Family Court of Australia

HAWKINS & ROE	[2012] FamCAFC 77	

FAMILY LAW – APPEAL – COSTS – Where the substantive proceedings concerned parenting matters only –Where on the evidence the judge could not have reasonably found that the father was in a better financial position than the mother and had the capacity to pay a costs order – Where the judge erred in finding valuation evidence of the mother to be full and complete – Where in considering the costs implications of the finding that the father was wholly unsuccessful, the judge should have taken into account also that the father’s proposed parenting arrangement was supported by one family report writer and the Independent Children’s Lawyer up until the time of the trial – Where offers by both parties were made – Where there were no allegations or findings of dishonesty – Where the circumstances of this parenting dispute were not such to justify an order for costs – Appeal allowed. 	

Family Law Act 1975 (Cth)	
Federal Proceedings (Costs) Act 1981 (Cth)
	
Browne v Green (2002) FLC 93-115
CDJ v VAJ (1998) 197 CLR 172
Cross v Beaumont (2008) 39 Fam LR 389
Edgar v Halle (No.2) [2010] FamCA 260
Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123
In the marriage of Greedy (1982) FLC 91-250
Harris v Harris (1991) FLC 92-254
House v The King (1936) 55 CLR 499
I and I (No 2) (1995) FLC 92-625
Mallet v Mallet (1984) 156 CLR 605 
Marinko v Marinko (1983) FLC 91-307
Penfold v Penfold (1980) 144 CLR 311
Pennisi v Pennisi (1997) FLC 92-774
Robinson v Higginbotham (1991) FLC 92-209

Appellant:	Mr Hawkins	

Respondent:	Ms Roe	

File Number:	BRC	6502	of	2008	

Appeal Number:	NA	134	of	2010	

Date Delivered:	8 June 2012	

Place Delivered:	
Brisbane	

Place Heard:	Brisbane	

Judgment of:	May, Thackray & Ainslie-Wallace JJ	

Hearing date:	29 February 2012	

Lower court jurisdiction:	Family Court of Australia	

lower court judgment date:	6 December 2010	

LOWER COURT MNC:	[2010] FamCA 1196	

REPRESENTATION

SOLICITOR FOR THE Appellant:	In person	

COUNSEL FOR THE RESPONDENT:	Mr Tony Smith	

SOLICITOR FOR THE RESPONDENT:	Richard Gray & Associates	

Orders
(1)	The appeal is allowed.
(2)	The order of Bell J made 6 December 2010 be set aside.
(3)	The Court grants to the appellant father a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant father in respect of the costs incurred by him in relation to the appeal.
(4)	The Court grants to the respondent mother a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent mother in respect of the costs incurred by her in relation to the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hawkins & Roe has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE Family Court of Australia at BRISBANE	

