Whittle & Whittle (No 3)
[2025] FedCFamC1F 250
•24 April 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Whittle & Whittle (No 3) [2025] FedCFamC1F 250
File number: HBC 252 of 2023 Judgment of: MCGUIRE J Date of judgment: 24 April 2025 Catchwords: FAMILY LAW – COSTS – where the wife applies for Orders pursuant to s79 of the Family Law Act – where the husband’s Response seeks declaration of a Financial Agreement as binding – where a declaration made as to Binding Financial Agreement – wife’s interlocutory application for discovery and for husband to file a sworn financial statement – where wife’s interlocutory application dismissed – where husband seeks costs on lawyer – client basis – costs ordered on party/party basis Legislation: Family Law Act 1975 (Cth) ss 90G and 117 Cases cited: Addison & Lahy [2008] FAMCA 248
Colgate Palmolive v Cussens Pty Ltd (1993) 46 FCR 225
Jensen & Jensen (1982) FLC 91-263
Kohan & Kohan (1993) FLC 92-340
Medlon & Medlon (No. 6) (Indemnity costs) (2015) FLC 93-664
Munday v Bowman (1997) FLC 92-784
Penfold v Penfold (1980) FLC 90-800
Division: Division 1 First Instance Number of paragraphs: 39 Date of last submissions: 4 April 2025 Date of hearing: 4 April 2025 Place: Hobart, delivered Melbourne Counsel for the Applicant: Mr McKenna (direct brief) Counsel for the Respondent: Mr Dixon S.C. Solicitor for the Respondent: Murdoch Clark ORDERS
HBC 252 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR WHITTLE
Applicant
AND: MS WHITTLE
Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
24 APRIL 2025
THE COURT ORDERS THAT:
1.The wife pay the husband’s costs on a party/party basis, in respect of the husband’s Response that the Financial Agreement be declared binding together with the wife’s interlocutory application dismissed by Orders of 7 September 2024, such to be agreed and if not agreed then to be assessed pursuant to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
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 pseudonym of Whittle & Whittle has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McGUIRE J:
APPLICATION
The husband is the applicant seeking an order for costs following a substantive hearing in respect of a declaration pursuant to s 90G of the Family Law Act 1975 (Cth) in respect of an issue as to whether a Financial Agreement made between the parties was binding. The husband was successful in the application.
The husband seeks that costs be paid on a lawyer–client basis as agreed between the parties or failing agreement then as assessed. The material filed by the husband's discloses his costs at a quantum of $145,793.09 inclusive of GST.
Incorporated in the husband's application for costs are interlocutory applications for disclosure made by the wife but unsuccessful and dismissed by order of 7 September 2023.
The wife resists any order for costs. The thrust of the counsel’s submissions, however, are limited as to whether any costs, if ordered, be assessed on a lawyer–client or party/party basis.
I accept the submissions of counsel for the respondent that any distinction between the notions of indemnity costs and lawyer–client costs is inconsequential to my determination here.
BACKGROUND
The parties cohabited from 2004. They married in 2006 and separated on 25 May 2021. An order for divorce was made in July 2022 to become final in August 2022.
There are two children of the parties namely X (aged 17 years) and Y (aged 14 years). The children live equally between the parents.
The parties chose to enter into a Financial Agreement executed inMay 2021.
On 21 March 2020 the wife commenced proceedings for property orders pursuant to s79 of the Act. It is uncontroversial that she did not disclose the existence of the Financial Agreement in her application.
The husband filed a Response seeking a declaration that the Financial Agreement be declared binding.
An Interlocutory Application was filed by the wife seeking specific disclosure by the husband and a financial statement. That application was dismissed by order of 7 September 2023. The costs of that application are incorporated in the application now before me.
The substantive application was listed for a two day hearing to commence 27 February 2025. It eventuated that the hearing was completed in one day.
Reasons and orders were delivered on 6 March 2025 including a declaration that the Financial Agreement was binding.
CONSIDERATION
The husband was represented by solicitors until December 2024 when his solicitor retired from practice. He was then assisted by senior and junior Counsel who both appeared at the hearing on 27 February 2025.
The wife was represented by solicitors and Counsel at the hearing.
Matters of costs are dealt with pursuant to s 117 of the Act which provides at ss (1) that each party to proceedings in this Court be responsible for his or her own costs.
That general rule is, however, subject at s 117(2) to a discretion being available to the Court to make an award for costs if there are 'justifying circumstances’.
It is well-established that the term justifying circumstances is not to be read as synonymous with extraordinary circumstances[1].
[1] Jensen & Jensen (1982) FLC 91-263.
Section 117(2A) of the Act sets out the matters which the Court is mandated to consider in determining if there are justifying circumstances towards a cost order and, if so, the order to be made.
The High Court in Penfold v Penfold[2] had cause to consider the interrelationship between s 107(1) and (2). Their Honours said at:[3]
It is an accurate description of s117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s117(2). At ss (1) is expressed to be subject to ss (2), the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Ss(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs.
Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgement under appeal that an order can only be made under s117(2) in a 'clear case'.
ss(2) does not in our view as a matter of law require the Judge to specify the circumstances which justify the making of an order … 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 …
[2] [1980] HCA 4 at p75,053.
