Sprule & Mollis
[2025] FedCFamC2F 458
•11 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sprule & Mollis [2025] FedCFamC2F 458
File number(s): BRC 7049 of 2023 Judgment of: JUDGE SHOEBRIDGE Date of judgment: 11 April 2025 Catchwords: FAMILY LAW – COSTS – Conduct of the Respondent – Imprudent Failure to Accept Offers Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited:
Atkins & Hunt [2015] FamCAFC 66
Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited & Ors [2008] NSWCA 243
Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160
Black and Kellner (1992) FLC 92-287
Brown & Greene [2002] FamCA 791
D & D (No 2) [2010] FamCAFC 64
Firmer & Britton [2012] FamCA 576
Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23
In Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213
In the marriage of Greedy (1982) FLC 91-250
Hadid v Lenfest Communications Inc [2000] FCA 628
Higginbotham & Robinson (1991) 103 FLR 110
Ketteman v Hansel Properties Ltd [1987] AC 189
Medlon & Medlon (No 6) [2015] FamCAFC 157
Nemeth v Nemeth (1987) FLC 91-844
Parke & the Estate of the Late A Parke (2016) 314 FLR 322; [2016] FamCAFC 248
Penfold v Penfold (1980) 144 CLR 311
Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788
Sparnon v Apand Pty Limited [1998] FCA 164
Venter & Venter (No 2) [2024] FedCFamC1F 862
Weir and Weir (1993) FLC 92-338
White v Overland [2001] FCA 1333
Division: Division 2 Family Law Number of paragraphs: 125 Date of last submission/s: 20 December 2024 Place: Sydney in Chambers Counsel for the Applicant: Mr James Linklater-Steele Solicitor for the Applicant: Keating Lehn Solicitors Counsel for the Respondent: Aspire Family Law ORDERS
BRC 7049 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR SPRULE
Applicant
AND: MS MOLLIS
Respondent
ORDER MADE BY:
JUDGE SHOEBRIDGE
DATE OF ORDER:
11 APRIL 2025
THE COURT ORDERS THAT:
1.Pursuant to s 117(2) of the Family Law Act 1975 (Cth) (“the Act”), the Respondent is to pay the Applicant the costs of and incidental to the proceedings fixed in the amount of $84,632 within 60 days of the date of these Orders.
2.In the event the Respondent neglects, refuses or fails to pay the costs so ordered within 60 days from the date of this Order, interest shall accrue on any outstanding balance in accordance with the provisions of the Act.
3.From the date of this Order, the sum of $84,632 (or such portion of it as remains unpaid), together with any interest is hereby declared to be a debt owing by Respondent to the Applicant.
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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE SHOEBRIDGE
BACKGROUND
The parties in this matter were engaged in a property dispute that was finalised by consent orders (“the Final Orders”) on 18 November 2024.
Though the substantive dispute between the parties has now been resolved, the Applicant seeks an order that the Respondent pay his costs in relation to the proceedings.
Pursuant to Order 20 of the Final Orders, the matter of costs is to be dealt with on the papers in chambers.
The Applicant husband seeks that the Respondent wife pay his costs in the fixed sum of $98,000, or alternatively on an “indemnity” basis.
The Respondent says that the parties should bear their own costs.
MATERIAL RELIED UPON
The Applicant relies upon the following documents, which the Applicant has referred to as “Primary Material”:
(1)Written Submissions and Submissions in Reply filed on 20 December 2024; and
(2)Minute of Order Sought (“Annexure A” to the Submissions); and
(3)Affidavit of the Applicant Mr Sprule filed 2 December 2024; and
(4)Affidavit of the Applicant’s solicitor, Alexis Erin Vaughan, filed 2 December 2024, annexing Costs Agreements and Cost Notices of:
(a)19 July 2023; and
(b)30 August 2023; and
(c)20 February 2024; and
(d)27 February 2024; and
(e)28 May 2024; and
(f)15 November 2024; and
(5)Reply affidavit of Alexis Erin Vaughan filed 12 December 2024; and
(6)Affidavit of Jacqueline Stassen filed 6 December 2024; and
(7)Respondent's Written Submissions filed 16 December 2024; and
(8)Order made by Judicial Registrar Grant on 30 August 2023; and
(9)Order made by Judicial Registrar Bownds on 21 February 2024; and
(10)Order made by Judge Shoebridge on 18 November 2024; and
(11)Order made by Judge Firth on 30 May 2024; and
(12)Applicant's Financial Statement filed 2 June 2023; and
(13)Respondent's Financial Statement 3 August 2023.
The Applicant further relies upon the following “Secondary Material” (Confined to Specific References noted in the Applicant’s Written Submissions):
(1)Applicant's Outline of Case filed 13 November 2024; and
(2)Respondent's Outline of Case filed 13 November 2024; and
(3)Response filed 3 August 2023; and
(4)Respondent's affidavit of Evidence in Chief filed 4 November 2024; and
(5)Applicant's affidavit of Evidence in Chief filed 18 November 2024; and
(6)Applicants' affidavit in Reply filed 14 November 2024; and
(7)Respondent's Financial Questionnaire filed 3 August 2023; and
(8)Respondent's Certificate of Readiness for Trial filed 29 May 2024; and
(9)Respondent's Genuine Steps Certificate filed 3 August 2023; and
(10)Applicant's Genuine Steps Certificate filed 2 June 2023.
The Respondent relies upon Submissions written by her solicitor and filed on 16 December 2024. The Submissions themselves do not specify what material the Respondent is relying upon in relation to costs. Within those submissions, she makes reference to the following documents:
(1)Order made by Judicial Registrar Grant on 19 July 2023; and
(2)Respondent’s affidavit of 4 November 2024; and
(3)Respondent’s affidavit of 15 November 2024; and
(4)Material produced in response to subpoena issued to the QLD Police filed 6 August 2024; and
(5)Material produced in response to subpoena issued to C Medical Clinic filed 10 October 2024.
I have not had regard to material produced in response to subpoena, as none of that material is in evidence. I have read the Respondent’s affidavits of 4 November 2024 and 15 November 2024. As each party has referred to the annexures to the affidavits read in the Costs Application, I infer that each party wishes to rely on those annexures and I have had regard to them accordingly.
The Respondent’s solicitor has filed an affidavit in support of the Respondent’s position on costs on 5 December 2024. That is not referred to in her submissions, and I was only made aware of it because the Applicant’s solicitor filed an affidavit replying to it on 12 December 2024, and it is referred to as a “primary document” in the Applicant’s Submissions. I have read that Affidavit.