Appeal Number: NA 134 of 2010
File Number: BRC 6502 of 2008

Mr Hawkins 	
Appellant

And

Ms Roe 	
Respondent

REASONS FOR JUDGMENT
May & Ainslie-Wallace JJ
Introduction
1.	This is an appeal by the father, Mr Hawkins, against an order for costs made by Bell J on 6 December 2010. The order provided that the father pay the mother, Ms Roe: “the sum of $15,000.00 as and by way of costs such payment to be made over a period of 12 months by monthly payments”.
2.	On 31 January 2011, Bell J granted a stay of the costs order pending the determination of the appeal by this Court.
3.	The father’s grounds of appeal assert that the judge erred by failing to consider the requirements of s 117 of the Family Law Act 1975 (Cth) (“the Act”) (grounds 1 and 3), and by failing to allow the father to tender relevant evidence (ground 2).
4.	The father also filed an application in an appeal to adduce further evidence. The application was filed on 14 February 2012 and the evidence pertains to the state of his financial circumstances, which he says have deteriorated since the making of the costs order and filing his notice of appeal. The father says he did not have the capacity to pay the costs order at the time it was made, and nor does he have the capacity to pay the order now.
5.	The father seeks orders that the costs order of Bell J made 6 December 2010 be set aside, that there be no order as to costs in relation to the substantive proceedings, and that the Court grant to both the father and the mother a costs certificate pursuant to the Federal Proceedings (Costs) Act (Cth) 1981. 
6.	The father seeks leave to appeal. In our view, the order was not interlocutory in nature and was made after final orders. Leave is therefore not necessary.
7.	The mother opposes the appeal. She seeks orders that the appeal be dismissed, the stay be set aside and the father pay the costs of and incidental to the appeal, including the costs of the stay, fixed at $7,000. 
Background
8.	The substantive proceedings before Bell J concerned parenting arrangements. Those proceedings were commenced by an application by the father in 1999 seeking interim orders in relation to the parties’ two children, born in 1996 and 1998.
9.	At the trial on 2 March 2010, the father was unrepresented. The mother was represented by Mr Smith of counsel. An Independent Children’s Lawyer had been appointed and was represented by Mr Selfridge of counsel. 
10.	The father’s application for shared parenting was not successful. Bell J made parenting orders on 3 March 2010 to the effect that the two children live with mother, and spend time with the father on alternate weekends from after school Thursday to before school Monday, and for half of the school holidays. The father was ordered to pay the sum of $3,300 to Legal Aid (Qld) on account of the costs of the Independent Children’s Lawyer. We will refer later to the reasons in this respect as they have some significance in relation to the issue of the father paying the mother’s costs.
11.	In his reasons for judgment of 3 March 2010, Bell J said he had “no hesitation in dismissing the application of the applicant [father] for co-parenting”, having found the degree of cooperation between the parties insufficient to justify such orders. 
12.	The mother filed a costs application on 31 March 2010. The application sought orders that the father pay costs fixed at $40,240 or alternatively costs assessed on a party and party basis. The amount sought was later revised down to $33,000.
Relevant Law
13.	In considering the law applicable to the determination of costs applications, it is important to recall the general principle under the Act as expressed in 
s 117(1), that each party to proceedings shall bear their own costs.
14.	In proceedings involving children’s or parenting matters, the general rule is not often displaced. The rationale for this practice is that in such matters it is proper that parents are able to put their case in seeking orders which they believe to be in the best interests of their children. It hardly needs to be said that the nature of family court litigation in relation to children is quite different to a commercial dispute in the state or federal courts.
15.	Section 117(2A) of the Act sets out the matters which the Court is to have regard to when considering what order (if any), should be made as to costs under s 117(2). 
16.	The section is in the following terms:
Costs 
…
(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. 
17.	With respect to the application of the section, in Penfold and Penfold (1980) 144 CLR 311, the High Court said at 315 and 316:
Sub-section (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 judgment under appeal that an order can only be made under s. 117 (2) in "a clear case".
	Sub-section (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. 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 (Kent v. Kent). 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.
(footnotes omitted)
18.	The weight to be given to a particular consideration under s 117(2A) is a matter for the discretion of the judge. However, in I and I (No 2) (1995) FLC 92-625 the Full Court of this Court held that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”. That is not to say that one single matter may not ultimately be determinative. The Full Court confirmed this in Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 at paragraph 41:
… A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
19.	With reference to the grounds of appeal propounded by the father, the 
s 117(2A) matters relevant to these circumstances appear to be (a), (e) and (f). Although not directly referred to by his Honour, in his reasons the judge appears also to have considered (c).
20.	In respect of (a), the financial circumstances of the parties, it is as well to recall previous decisions of this Court that a disparity in financial resources between the parties may justify an order for costs in favour of the party with fewer financial resources (Marinko v Marinko (1983) FLC 91-307, Mallet v Mallet (1984) 156 CLR 605). Also relevantly, the apparent inability of a party to pay costs is not a bar to a costs order being made in circumstances where that party’s conduct is determined to warrant an order (Cross v Beaumont (2008) 39 Fam LR 389).
21.	In respect of (e), whether any party to the proceedings has been wholly unsuccessful in the proceedings is a well established consideration. The general rule that costs do not follow the event can be displaced by the result of the litigation as well as its conduct by either party. 
22.	Although an appellate court should be very reluctant to interfere with the exercise of discretion in respect of costs (as observed by this Court in Browne v Green (2002) FLC 93-115 and Harris and Harris (1991) FLC 92-254), it can and should interfere when the result is “plainly unjust or if the discretion was exercised on wrong principles” (see Robinson v Higginbotham (1991) FLC 92-209). It is also accepted that an appellate court will uphold an exercise of discretion to order costs if it is apparent that there are appropriate reasons on which the judge could rely (see In the marriage of Greedy (1982) FLC 91-250).
23.	It was held by Evatt CJ and Gibson J In the marriage of Greedy that “[a]n award of costs ought to bear some relation to the conduct of the proceedings by the parties or to their relative circumstances at the time of the application and hearing of the matter” (at 77,381). It was further said at 77,382:
	…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 a matter.
24.	In the context of offers we would refer to Pennisi v Pennisi (1997) FLC 92-774 where the Full Court said at 84,547:
The husband’s submissions refer to Robinson and Higginbotham (1991) FLC 92‑209 as authority for the proposition that the fact that an offer just exceeds the award is no bar to an order for costs.  Equally, however, it is only one of the factors to be considered under s 117(2A) and it is not the law that an offer of greater or equivalent value to that which results from the Court will lead to an order for costs in favour of the offeror – Harris and Harris (1991) FLC 92‑254.  
We would also add that just because an offer is marginally less than the amount ordered by a Court does not mean that it is not a factor to be taken into account in determining whether costs should be awarded.
…
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 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.
Application to Adduce Further Evidence
25.	There is also before us an application filed by the father seeking leave to adduce further evidence. Section 93A(2) of the Act confers an unfettered discretion on the Full Court in an appeal to receive further evidence. The general principles relating to this discretion were described by the High Court in CDJ v VAJ (1998) 197 CLR 172. In that case it was said at [109]:
	One consideration in construing s 93A(2) is its remedial nature.  Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous.  The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures.  A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
26.	Further at [111] it was said:
	…The power to admit the further evidence exists to serve the demands of justice.  Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial.  Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial.
27.	We will deal with this application after a consideration of the grounds of appeal.
Reasons of the Judge
28.	The costs hearing was heard by Bell J on 6 December 2010. The father appeared in person and the mother was represented by Mr Smith of counsel. 
29.	Bell J made the order which is now the subject of this appeal and delivered 
ex tempore reasons at the hearing on 6 December 2010. As reference was made in paragraph 5 of those reasons to the earlier substantive reasons, and as it is clear his Honour relied on those earlier findings, it is necessary to make some reference to them. 
30.	We note in particular his Honour’s comments at paragraph 63 of the substantive reasons dismissing what was described as the co-parenting application:
63. 	As I have said, I regret that I have no hesitation in dismissing the application of the applicant for co-parenting.  I must say that if, in fact, it had not have been for the mother’s response wherein she suggested the four night, the Thursday to Monday morning continue, I would have closely looked at shortening that period for [N], not for [Z], but I would have looked closely at it to even drop it down to Friday afternoon to Monday morning, but the mother says no, let them both go together, which is very important because they love each other, even though [Z] thinks his sister is a bit of a pain which many brothers do, but I would not interfere with the present status quo and I will order accordingly.
