Simons & Morin (No 3)
[2024] FedCFamC1F 789
•21 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Simons & Morin (No 3) [2024] FedCFamC1F 789
File number(s): SYC 5136 of 2020 Judgment of: HARPER J Date of judgment: 21 November 2024 Catchwords: FAMILY LAW – COSTS – Where the de facto wife (“wife”) seeks costs in a fixed sum for property proceedings only – Where neither party was wholly unsuccessful – Where the de facto husband’s (“husband”) denial that a de facto relationship existed until the eve of trial is conduct justifying a costs order in favour of the wife – Where the wife’s rejection of offers of settlement made by the husband were not unreasonable as they were materially worse than the final outcome – Where the wife made two offers of settlement to the husband – Where the husband’s rejection of the first offer by the wife was not unreasonable as it was made early in the proceedings – Where the husband’s rejection of the wife’s second offer was unreasonable as he should have been in a position to assess the strengths of his case and the offer was materially better than the final outcome achieved – Where the husband’s rejection of the wife’s second offer was a failure in his duty to act in accordance with the overarching purpose of s 95 of the Family Law Act 1975 (Cth) – Where the wife’s alternative claim for indemnity costs is not established – Where it is not possible to quantify the wife’s costs on a party/party basis without assessment by a registrar – Order for husband to pay 50 per cent of wife’s costs of the proceedings on a party/party basis as agreed or assessed – Order to certify counsel. Legislation: Family Law Act 1975 (Cth) Pts VII, VIIIAB, ss 90SM, 95, 96, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68, 68A
Cases cited: Atkins & Hunt [2017] FamCAFC 131
Colgate Palmolive & Co v Cussons (1993) 46 FCR 225
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397; [1988] FCA 364
Harris & Dewell and Anor (No. 2) (2018) FLC 93-863; [2018] FamCAFC 180
Moorcroft & Moorcroft (2020) 60 Fam LR 361; [2020] FamCAFC 83
Munday and Bowman (1997) FLC 92-784
Parke & The Estate of the Late A Parke (2016) FLC 93-748; [2016] FamCAFC 248
Prantage & Prantage (Costs) [2014] FamCA 850
Simons & Morin (No 2) [2024] FedCFamC1F 170
Division: Division 1 First Instance Number of paragraphs: 80 Date of last submission/s: 18 November 2024 Date of hearing: On the papers Place: Sydney Counsel for the Applicant: Mr Kearney SC Solicitor for the Applicant: Rubin Blight Hardy Family Lawyers & Mediators Counsel for the Respondent: Mr Auld Solicitor for the Respondent: Abbott Delaney Lawyers FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Simons & Morin (No 3) [2024] FedCFamC1F 789
CORRIGENDUM
HARPER J:
Amendment has been made to the coversheet and at [60] and [62] of these Reasons to reflect application of s 68A of the Federal Circuit and Family Court of Australia Act 2021 (Cth) to proceedings commenced and not finally determined by, or instituted on or after, 6 May 2024 and the substituted application of s 95 and s 96 of the Family Law Act 1975 (Cth).
I certify that the preceding one (1) paragraph is a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Harper. Associate:
Dated: 6 December 2024
ORDERS
SYC 5136 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SIMONS
Applicant
AND: MR MORIN
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
21 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The Respondent de facto Husband (“husband”) shall pay to the Applicant de facto Wife (“wife”) 50 per cent of her costs of and incidental to the proceedings on a party/party basis as agreed or assessed in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) (“the Rules”) with certification that it was reasonable to engage senior counsel.
2.The husband shall pay to the wife her costs of and incidental to the Application in a Proceeding filed on 16 April 2024 on a party/party basis as agreed or assessed in accordance with the Rules with certification that it was reasonable to engage senior counsel.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Simons & Morin have been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are parenting and property proceedings under Pt VII and Pt VIIIAB of the Family Law Act 1975 (Cth) (“the Act”) between the applicant de facto wife, Ms Simons (“wife”) and the respondent de facto husband, Mr Morin (“husband”).
On 19 March 2024, I delivered final judgment on both the property and parenting issues. The relevant procedural history and background to these proceedings are set out in that judgment: Simons & Morin (No 2) [2024] FedCFamC1F 170 (“final judgment”). I will not repeat what I have set out in there unless necessary for this judgment.