THE APPLICANT’S COMPLAINTS
The following facts were not in dispute at the time of Trial:
(a)the Applicant is 53 years old; and
(b)the Respondent is 55 years old; and
(c)the parties commenced living together in 2016; and
(d)in late 2017, the parties purchased a property at Town D, in Queensland. The Respondent contributed $450,000 towards the purchase and the Applicant contributed $58,659; and
(e)the parties separated on a final basis in June/July 2021; and
(f)the Respondent has occupied the Town D property post separation.
The Applicant maintained that he had contributed a further $35,000 towards the cost of constructing a deck on the property at Town D. That was disputed.
The source of funds applied by the Respondent towards the purchase of the Town D property appeared to be the subject of at least some level of dispute. The Applicant maintained that it was only through late discovery that he had ascertained that the property settlement between the Respondent and her former partner resulted in the Respondent receiving about $229,000 and the Respondent’s mother receiving about $297,000. The funds contributed by the Respondent towards the purchase of the Town D property was in fact sourced from a combination of those amounts. That much seems to have been agreed.
That was relevant, at least on the Applicant’s case, because the Respondent’s mother has dementia. The Respondent holds a Power of Attorney for her mother and on the Applicant’s case, the Respondent appears to use her mother’s assets interchangeably with her own.
The Respondent had maintained throughout the proceedings that she was relying upon a “Kennon claim”. That is to say, she alleged that the Applicant had perpetrated violence upon the Respondent such that that conduct made the Respondent’s contributions more arduous than they otherwise would have been.
The Respondent also maintained throughout the proceedings that she had health conditions that were relevant to her future needs, and to her capacity to support herself.
There was otherwise a large volume of disputed facts in relation to the contributions made by each party. Many of those remaining issues were unlikely to have had any great impact upon the outcome of the matter.
The Final Orders, made by consent, provide for:
(a)the Respondent to pay to the Applicant the sum of $230,730.50; and
(b)the Applicant to transfer the Town D property to the Respondent; and
(c)the parties to retain their own superannuation and other assets and liabilities.
That outcome represents an adjustment of the relevant pool of assets and liabilities in the proportion of approximately 30% to the Applicant and 70% to the Respondent.
The Applicant says that there are a number of reasons why the Court should consider making a costs order against the Respondent.
The Respondent’s Contended Division
By her Response filed 3 August 2023, the Respondent sought that the Town D property be transferred to her in its entirety and that no payment be made to the Applicant.
That Response was supported by a Financial Questionnaire filed 3 August 2023, in which the Respondent said that contributions ought to be assessed at 89.5% in her favour, with a further 15% adjustment for the factors in s 90SM(4)(d)–(f) and s 90SF(3) of the Family Law Act 1975 (Cth) (“the Act”). That is to say, the Respondent was seeking more than 100% of the available pool.
There is no evidence to suggest that the Respondent had altered her position in relation to the outcome sought by her until a Case Outline was filed 13 November 2024, on her behalf during the week immediately prior to the trial. In that document, the Respondent indicated that what she sought at trial was an 89:11 division in her favour. That outcome was said to be informed by a “Kennon adjustment of 5%” and by taking into account the financial consequences of the Respondent’s health.
On the first day of Trial, the matter was settled on a 70/30 split in the Respondent’s favour.
The Applicant, via the Initiating Application filed by him on 2 June 2023, sought 35% of the net sale proceeds of the Town D property, with him to retain his superannuation entitlements. The Respondent says that that was a 60/40 split in her favour, however, there was a lack of agreement at that time about the value of the pool. The Applicant filed an Amended Application for Final Orders on 11 October 2024, by which he sought 30% of the overall pool.
The Applicant made offers during the dispute, and I will address those below.
The “Kennon” Claim
The Respondent maintained throughout these proceedings her assertions that the Applicant perpetrated violence upon her.
The Applicant rejected that position. He conceded that the parties had argued, however, he rejected that the Respondent’s case was consistent with the case authority in this jurisdiction in relation to such matters.
The Respondent’s evidence on this topic is set out in paragraphs 48 to 80 of her trial affidavit filed 4 November 2024.
A summary of that evidence is as follows:
(1)at paragraph 48 she describes an occasion when the Applicant accused her of infidelity. She says that he was verbally abusive, and she stayed the night with friends; and
(2)at paragraph 52 she deposes to a disagreement between the parties that she recorded; and
(3)she deposes to an event some time after April 2019 when she says that the Applicant pushed her into a large mirror, causing it to fall on her; and
(4)she deposes to an occasion in July 2020 when the Applicant was verbally abusive for an extended period of time culminating in a physical altercation between the Applicant and the Respondent’s son. The police sought and obtained a Domestic Violence Protection Order after that event. The Protection Order named the Respondent and her two adult children as the protected parties and it was put in place for a period of five years; and
(5)the Respondent deposes to other events including threats, harassment and abuse; and
(6)in terms of the effects of the violence, the Respondent deposes to being weary (though, I think she meant wary) of further relationships with men, and she deposes to the harassment that she says was perpetrated by the Applicant and his new partner as having an effect upon her sleep, and upon her ability to cope on a day to day basis; and
(7)she deposes to hair loss and a medical condition.
There is no admissible evidence in relation to any medical diagnosis or treatment of the Respondent. She annexes a one page letter from her general medical practitioner to her own affidavit. I would not have received that into evidence.
The Applicant points to the problematic quality of the Respondent’s evidence in relation to her Kennon argument. During the course of the proceedings, the Applicant put the Respondent on notice of the possible costs consequences if that Kennon argument should fail (Ms Vaughan’s Affidavit filed 2 December 2024, annexure “MRS-2”). The Applicant pointed out that the first Domestic Violence Order between these parties was in 2018, and was to protect the Applicant from the Respondent (Applicant’s affidavit filed 10 October 2024, paragraph 117).
In her written submissions, the Respondent says that she did not “abandon” the Kennon argument when compromising this matter.
The Respondent’s Health
The Respondent advanced as a part of her case the contention that she had a medical condition, and that the effects of that disease ought inform the overall adjustment of property under s 90SM(4)(d)–(g) and s 90F(3) of the Act. The Respondent asserted that the condition had an impact upon her working capacity (Respondent’s affidavit filed 4 November 2024, paragraph 81).
The Applicant says that that aspect of the Respondent’s case was “doomed to fail” for the following reasons:
(a)the medical “evidence” was presented in a form that was inadmissible; and
(b)the medical “evidence” did not, in any event, support the conclusions that would be necessary on the Respondent’s case; and
(c)the Respondent’s evidence in relation to the effects of her medical condition was unlikely to be persuasive.