31.	We note also his Honour’s comments at paragraphs 66 and 67 in the substantive reasons in respect of the Independent Children’s Lawyer’s application for costs and the merits of the father’s case:
66. 	There is one final matter to be determined, or two, rather, and that is the ICL’s claim for costs as against the father.  It has been quite properly conceded by counsel for the ICL that the husband’s application was not without merit.  Therefore, in those circumstances, taking into consideration the provisions of section 117, I could not order the whole of the costs.  However, there has been a determination made by Legal Aid that the parties, because of their financial situation, investigated by the Legal Aid Commission, should pay co-costs of $3300 each.
67.	The mother has already paid that.  The father has not.  He supplies to me a letter dated 16 March 2009 to the Grants Officer, Legal Aid setting out what he says is material to enable him to be relieved of the lawyers’ costs, due to the financial hardship.  The legal aid has not accepted such request.  He also refers me to the waiver of court fees application which he says is approved on 30 March.
32.	It was submitted that these remarks appear to be in conflict with the later reasons for the costs order.
33.	In order to gain some sense of the matters which his Honour took into consideration in making the decision as to costs, it is necessary to set out in detail the reasons for judgment leading to the costs order.
34.	In the first paragraph of the costs reasons, Bell J first made a finding as to the position of the applicant mother:
1. 	…The mother has put before me evidence to show that she is not in a financially strong situation at all. She has the responsibility of the children, and notwithstanding the fact she receives an amount of approximately $18,000 per year by way of child support, she is not, as I have said, in a very financially strong position at all.
35.	His Honour then considered the position of the father:
2. 	On the contrary, it is alleged by the applicant mother through her counsel that the father, the respondent, is capable of paying her costs. She points to the fact, particularly, that he is in receipt of a considerable income, something like 100 and 90-odd thousand dollars per year; that he is in receipt of a car and a telephone; that he does pay, admittedly, eighteen and a half thousand or thereabouts by way of child support, but that he is the owner of two properties, one in which he resides with his present partner […] – which the difficulty is the valuation in relation to that – and another investment property which the valuations of Mr [G] on the mother’s part and Ray White on the respondent father’s part are about equal at about 430, 000.
36.	His Honour next addressed the contentious matter of discrepancies between the valuations provided by the parties in respect of the property in which the father lives with his current wife. His Honour observed:
3. 	The difficulty is that the property in which he resides, there is a vast difference, which is quite rare, in valuation.  The valuer put forward by the applicant mother in a full valuation, Mr [G], estimates that the property is worth around about 820 to 900, whereas the respondent’s valuer – which does not appear to be a total and full valuation – is around about 600, 640.  There was a difference of about 250,000 in respect of valuation, which, as I said, is quite rare.  Normally, you would expect some variation between 10 to 15 per cent, but not as high as this…  
37.	Bell J did not make any findings in relation to the value of the property. However, the judge continued in the same paragraph to consider that the father did not appear to have any other method or asset from which to fund a costs order against him, and expressed the father’s financial position as his Honour understood it:
3. 	…There does not appear, on the evidence before me, any other area in which the father could seek funding to enable him to pay the costs, albeit as I have already said in argument which I think are remarkably reasonable in all the circumstances, he is also indebted to MasterCard, I think it is, for something like $43,000.  His present partner no longer works and looks after the children.  He has made impassioned pleas about his looking after six children which, perhaps looking at it one way, might be right, but in another way, there is a considerable onus both emotionally, physically, and financially upon the mother to maintain the children the subject of these disputes, two of them.  
38.	The judge then addressed the bases on which the father opposed the costs application. It is apparent from the reasons that, having determined that the father had been unsuccessful in the parenting proceedings, the only relevant basis the father could argue against an order for costs was the financial inability to pay:
4. 	He has based his opposition to the order for costs on three headings:  whether, in fact, he was totally unsuccessful, a matter which I have to consider pursuant to the provisions of s 117;  whether he has the ability to pay;  and the third is whether, in fact, the offers which he allegedly made to the mother were so out of kilter with the final order that, in effect, he did not fail totally.  I am not particularly interested in either the first or third submissions.  I do consider that he was unsuccessful in his opposition to the application of the wife.
39.	His Honour explained his finding that the father had been unsuccessful. He referred first to the father’s attitude to the proceedings, and secondly to the offers of settlement:
5. 	I have referred to my reasons for judgment, and I consider that he was a person who is very difficult to get on with, a bully, was selfish, and only wanted what he wanted and would not bend, as far as I was concerned in bending towards the children.  Consequently, I am not satisfied that he has other than been unsuccessful.  Secondly, I do not accept that his offer was very close to the mother’s.  I consider that the mother’s offer was generous.  In fact, it was so generous that I had – I mentioned this in my reasons – considered shortening the time, particularly in relation to the boy, I think it was, but that she generously conceded that it would be in the boy’s interests that the matter remain, in effect, as it was.  
40.	Bell J then addressed the financial ability of the father to pay a costs order. His Honour did not consider the father’s capacity by reference to any specific sum until the final making of the order in the sum of $15,000. The judge considered the father’s position by comparison to the position of the mother. His Honour acknowledged the father would at the time experience difficulty in paying an order for costs, however nonetheless found that he had the financial means to fulfil such an order:
6. 	The only argument he has, in my opinion, is that he financially is unable to pay.  I have to consider that.  The mother is in extreme difficulties, as far as I am concerned.  The father is in a better financial shape, albeit he is, at this stage, he says, financially strapped to pay it.  I consider that he does have the financial means to pay something towards the costs, but what amount?  Naturally, of course, I would make an order that such amount be paid off over a period of time.  There would not be an indebtedness to him within, say, a month or something of that nature. 
41.	His Honour concluded by determining the father had the capacity to pay costs in the amount ordered and set a timeframe for payment:
7. 	Doing the best I can, I consider that he has the ability to pay the sum of $15,000 of and by way of costs to the mother and that such costs be paid over a period of 12 months with monthly payments.
42.	In summary, his Honour found that the father had been “unsuccessful”, that his offer was not “close to the mother’s” and that her offer was “generous”, and that the father was “in a better financial shape” and did “have the financial means to pay”.
43.	As stated previously, on 31 January 2011 Bell J granted an application to stay the costs order pending determination of the appeal. In granting the stay, his Honour stated that he recognised both parties were experiencing financial hardship difficulties.
Grounds of Appeal
44.	The father’s notice of appeal contains three grounds of appeal.
Ground 1 – Failure to properly consider mandatory requirements of s 117 of the Act
45.	The father submits his Honour erred by failing to properly consider the mandatory requirements s 117 of the Act before making a costs order because his Honour:
i) 	made an order for costs where the father clearly had no capacity to pay; and
ii) 	failed to give any or failed to give any proper weight to the submissions made by the father with respect to costs.
46.	The questions raised by this ground are what were the circumstances that justified an order for costs, and did the judge in effect reverse the onus?
47.	The father submits his Honour failed to have sufficient regard to his financial limitations, compared to the consideration of the mother’s financial circumstances and therefore his Honour’s finding fell outside a reasonable exercise of discretion. In addition, the father submits his Honour failed to provide any reasons as to why the father was in better financial shape, and either ignored or failed to give sufficient weight to the evidence about his financial burdens. 
48.	The father further submits that the judge failed to provide any reasoning to justify the specific amount ordered to pay ($15,000). The father says there was evidence that any order for costs would add significant financial stress to his family, and the judge failed to give any weight to this evidence. 
49.	In written and oral submissions in the appeal, the father outlined the evidence before the judge pertaining to his financial circumstances. The father says this evidence, if considered and understood by the judge, could not have led his Honour to make the finding that the father had the capacity to pay a costs order. He submits the order was an “impossible request”, whether in the form of a lump sum or periodic payments. 
50.	We are asked to consider that his Honour could not, in the short time between the hearing of the matter and the delivery of judgment (ex tempore reasons were delivered the day of the hearing), have been able to properly consider the details of the father’s financial circumstances.
