Offers of Settlement -v- Costs Orders

Parties in property proceedings often have difficulty in taking a commercial approach to those proceedings.  Unfortunately, that failure can often result in a significant costs order.

In the Division 2 decision of His Honour, Judge Shoebridge, Sprule & Mollis [2025] FedCFamC2F 458 the parties reached agreement on what was to be the first day of trial, 18 November 2024, and entered into Consent Orders providing for an overall distribution as to 30% to the Applicant and 70% to the Respondent.  Interestingly, those Consent Orders provided for the issue of costs to be dealt with ‘on the papers’.  The applicant’s position was that the respondent should pay his costs on an indemnity basis, fixed at $98,000.  The respondent’s position was that each party should pay their own costs.

In determining the matter, His Honour had to undertake some evaluation of the merits of the matter given the complaints made by both parties as to disclosure, delays and general conduct.

Throughout the proceedings the respondent had maintained a position of seeking a distribution of close to 100% of the asset pool and at one stage she sought an outcome that provided her with more than 100% of the asset pool.  By her Case Outline filed only 5 days prior to the scheduled hearing the applicant sought a distribution in her favour as to 89% of the asset pool.  This was partly as a result of her alleged superior contributions but also on the basis of a Kennon argument in respect of which she provided little, if any, supporting evidence.

Both parties made complaints against the other as to alleged lack of disclosure however, it was ultimately accepted by the respondent, after having to provide details of her mother’s assets over which she held a Power of Attorney, that some of the facts that she had deposed to were, in fact, inaccurate.  The relevance of this was that it significantly reduced the initial contributions made by the respondent.  The applicant complained that this significantly increased his costs in the proceedings.

The applicant had made two written offers some eight months prior to the scheduled hearing, both of which were less favourable to him than the ultimate outcome.  Further, the respondent did not make an offer of settlement until 3.50pm on the last business day prior to that hearing and even than the offer was less favourable to the applicant than the ultimate outcome.

On the issue of conduct throughout the matter His Honour opined, at paragraph 82 of his judgment:

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.

His Honour found in favour of the applicant and ordered the respondent to pay costs in the fixed sum of $84,632, to be paid within 60 days.  This was calculated on the basis of 85% of actual solicitor costs from the date of the most recent offer of settlement, plus barrister’s fees and other disbursements.