As I said above, I would not have admitted into evidence the letter from a medical GP annexed to the Respondent’s affidavit.
In terms of her affidavit evidence on this issue, the Respondent said:
(1)“I don't enjoy going to new places. When I do go out somewhere new, I start to have anxiety and a feeling of dread. I no longer have the same enjoyment from new experiences and prefer to stay home” (Respondent’s affidavit filed 4 November 2024, paragraph 73); and
(2)“I constantly felt sick and burnt out” (Respondent’s affidavit filed 4 November 2024, paragraph 79); and
(3)“Today I can’t control my body and I get stressed induced [sickness] where I have to run to the toilet. I've also lost my hair. I find that I have lost my interest in going out, …”(Respondent’s affidavit filed 4 November 2024, paragraph 80).
It is fair to say that the evidence supporting the Respondent’s assertions that medical conditions should influence the outcome of this matter was extremely weak.
Issues Relating to Disclosure
The Applicant says that the Respondent:
(a)asked on multiple occasions for documents that had already been produced; and
(b)asked for documents that did not exist.
The Respondent apparently formed the view that the Applicant might have property interests in addition to those disclosed by him (Applicant’s affidavit filed 2 December 2024, paragraphs 75–76). Specifically, the Respondent held the view that the Applicant had an interest in a family trust that would constitute an asset or a financial resource.
The Respondent raised the issue with the Applicant in February 2024 (Applicant’s affidavit filed 18 October 2024, annexure “MRS-13”). On 28 February 2024, in Court, the Applicant provided full details of his family members to allow the Respondent to conduct whatever searches she wished to. The Applicant’s position was that he did not have any such interest.
In September 2024, the Respondent wrote to the Applicant in the following terms (Applicant’s affidavit filed 18 October 2024, annexure “MRS-14”):
We ask that your client provide a copy of the [Sprule] [sic] family Trust deed and any minutes for the last 3 years.
If this is not available to your client, we ask that the following be disclosed to allow necessary searches.
The name of the trust as stated on the trust deed.
[Mr Sprule]’s [sic] mother and fathers full name, dates of birth and current residential address. Details of all the properties held in [Mr Sprule]’s parent's names.
Names of any siblings that may be beneficiaries to the trust.
Any ABN in connection with a company, PTY LTD, under the trust deed.
The Applicant responded, advising that he was not aware of any family trust.
The Respondent pressed the assertion notwithstanding. The Applicant complains that he was put to the cost of deposing to evidence for the trial that confirmed that he was not a beneficiary of any trust (Applicant’s affidavit filed 18 October 2024, paragraphs 105–110 and annexure “MRS-10”).
The Applicant’s complaint is that those costs were wasted given the settlement of the matter.
It is, of course, fundamental in family law proceedings for each party to make a full and frank disclosure of all material facts to the other party and the Court (see Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338).
The Applicant complains that:
(a)he found it necessary to make repeated requests for disclosure of documents, including for example documents relating to the disposal of Motor Vehicle 1, and the Respondent’s superannuation balance; and
(b)There were documents including bank statements of the Respondent, a Power of Attorney that she held in relation to her mother, and statements for a bank account held by the Respondent’s mother that were only obtained by the issue of subpoena; and
(c)Those documents revealed that the Respondent had unfettered access to her mother’s funds. The Respondent’s mother suffers from dementia. The documents revealed that the Respondent has been using her mother’s funds; and
(d)It was via those documents that the Applicant ascertained that it was in fact the Respondent’s mother who contributed:
(i)the sum of $297,000 towards the purchase price of the Town D property (Applicant’s affidavit filed 2 December 2024, paragraphs 59–62 and annexure “MRS-9”); and
(ii)payment towards improvements such as the fence to the Town D property.
The Applicant complains that it was only after the issue of the abovementioned subpoena that the Respondent made further disclosure, and that that further disclosure was late, some of it being received on the day that his affidavit of evidence in chief was due for filing (Applicant’s affidavit filed 18 October 2024, paragraphs 40–47). The Applicant says that it was only then that the Respondent acknowledged that some of her assertions of fact to that point in time were inaccurate (Respondent’s affidavit filed 4 November 2024, paragraphs 20, 27, 33 and 71).
The Applicant complains that his costs in the matter were increased by (Applicant’s affidavit filed 2 December 2024, paragraph 66):
(a)receiving mis-named documents, or additional documents not referred to in the accompanying list; and
(b)receiving the same documents on multiple occasions; and
(c)not attaching documents that were said to be attached to correspondence; and
(d)providing documents late, in some cases close to or on the day of Court events.
The Respondent makes her own complaint about the Applicant’s disclosure. That is made in the context of offers, which I will deal with below. However, whilst addressing the issue of disclosure, I observe that in the affidavit of the Applicant’s solicitor filed on 12 December 2024, the solicitor sets out in some detail the documents disclosed, and the dates that that disclosure was made. Relevantly, at paragraphs 6 to 8, she says:
6.It is incorrect to assert that the Respondent "was unable to accept the applicants [sic] compulsory offer made on 14 April 2024 due to the conduct of the applicant failing to provide requested disclosure to support his claim of 35% net proceeds of the sale of [E Street, Town D] and retaining his superannuation". In relation to this I say as follows:
(a)My client's compulsory offer of settlement was made in accordance with the Rules and Orders of the Court on 20 March 2024, not 14 April 2024.
(b)My client's compulsory offer of settlement sought a payment from the Respondent of $200,000 which based upon the valuation report that had been prepared by [F Valuations], equated to 20% of the value of the [Town D] property.
(c)My client's compulsory offer of settlement of 20 March 2024 remained open for acceptance for nearly 8 months, until 17 November 2024, when a further offer of settlement was made by him.
(d)My client made disclosure to the Respondent on an ongoing basis through the course of the proceedings, providing disclosure under the Rules on 13 June 2022, 14 July 2023, 19 February 2024, 20 February 2024, 29 May 2024, 30 September 2024, 1 November 2024, and 11 November 2024.
(e)At the time of the making of his compulsory offer of settlement, my client had already provided a significant amount of disclosure to the Respondent. This encompassed the following:
(i)Bank statements for the period 31 July 2017 to 31 January 2018, and other periods between 1 February 2018 and 31 July 2018 that evidenced contributions of my client toward the acquisition and improvement of the [Town D] property.
(ii)Bank statements for the only account held by him for the period 29 January 2021 to 31 January 2024 (save for a brief period of 17 May 2022 to 28 July 2022).
(iii)Superannuation information that provided detailed information for the periods/dates 1 July 2017 to 30 June 2018, 18 May 2022, 1 July 2022 to 31 December 2022, and 16 February 2024.
