Bosanac v Commissioner of Taxation

Note: The form of the order is subject to the entry in the Court's records.

Note: This copy of the Court's Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

1. On 6 December 2024, I delivered Reasons for Judgment in properties proceedings between the Applicant Wife and the Respondent Husband.
2. Consequent to those proceedings being heard and determined, the Wife filed a Costs Application on 3 January 2025. In that application, the Wife now seeks:-

(a) her costs of the substantive proceedings, being:-

(i) $300,000 on an indemnity basis; or

(ii) in the alternative, $225,000; or

(iii) costs on a solicitor/client basis as assessed; and

(b) her costs of this application.

1. The Husband resists the Wife's Costs Application and seeks that it be dismissed and the Wife pay his costs of this application.

1. The gravamen of the Wife's case is that she made what she says are reasonable offers to resolve the dispute before the Final Hearing on 4-6 March 2024, both during mediation and in writing, and that the Husband unreasonably failed to accept those offers. The Wife's case rests on her offers having proposed a very similar percentage division of the property pool to the percentage split that was enshrined in my orders of 6 December 2024. The Wife says that, although the arithmetic would suggest that compared to all but one of the offers she made, the Husband achieved a better result at trial (albeit only by a small amount), when one factors in significant legal fees incurred by each of the parties, the Husband (and axiomatically the Wife) would have been better off financially if the matter had resolved in accordance with the Wife's offers.
2. Counsel for the Wife acknowledged that there are two significant limitations to the Wife's case. First, there was a serious question to be tried regarding whether real property formally owned by the Wife and her Mother should be included in the property pool, or treated as being held on trust by the Wife for her Mother. Second, the components making up the Wife's various offers to settle do not easily align with the components that made up the final orders pursuant to my Reasons for Judgment, raising an issue that the Wife's application seeks to compare 'apples with oranges' and undermining the suitability of the percentage-based comparison she proposes.
3. The Husband's case is that there were sufficient outstanding uncertainties before the Final Hearing that it was not unreasonable for him to proceed to Final Hearing, and that while the result at trial more closely resembled the Wife's proposal, his own proposal was not outside the ambit of judicial discretion. Counsel for the Husband further argued that the Wife had failed to provide an itemised bill of exactly what work was done when and by which legal practitioners in her case, and therefore there was not enough specificity for me to make any findings as to the reasonableness of costs.
4. That second argument for the Husband was somewhat curious, because both parties affirmed repeatedly that they did not seek a formal taxation of costs, and that they considered such a process would be disproportionate. The kind of line-by-line review of costs incurred that Counsel for the Husband suggests would, at least at first blush, seem more appropriate to a formal taxation process.
5. Necessarily, dealing with this application requires consideration of pre-trial negotiations. Counsel for both the Husband and the Wife confirmed orally that they had no objection to me receiving and considering evidence of those negotiations.

