, notwithstanding their previous experience in April [2018] and what I thought were clear and strong observations in my reasons for decision at the time as to the necessity of compliance with court orders, the manner in which [the] proceedings have been conducted remains, to express it as neutrally as possible, unacceptable.”

    48.That criticism was directed at both parties. The specific failings by each in their conduct of the proceedings referred to above as potentially justifying orders for costs must be considered against that background.

    (Footnotes omitted)

16. The balancing exercise undertaken by the trial judge with respect to the conduct of each party was careful and considered and it was entirely open to the trial judge to balance these competing considerations in the way his Honour did in the exercise of his discretion.

17. For these reasons, we find no substance in Ground 3.

18. We turn now to consider Ground 1 of the appeal which focusses on the husband’s offer of settlement made on 17 August 2016.

19. Commencing at [53] of the costs reasons, his Honour can be seen to have given detailed consideration to the husband’s settlement offer of 17 August 2016. His Honour discusses, and rejects, the wife’s contentions as to the various matters the wife relied upon for the overall proposition that her rejection of the offer was reasonable.

20. At [74], the trial judge recorded, by reference to Browne v Green (2002) FLC

    
    

    93-115 at 89,163 that:

    The failure to heed a reasonable offer in circumstances where the offeree has adequate knowledge at the time the offer is made to give it a proper consideration is something to which “very significant weight indeed ought normally be given”.

    (Footnotes omitted)

21. Whilst his Honour records the various respects in which the information available to the wife was incomplete (for example, at [71] and [76]), his Honour ultimately concluded (at [79]) that the wife’s rejection of the offer made on 17 August 2016 “is a matter which could justify an order for costs”.

    
    

    Self-evidently, his Honour was keenly aware of the principle that “very significant weight” ought normally be given to a reasonable offer and that the wife’s rejection of the subject offer could justify an order for costs.

22. The principle expressed in terms that “very significant weight” ought normally be given to a reasonable offer does not translate to the proposition that the making of such an offer is, in all circumstances, to be taken to have determinative significance, irrespective of other considerations. This is reflected in the fact that paragraph (f) of s 117(2A) – the making of offers – is one of the discretionary factors falling to be considered in the exercise of discretion as to costs. Undoubtedly, it is an important factor, as was recognised by the trial judge in his specific references to authority.

23. Having recorded at [79] that the wife’s rejection of the subject offer is a matter which could justify an order for costs, Ground 1(c) of the appeal asserts that what his Honour then recorded at [80] amounts to his Honour taking into account an irrelevant consideration. His Honour said:

    80.I note at this point that at the time those offers were made, the parenting proceedings remained on foot, and seemingly headed to trial. I do not know what proportion of the legal fees spent by each party after the date of the offer related to those proceedings.

24. In the course of argument of the appeal, senior counsel for the husband accepted that Ground 1(c) could not be pressed, given that at [80] the trial judge was referring to the legal fees spent by each party, not simply by the husband, after the date of the offer related to the proceedings which at that time included the parenting proceedings which remained on foot.

25. What his Honour expressed at [80] reflects his Honour’s legitimate focus on the costs of both parties of the proceedings overall.

26. Following [80], the trial judge discusses other offers made by each party, not relevant to any of the complaints on this appeal.

27. From [101]-[111], the trial judge sets out his conclusions in relation to the competing applications for costs and the competing considerations. That passage of the judgment bears quoting in full, reflecting as it does the balancing exercise undertaken by the trial judge of the competing factors, as between the cases of each party, for and against the making of a costs order in favour of each party:

    101.As appears from what is set out above, there are various factors which taken in isolation could justify an order for costs.

    102.The wife’s conduct of the proceedings, to the extent that conduct led to the vacation of the second trial date, could justify an order for costs thrown away by the husband in relation to that date. The husband initially quantified those costs at $5,000, but subsequently (and without any explanation for the change) quantified them at $10,000.

    103.The wife’s failure to accept the husband’s offer of settlement made on 17 August 2016 could also justify an order for costs in favour of the husband.

    104.The husband’s conduct of the proceedings more broadly, and in particular in relation to disclosure and the inaccurate and arguably evasive nature of his evidence in relation to his estimated earnings, could justify an order for costs in favour of the wife.

    105.Those matters, however, cannot in my view be taken in isolation. They must be viewed in the context not only of the respective financial circumstances of the parties, and my findings as to the superiority of the husband’s financial position, but also in the context of the overall conduct of the proceedings by each of them.

    106.As noted at the commencement of these reasons, these two parties spent approximately $700,000 litigating a parenting dispute which was not complex and which resolved by consent, and a financial dispute in which there were no valuation issues of note and the (eventually agreed) finding as to contributions was obvious from the outset. Each party pursued un-meritorious points. Each adduced evidence which was at best unhelpful, and at worst irrelevant to matters actually in dispute. Neither properly complied with orders designed to ensure the readiness of the matter for trial at the originally listed date, or for that matter the second listed date.

    107.Both parties must bear their share of responsibility for the disproportionate expenditure by each of them on legal fees. Neither is blameless in that regard, and it would be simplistic to attribute the fact that they incurred costs of that magnitude solely to the rejection by the wife of the August 2016 offer, or for that matter to the husband’s approach to his duty of disclosure.

    108.In all the circumstances, the only matter in respect of which I consider it appropriate to make an order for costs is the vacation of the second trial date, which arose primarily because of the inexcusably late introduction by the wife of the Kennon claim.

    109.I propose to order the wife to pay the husband’s costs thrown away in that regard in the sum originally sought by counsel who appeared on his behalf on the relevant date, being $5,000.

    110.As already noted, no explanation was proffered as to why the amount sought in that regard doubled by the time the husband’s costs submissions were filed.

    111.I do not otherwise propose to make any order in respect of the costs of the primary proceedings or any part of them.

    (Emphasis added)

28. As we have already observed, long-standing authority establishes that discretionary decisions about legal costs should only be disturbed in instances of clear error, which will be rare. Here, the trial judge meticulously identified and comparatively weighed the factors which the Act obliged his Honour to take into account, which synthetic process resulted in an order favouring the husband in the sum of $5,000. We discern no legal or discretionary error as alleged in the appeal. We are not persuaded that his Honour was bound, in the exercise of his discretion, to attach determinative weight to the husband’s offer in all the circumstances of this case. It may be speculated that had the husband’s conduct in the proceedings not been marked by significant failures to disclose, and the other aspects concerning both parties’ conduct in the proceedings, the position may well be different.

29. Ultimately, we are not persuaded that Ground 1 is established.

Conclusion and costs

1. We are not persuaded that the result determined by the trial judge is plainly unjust, nor that his Honour’s discretion was exercised on wrong principles.

2. There being no merit in the appeal, it is to be dismissed.

3. In that event, the hearing of the appeal having been adjourned for a brief period to afford the parties the opportunity to discuss costs, the parties were in agreement that in the event the appeal fails the wife should have her costs of the appeal fixed in the sum of $10,000 and we so order.

I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Kent & Austin JJ) delivered on 1 May 2020.

Associate:

Date:  1 May 2020