In the final judgment I made orders that if any party seeks costs, an application was to be filed within 28 days of the judgment being delivered.
On 16 April 2024 the wife filed an Application in a Proceeding seeking costs against the husband on several alternative bases. The specific orders sought are set out below. The husband did not file an application seeking costs.
Some additional brief procedural background is also relevant to the determination of costs.
On 14 June 2024 the husband filed an Application in a Proceeding seeking Order 1 of the final judgment on 19 March 2024 be stayed pending the determination of Appeal Proceedings NAA 89/2024. Order 1 of the final judgment provided:
Within 90 days of the date of these orders (“the due date”) the Respondent, [Mr Morin] (“the father”), pay to the Applicant, [Ms Simons] (“the mother”) or as she directs $803,320 (“the Adjustment Payment”).
On 8 July 2024 the husband’s Application in a Proceeding was mentioned. I made the following orders in accordance with the wife’s proposed orders:
1)That Order 1 of the Orders of 19 March 2024 be stayed pending determination of Appeal Proceedings NAA 89/2024.
2)That the de facto Wife’s costs of and incidental to the Application in a Proceeding filed 14 June 2024 be reserved and heard together with the de facto Wife’s Application in a Proceeding (Costs) filed 16 April 2024 with costs of each party reserved pending determination of costs arguments by the Court.
On 9 August 2024 the appeal NAA 89/2024 was dismissed and the stay of Order 1 of 19 March 2024 was dissolved.
On 15 August 2024 the husband paid to the wife the principal amount due for the adjustment payment required by Order 1. On 8 October 2024 the husband paid to the wife the interest owing upon the principal sum between the date of default being 17 June 2024 and the date of payment being 15 August 2024.
On 19 August 2024 I made orders that the wife was to file and serve any written submissions in support of her application for costs by no later than 2 September 2024, that the husband was to file an affidavit and written submissions in response by 30 September 2024, and that the wife was to file any written submissions in reply by 14 October 2024.
On 2 September 2024 the wife filed written submissions in support of her costs application. She sought amended orders for costs with respect to the property proceedings, the husband’s stay application of 14 June 2024 and her application for costs.
On 30 September 2024 the husband filed a Response and written submissions seeking that the wife’s costs application be dismissed. The husband’s supporting affidavit was filed one day late on 1 October 2024 and I will have regard to it.
On 14 October 2024 the wife filed submissions and an affidavit in response to the husband.
On 14 October 2024 I made orders reserving judgment in relation to the wife’s costs application.
On 15 October 2024 the husband requested to be heard either in writing or orally in respect of the objections made by the wife in her responsive material to his supporting evidence for costs.
On 17 October 2024 I made orders listing the proceedings for mention on 11 November 2024 and vacated the order reserving judgment made on 14 October 2024.
On 11 November 2024 the parties made submissions in relation to objections to evidence in the wife’s application for costs. One issue was a reference in the wife’s submissions to information arising out of a mediation. The wife made clear she did not rely upon that part of her submissions. Another issue was the way to deal with a range of objections taken by each party to the evidence of the other. I made orders that objections to evidence would be dealt with in the judgment.
I have considered the evidence of both parties. I have considered the objections made by each party to the other’s evidence. I decline to uphold any objections to the evidence relied upon by either party in support of their respective arguments regarding costs. In my view it is unnecessary and unproductive to give a ruling on each objection.
ORDERS SOUGHT AS TO COSTS
By way of her written submissions filed 2 September 2024, the wife seeks the following amended orders:
1. That within fourteen (14) days from the date of these Orders, the Respondent de facto Husband shall pay to the Applicant de facto Wife her costs of and incidental to the property proceedings fixed in the sum of $300,000.
2. That in the event that an order is not made as sought in paragraph 1 herein, the Respondent de facto Husband shall pay to the Applicant de facto Wife 50% of her costs of and incidental to the proceedings on an indemnity basis as agreed or assessed and pay the same within fourteen (14) days of any agreement or assessment.
3. That in the event that an order is not made as sought in paragraphs 1 or 2 herein, the Respondent de facto Husband shall pay to the Applicant de facto Wife 50% of her costs of and incidental to the proceedings on a solicitor/client basis as agreed or assessed and pay the same within fourteen (14) days of any agreement or assessment.