1. These reasons should be read in conjunction with my Reasons for Judgment dated 6 December 2024 in the substantive proceedings (Cabello & Cabello (No 2) [2024] FedCFamC2F 1727). Those reasons set out the background of this matter, which I adopt, but shall not repeat here. Instead, I shall highlight only those key items relevant to the Wife's Costs Application.
2. The substantive proceedings initially involved both parenting and property applications. The parenting proceedings resolved by consent on 7 June 2023, in a context of the matter being listed for Final Hearing for three days but not being able to be reached. It is common ground that the parties continued to negotiate the property dispute over the three days of the listing, but were unsuccessful.
3. Prior to that listing, on 25 July 2022, the parties attended mediation, at which the Wife says she offered to resolve the property proceedings on what she characterises as a split of 58.81% to the Husband and 41.19% to the Wife (in dollar terms $3,768,096 and $2,638,648 respectively). That offer would have involved the Husband assuming liability for the mortgage over the former matrimonial home, situated at B Street, Suburb C, in New South Wales ("the Suburb C Property"). The Wife has provided a table setting out the components making up this offer, which has a number of missing figures, and does not apply the same values I determined in my 6 December 2024 judgment. The Wife's percentage split also assumes a total property pool value of $6,406,744 (over $500,000 less than the total value I subsequently determined), and many of the items it includes do not match items in the final property pool. Doing as best I can to align items listed in that offer with items listed in the final pool, and applying the values I assessed for the final pool (a necessarily imprecise exercise), I would estimate the property divide to be 57% to the Husband and 43% to the Wife (in dollar terms $3,947,729 and $2,970,755, respectively). Finally, I do not understand this offer to have been a formal offer in writing, let alone a Calderbank offer, but rather an oral offer with some degree of informal supporting documentation.
4. At the 25 July 2022 mediation, the Husband's best counter-offer was for the Wife to retain responsibility for the Suburb C Property mortgage and for the Wife to make a payment to the Husband of $435,000. The Husband wished to include the maternal grandmother's house ("the H Street Property") in the property pool. The Wife estimates this offer as a split of 68.26% to the Husband and 31.74% to the Wife (in dollar terms $4,946,485 and $2,260,259 respectively) including the H Street Property, or 72.67% to the Husband and 27.33% to the Wife (in dollar terms $4,946,485 and $1,860,259) excluding the H Street Property. Following the same rough approximation process to apply the values I determined at trial, I would estimate the Husband's counter-offer as 66.63% to the Husband and 33.37% to the Wife (in dollar terms $4,831,628 and $2,419,856 respectively) including the H Street Property, and 69.84% to the Husband and 30.16% to the Wife (in dollar terms $4,831,628 and $2,086,856 respectively). Again, I do not understand this to have been a formal offer in writing, let alone a Calderbank offer.
5. The Wife's documentation estimates legal fees up to the 25 July 2022 offer as $150,724 for the Husband and $133,260 for the Wife.
6. On 15 August 2022, the Husband made a formal offer of settlement to the Wife in largely the same terms as his best offer on 25 July 2022, save that the proposed payment from the Wife was increased to $450,000. Following the same rough approximation process as before, I would estimate this division as 66.84% to the Husband and 33.16% to the Wife ($4,4846,628 and $2,404,856 respectively) with the H Street Property included, and 70.05% to the Husband and 29.95% to the Wife ($4,846,628 and $2,071,856 respectively) with the H Street Property excluded.
7. On 2 September 2022, the Wife made a formal written offer to the Husband, described as an open offer under Division 4.2.2 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("the Rules"), although not said to be a Calderbank offer. The letter conveying that offer expressly stated that the Wife would seek indemnity costs from the date of the letter if her offer was not accepted. The Wife included the H Street Property in the pool, albeit at a net value of $283,000 to her, whereas I determined at trial that, had the H Street Property been included in the pool, the appropriate net value would have been $333,000. The Wife states that this offer amounted to a split of 58% to the Husband and 42% to the Wife ($3,944,242 and $2,911,668 respectively), or 60% to the Husband and 40% to the Wife ($3,944,242 and $3,194,668 respectively) if the H Street Property were excluded. Apart from the inclusion of the H Street Property, it does not appear to me that the Wife had changed the substance of her offer from the 25 July 2022 mediation, and the change in the Wife's estimated percentage breakdown reflects changes in the estimated value of various assets instead. Therefore, my rough approximation of the split if I apply the values I determined at Final Hearing would remain 57.06% and 42.94% with the H Street Property excluded, or 54.44% and 45.56% with the H Street Property included.
8. On 12 October 2022 the High Court published the decision of Bosanac v Commissioner of Taxation [2022] HCA 34 ("Bosanac"), which had significant implications for the outcome in this case regarding whether H Street Property should be included in the property pool.