51.	The evidence before his Honour was that, at the time of the costs hearing, the father had a salary of approximately $195,000. In addition to his salary, the father received income by way of rent from an investment property. It is his submission however, that the mortgage repayments for that property exceeded the amount received in rent. According to his financial statement before the judge, filed 1 October 2010, a total of $400 per week was received in rental income (the father’s share is 50 per cent or $200), and the minimum weekly mortgage repayment was $614. 
52.	The father submits that in evaluating his financial circumstances, the judge did not appropriately consider the financial responsibilities and outgoings to which his income is diverted. The father says his average weekly income is generally less than the expenditure required to support his family of five dependents (two of whom are the children in these proceedings). 
53.	The father’s financial statement detailed a total weekly income of $3,969 comprising $3,769 in salary (before tax), and $200 in rental income from the investment property which he jointly owns with his current wife. The only other income his household received was his wife’s $200 share of the rental income from the investment property. The father’s total weekly personal expenditure according to the statement was $4,672. The expenditure included mortgage repayments on both properties, insurance policies, credit card repayments, personal loan repayments, child support/maintenance payments, and general family living expenses. The father also submitted before us that the gap between his income and expenses was reflected in the credit card debt, because he was using the credit card to “top up” his household finances.
54.	The father provided details of the value of his assets and liabilities in the financial statement, and in an affidavit filed on 1 October 2010. The total value of the father’s share of assets according to the financial statement was $517,000, constituted by his half share in the two properties, a $5,000 car and $12,000 of household contents. The value of his share of liabilities, according to the statement was $536,196.
55.	In his affidavit the father provided documentary evidence of the extent of his liabilities. Of relevance to the asset and liabilities determination are the accounts for the home property mortgage, the investment property mortgage and the father’s credit card. 
56.	The documentary evidence about the father’s affidavit showed that at September 2010, the debt over the home property was $177,945.37. As at May 2010, the debt over the investment property was $426,437. These properties are owned jointly by the father and his current wife. As sole income provider however, in effect the father is solely responsible for financially servicing the entirety of these debts. As at August 2010 the father’s credit card debt totalled $31,929.81. The total of the father’s liabilities based on this documentary evidence, and including the mortgage liabilities as entirely his own was approximately $636,311.37. 
57.	The main assets of the father were thus the home he lives in with his current wife and children, and the investment property. As will be explained, both parties filed valuation evidence in respect of both properties. The valuations for the investment property were close, however the valuations before his Honour for the home property were significantly different. While the value of these properties was in issue, the amount of the liabilities attached to each was not. 
58.	In submissions before us, the father explained that the costs of selling and the absence of any equity in the properties would, on his valuation evidence, mean a negative surplus would result should he liquidate either of the properties. 
59.	The judge therefore had before him two figures of the liabilities. The $536,196 figure, contained in the financial statement, encompassed a personal loan, credit card debts, a car loan, a business loan and the father’s fifty per cent share of liabilities for the house and investment property. The $636,311.37 figure, presented by the affidavit evidence, encompassed only the credit card and mortgage debts, however reflected the reality of the father’s 100 per cent financial responsibility for those mortgages. 
60.	It is apparent, applying either figure, that at the time of the costs hearing the father’s liabilities over his assets exceeded their value. Additionally his weekly expenditure for repayments towards those liabilities and family living expenses clearly exceeded his weekly income.
61.	In referring to this detailed evidence it needs to be recalled that the capacity to pay from income, or even the sale of assets, is not a complete answer to whether a costs order can be justified.
62.	In his affidavit filed in the costs proceedings, the father sought to demonstrate his inability to fund a costs order by presenting evidence of his inability to raise capital. As an annexure to the affidavit, the father tendered a letter dated 
18 February 2010 from a mortgage advice company. The letter advised the father that after a review of his finances and the substantial level of debt in relation to household income, it was not foreseeable that the father had any ability to borrow further funds from his current lender, or any other lender at the time. The father was advised that a significant increase in his household income would be necessary in order for an application for further funds even to be considered. 
63.	The mother’s valuation evidence was disputed, but if accepted there may have been some capacity for the father to draw on the value of the house property to fund a costs order. However, short of selling this property (the father’s family home), it is apparent from financial advice that the father had received, that his financial circumstances were not such that he would be successful in refinancing or further borrowing in order to meet such an order.
64.	The unfavourable state of the father’s financial circumstances was recognised by the judge in both the substantive and costs proceedings. As outlined above, in the reasons for costs, his Honour made specific reference to his reasons in the substantive proceedings. In those reasons, the judge acknowledged the father’s application for Legal Aid, for which he was unsuccessful, and for a waiver of court filing fees, for which he was successful (Bell J reasons 
3 March 2010 para [67]). 
65.	In her summary of argument, the mother submits generally that the requirement to have regard to the financial circumstances of each of the parties does not require the Court to take into account “the income, property and financial resources of each of the parties”. It is an inquiry to enable the court to have some concept of the relative financial positions of the parties, not a search for minutiae (Browne and Green).
66.	While this is generally the case, the evidence before his Honour in relation to the father’s financial circumstances was comprehensive and required more than a general appreciation of its contents.
67.	The mother submits that although not specifically mentioned in the judgment, his Honour did not have any tax return or employment contract or certifiable details of the father’s income and employee benefits.  It is submitted that the decision of Cross and Beaumont relied on by the father should be distinguished from this case because it related to property proceedings, whereas these proceedings related solely to the issue of equal shared time of children. 
68.	Of some significance it is submitted, the Family Report was against the father’s proposals, and that the father conducted his own case in a manner that unduly attenuated the proceedings. The mother submitted she made an offer of settlement commensurate with the final order of his Honour, and that the order for costs provided for a reasonable period of time in which to pay, of 12 months at modest monthly repayments. 
69.	The mother further submitted his Honour properly took into account the relevant provisions of s 117, properly considered the evidence before him, and was entitled to conclude that the father did have the capacity to pay something towards the costs.
70.	On the evidence before his Honour, it is apparent that the value of the father’s debts exceeded the value of his assets and there was no apparent reason why the father was “in better shape” than the mother. Indeed his Honour acknowledged that the father was experiencing financial difficulties at the time (Bell J reasons 6 December 2010 para [6]). His Honour properly found that the father had no method or asset, other than the house property which had a disputed value, from which to fund a costs order (Bell J reasons 
6 December 2010 para [3]). Notwithstanding this evidence, his Honour found in relation to s 117(2A)(a) that the financial circumstances of the father were such that he had the capacity to pay some of the mother’s costs. 
71.	We consider the father has established this ground of appeal. It is apparent that his Honour failed to have sufficient regard to the evidence about the father’s financial circumstances. In placing considerable weight on the finding that the father was in a better financial position than the mother and had the capacity to pay a costs order, his Honour fell into error. 
72.	In coming to this conclusion we would wish to emphasise that it is not necessary to conclude that a party has the capacity to pay a costs order before making any such order. In many cases there may be little evidence about the parties’ financial circumstances or it may be controversial. However if, as it seems here from the reasons of the judge, the father’s financial circumstances were a reason justifying the order, then to conclude that the father could meet this order was an error. 
73.	Accordingly, we conclude that the judge should have found that the father did not at the time of the hearing have the capacity to pay, from his income or by reason of his assets, a costs order. His Honour could then have considered the other factors.
Ground 2 – Failure to allow evidence
74.	The father submits the judge erred in failing to permit him to tender relevant evidence. The evidence the father refers to is another valuation of the jointly owned house property (the “DK Property Valuation”). He explains that he attempted three times to file this valuation in the costs proceedings. 
75.	The father also submits he emphasised to the judge at the costs hearing that the mother’s valuation evidence was not complete, and that the document stated on its face it was not to be used as a valuation. Therefore it is said his Honour erred in using the mother’s valuation evidence to form part of his reasons for judgment. 
76.	It can be seen from the reasons and from the transcript of proceedings on 