4. That in the event that an order is not made as sought in paragraphs 1, 2 or 3 herein, the Respondent de facto Husband shall pay to the Applicant de facto Wife 50% of her costs of and incidental to the proceedings on a party/party basis as agreed or assessed and pay the same within fourteen (14) days of any agreement or assessment.
5. That within fourteen (14) days from the date of these Orders, the Respondent de facto Husband shall pay to the Applicant de facto Wife her costs of and incidental to the Application in a Proceeding filed 14 June 2024:
5.1 fixed in the sum of $3,234; or if not so ordered
5.2 on an indemnity basis as agreed or assessed; or if not so ordered
5.3 on a solicitor/client basis as agreed or assessed; or if not so ordered
5.4 on a party/party basis as agreed or assessed.
6. That within fourteen (14) days from the date of these Orders, the Respondent de facto Husband shall pay to the Applicant de facto Wife her costs of and incidental to this immediate application for costs:
6.1 fixed in the sum of $41,465; or if not so ordered
6.2 on an indemnity basis as agreed or assessed; or if not so ordered
6.3 on a solicitor/client basis as agreed or assessed; or if not so ordered
6.4 on a party/party basis as agreed or assessed.
7. Certify for counsel, including senior counsel in respect of each of the proceedings and this immediate application.
In his Response filed on 30 September 2024, the husband seeks:
1.That leave be granted to the Respondent to rely on his Affidavit filed 30 September 2024, which is 7 pages of content over the 25 page limit.
2.That the Application in a Proceeding filed 16 April 2024, sealed on 19 June 2024, be dismissed.
I give the husband leave to rely upon the affidavit filed 30 September 2024.
PRINCIPLES REGARDING COSTS
In proceedings to which the Act applies, the starting point is that each party shall bear his or her own costs (s 117(1)). If, however, the Court is of the opinion that there are justifying circumstances, the Court may make such order as to costs and security for costs as the Court considers just (s 117(2)), being costs in the conventional sense as indemnity for another’s liability for professional fees and out of pocket expenses reasonably incurred in the litigation.
The Court has a wide discretion, which is to be exercised judicially (Parke & The Estate of the Late A Parke (2016) FLC 93-748; Atkins & Hunt [2017] FamCAFC 131). When considering what, if any, order for costs should be made, the Court must have regard to the factors set out in s 117(2A):
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(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;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
It is well settled that no one factor in s 117(2A) has priority, nor must more than one factor be satisfied; rather, any one factor may be sufficient (Prantage & Prantage (Costs) [2014] FamCA 850 at [12]; Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) & Fish (2005) 33 Fam LR 123 at [41]).
The first question is whether the wife has established any circumstances which justify departing from the position that each party pay their own costs, and the making of a costs order in her favour. The second question is whether, if there are circumstances justifying a costs order, the husband should pay the wife’s costs as a fixed sum, or on an indemnity basis, other than costs as agreed or assessed on a party and party basis.
I have had regard to all the factors set forth in s 117(2A).
DISCUSSION
Section 117(2A)(a) – the financial circumstances of the parties
The final judgment made orders for property division of 43/57 in favour of the husband. The net assets value held by the husband after trial was $5,894,993. The net assets value held by the wife after trial was $4,447,100 including the adjustment payment of $803,320 from the husband.
It is the wife’s contention that the husband has been in a superior financial position to her throughout separation and the proceedings and that such disparity remains following the final judgment where he was allocated $1,450,000 more in net assets. She stated his failure to pay the adjustment payment by the due date caused her to need to take out a mortgage to pay her legal costs. She asserts the husband also has entitlements to retained earnings with his former employer valued at $1,232,400 which were not included in the property pool and these earnings are to be paid to the husband by 2027 with the secured release of USD500,000 in May 2024.