[3] [1980] FLC 90-800 at page 75-053.
The consideration at s 117(2A) is a broad discretionary one where no one factor prevails over any other but the factors are addressed on a case-by-case basis[4].
[4] Medlon & Medlon (No. 6) (Indemnity costs) (2015) FLC 93-664.
In the matter before me, each of the parties is in employment with substantial remuneration. The evidence suggests that the wife is employed as a professional with an income of approximately $390,000 per annum. The husband disclosed in cross-examination an income of approximately $275,000 per annum. I can infer, therefore, that there is a capacity to meet any costs order. Relevantly, the Financial Agreement entered into by the parties and now binding obliges the husband to meet the private school fees of the two children which he deposes to be $46,535 per annum.
Quite obviously, neither party is in receipt of a grant of legal aid.
I do not find that the conduct of either party to the proceedings had any impact on the matter generally or the costs of the parties. Indeed, it is to the credit of each of the parties that they were able to limit an estimated two day trial to one day. Each party complied with procedural orders.
If the husband complains that the wife did not disclose the fact of the Financial Agreement in her application initiating proceedings for s 79 orders then I do not find that this had any consequential impact ultimately on the costs of the parties.
This was not a matter where proceedings were necessitated by the failure of a party to comply with previous court orders. That is, the issue of whether or not the Financial Agreement was binding is a legitimate one and not one I can find was brought with any mala fides.
By its nature, the application of the husband made through his Response to the wife’s initiating application was a discrete one as to whether or not the financial agreement was binding. He was ultimately successful meaning that the wife was wholly unsuccessful in her application initiating proceedings and her resistance of the husband's application for a declaration.
This is not a matter where I have evidence of either party making any offers of settlement.
Relevantly, and as mentioned above, the application was ultimately a discrete one. The husband might be said to have been entitled to rely on the Financial Agreement found to be properly executed. The wife chose to bring an initiating application for property settlement pursuant to s 79 of the Act. She was ultimately prevented from prosecuting that application by reason of the husband successfully seeking the declaration for the Financial Agreement to be binding.
Taking all of the above into account I find, therefore, that my discretion should be exercised in favour of an award for costs for the husband. Again, the husband was entitled to follow his separation and divorce with an expectation of the Financial Agreement ending all financial relationships and responsibilities between the parties other than set out in the Financial Agreement. In bringing her application under s79 of the Act, the wife effectively challenged the binding nature of the Financial Agreement. She was unsuccessful. As a result, the husband has prima facie been put to unnecessary cost and expense. I find this a justifying circumstance for an award for costs. My reasons herein apply equally to the husband’s application for costs in respect of the wife’s interlocutory application for discovery or a sworn financial statement from the husband. Relevantly, she was wholly unsuccessful in this discrete application.
LAWYER-CLIENT COSTS
I am comfortable that the long line of authority in respect of “indemnity costs” remains relevant for any consideration of lawyer–client costs.
Relevantly, I have no evidence of any costs agreement between the husband and his solicitors.[5]
[5] Addison & Lahy [2008] FAMCA 248 at [95].
Ordinarily, it is established that costs orders should be paid on a party/party basis and that the court should not depart lightly from this ordinary rule unless there be circumstances of an exceptional kind.[6]
[6] Kohan & Kohan (1993) FLC 92-340 at p79,614.
In the oft cited decision in Colgate Palmolive v Cussens Pty Ltd[7], Sheppard J confirmed the need for some “special or unusual feature” to justify the court from the departing from the ordinary practice of party/party costs. Holden CJ then in Munday v Bowman[8], in following Colgate-Palmolive, provides some assistance in giving examples of circumstances that might warrant the exercise of the discretion towards an award for costs on an indemnity basis.
[7] (1993) 46 FCR 225.
[8] (1997) FLC 92-784 at p84,660.
Importantly, however, the list is not exhaustive and the discretion remains a broad one in the Court on a case-by-case basis.
Put simply, however, the submissions by the husband in support of his application for costs do not, in my view, expose any “special or unusual, circumstances”. Being ultimately successful in his application is not in itself unusual. The conduct of the case was not the unusual. I have not found that the wife’s s79 application was brought with mala fides. Whilst finding for the husband in the substantive application as to the declaration of the Financial Agreement being binding, I did not specifically make any findings that the wife’s application was wholly unmeritorious but rather exercised my discretion having regard to the facts of the case and the relevant law and in favour of the husband.
Where the husband seeks orders that his costs be on a lawyer-client basis, I reject that submission.
Finally, it is the submission of the wife’s counsel, as I understand it, that the husband should not have his costs on any basis given that he argued only for costs to be awarded on a lawyer-client basis. I reject that submission. It is clear that the husband followed the normal principles of making an application for costs but sought the assessment to be on a lawyer-client basis. My discretion, therefore, is enlivened by the application and not by the particularity of the assessment sought by the husband.
There will be an order that the wife pay the husband’s costs on a party/party basis such to be agreed and if not agreed then to be assessed pursuant to the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth). The order relates to both the wife’s unsuccessful interlocutory application and to the hearing as to whether the Financial Agreement be declared binding.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 24 April 2025
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