6 December 2010, that his Honour understood there was a dispute between the parties as to the value of the father’s properties. There was also a dispute as to whether the documents relied on by the father were in fact valuations, or appraisals. At the hearing, counsel for the mother submitted that the father’s valuations were in fact appraisals, in contrast to the mother’s, which counsel submitted were full and proper valuations by a valuer. As will be explained, the mother’s valuation was in fact not a full and proper valuation, as was submitted by her counsel and apparently accepted by the judge.
77.	In considering the judge’s refusal to allow the further evidence, it must be noted that on 14 October 2010 his Honour made orders that the father file and serve any further material to be relied upon by 1 December 2010. On 
2 December 2010 the father filed an affidavit which included two valuations or appraisals by Ray White Real Estate …, which had been provided to him on 26 November 2010. Like the mother’s valuation evidence, the father’s affidavit contained two valuations: one each for the H Street and F Street properties. The affidavit was objected to by counsel for the mother because of the filing being one day out of time. 
78.	His Honour noted the mother’s objection, however did not reject the affidavit.
79.	At the hearing, the father sought leave to file a further valuation, the 
DK Property Valuation, which he had received in between filing the earlier valuations and attending the hearing. It is with respect to this valuation of the H Street property which the father says his Honour erred by failing to admit. The judge did not accept into evidence this valuation, which would have been the father’s second valuation of the H Street property. The DK Property valuation was provided to us in the Appeal Book. The value of the property as estimated by the DK Property Professionals valuation is $650,000. The father submitted, and it is apparent from the transcript, that the judge did not expressly reject the valuation but did ignore it.
80.	The father did not bring to the attention of the judge the incomplete nature of the mother’s valuation, nor the exact value expressed by the DK Property Professionals valuation, however he did point out that the valuer had been able to view the interior of the property. This is in contrast with the mother’s valuation, which on its face stated that it was based on an external inspection only. The father also emphasised to the judge that the later valuation provided an estimated value much closer to his Ray White valuation. 
81.	The valuation evidence for the mother before the judge was the affidavit of 
Mr G, a certified practicing valuer with P National Valuers. For the father, the evidence was contained in the affidavit of the father, which included as annexures current market appraisals or valuations from Ray White Real Estate …. Mr G and Ray White Real Estate each provided a valuation of both the H Street and F Street properties. 
82.	The mother’s evidence valued the H Street property at between 
$820,000 and $900,000. The father’s evidence valued the property at between $640,000 and $650,000. In respect of the F Street property, the mother’s evidence valued it at between $450,000 and $500,000. The father’s evidence valued the property at between $420,000 and $430,000. 
83.	In the reasons, his Honour noted that the vast difference in the valuations of the H Street property was a rare occurrence in valuation practice. At the hearing he observed that resolution of the valuation issue would “require another trial”. While his Honour did not make a finding as to the value of the property, he did note that the mother’s higher value was based on a “full valuation”, whereas the father’s lower value did not appear to be based on a “total and full valuation”. 
84.	At the hearing before this Court, it was submitted by the father that the mother’s valuation evidence was not in fact a “total and full valuation” as described by the judge. The valuation of the mother’s valuer, Mr G, is titled “Restricted Assessment” and carries a statement that:
	In producing the assessment contained in this letter, the Valuer has not carried out the usual range of enquiries that a Valuer is required to make by professional practice standards…an External inspection of the property from the street front only was carried out…Furthermore, the client acknowledges that it accepts that this Assessment is not and will not be construed to be a valuation in the same meaning as a calculation conducted in accordance with the General Concepts, Principles and Definitions as detailed in the standards promulgated by the API, which is based on an inspection of the subject property.
85.	In the appeal, the father explained that it was the incompleteness of the mother’s valuation evidence and the discrepancies between the parties’ valuations which prompted him to seek further, complete valuations, including the third valuation which was not accepted into evidence by the judge. 
86.	It is not apparent from the transcript that the father presented this rationale or explanation to the judge at the costs hearing, however the statement quoted above appeared on the first page of the mother’s valuation which had been filed on 18 October 2010, nearly two months prior to the hearing. It is important to reiterate however, that counsel for the mother submitted to his Honour that the mother’s valuation was a full and proper valuation. Unsurprisingly, his Honour relied on this submission. 
87.	The father submitted therefore that the judge erred in relying on the mother’s valuation as evidence of the value of the H Street property. He further submitted that had the judge taken into account the DK Property Professionals valuation, which was a full and complete valuation and provided an estimate close to that of the Ray White appraisal, the valuation dispute referred to in his Honour’s reasons would have been largely settled. 
88.	We do not suggest that it was an unreasonable exercise of his Honour’s discretion to not permit the father to file his additional valuation evidence on the day of the costs hearing. His Honour had already permitted the father to file valuation evidence out of time after the specifically ordered filing date had passed. 
89.	In the circumstances however, where there was a significant and unusual discrepancy in the valuations already before his Honour, it would have been preferable for the further valuation evidence to have been admitted.
90.	We do find that the judge erred in finding that the mother’s valuation was full and complete. While this was not a determinative factor in his Honour’s reasons in making the costs order, it is clear his Honour gave some weight to the value contained in the valuation, which he took to be full and complete. The valuation evidence is relevant to the father’s capacity to pay such an order. As explained above, on the father’s valuation evidence, the mortgage over the property exceeded its value. On the mother’s valuation evidence this was not the case.
91.	We regard this ground as only having limited significance and on its own would not lead to an appeal being allowed in a costs matter. It is however linked with ground 1 and to that extent has some significance.
Ground 3 – Failure to take into account that the father was not wholly unsuccessful 
92.	The father submits the judge erred in concluding that he was wholly unsuccessful in his application.
93.	In his summary of argument the father said that his Honour, in the earlier reasons for judgment on 3 March 2010, accepted that the father’s application had merit (which was submitted by the Independent Children’s Lawyer at the time), and that there were differences between the final orders and the offers of settlement made by the parties. 
94.	The father further said he was not wholly unsuccessful given the final orders for the children’s issues did not allocate sole parental responsibility. He says this argument was presented before his Honour at the costs hearing, but the judge gave no or insufficient weight to this point in the reasons. 
95.	It was submitted for the mother that the issue of sole parental responsibility was not an issue at the trial and was not considered in the judgment other than when orders were pronounced. It was further said that the other issues raised as being matters for “success” did not become issues litigated at the hearing and do not figure in the judgment.
96.	An important element of the mother’s position as explained to the judge is that the issue for determination by his Honour was the father’s application for shared parenting, including that the children live with each parent week about. The interim orders in place prior to the trial before Bell J were largely the same as those made by his Honour. The mother made offers and filed a response broadly in the same terms. 
97.	As explained in the mother’s affidavit filed in support of her costs application, numerous expert reports had been written, including the report of Ms B which did not support the father’s application. The father was also aware that the Independent Children’s Lawyer did not support his position. 
98.	In considering his Honour’s determination that the father was unsuccessful, it is necessary to consider first the course of the litigation.
99.	According to the mother’s affidavit supporting her costs application, the mother instructed her solicitors to make an offer of settlement to the father on or about 1 February 2010. She stated the offer was in essentially the same terms as the consent order made on 30 October 2009 by Bell J in interim proceedings. The offer was included as an annexure in the affidavit of the mother’s solicitor, Richard Gray, filed 13 October 2010 before Bell J at the costs hearing. The offer was rejected by the father. 
100.	The terms of that offer of settlement with respect to the children’s living arrangements and time spent with the father were the following:
Father’s Time with the Children
i.	From the conclusion of school each alternate Thursday until the commencement of school on the following Monday with such time to commence on Thursday 
5 March 2010. 
ii.	For the Easter and September school holiday period in off numbered years and for the June-July school holiday period in even numbered years.
iii.	For the second 3 weeks of the Christmas school holidays in even numbered years with such time to commence at 11.00am on Christmas Day.
iv.	For the first three weeks of the Christmas school holidays in odd numbered years with such time to conclude at 11.00am on Christmas Day.
	…
Special Occasions
	3. 	Each parent shall spend time with the children on special occasions at all times as may be agreed between the parties and failing agreement as follows: - 
v.	In even numbered years with the mother from 4.00pm on Christmas Eve until 11.00am on Christmas Day.