The husband made submissions that to meet his obligations of the final orders he has had to significantly draw on his financial resources. To pay to the wife the adjustment payment of $803,320 and the costs of the appeal for $35,764, the husband claims to have drawn down on his bank accounts and taken a loan for GBP265,000. He asserted he sold various investments and that the early release of USD500,000 from his retained earnings was only so he could discharge the mortgage against the matrimonial home pursuant to court orders, which he did and then transferred the unencumbered property to the wife on 7 June 2024. The husband denies he has significant liquid assets and argues he has liabilities to service the loan taken to meet the adjustment payment, and any sale of real estate will create taxation liabilities and difficulties with regards to terms of leases and tenants.
After the property proceedings, the wife has an unencumbered property valued at $2,800,000, an investment property valued at $540,000 subject to a mortgage, and cash in excess of $800,000 from the adjustment payment. The wife is a qualified professional and is employed in what the husband anticipates is a well-paid position.
In my view, the financial position of neither party discloses any circumstance justifying a costs order in the wife’s favour.
Section 117(2A)(c) – the conduct of the parties
The wife argued she incurred increased costs in the proceedings as a result of the husband’s conduct in relation to:
(a)His denial that a de facto relationship existed until the eve of trial;
(b)The interlocutory application filed 2 December 2020;
(c)The wife’s Application in a Case filed 4 November 2022;
(d)The stay application filed 14 June 2024; and
(e)His failure to comply with various orders of the Court.
First, the husband’s denial of the existence of a de facto relationship over the course of the proceedings until the first day of trial was claimed by the wife to have impeded the expeditious conduct of proceedings. The wife also submitted the husband opposed interlocutory applications and did not comply with the orders of 10 November 2020 to advise of his characterisation of the relationship before ultimately abandoning his position without explanation on the eve of trial. She claimed the conduct caused her significant and unnecessary costs between March 2020 and 24 October 2023 in bringing and defending her s 90SM application including $64,000 for senior counsel to spend four days preparing for trial on the basis that the de facto relationship was disputed. The wife asserted it was unreasonable for the husband to not have conceded his position earlier.
Second, the husband filed an Application in a Case on 2 December 2020 seeking interim parenting and property orders. The wife’s solicitors wrote to the husband pointing out that the Senior Judicial Registrar before whom the matter became listed for interim hearing lacked jurisdiction to deal with the entirety of the application and proposed that the hearing date of 3 March 2021 be vacated. The husband opposed this course and at the interim hearing it was confirmed there was a lack of jurisdiction and the property matters were adjourned to be listed before a Judge. On 12 April 2021 the husband advised the wife he no longer pressed the property orders and the parties entered into consent orders with costs reserved. The wife claims she incurred unnecessary legal fees between 2 December 2020 and 12 April 2021 as a result of these events as her solicitors and counsel had to prepare and file responsive material to the husband.
Third, the wife filed an Application in a Case on 4 November 2022 after the husband ceased making mortgage repayments to the Suburb F property and did not agree to correspondence sent by the wife’s lawyers seeking reinstatement of the payments pending trial. The wife claims she incurred significant and unnecessary legal fees in preparation of associated material before the husband ultimately entered into consent orders with her on 29 November 2022 to resume making payments.
Fourth, the wife argues the husband filed his application for a stay pending his appeal and since the appeal failed the husband should pay her costs of the stay application.
Fifth, the wife claimed the husband failed to comply with orders of this Court made on 15 September 2020, 18 May 2021, 19 September 2022 and 16 October 2023 by his late or incomplete filing of Financial Statements and trial material. The wife asserts the husband’s non-compliance and delay increased costs.
It is the wife’s contention that the husband’s superior financial position should characterise his conduct as intentionally oppressive towards the wife’s ability to properly prosecute her case.
The husband submitted there was no relevant conduct that would justify an award of costs against him and that an order for costs is not to be punitive in nature nor used to hold parties “accountable”. That much may be true but s 117(2A)(c) specifically makes conduct in relation to the proceedings a relevant consideration.
In my view, some of the conduct of the husband during the proceedings engendered unnecessary costs for the wife, particularly his failure to concede the existence of a de facto relationship until the date of trial. It is clear from his own evidence that the scope of factual dispute covered in the parties’ affidavits were materially expanded by the wife’s need to prove her contentions about the existence of the de facto relationship. This is a factor justifying a costs order in the wife’s favour. The other conduct supporting this conclusion was in relation to his application filed on 2 December 2020. I am not persuaded the remaining conduct relied on by the wife would otherwise justify a costs order in the wife’s favour, for example, the husband’s stay application was successful, even if his appeal was not.