(iv)Documents evidencing his liabilities with [G Finance] and [H Finance].
(v)His payslips for the periods 23 April 2022 to 13 May 2022, 23 June 2023 to 30 June 2023, 7 October 2023 to 20 October 2023, and 10 February 2024 to 16 February 2024.
(f)The Respondent was already in possession of certain documents that evidenced contributions made by my client and withheld these until 17 October 2024. My client has addressed this at paragraphs 63 and 64 of his Affidavit filed on 2 December 2024.
7.Of the 302 pages of bank account statements that had been provided by my client at the time of the compulsory offer of settlement, statements for the period 4 July 2023 to 31 January 2024 contained some redactions made by him. My client has addressed this at paragraph 77(c) of his Affidavit filed on 2 December 2024 and the basis of him making certain redactions. The period of redactions was for a 6-month period 2 years after separation, and did not relate to the significant issue in dispute between the parties of the weight that should be attributed to their respective contributions during their de facto relationship. My client subsequently provided an unredacted version for that 6-month period on 11 November 2024.
8.At paragraph 12 Ms Stassen states "the applicants [sic] failure to provide requested disclosure bank [sic]...". It is incorrect to assert that my client failed to provide bank statements requested of him. Through the course of the proceedings my client provided bank account statements for the entire duration of the parties' relationship and following separation, up to and including 28 May 2024 - specifically, the Respondent was provided with statements for my client's bank account for the period 20 May 2016 through to 28 May 2024 inclusive as follows
a.As referred to above, by 20 February 2024 the Respondent was in receipt of 302 pages of bank statements of my client, for the periods referred to at paragraphs 6(e)(i) and (ii) above.
b.On 29 May 2024 my client provided further historical statements and updated statements for his bank account such that date onwards, the Respondent was then in possession of all statements for my client’s bank account for the period 3 February 2017 (i.e. from the date of opening his own bank account independent of his former Wife), through to 28 May 2024.
c.On 1 November 2024 after being successful in obtaining historical statements from the [Suburb J], NSW branch of the Westpac bank, my client provided statements for the bank account he had previously held with his former Wife that spanned a brief initial period of the parties' relationship before the opening of an account in his sole name, independent of his former Wife. During the proceedings the Respondent asserted the parties commenced their relationship in October 2016 -these statements therefore relate to the first 3 to 4 month period of the parties' 5-year relationship only.
Failure to comply with the Pre-Action Procedures
The Applicant complains that despite his adherence to the “Pre-Action Procedures” set out in ch 4 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), the Respondent simply failed to respond to his invitation to mediate the matter, or to otherwise take steps to try and resolve the matter without the need for litigation (Applicant’s affidavit filed 2 December 20254, paragraphs 44–45).
Failure to comply with Court Directions
The Applicant makes the following complaints about the Respondent:
(a)when the proceedings were first mentioned, the Respondent was given until 2 August 2023 to file her Response, an indulgence of about 17 days. She in fact filed that Response on 3 August 2023; and
(b)the Respondent failed to file her evidence in chief for Trial by the date specified in the Trial Directions. According to the Directions, she should have filed her material by 29 October 2024. Instead of doing that, the Applicant’s solicitors unilaterally wrote to the Court seeking an extension of time (Applicant’s affidavit filed 2 December 2024, annexure “MRS-7”). Despite being reminded about the protocol for communication with the Court, the Applicant not only failed to file an Application as per the Rules seeking a variation of the Directions, but also unilaterally wrote to the Court again. Her trial affidavit was eventually filed on 4 November 2024.
The Respondent failed to comply with the Rules and with Orders to exchange offers. The Applicant points out that:
(a)Order 6 of the Orders made by Judicial Registrar Grant on 30 August 2023 obliged the parties to serve an offer of settlement on each other within 28 days after the Conciliation Conference if the matter did not settle at that conference, and to ensure that thereafter there was a current offer to settle with the other party; and
(b)Order 1 of the Orders of Judicial Registrar Bownds on 21 February 2024 repeated that obligation.
The parties participated in a Conciliation Conference with Judicial Registrar Bownds on 21 February 2024. The matter did not settle.
For an offer to be made within 28 days of the Conciliation Conference, that offer would have to have been served by 20 March 2024. The Respondent made an offer on 7 May 2024 which expired on 16 May 2024. She did not make another offer until 15 November 2024, the working day before the Trial was due to commence. The Applicant did comply with the obligation to make written offers. I will deal with the issue of offers in more detail below.
The Respondent did not personally attend a Compliance and Readiness hearing. The Court was told that the Respondent had Covid. The Applicant says that that explanation was inaccurate.
Failure to Facilitate Valuations
The Applicant says that:
(a)the parties were required to instruct valuers to value real property by 18 September 2024; and
(b)the Applicant’s solicitor sent draft written instructions to the Respondent’s solicitors on 17 September 2024, that is to say, one day before the joint instructions were due; and
(c)the Respondent’s solicitors did not respond until 24 September 2024.
The Applicant says that:
(a)the parties were required to instruct chattel valuers by 18 September 2024; and
(b)the Applicant’s solicitors wrote to the Respondent’s solicitors on 17 September 2024 setting out what the Applicant understood the respective positions to be on values of chattels; and
(c)the Applicant’s solicitors sent a draft letter of instructions to the Respondent’s solicitors on 18 September 2024, that is to say, on the day that joint instructions were due; and
(d)the Applicant’s solicitor wrote to the Respondent’s solicitors about the issue on 19 September and 20 September; and
(e)the Respondent’s solicitors responded on both occasions, but that response was not satisfactory to the Applicant; and
(f)the Applicant’s solicitors wrote again on 25 September, but did not receive a response.
RELEVANT LEGAL PRINCIPLES REGARDING COSTS GENERALLY
In Venter & Venter (No 2) [2024] FedCFamC1F 862 (“Venter”), Carew J summarised the law in relation to costs thus:
[29]Generally, in this Court, each party bears their own costs unless there are circumstances that justify a costs order having regard to the matters contained in s 117 of the Family Law Act 1975 (Cth) (“the Act”), ss 68(4) and 69(4)(d)-(e) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
[30]It is uncontroversial that this Court also has power to order costs against a party’s lawyer.
[31]Section 117(2A) of the Act sets out the matters to which the Court must have regard, namely:
…
(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.
An additional source of power to award costs in an appropriate matter is to be found in s 69(4)(d)–(e) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”), which empowers the Court to award costs against a party to be assessed on an indemnity basis or otherwise.