vi.	In even numbered years with the father from 11.00am on Christmas Day until 10.00am on Boxing Day.

vii.	In odd numbered years with the mother from 11.00am on Christmas Day until 10.00am on Boxing Day.

viii.	In odd numbered years with the father from 4.00pm on Christmas Eve until 11.00am on Christmas Day.

	…
Telephone and Electronic Communication
	7. 	The parent who does not have care of the children is permitted to telephone the children at all reasonable times and the parent who has care of the children will make the children available to speak privately with the other parent at that time.
101.	The interim orders did not include provision for school holiday time, because the trial which would produce final orders was to be held before the next school holiday period.
102.	The final orders of Bell J on 3 March 2010 are in the following terms:
Orders
		(1)	That all previous orders be discharged.
(2) 	That the children [Z] born … July 1996 and [N] born … March 1998 live with the mother.
(3)	That the father spend time and communicate with the children as follows:-
	(a) 	from after school Thursday until before school Monday each alternate week, such time to be suspended during all gazetted Queensland school holidays;
(b)	for one half of all gazetted Queensland school holiday periods, such that the children are with the mother for the April and September school holidays and the second half of the Christmas school holidays in even numbered years and the July school holidays and the first half of the Christmas school holidays in odd numbered years;
		(c) 	from 4.30pm on Christmas Eve until 12 noon Christmas Day in even numbered years;
	(d) 	from 12 noon Christmas Day until 12 noon Boxing Day in odd numbered years;
	…
(g) 	by telephone at any reasonable time on two (2) occasions each week and with the mother to be able to contact the children similarly when the children are in the father’s care.
103.	The mother’s offer to settle essentially reflected the interim consent orders made by Bell J in terms of the children living with the mother, spending time with the father each alternate week from Thursday afternoon to Monday morning, and communicating with each parent at all reasonable times when not in their care. Although the final and interim orders with respect to school holiday time were in different terms (because of the timing of the making of those orders and their intended duration), the effect of each order was equal time with each parent for the school holidays. The mother’s offer also provided for equal or near equal time with each parent for the school holidays.  
104.	In an affidavit before Bell J at the costs hearing filed 1 October 2010, the father claimed he had made two offers to settle the proceedings. The first was in or about April 2009, however this offer was not provided in the material. The second offer was sent by email to the mother’s solicitor on 27 February 2010. 
105.	It is apparent from the transcript of the costs proceedings that there was some debate as to whether or not the mother’s solicitor had received the father’s offer. In the Appeal Book, the father provided email correspondence dated 26 and 27 February 2010. On 27 February 2010 the mother’s solicitor acknowledged receipt of an email entitled “Offer and Pre-Hearing Doc”, sent 
26 February 2010. The solicitor replied by email, stating the attachments could not be opened and requesting the father therefore please resend the documents. The same morning, the father then replied by copying the text of the attachments into the body of the email.
106.	Based on the email correspondence and submissions before us, we consider the submission by counsel for the mother at the costs hearing that the solicitor had not received the offer to be an unreasonable submission. In any event, he had knowledge of the existence of an offer from the father and acting appropriately, he could reasonably have made inquiries in order to properly respond to the offer.
107.	In his reasons, the judge makes a finding in respect of the father’s offer, that it was not as generous as that of the mother. It is difficult to determine, however, whether or not his Honour did in fact receive into evidence and read the father’s offer of 27 February 2010. The transcript indicates the offer was discussed in some detail, however not physically reproduced by the father at the costs hearing. In oral submissions before us, it was submitted by the father that his Honour had been handed a laptop on which to read the offer. Counsel for the mother submitted that he did not recall this occurring at the hearing.
108.	It is important nonetheless, to set out the terms of the father’s offer of settlement, which has been provided to us in the Appeal Book:
…
2. 	That the parents commence a graduated plan that eventually progresses the children to live with each parent on a weekly shared alternating cycle.
3. 	That the graduated plan commences by having the children spending time with the father in his care commencing each alternate Wednesday at the conclusion of school and finishing with the father delivering the children to school on the coming Monday morning.
4.	 That the graduated plan after one school term of the initial 5 nights per fortnight cycle increase to 6 nights per fortnight cycle. That this increase in the plan commence by having the children spending time with the father in his care commencing each alternate Tuesday at the conclusion of school and finishing with the father delivering the children to school on the coming Monday morning.
5. 	That the graduated plan after a one school term of the 6 nights per fortnight cycle increase to 7 nights per fortnight cycle. That this increase in the plan commence by having the children spending time with the father in his care commencing each alternate Monday at the conclusion of school and finishing with the father delivering the children to school on the following Monday. 
…
9. 	The children will spend time with each parent during the school holidays as follows:
	a. 	First term holiday…with their Mother in 2010 and each alternate year thereafter and with the Father in 2011.
	b. 	Second term holiday…with the Father in 2010 and each alternate year thereafter and with the Mother in 2011 and each alternate year thereafter.
	c. 	Third term holiday …with the Mother in 2010 and each alternate year thereafter and with the Father in 2011 and each alternate year thereafter.
	d. 	In the Christmas school holidays the children will spend half with each parent alternating each year. With the Father to have the first block and Mother to have the second block on 2010/2011 holiday and the Mother to have the first block and the Father to have the second block in the 2011/2012 holiday and alternating each year thereafter.
…
15. 	Both parents to have unrestricted reasonable telephone contact with the children at all times.
109.	The father’s offer, like that of the mother, reflects the essence of the interim consent orders made by Bell J in October 2009 with respect to time spent during school holidays and contact by means of telephone communication. It is obvious however, notwithstanding provision for a lengthy graduated transition plan, that the father’s offer with respect to living arrangements for the children was ultimately on a week about shared time basis.  
110.	Having found that the offer of the mother was largely reflective of the interim and final orders made in the parenting proceedings, we now turn to consider the father’s submissions supporting his ground of appeal that the judge failed to take into account that he was not wholly unsuccessful. The father’s submissions in this respect went to the differences between the offers of settlement and the final orders made, and the reasons for which the father was unable to accept the mother’s offer. 
111.	The first matter raised by the father was that of time spent during Christmas school holidays, as provided for in III and IV of the mother’s offer and in order (3) (b) of 3 March 2010. The mother’s offer provided for separate arrangements for the Christmas school holidays and the other school holidays, whereas the final orders of Bell J provided for half time for all school holiday periods. The father submitted to the judge at the costs hearing that the mother’s provision for Christmas holidays resulted in a “skewed arrangement” which lessened the father’s time with the children by one week and a half. As such, it was the father’s submission that the mother’s offer was different to the final orders and in this respect she was unsuccessful.
112.	At the hearing before us, counsel for the mother submitted that the mother’s intention to be understood from clauses III and IV of the offer was half the school holidays with each parent. Counsel stated this was to be inferred from the language, “the first 3 weeks” and “the second 3 weeks”. 
113.	Before us, the father clarified that his complaint in respect of the Christmas holiday time arrangement was not the length of time, but rather that he would have been disadvantaged by the mother’s offer on the alternate years which provided for him to have the children in the first part of the school holidays. The father submitted that due to his employment in the retail industry, he was not able to take time off to spend with the children until after Christmas Day. The father also raised this at the costs hearing. He submitted that his offer differed from the mother’s in this respect. On our reading of his offer however, the father appears to have offered the same, half holiday period in alternating blocks each year:
9.	The children will spend time with each parent during school holidays as follows:
		…
d. 	In the Christmas school holidays the children will spend half with each parent alternating each year. With the Father to have the first block and Mother to have the second block on 2010/2011 holiday and the Mother to have the first block and the Father to have the second block in the 2011/2012 holiday and alternating each year thereafter.