Section 117(2A)(d) – whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
As already noted, the wife claimed the husband failed to comply with a series of court orders for financial disclosure and filing of trial material. The husband for his part pointed to the wife’s late filing of responsive material eight weeks after the date provided by orders made on 10 November 2020.
But in my view neither party explained how the proceedings were necessitated by a failure to comply with previous orders of the Court. I do not accept there is any factor under this heading justifying a costs order against the husband.
Section 117(2A)(e) – whether either party has been wholly unsuccessful
Neither party was wholly unsuccessful.
Section 117(2A)(f) – offers in writing
The wife contends she made two offers of settlement to the husband on 8 July 2021 and 28 June 2022 which, if accepted, would have resulted in a significantly better outcome for him as compared to the final orders and considerable costs savings to both parties.
In her submissions, the wife summarised the effect of her offers as against the outcome of the final orders as follows:
Primary Orders
19 March 2024Offer
8 July 2021Offer
28 June 2022Payment by husband to wife $803,320 $750,000 $1,200,000 Payment to mortgage 1,165,400 50
(from offset account)
Nil Super Fund 2 split to wife Nil 393,924 360,355 Total liability of husband $1,968,720 $1,143,974 $1,560,355
The offers were open for acceptance for 28 days and made separately from any parenting issue. I accept that in the course of the proceedings and by service of costs notices the husband was provided clear notification of the wife’s accrued and anticipated costs. The wife also made additional offers to resolve discrete aspects of the proceedings.
The husband argued that the wife claimed she beat her settlement offers in the final judgment but the context in which the offers were made differed to the balance sheet presented at trial so his rejection of the wife’s offers did not justify the making of a costs order without “something more”. The husband listed a range of issues the wife did not take into account such as changes in the values of the husband’s assets, currency fluctuations and uncertainty of the husband’s income at the time of offer. The wife argued that the basis upon which the offers were made and the rationale attached are immaterial to the relevance and effect of each offer having being made and open for acceptance.
The husband made three offers of settlement to the wife on 5 March 2021, 24 June 2021 and 28 April 2023. The wife asserted the offers made on 5 March 2021 and 28 April 2023 were open for acceptance in relation to the property proceedings alone but the offer of 24 June 2021 was conditional on her accepting the husband’s proposed parenting orders.
The first offer on 5 March 2021 offered a property division to the wife of 39.3 per cent. This included a proposed payment of $620,000 to the wife over three years, and for the wife to receive the husband’s superannuation and the full title and liability of the Suburb F mortgage.
The second offer on 24 June 2021 included orders as to both property and parenting proceedings. The husband denied the offer was conditional on acceptance of parenting orders and stated in his affidavit it was open to the wife to accept the property aspect and make a counter-offer as to the parenting aspect. Whether this option was conveyed to the wife is unclear as the letter of offer dated 24 June 2021 states “If your client does not accept this offer in full by 5.00pm on 1 July 2021, we will assume your client has rejected this Offer”. The wife argued that any offer in the financial proceedings that was conditional on parenting orders was unacceptable.
The third offer on 28 April 2023 offered a property split of 43.95 per cent to the wife. The terms were the same as the offer of 5 March 2021 except that instead of the proposed payment to the wife she would retain the partial property proceeds of $90,000.
In the final judgment the final division of assets was 43/57 in favour of the husband.
The wife argued the husband’s offers were significantly less than the outcome she achieved in the final orders and summarised the effect of the husband’s offers as follows:
Primary Orders
19 March 2024Offer
5 March 2021Offer
28 April 2023Payment by husband to wife $803,320 $620,000 $0 Payment to mortgage 1,165,400 Nil Nil Super Fund 2 split to wife Nil 396,609 396,609 Total liability of husband $1,968,720 $1,016,609 $396,609
I agree the husband’s offers were materially and substantially different to the final orders of the Court and less favourable to the wife. On the other hand, by her offers, the wife presented the husband with an opportunity to resolve the proceedings on a basis which was materially better for him than the ultimate outcome, even if both offers included a split of superannuation which the final orders did not.
