Overview — Offers of settlement and costs orders

As offers of settlement must be made in proceedings relating to property, where there is a failure to make such an offer, a costs order will only follow if no genuine attempt is made to resolve the parties’ dispute.

Section 117 of the Family Law Act 1975 (Cth) provides that each party in family law proceedings shall pay their own costs, subject to any order made by the court. See Parties normally bear their own costs.

However where a party does not comply with the case management rules, before making a costs order against a party, one of the matters the court must take into account is whether either party has made a genuine offer to settle the matter in writing to the other party. Written offers of settlement can therefore be a critical factor in persuading a court to make, or not make, a costs order.

The Family Law Rules 2004 (Cth) provide for occasions during the litigation process at which written offers of settlement must be made. See Compulsory offers of settlement in property cases. These occasions are intended by the court to focus the parties and their legal representatives on the resolution of the proceedings, to assist in the identification of disputed issues and to reduce costs of holding a hearing.

Both the Family Court (of Australia and Western Australia) and the Federal Circuit Court insist that parties attend a dispute resolution conference to discuss their alteration of property proceedings. Usually termed a “conciliation conference”, either a registrar or an impartial mediator will encourage parties to come to an agreement in the form of Consent Orders that are approved by the court in order to discontinue the proceedings.

Apart from compulsory offers of settlement, a party may make a proposal to settle proceedings at any time, before or after the proceedings have commenced. Any offer must be made in writing and may not be disclosed to the court except in respect to a costs application.

Practice Tip: Practitioners should read Farmer v Panshin [2014] FamCAFC 78; BC201451184 which looked at offers to settle and costs orders following protracted litigation.

Offers of settlement can also be withdrawn by written notice at any time but may be the subject of a costs application if the other party is not provided with adequate time to consider a counter-offer. See Withdrawal of offers of settlement.

All offers of settlement must be made in writing and should be authorised and signed by the client prior to being proposed. Before submitting an offer, the lawyer should provide the client with a Costs Notice indicating those fees which have been paid, are outstanding and costs that are likely to be incurred if the matter should go to trial. Consideration should be given as to whether an order to pay costs should be included in the offer.

The provisions of s 117 of the Family Law Act 1975 (Cth) apply equally to proceedings in the Family Court of Australia and the Federal Circuit Court of Australia. In WA, for cost disputes in relation to married parties s 117 of the Family Law Act 1975 (Cth) applies while for de facto couple and matters concerning ex-nuptial children, s 237 of the Family Court Act 1997 (WA) applies. This is a mirror provision of s 117 Family Law Act 1975 (Cth).