Family Court: amount of costs ordered

In the recent Full Court of the Family Court case of Steele and Stanley, the court considered an appeal by the wife who considered that the trial judge had not given her enough costs against the husband.

The trial judge had this pearl of wisdom in response to the wife’s solicitor’s statement that: “the end result of this case was ‘very clear'”:

Hindsight is a wonderful thing whereas in complex financial arrangements looking
ahead can be more difficult.

The Full Court’s attention was drawn to s.117(2A) of the Family Law Act. This subsection sets out a “shopping list” of matters to be taken into account as to whether or not to make costs orders. The Full Court held:

We accept that the insertion of s 117(2A) in the Act has placed a greater obligation on judicial officers in giving reasons in costs matters than was originally the case.

s.117(2A)(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

This paragraph is a factor to be taken into account as to whether a costs order ought be made.

The wife submitted that s 117(2A)(f) should be approached in the same way as it had been in Robinson & Higginbotham (1991) FLC 92-209 where Nygh J said (Simpson and Smithers JJ concurring):

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 the costs 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. In the circumstances of this case, although
paragraph (f) does not have a priority per se, the considerations represented by paragraph (f) are of overriding importance.
It is, therefore, my view that her Honour erred in not awarding the wife reasonable costs incurred after the date on which the offer was made …

In response, counsel for the husband referred to Pennisi v Pennisi (1997) FLC 92-774 where the Full Court (per Nicholson CJ, Barblett DCJ and Faulks J) said:

The plain words of the paragraph [s 117(2A)(f)] do not limit a Court’s attention
to offers which are greater than the amount awarded. Nor does the paragraph
state what consequences flow from whether the offer is greater or lesser than
the amount awarded, or how much that is the case. Words of limitation should not
be imported into the provision and nor should it be read as though offers in
proceedings under the Act carry the same consequences as payments into court in
common law matters.
We do, however, consider that the closer the offer is to
the award when the offer is under the amount awarded by the Court, the more
weight that should be given to this factor in considering the question of costs.
This principle must not, however, be rigidly applied. Offers must be seen in the
context of the case and the extent of the offeree’s knowledge of the parties’ financial
circumstances while the offer is live. In the family law jurisdiction, it is not
uncommon to find relationships where one party, often the wife, has
significantly less grasp of the parties’ financial arrangements, or the
financial circumstances are so complex that it would be premature to accept an
offer. There are also cases where the contents of the offer are in themselves
the subject matter of disputed value and legitimate subject matter for
determination. These and other features of the context of offers must be taken
into account when considering whether it was reasonable or not to accept an
offer, no matter how close to the ultimate result the offer may be.

The court held:

There is no inconsistency between Robinson & Higginbotham and Pennisi v Pennisi. From both cases it is apparent that the significance of offers of settlement may differ and the context in which the offer of settlement is made is a proper matter to be considered.

The wife’s appeal was dismissed with an order that she pay the husband’s costs of the appeal.