The wife’s offer of July 2021 was early in the proceedings. I am not persuaded that the husband’s refusal to accept this offer was unreasonable. However, by 28 June 2022, the husband should have been, properly advised, well apprised of the strengths of his case, including the risk he ran in denying the existence of a de facto relationship. There was ultimately no real dispute about the facts which supported the conclusion that the parties were in a de facto relationship, so the husband should have been in a position to concede its existence by June 2022. The second offer was materially better for him than the final outcome, and it was unreasonable for him to decline it. Conversely his offers were materially worse for the wife than the final outcome. It was not unreasonable for her to decline the husband’s offers.
In relation to the husband’s application for a stay specifically, on 5 July 2024 the lawyers of the wife sent a letter to the husband seeking that he withdraw his Application in a Proceeding seeking a stay and that he comply with his obligation to pay to the wife the adjustment payment as his Financial Statement filed on 3 July 2024 showed he had the liquid funds available to do so. If the husband complied by 8 July 2024 the wife was agreeable to waive her right to claim the costs of the husband’s stay application. The husband declined. I do not consider this refusal to be a circumstance justifying an award of costs against the husband for his stay application. The offer by the wife involved almost total capitulation. It was reasonable to not accept it.
Section 117(2A)(g) – such other matters as the court considers relevant
The husband additionally submitted he paid the wife $120,000 in “litigation funding”. In the final judgment I accepted this payment was properly characterised as a partial property settlement expended by the wife on legal fees. It was added back to the balance sheet for this reason. Since the wife received less than the husband in the final outcome he made a contribution to the wife’s legal fees in this way.
The husband’s solicitor affirmed an affidavit in which she gave evidence of an assessment of the time spent at the final hearing on parenting and property or other issues. She made this assessment by reading the transcript and making notes. She assessed the time spent on property issues to be 20.75 per cent of the hearing time. I received this evidence on the basis it may have some probative value.
I do not find the solicitor’s percentage allocation of time spent at the final hearing between parenting and property issues at all persuasive but based on my own experience in presiding at the trial, I accept that parenting issues occupied more time than property issues at the final hearing. I have taken this into account, but it is of very limited assistance in determining an application for costs in complicated property and parenting proceedings which occupied more than four years in this Court.
The Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) applied to these proceedings from 1 September 2021. The parties were obliged by s 68 of the FCFCOA Act to conduct proceedings, including negotiations for settlement of their dispute, consistently with the overarching purpose set forth in s 67 of the FCFCOA Act. This purpose is to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible. After 6 May 2024, s 67 and s 68 ceased to apply to proceedings commenced and not finally determined or instituted after that date (s 68A of the FCFCOA Act), and s 95 and s 96 of the Act, which are materially the same, apply. The wife’s application for costs is a proceeding commenced and not finally determined as at 6 May 2024. Separately to s 117(2A)(g), s 96(4) of the Act now also requires the Court, in exercising discretion to award costs to take account of any failure to comply with the duty to conduct the proceedings consistently with the overarching purpose. As pointed out, s 68 (now materially replicated in s 96 of the Act) specifically mentions negotiations for settlement, which in my view includes written offers of settlement.
In my view, the husband failed to conduct the proceedings in accordance with the overarching purpose after September 2021 by failing to concede the existence of the de facto relationship well before trial and also failed in his duty to act consistently with the overarching purpose in failing to accept the wife’s offer of June 2022. I take this into account, as I must, in exercising the discretion in s 117 to award costs. These failures are also factors justifying a costs order in the wife’s favour.
CONCLUSION ON JUSTIFYING CIRCUMSTANCES
I am satisfied aspects of the husband’s conduct, and his failure to accept the wife’s second offer and to comply with a duty to conduct proceedings consistently with the overarching purpose of s 67 of the FCFCOA Act (now s 95 of the Act), which applied until 6 May 2024, constitute circumstances justifying an order for costs in the wife’s favour. The question thus remains the basis on which costs should be awarded.
INDEMNITY COSTS
The wife seeks as one of her alternative orders “50% of her costs of and incidental to the proceedings on an indemnity basis as agreed or assessed” and indemnity costs against the husband for his Application in a Proceeding filed 14 June 2024.