There is an additional mandatory requirement created by s 68(4) of the FCFCOA Act which requires the Court to take into account any failure to comply with the duty imposed by s 68(1) or (2), which require the parties and the lawyers for the parties to conduct the proceedings in a way that is consistent with the overarching purpose of the family law practice and procedures provisions of the FCFCOA Act. The overarching purpose is set out in s 67 and requires, among other things, for the proceedings to be conducted as “quickly, inexpensively and efficiently as possible”. The objectives of the overarching purpose include “the efficient use of the judicial and administrative resources”, “the efficient disposal of the Court’s overall caseload”, “the disposal of all proceedings in a timely manner” and “the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute” (per s 67 of the FCFCOA Act).
An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances” (see Penfold v Penfold (1980) 144 CLR 311 at 315 (“Penfold”).
As to the identification of such circumstances by the Court, the High Court of Australia in Penfold said the following at 315–316:
Sub-section (2) [of s 117] 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. 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.
(Citation omitted)
Adding to what was said by Carew J in Venter, the Applicant submits that:
The need for clarity, precision and openness in the conduct of litigation is the responsibility of parties and their legal representatives. It flows from the statutory duty of a party and the duty under the court rules to assist the Court to further the overriding purpose to facilitate the just, quick and equitable resolution of the real issues in dispute (see Baulderstone Hornibrook Engineering Pty Limited v Gordian Runoff Limited & Ors [2008] NSWCA 243 at 161).
In Ketteman v Hansel Properties Ltd [1987] AC 189 at 220, Lord Griffiths spoke of the “pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently”.
The Court in White v Overland [2001] FCA 1333 at [4] outlined the positive obligation to give proper notice of claims as being a matter fundamental to the proper conduct of litigation:
However, by way of general principle I would simply like to make perfectly plain my view that in the efficient and proper conduct of civil litigation, even civil litigation hard fought between parties, it should always be recognised that in the propounding of issues for trial the parties should take steps to ensure that all relevant parties to the dispute are cognisant of what the issues are.
Any practice of quietly leaving footprints in correspondence or directions hearings to be uncovered some time later in an attempt to reveal that a matter was always in issue should be discouraged firmly.
Even if something has been said, where it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said.
Litigation is not a game. It is a costly and stressful, though necessary, evil.
In Nemeth v Nemeth (1987) FLC 91-844, Evatt CJ, Smithers and Baker JJ said at 76-385 that “the failure of a party to be completely open and forthcoming as to his or her financial position, should always place that party at risk in relation to an order for costs”.
Nygh J in Higginbotham & Robinson (1991) 103 FLR 110 said at 112:
…Similarly, when one looks at paragraph (f) it is quite clear that the purpose of that provision is to ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided, the workload of this Court is lightened, and one other consideration is certainly that a party with greater wealth is not placed in a position whereby he or she can wear out the other by simple attrition...
Kent J in Firmer & Britton [2012] FamCA 576 said at [12]:
The Court has limited resources and parties need to be mindful that there is always the prospect, if justifying circumstances exist, that they litigate at their peril in terms of the potential for an Order for costs after an offer.
In the marriage of Greedy (1982) FLC 91-250, it was further said:
There may be situations where refusal to negotiate, to make an offer or to put forward an alternative order may be a factor justifying an order for costs. The failure of a party to take part in negotiations in a genuine manner may contribute to delay and cost and obstruct the proper resolution of the matter.
In Brown & Greene [2002] FamCA 791 (“Brown & Greene”), the Full Court of Kay, Coleman & Warnick JJ noted at 57:
We think that whilst s 117(2A) does not provide any direct guidance to where weight should be given in any one particular case, it is very important for the Court to give proper consideration to written offers of settlement that have been made. The insertion of s 117C into the legislation is a clear indication of the desire of Parliament to enable parties to avoid unnecessary litigation by indicating to the other party an appropriate basis upon which litigation can be settled. The failure to heed a reasonable offer in circumstances where there is adequate knowledge of the parties 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. It is clearly a circumstance that would justify the making of an order for costs in favour of the husband.
APPLICATION OF THE RELEVANT LEGAL PRINCIPLES TO THE CIRCUMSTANCES OF THIS CASES
The financial circumstances of each of the parties to the proceedings
The Court is not required to undertake a wholesale examination into every aspect of the parties’ financial circumstances. The inquiry under s 117(2A)(a) of the Act is an inquiry to enable the Court to have some concept of the relative financial positions of the parties. It is not a search for minutiae nor is it to be seen as an appropriate exercise to conduct inconsequential arguments over the value of each party’s assets (see Brown & Greene at [20]).
The evidence before the Court at Trial demonstrated that the parties are of moderate means (Applicant’s Financial Statement filed 2 June 2023; Respondent’s Financial Statement filed 3 August 2023).
I accept that at the time of Trial, the Applicant’s taxable income was approximately $79,000 per year and from that he meets his child support obligations of $229.40 per week (Applicant’s affidavit filed 18 October 2024, paragraphs 99–103).
The Respondent, pursuant to the Final Orders, receives the Town D property valued at $1,000,000. She is also obliged to pay the Applicant the sum of approximately $230,000. It is not clear, on the face of the financial information available at Trial, where she will source those funds from. She has nevertheless consented to the Final Orders and the Court is entitled to assume, and I do, that she has available to her the means to do so. The Applicant says that the Respondent has been deliberately coy about her true financial circumstances. He says that that is because she controls her mother’s funds and uses them as if they were her own.
The written submissions relied upon by the Respondent are not very helpful on this topic. In those submissions at page 3 paragraph 2(b), there is a table that purports to set out her assets and liabilities. If that information is accepted at face value, the Respondent has a net asset position, even after the payment to the Applicant, of at least $782,773.50 with no indication that her property will be subject to any mortgage.
The Respondent’s submissions also say, at page 2, that the Respondent is aged 55 and is the holder of a current Pensioner Concession Card. She is the full-time carer of her mother and has been in receipt of a carer’s allowance since 2019. Her weekly income as a carer is $550.
Yet, in circumstances where the Applicant complains about a lack of transparency by the Respondent in relation to her true financial circumstances, she has entered into consent orders that oblige her to pay $230,000 to the Applicant.
I conclude that the Respondent, even after payment to the Applicant, has the capacity to meet a costs order. In any event impecuniosity is, of course, not a complete answer of itself to an application for costs (see Atkins & Hunt [2015] FamCAFC 66 at [28] in relation to security for costs; see Medlon & Medlon (No 6) [2015] FamCAFC 157 at [23] in relation to indemnity costs; and D & D (No 2) [2010] FamCAFC 64 at [21]).