114.	The second matter in which the father submitted the mother’s offer was different to the final orders was the issue of allocation of parental responsibility.  In her offer, the mother provided for parental responsibility as follows:
10. 	Each party shall have sole responsibility for the day to day care, welfare & development of the children when the children are in that party’s care.
11. 	In the event a joint decision is to be made, the mother is to forward to the father details of the decision she proposes making and if no response is provided to the mother within 14 days of receiving such notice the mother shall be at liberty to make the decision as set out in her proposal. If the father provides a proposal to the mother within the 14 day period referred to above the parties are to attend upon mediation with a view to resolving the issue and/or dispute.
115.	At the costs hearing before Bell J, the father submitted that paragraph 11 enabled the mother to be the “initiator of the ideas” and the “decision-maker”. The father stated he was unable to accept the offer with this clause, as it was important to both the children and him that ideas and decision-making as to the children’s future be equal or joint between the parties.
116.	In the appeal, it was submitted for the mother that the issue of sole parental responsibility did not become an issue at trial and was not considered in the judgment other than when orders were pronounced. 
117.	Bell J made no provision for the allocation of parental responsibility in his orders. The omission of an order to that effect may merely have been an oversight on the part of the judge. Both parties had sought in their minute of orders before the judge at the trial, shared parental responsibility. As the final orders contained no order as to allocation of parental responsibility, the presumption of equal shared parental responsibility was not displaced, and as such we consider that neither party was unsuccessful. It may even be said that both parties were in fact successful in a sense. Accordingly, we do not consider the matter to be relevant to the father’s appeal. 
118.	The third matter raised by the father was the children’s complete attendance at school and extra curricular activities. Paragraph 13 of the mother’s offer provided that:
13. 	Both parties shall ensure the children attend all prearranged school and extra curricular activities provided that both parties inform the other of such events in a timely manner…
119.	Nothing to this effect was included in the final orders. The father appears to have raised this with the judge in oral submissions. He stated that there were some stipulations surrounding movements of the children in the mother’s offer which did not go into the final orders, suggesting by inference that she had been unsuccessful. The father did not however, press the matter any further. 
120.	In the appeal the father submitted that he had refused the mother’s offer because he believed paragraph 13 to impose conditions and requirements which could not reasonably be met, and which were biased towards the mother.
121.	At the costs hearing, the father also raised before the judge discrepancies between the parties’ offers and the final orders as to provision for communication. The father accepted his Honour’s response that both parties had been unsuccessful compared to the final orders. Accordingly, we do not consider the matter to be relevant to the father’s appeal.
122.	Having considered the offers of the parties before him, his Honour made a finding that the mother’s offer was generous to the point of being more time than he would have ordinarily ordered. He found the father’s offer was neither close to the mother’s offer, nor to the final orders. Accordingly, his Honour determined the father had been unsuccessful.
123.	In so concluding, the judge also referred to the unwillingness of the father to “bend” towards the children. In this respect, it is important to note that the father maintained his position, seeking shared parenting arrangements on a week about basis, until the end of the trial. 
124.	In his summary of argument filed 1 March 2010, two days before the trial, the minute of order sought by the father was that the children live with each parent on a weekly shared alternating cycle commencing each Monday morning, that the children spend half of all school holidays with both parents, and that the children share special days and times with both parents. In her summary of argument filed 22 February 2010, the mother sought that the children live with her, spend time with the father every second week from after school Thursday until before school the following Monday being four nights per fortnight, spend half of all school holidays with the father and share special days and times with both parents. 
125.	The parties’ positions at trial were substantially the same as in their respective offers of settlement. Furthermore, the parties had adopted those positions at the outset of the proceedings, the father in his initiating application on 17 July 2008 and the mother in her amended response on 18 November 2008.
126.	It is clear from the reasons that his Honour placed significant weight on the offer of the mother. In considering the finding that the mother’s offer was more generous than that of the father, we are not able to properly discern whether the judge read the offer of the father, however it was obviously discussed at the costs hearing. 
127.	In any event, based on the submissions of the father at the costs hearing before Bell J and at the appeal hearing before us, it is apparent that the issue of whether the father was wholly unsuccessful is not limited to consideration of the offers and the final orders. In determining the reasonableness of the father’s refusal of the offer and his continued pursuit of the shared care arrangement, we need also consider the information which he says formed the basis of his persistence with the litigation. 
128.	The father maintained at the costs hearing and in the appeal that his parenting application had not been without merit. There appear to us to be two relevant issues which have influenced the father’s view as to the merits of his case. First, the existence of conflicting family reports in the proceedings, and second, the concession by the Independent Children’s Lawyer at one point that the father’s case was not without merit.
129.	At the costs hearing, the father submitted to the judge that his offer to the mother on 26 February 2010 was “in keeping” with the family report of 
Mr P, and with “legal advice and direction” he had been given by the Independent Children’s Lawyer. 
130.	The family report of Mr P was produced on 11 November 2008, and a subsequent family report was produced on 24 September 2009 by Ms B. The report of Ms B was relied upon heavily by Bell J in his reasons in the substantive proceedings.
131.	Mr P made the following positive findings in respect of a shared care arrangement, which favoured the father’s proposal:
205. 	Consequently, however, and on balance; the writer considers that both children would adjust reasonably quickly to a shared care arrangement…
…
210. 	However, in the absence of the parents achieving agreement concerning shared care, the writer can see no reason why an equal shared care arrangement (or at least, six days of contact for the children to their father, in a fortnightly cycle) should not be able to be achieved within a one year period. 
132.	In contrast, Ms B 10 months later made recommendations which did not favour the father’s proposal:
64. 	It is respectfully recommended that [Z] and [N] live with their mother and spend time with their father from after school on Thursday to before school on Monday each alternate week.
133.	In oral submissions before us, the father stated that Mr P had been brought before the Court during the trial in March 2010. Following questioning in relation to Ms B’s updated report, the father says Mr P changed his view, and his evidence at the trial was that he supported Ms B’s position. 
134.	It is pertinent to recall at this junction that the views of report writers are but one piece of evidence in parenting proceedings and the highly discretionary nature of these decisions. Accordingly, it would be unreasonable to expect litigants to “bow out” of proceedings based on the recommendations of family report writers. It is understandable in circumstances such as these that a parent would persist with litigation, armed with some positive recommendations in their favour, notwithstanding later recommendations to a different effect.
135.	In seeking to explain why he had persisted with the litigation, the father also referred to advice from the Independent Children’s Lawyer. As outlined above, in his reasons in the substantive proceedings referred to in the reasons for costs, the judge stated that the Independent Children’s Lawyer had properly conceded that the father’s application was not without merit.  
136.	In her affidavit filed 31 March 2010, the mother stated that the Independent Children’s Lawyer had informed the father of his position, in support of the recommendations of Ms B, at the commencement of the trial. The mother said she was anxious to settle the matter on the first day of the trial without incurring further costs, however the father remained inflexible and continued.
137.	In the appeal it was submitted for the mother that the father was unreasonable to proceed with the trial in such circumstances. Furthermore, this account can only bear relevance to the costs decision from the point of the commencement of the trial, because it was only at that point that the father appeared to have lost the support of the Independent Children’s Lawyer, and then during the trial to have lost the support of Mr P, according to the father’s submissions before us. 