Indemnity costs are awarded only in exceptional circumstances and are rare (Moorcroft & Moorcroft (2020) 60 Fam LR 361; Harris & Dewell and Anor (No. 2) (2018) FLC 93-863).
The wife relied on the principles in a range of authorities (Munday and Bowman (1997) FLC 92-784; Colgate Palmolive & Co v Cussons (1993) 46 FCR 225; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397) in her submissions that an award of indemnity costs was warranted.
The husband succeeded in his application for a stay. I am not persuaded there is any basis for an award of indemnity costs in relation to that application.
She argued that the husband had a wilful disregard of known facts or an “ulterior motive” for not conceding earlier the existence of a de facto relationship between the parties, and that the husband’s conduct prolonged proceedings causing unnecessary expense. The alleged “ulterior motive” was not clearly identified by the wife.
The wife made two settlement offers to the husband which she claimed had they been accepted would have saved expenses for both parties. As above, I have found the husband’s rejection of the second offer to be unreasonable. I have taken this into account on the question of indemnification for costs.
However, on balance I do not consider the circumstances to be relevantly exceptional. Moreover, even if the husband had conceded the existence of the de facto relationship, both parties would still have been required to prove their cases on contributions, and the composition of the balance sheet would have remained subject to determination of some difficult issues.
CONCLUSION
The wife stated she incurred total costs of $622,522 up to the date of final orders.
She provided the Court with itemised invoices issued by her solicitors and schedules of legal fees paid in relation to the property proceedings only between 25 February 2020 and 27 March 2024. By reference to a schedule she prepared herself, the wife claimed she incurred costs of approximately $340,865 in relation to proving a de facto relationship and property issues, comprised of:
(a)Costs paid to Rubin Blight Hardy: $126,326;
(b)Costs paid to EE Lawyers: $109,188;
(c)50 per cent of the $196,900 paid to senior counsel: $98,450; and
(d)Updated single expert valuations after the date of her first settlement offer: $6,900.
She also tendered a schedule of costs in relation to the husband’s stay application filed 14 June 2024 and for her costs application. Where court appearances concerned both property and parenting matters the wife claimed 50 per cent of the costs should be attributed to financial issues.
The husband argued that the quantification of costs for the property proceedings could not be easily identified, or were less than the quantum claimed by the wife, from those incurred for the parenting aspects which were jointly heard at trial. He disagreed the costs of court appearances should be equally split between parenting and property matters.
The schedules of costs prepared by the wife are not persuasive. The basis upon which she purported to attribute a specific amount to a property issue or a de facto relationship issue was not explained nor self-evident from the face of the schedule or other documents upon which she relied. I give the wife’s schedules little weight.
It is often desirable for costs to be awarded in a fixed amount to avoid the further costs to the parties involved in an assessment. However, having decided that indemnification is not warranted, and since, as explained, on the evidence it is not possible to quantify the wife’s costs, even by a reasonable estimate, by reference to non-parenting issues, it will be necessary for the costs to be assessed by a registrar.
The husband has been wholly unsuccessful in resisting the wife’s application for costs in that he resisted any order for costs against him. In my view this justifies an order in favour of the wife for her costs assessed on a party and party basis.
As already mentioned, the proceedings continued in this court for over four years. Putting aside the costs of the husband’s stay application, and the possibility of a fixed amount, the wife’s approach seeks 50 per cent of her costs of the proceedings as representing her costs in relation to property and de facto relationship issues together with her own costs application, as agreed or assessed. I consider this approach reasonable and the most just in the circumstances.
I conclude that an assessment cannot be avoided. There remains the question whether any assessment should be on a solicitor and client basis rather than on the usual party and party basis. I am not satisfied that there is a sound reason to depart from the usual basis of assessment being party and party costs. I will order the husband to pay 50 per cent of the wife’s costs of and incidental to the proceedings as agreed or assessed on a party and party basis.
The wife sought an additional order to certify counsel as the complexity of the matters warranted the briefing of senior counsel, and both parties retained senior counsel with the husband also having the assistance of junior counsel. The wife stated in her affidavit that had the property matters settled she would have only retained junior counsel at final hearing for the parenting proceedings. I agree that certification for counsel is warranted.
I am not persuaded there should be any order for costs of the husband’s stay application.
I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 21 November 2024
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