The conduct of the parties in relation to the proceedings
The Applicant invests considerable effort into criticism of the Respondent’s conduct throughout this dispute.
There are aspects of the Respondent’s conduct that raise concern, namely:
(a)the Applicant complains about the Respondent’s contention for an unrealistic outcome from start to finish. Given the disproportionate direct financial contributions and the modest length of the relationship, the outcome was always going to lean in favour of the Respondent. It is difficult to take things much further than that given that the evidence of both parties was not tested. It seems to me that both parties were somewhat ambitious in terms of the outcome sought by them initially, but the Respondent perhaps more so. However, at least from the time that the Applicant made written offers in February and March 2024, he demonstrated some preparedness to compromise his position. The Respondent did not show any such preparedness until the eve of Trial; and
(b)the Applicant complains that the Respondent failed to engage with invitations to try and resolve the dispute without the need for litigation. Specifically, the Applicant criticises the Respondent for not accepting invitations to try and resolve the dispute through mediation in the letter that was sent pursuant to the Pre-Action Procedures requirement in the Rules. I would not give much weight to that criticism in isolation, however, I accept that that conduct is consistent with other aspects of the Respondent’s conduct in these proceedings; and
(c)the Respondent’s contention for an outcome that reflected a “Kennon” argument, in a context of barely any evidence supporting such a contention. The matter was listed for two days, as opposed to one, expressly because of the Respondent’s “Kennon” claim (see Orders of 30 May 2024 by Judge Firth, Notation A). Though the evidence was untested, even if the Respondent’s evidence was accepted at face value, it is hard to see how that would have had any, or any significant, impact on a decided outcome. There was no admissible evidence from any medical practitioner or the like. The Respondent has simply annexed what is, on the face of things, a hearsay document to her affidavit. The author of the hearsay document was not being called to be cross-examined. The admissible evidence supporting the “Kennon” claim was practically non-existent; and
(d)the Respondent makes complaint that the Applicant failed to make disclosure of a Domestic Violence Order made in 2022 protecting a subsequent partner of the Applicant from the Applicant. I take that failure into account. Whilst it might have had some relevance to the Kennon argument, it would not have overcome the other difficulties that I have identified; and
(e)similar comments apply in relation to the Respondent’s contentions for an adjustment based upon medical ailments suffered by her. Again, the admissible evidence was practically non-existent; and
(f)the Respondent seeking, on multiple occasions, disclosure in relation to a Trust that the Applicant says that he has no knowledge of. It is not unusual, in this jurisdiction, for suspicion to run high. However, in the absence of at least some evidence justifying pursuit of that issue, it does appear that the Respondent wasted at least some costs in addressing that matter; and
(g)the Applicant complains about the Respondent causing delays in valuations and otherwise not complying with Rules and/or Directions. Whilst it is unquestionably true that the Respondent has failed in that regard, I have some concerns about the Applicant’s own conduct also. The Applicant, for example, appears to have waited until the day before joint instructions were due to be sent to valuers to provide a draft of those instructions to the Respondent, and then complains that the Respondent did not reply the next day. Overall, I accept that the Respondent’s failings on that issue outweigh the Applicant’s; and
(h)failure by the Respondent to make appropriate disclosure of her financial circumstances, including failure to provide copies of documents relevant to her control of her mother’s funds, in circumstances where it appears that the Respondent not only controls those funds, but makes use of them in a way that has at least some benefit to herself as well as to her mother. There is some merit in that argument.
The conduct of the Respondent is certainly concerning and goes further than the mere suspicious duelling that parties often engage in in this jurisdiction. I am left with the strong impression that the Respondent was simply delaying an inevitable outcome that included the payment of some money to the Applicant, hoping that it might go away, and justifying that delay with arguments that, properly advised, she must have known were weak or practically non-existent.
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.
On 30 August 2023, the parties were ordered to participate in a Conciliation Conference by Judicial Registrar Grant. Order 6 of the Orders made on that date obliged each party to serve a written offer on the other if the matter was not settled at the Conciliation Conference. The Conciliation Conference was held on 21 February 2024.
Rule 4.11 of the Rules also obliges parties to make a written offer within 28 days of a Conciliation Conference.
On 21 February 2024, after the Conciliation Conference, Judicial Registrar Bownds ordered each party to serve a written offer on the other within 28 days, to ensure that at all times there was a current offer to settle with the other party, and noted that such offers could be relied upon in relation to any application for costs.
The Applicant made the following offers (Applicant’s affidavit filed 2 December 2024, paragraphs 1–11):
(1)An offer of settlement at the Conciliation Conference on 21 February 2024, when he proposed settlement on the basis of a payment to him of $230,000; and
(2)A written offer dated 20 March 2024, when he proposed a payment of $200,000 to him.
The Respondent rejected the offer made at the Conciliation Conference, and she failed to accept the written offer made on 20 March 2024, which then lay open for over seven months.
The Respondent did not make a written offer until 15 November 2024, which was the working day before the Trial was due to commence.
The Applicant says that the Respondent’s written offer was not capable of acceptance. In the affidavit of the Applicant’s solicitor filed on 2 December 2024, she states at paragraphs 13–14):
(13)At 3.50pm on Friday, 15 November 2024 my office received correspondence from the Respondent's solicitor containing an offer of settlement. The parties' final hearing was due to commence at 10 am the following Monday, 18 November 2024. The offer:
(a) Contained a settlement date of 90 days from the date of a final order.
(b)Did not specify default provisions in the event the Respondent failed to settle within 90 days.
(c)Did not specify a cash sum to be paid to my client, but rather stated that the Respondent would "pay your client the sum necessary to give effect to the Applicant retaining 30% of the property pool (including superannuation)".
(d)Did not provide any particulars as to "the property pool (including superannuation)" that the offer was based upon.
(e)Provided that each party would bear their own costs of and incidental to the proceedings.
(14)If the intention of the Respondent was to base her offer of settlement upon the balance sheet contained within her Case Outline filed on 13 November 2024, then the offer of settlement would have provided for a cash payment to my client of $224,554.40. The final Orders made on 18 November 2024 provide for a more favourable outcome to my client than the terms of the Respondent's offer made late on 15 November 2024.
There is no explanation by the Respondent for the failure by her to comply with the Orders to make a written offer within 28 days of the Conciliation Conference.
Pursuant to the Final Orders made by consent on what would otherwise have been the first day of Trial, the Applicant is to receive 30% of a property pool of $1,167,765, an overall adjustment of $350,329. Thus, he is to receive a cash payment of $230,730.50 within 60 days.