138.	The father also referred to a statement by Federal Magistrate Baumann, earlier in the proceedings on 18 September 2008, which appeared to treat his equal time proposal as an inevitability. A transcript of the proceedings at which the statement was made was attached to his affidavit of filed 1 October 2010 in the costs proceedings. Baumann FM stated:
We’re looking at the long term arrangement which would be, as I said, it seems to me, having regard to the facts and circumstances, putting aside all the disputes between the parties…it seems to me that this is probably a case which will end up as an equal shared time arrangement.
139.	It is reasonable to conclude, when considering the whole of the circumstances and the judge’s clear and repeated finding that the father had been unsuccessful, that the comments of the Federal Magistrate and the Independent Children’s Lawyer were insignificant. Given however the father was 
self-represented and not receiving legal advice throughout the proceedings, it cannot reasonably be said, in our view, that the father was wrong to persist with the litigation when he had received some positive feedback in favour of his position over the course of proceedings.
140.	The position of the mother must also be considered. The father was ultimately unsuccessful in achieving the orders he sought at no doubt great expense to her.
Discussion
141.	Having determined that the appeal should be allowed by reason of ground 1, we are then left with the question of whether there were justifying circumstances for the making of the order. In our view there were circumstances which may have enlivened the consideration of whether a costs order could be justified, but the discretion should not have been exercised to order costs. 
142.	We are mindful that apart from the authorities which we have already referenced, the well known passage from House v The King (1936) 55 CLR 499 should be considered, especially as this is an appeal from an order for costs. 
143.	In that case it was said at 504-5:
	 It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
144.	Costs orders have been made where the Court is satisfied that a party has knowingly made a false allegation or statement in children’s proceedings. It is this kind of serious conduct which more predictably attracts the making of a costs order (Edgar v Halle (No.2) [2010] FamCA 260). 
145.	As was said by the Full Court of this Court in Cross & Beaumont, the financial incapacity to pay a costs order is not a barrier, where the conduct of a party may warrant the making of such an order. In that case, the judge had made findings that the father’s approach to the outcome of the proceedings had been unreasonable, and relied on these findings to make a costs order despite the inability of the father to pay. On appeal however, the Full Court held that:
60. 	… Although his Honour was critical of the way in which the husband presented part of his case, his conduct was not such as to make it immediately obvious why he should be required to pay costs he clearly could not afford. We are of this view notwithstanding the wife also has virtually no assets […] and a significant liability relating to legal costs.
146.	While in this case the judge expressed adverse findings about the conduct and attitude of the father in his reasons, it is relevant to note that there was no allegation or finding of dishonesty. Nor did his Honour make any adverse findings about the father’s conduct of his case at the trial. Counsel for the mother conceded in oral submissions before us that at no point during the trial did his Honour direct the father to cease repetitive questioning, or to move his questioning more quickly, for example. 
147.	Whilst the categories of occasions when costs may be ordered is not limited, the occasions on which such an order should be made in a parenting dispute should have some particular features. Where there is a complete absence of preparedness to compromise in the face of unambiguous expert evidence, where false allegations are made, or where one party is clearly motivated by self interest rather than the best interests of a child, then a judge may well conclude that there are circumstances justifying an order for costs.
148.	On the evidence before the judge in this case an order for costs should not have been made.
Application to Adduce Further Evidence
149.	As we have decided to allow the appeal for the reasons stated it is not necessary to also allow the further evidence.
Costs
150.	In the event the appeal was dismissed, the father sought that there be no order as to costs. He submitted he had no capacity to pay, and that his appeal had merit. 
151.	The mother sought an order for costs, for the costs of the appeal and the costs of the application for further evidence, fixed in the sum of $7,000.
152.	In the event the appeal succeeded, both parties sought costs certificates pursuant to the Federal Proceedings (Costs) Act 1981(Cth). 
153.	The father represented himself, however he no doubt incurred expenses in the preparation of the appeal books. We intend to allow the appeal and in the ordinary course we would consider making an order that the respondent pay the costs. However, the error we have found was that of the judge. The proper order is for a certificate for each party.
Thackray J
154.	I have had the considerable benefit of reading the judgment of May and Ainslie-Wallace JJ, but respectfully do not agree with them that the appeal against the costs order made by Bell J should be allowed.   
155.	The Full Court said in Harris and Harris (1991) FLC 92-254 at 78,711 that costs orders are “peculiarly a matter which are within the discretion of the trial judge” and that “only in the rarest of cases” should an appeal court interfere with such orders.  Although, I accept this may state the proposition “at its highest” (Browne v Green (2002) FLC 93-115), there is nevertheless a long line of authority emphasising the extent to which costs orders are protected from appellate interference.
156.	In Mallet v Mallet (1984) 156 CLR 605 the High Court had occasion to deal with another costs order made by Bell J.  His Honour’s reasons at first instance in that matter had been expressed as follows: 
It is a very strong argument, particularly in relation to the fact of the failure of the wife to convince me of those matters to which he has referred.  However, I do feel the wife is in a much less powerful position financially than the husband...It might be said by the husband that the order I am going to make is plainly unreasonable, but I consider, particularly as a result of the difference in the net financial position, that he should pay some amount of costs towards the wife’s costs, and I propose to fix the figure at $30,000. 
157.	Gibbs CJ, Mason, Deane and Dawson JJ (at 618, 629, 643 and 650) all agreed with Wilson J who said (at 632) that the order for costs made by Bell J consequential upon these succinct reasons “was plainly within the range of a sound discretionary judgment and the reasoning of the learned judge shows a proper understanding of s. 117 of the Act”.   
158.	In arriving at his decision in the present matter, Bell J:
•	found not only that the husband had been “unsuccessful”, but that he had been “very difficult to get on with, a bully, was selfish, and only wanted what he wanted and would not bend…towards the children”;
•	considered the parties’ financial circumstances;
•	found the husband was in “better financial shape” than the wife, who was “in extreme difficulties”, and could afford to “pay something towards [her] costs”; and
•	gave the husband extended time in which to pay what amounted to only a portion of the wife’s costs.            
159.	In my view, the reasons given by Bell J were adequate to support the order made.  They demonstrated a clear understanding of the legislation.   I am not persuaded the order was “plainly unjust”, or that the discretion was “exercised on wrong principles”:  see Robinson and Higginbotham (1991) FLC 92‑209 at 78,419. 
160.	The fact the husband would have difficulty meeting the costs awarded, or may even ultimately be unable to do so, would not have been a sufficient reason for refusing to make the order:  see Cross v Beaumont (2009) 39 Fam LR 389.  In this regard, it is not without significance that Bell J prefaced his finding about the husband’s capacity to pay with the words, “Doing the best I can”.  This expression suggests to me that the Judge himself was not entirely convinced the husband would be able to make the payment within the time allowed, but nevertheless felt it appropriate, in the exercise of his discretion, to make the order.
161.	I accept the validity of what May and Ainslie-Wallace JJ have said concerning the potential merit in the position taken by the husband at trial.  Indeed, as they point out, Bell J himself accepted the husband’s case was not without merit.  However, even a meritorious case can be “unsuccessful” when the other case is found to have greater merit.  
162.	I also respectfully agree with May and Ainslie-Wallace JJ that the “general rule” that each party will pay their own costs is not often displaced in parenting cases, and that the nature of such litigation is quite different to a commercial dispute in other courts.  However, the statute itself does not differentiate between parenting and financial cases.  The discretion given to a trial Judge to determine a costs dispute, even in a parenting case, is a very wide one, and I am not persuaded there is an adequate basis for overturning the order.
163.	I would dismiss the appeal.  Had my view been the majority one, the husband would then have an obligation to pay the wife $15,000 in costs.  Given his undoubtedly difficult financial circumstances, I would have made no order for costs in relation to the appeal.  However, given the majority have determined the appeal should be allowed, I agree it is proper that each party be granted a costs certificate.

I certify that the preceding one hundred and sixty-three (163) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court delivered on 8 June 2012.

Associate:  

Date:  8 June 2012