The Applicant points out that he is to receive payment within 60 days rather than the 90-day time frame provided for in his offers. Nothing turns on that difference in my mind.
The Applicant says that the amount of the cash payment that he is to receive is superior to the amounts that he offered to accept in February and in March of 2024. That is conceded by the Respondent (Respondent’s solicitor’s affidavit filed 5 December 2024, paragraph 17).
On behalf of the Respondent, her solicitor has filed an affidavit on 5 December 2024. The Respondent’s solicitor says, at paragraph 12 to 13 of that affidavit, that the Respondent was unable to accept the offer made by the Applicant on 14 April 2024 because of what is described as the failure by the Applicant to provide requested disclosure to support the relief then sought by him in his Initiating Application. Specifically, what is complained of is:
(a)Failure to provide requested “disclosure bank”, which I assume means bank statements; and
(b)Providing bank statements that were “blanked out”; and
(c)Refusing to provide disclosure of current domestic violence orders; and
(d)“Failure to be forthcoming in adding his assets to be independently assessed valuer”.
I reject those assertions. I accept the evidence of the Applicant’s solicitor about disclosure that I have referred to above. I accept that there was sufficient disclosure and certainty about the pool and it’s value, for the Respondent to have been able to properly assess the offer made by the Applicant on 20 March 2024. In arriving at that conclusion, I note that the material referred to in paragraphs 6, 7 and 8(a) of the affidavit of the Applicant’s solicitor filed on 12 December 2024 was all in the hands of the Respondent prior to the date of the written offer on 20 March 2024.
I do not accept the Respondent’s submission that redactions in bank statements provided by the Applicant affected the capacity of the Respondent to assess his offer of settlement. The redactions referred to a 6 month window of time post-separation and could not have had any relevance to the issue of contributions made during the relationship.
CONCLUSIONS REGARDING COSTS GENERALLY
I have concluded that it is appropriate for the Respondent to meet at least some of the Applicant’s costs in these proceedings. Whilst no particular element within s 117(2) of the Act is decisive by itself, the tipping point in my mind is the written offer made in March 2024, when there was sufficient certainty about the relevant assets and liabilities, and their values, to allow the Respondent to have made an informed decision about that offer. That offer, if accepted, would have ended the dispute on terms more favourable to the Respondent than the eventual outcome. The consequence of failing to accept that offer has caused both parties to incur legal expense unnecessarily.
I am persuaded that the Respondent conducted these proceedings in a manner that sought to delay a final outcome that inevitably would involve the payment of some money to the Applicant. I am also persuaded that she attempted to justify that delay by pressing arguments that were at best extremely weak, and which may very well be described as utterly hopeless.
I am satisfied that the Respondent’s conduct, in the form of failing to make frank disclosure of her financial circumstances, was inconsistent with her obligations as a litigant in this jurisdiction, and contributed to the costs incurred by the Applicant in the form of necessitating subpoena, perusing the documents produced in response to those subpoena, drawing a Notice to Admit, and other related work.
I do not find it necessary to address the myriad of other complaints that the Applicant makes about the Respondent’s conduct.
LEGAL PRINCIPLES REGARDING INDEMNITY COSTS
The Applicant says that the Respondent should pay his costs on an indemnity basis.
In Venter, Carew J said about indemnity costs:
[42]A court will not lightly make an order for costs to be paid on an indemnity basis. There needs to be some circumstance of an exceptional kind to justify that course.
[43]Rule 12.13(4) requires the terms of any costs agreement to be disclosed when indemnity costs are sought. If costs are to be awarded on an indemnity basis, regard must be had to the reasonableness of the costs incurred (see for example r 12.47).
[44]When considering the factors set out in s 117(2A) of the Act, it is sufficient for one factor to be present.
…
[46]If a costs order is made, the Court may set a time for payment.
[47]Part 12.6 of the Rules deals with ‘calculation of costs’ and provides as follows:
12.17 Method of calculation of costs
(1)The court may order that a party is entitled to costs:
(a)of a specific amount; or
(b)as assessed on a particular basis (for example, party and party, solicitor and client or indemnity); or
(c)to be calculated in accordance with the method stated in the order; or
(d)for part of the proceeding, or part of an amount, assessed in accordance with Schedule 3.
(2)If costs are payable under the Family Law Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party and party basis.
(3)In making an order under subrule (1), the court may consider the following:
(a)the importance, complexity or difficulty of the issues;
(b)the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c)the rates ordinarily payable to lawyers in comparable proceedings;
(d)whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e)the time properly spent on the proceeding, or in complying with pre‑action procedures;
(f)whether expenses (paid or payable) are fair, reasonable and proportionate.
[48] Rule 12.08(2) (referred to in r 12.17(3)(b)) provides as follows:
(2)In considering whether a party’s legal costs have been fairly, reasonably and proportionately incurred, regard must be had to all relevant matters including, but not limited to, whether a lawyer representing the party, a lawyer representing any other party, or any self‑represented litigant has:
(a)complied with all relevant rules and orders of the court, including requirements that documents be filed or provided to other parties by a given date; and
(b)acted reasonably in raising, pursuing or contesting a particular allegation or issue; and
(c)made reasonable efforts, subject to the client’s instructions, to resolve the dispute through negotiation, mediation or arbitration; and
(d)made reasonable efforts to narrow the issues in dispute; and
(e)filed no more interlocutory applications than are reasonably necessary in the circumstances of the proceeding; and
(f)filed no more affidavits or other documents than are reasonably necessary in the circumstances of the proceeding.
[49]The tensions created by the differing objectives sought to be addressed by a costs order awarded on a party and party basis, as opposed to an indemnity basis, were discussed in Re Wilcox, Ex parte Venture Industries Pty Ltd, where the Full Court of the Federal Court of Australia said at 156:
The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown.
The gap has highlighted the conflict between two seemingly irreconcilable objectives. The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis. The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur. These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis. The principles were stated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225.
[50]The Full Court went on to restate the principles from Colgate-Palmolive in the following terms:
(a)the Court ought not to depart from the rule that costs be ordered on a party and party basis unless the circumstances of the case warrant the Court in departing from the usual course;
(b)the circumstances which may warrant departure from the usual course arise as and when the justice of the case so requires or where there may be some special or unusual feature in the case to justify the Court in departing from the usual course;
(c)whilst the circumstances in cases in which indemnity costs have been ordered offer a guide, the question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for costs other than on a party and party basis.
[51]While there is no exhaustive list of what circumstances may warrant an order for costs to be paid on an indemnity basis, some circumstances that have been found to justify such an order were identified by Sheppard J in Colgate-Palmolive as follows:
(a)Making allegations of fraud knowing them to be false;
(b)Making irrelevant allegations of fraud;
(c)Evidence of particular misconduct that causes loss of time to the Court and to the other parties;
(d)Commencing or continuing proceedings for some ulterior motive or in wilful disregard of known facts or clearly established law;
(e)Making allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; and
(f)An imprudent refusal of an offer to compromise.
(Footnotes omitted)
CONCLUSIONS REGARDING INDEMNITY COSTS
I have found that the Respondent imprudently rejected (or at least failed to accept) an offer in circumstances where, properly advised, she should have done so. I have also found that she acted in a manner that was calculated to delay an outcome that would inevitably have included a payment of funds to the Applicant.
The Respondent failed, without explanation, to comply with two Orders obliging her to serve an offer of settlement.
That conduct is, in my view, sufficiently exceptional to justify an order of indemnity costs, from the date that the offer was made on 20 March 2024. Regardless of how the nature of the costs are characterised, and for the reasons that I set out below, I have concluded that I should order costs fixed in a particular amount, as provided for in r 12.17(a).
DETERMINATION OF THE QUANTUM OF COSTS
In Venter, Carew J said:
[52]In Parke & the Estate of the Late A Parke, Murphy J quoted with approval the observations made by Einstein J in Idoport Pty Ltd v National Australia Bank Limited, Idoport Pty Ltd v Donald Robert Argus when that court was considering an analogous provision to that contained in r 12.17(1)(a) of the Rules:
130.If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” (Beach Petroleum NL v Johnson (No 2)(1995) 57 FCR 119, at [24] cited in Idaport [sic] at [9]). The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”. (Idaport [sic] at [9](v), citing Harrison v Schipp (2002) 54 NSWLR 738).
131.Obviously enough, the court must act judicially in fixing or specifying a sum of costs, but:
...the requirement that the power to award a gross sum should be exercised judicially does not mean that it must be exercised in any scientific or formulaic manner; At the heart of the judicial function is the responsibility to weigh up competing factors and considerations, many of which might conflict, to reach a determination. Acting judicially carries with it an obligation to apply the rules of natural justice, to act impartially and to apply the law to the facts. ...
[53]Not only does this Court have the power to order a specific amount for costs, it is generally the preferred approach for a specific amount to be ordered rather than requiring an assessment of costs. This is because the latter approach will inevitably involve the parties in yet further conflict, delay, and cost. In finding it appropriate to make an order that costs be paid in a fixed sum, the Full Court in Warbrick & Warbrick (No 2) said that it did “not intend to permit the costs question to become, in effect, satellite litigation”.
The task of generating bills in taxable form would visit yet further significant expense upon the parties and, potentially, further proceedings (see Sparnon v ApandPty Limited [1998] FCA 164 per Von Doussa J at 4; Hadid v Lenfest Communications Inc [2000] FCA 628 (“Hadid”)).
When considering fixing the amount of costs it is appropriate for the Court to apply a “much broader brush” than would be applied on a taxation (see Sony Entertainment (Australia) Ltd v Smith (2005) 215 ALR 788 at [197]–[200]; Hadid at [35]).
In Idoport Pty Ltd v National Australia Bank Ltd [2007] NSWSC 23, the Court said at [10] that the Court must act judicially, but that does not mean that it must exercise the power to award a lump sum in any “scientific or formulaic manner”.
Murphy J observed in Parke & the Estate of the Late A Parke (2016) 314 FLR 322 at 341[130]:
If the court is to fix a sum it should be “fixed broadly having regard to the information before the Court” ... The process does not “by its very nature ... envisage that a process similar to that involved in a traditional taxation or assessment of costs should take place”.
(Citations omitted).
The Court may fix the amount of the costs payable rather than order that they be taxed. The purpose of fixing costs is to avoid the expense, delay and aggravation involved in taxation (see Beach Petroleum NL v Johnson (No 2) (1995) 135 ALR 160 at 162; In Harrison v Schipp (2002) 54 NSWLR 738 at 743 [22] per Giles JA). Consistent with that objective, in fixing the sum the Court will not subject the costs to the detailed scrutiny often applied on a taxation.
The evidence of the Applicant’s solicitor is that the taxation exercise would likely cost $9,000 (Applicant’s solicitor’s affidavit filed 2 December 2024, paragraph 19).
The affidavit of the Applicant’s solicitor filed on 2 December 2024:
(a)annexes the relevant Costs Agreements entered into between the Applicant and his solicitors; and
(b)annexes Costs Notices served upon the Applicant by his solicitors at various stages throughout the proceedings; and
(c)annexes the Retainer Agreement for counsel engaged by the Applicant’s solicitor in the proceedings.
The Applicant’s solicitor deposes to having taken the advice of a costs assessor. That is clearly hearsay. However, I will have regard to it since:
(a)it is not objected to; and
(b)it offers some information upon which to formulate a reasonable outcome in this matter; and
(c)it avoids the further costs to both parties of having costs assessed and taxed.
The costs assessor opines that:
(a)the cost of having the file assessed would be about $9,000; and
(b)costs assessed on an indemnity basis usually end up being about 85% of the actual professional fees charged between solicitor and client, plus outlays.
The Applicant’s solicitor deposes to actual professional fees, sundries and disbursements being incurred in the amount of $75,003 from 10 April 2024.
85% of $75,003 is $63,752.
The Applicant’s solicitor deposes to counsel’s fees being incurred during the same period as $18,810.
She deposes to other outlays being incurred during the same period of time as $2,070.
$63,752, plus $18,810, plus $2,070 equals $84,632.
I am satisfied that costs fixed in the amount of $84,632 is an amount that appropriately reflects the findings that I have made above.
TIME FOR PAYMENT
The parties agreed to a time frame of 60 days from the date of the Final Orders for the Respondent to pay the Applicant the funds that she was obliged to pursuant to those Orders.
I will provide for the same period of time for the Respondent to pay the Applicant the costs ordered herein.
The Applicant seeks an order to the effect that if the Respondent neglects, refuses or fails to pay on time, interest is to accrue on the outstanding sum in accordance with the Act. I will make such an order.
The Applicant also seeks an order that any outstanding sum, together with interest, be declared a debt owed by the Respondent to the Applicant and provable by calculation being made by the Applicant’s solicitor. I will make the declaration that any outstanding sum is a debt, but I will not attempt to bind anyone hearing this in the future, presumably to enforce the debt, by making a solicitor’s calculation the last word on the quantum owed.
I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Shoebridge. Associate:
Dated: 11 April 2025
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