9. On 9 May 2023, the Wife's mother filed an affidavit setting out the circumstances of the acquisition of the H Street Property, and providing evidence as to the intention of the Wife and her parents at the time of purchase of the H Street Property.
10. On 17 May 2023, the Wife made a further offer of settlement based on a split of 59% to the Husband and 41% to the Wife ($4,019,682 and $2,835,600 respectively). As best I can tell, the details of this property split are largely the same as in the Wife's 25 July 2022 offer, save that she now also sought a cash payment of $100,000. The Wife still proposed that the Husband be responsible for the mortgage over the Suburb C Property, and was no longer willing to include the H Street Property as an item in the property pool. Again applying the values I determined at final hearing as a rough approximation, I would therefore make this split 55.62% to the Husband and 44.38% to the Wife ($3,847,729 and $3,070,755 respectively).
11. The Wife's affidavit presents the 17 May 2023 offer as an offer to settle the property proceedings. As I read the relevant correspondence, it appears to be an offer covering both property and parenting (where the Wife still sought sole parental responsibility, versus the final parenting orders of 9 June 2023 providing for joint parental responsibility), and it is not clear on the face of that correspondence that it was open to the Husband to accept the property proposal without also accepting the parenting proposal. Once again, the offer was said to be an open offer under Division 4.2.2 of the Rules, but was not said to be a Calderbank offer.
12. The Wife's 17 May 2023 documentation estimates that the parties' legal expenses up to 29 November 2022 as being $271,034 for the Husband and $222,952 for the Wife.
13. On 22 May 2023, the Husband made an offer of settlement. It appears to be the same his offer of 15 August 2022. The Wife would remain responsible for the mortgage over the Suburb C Property, and would need to pay him $450,000. The Husband's calculation of the asset pool still included the H Street Property. The letter enclosing the offer stated that the Husband would rely on it with regard to costs if the matter went to trial, but did not state that it was an offer pursuant to Division 4.2.2 of the Rules, nor that it was a Calderbank offer.
14. On 6 June 2023, the matter was due to come before a Judge of Division 2 for final hearing, but could not be reached on that day.
15. On 9 June 2023 at the conclusion of the unreached final hearing, among other procedural-style orders the parties entered into interim consent orders for various single expert valuations of real properties they held. Relevantly, that included a valuation for a property the Husband brought into the relationship and marriage, situated at E Street, Suburb F, in New South Wales ("the Suburb F Property").
16. Also on 9 June 2023, after the making of the consent orders, the Wife made a further written offer to settle. That offer represented a marked shift in the Wife's position, as she now proposed that the parties each be responsible for half of the mortgage over the Suburb C Property, instead of the full debt being borne by the Husband. The Wife states this offer reflected a split of 65.88% to the Husband and 34.12% to the Wife ($4,602,596 and $2,383,865 respectively). As best I can estimate based on the values I determined at trial, I make the split 60.30% to the Husband and 39.70% to the Wife ($4,172,179 and $2,746,306 respectively). Noting the roughness of my estimate, it appears this offer would have left the Husband better off than under the final orders of 6 December 2024, without needing to include legal fees.
17. The Wife's 9 June 2023 offer purports to be made in accordance with the principles in Calderbank v Calderbank [1975] 3 All ER 333, but I am not persuaded the offer in fact complies with the requirements of those principles, as the letter does not set out the legal basis upon which the Wife asserts that her offer should be considered compelling. The closest that the letter comes to such a rationale is to note that if the matter continues the parties will "incur very significant further costs". I appreciate that setting out a compelling legal basis for a settlement offer in property proceedings is challenging because the ambit of judicial discretion (especially in a case such as this) can be very wide. It is not necessarily clear that the Husband's steadfast position in his 15 August 2022 and 22 May 2023 offers was outside the bounds of possible results (although I remarked in trial that it looked to me to represent the upper limit of those bounds). However, the inclusion of that rationale is an essential element of a Calderbank offer. Rules 4.06 and 4.07 provide alternative means to make an open or 'with prejudice' offer, and to rely on the existence of an offer that is without prejudice save as to costs at the appropriate time, and therefore the difficulties in setting out compelling rationales as required in a Calderbank offer does not stymie a party's ability to seek costs following success at trial. It is important that parties and their legal representatives ensure they do not represent their offers as Calderbank offers unless all requirements are met.
18. On 11 September 2023, the Wife made a further offer of settlement. The Husband had not yet responded to the 9 June 2023 offer. The Wife's revised offer proposed that she be responsible for 68.18% of the mortgage over the Suburb C Property (that is, for $300,000 of mortgage debt), the Husband be responsible for the remaining 31.82% (approximately $139,956 at that time), and that the H Street Property be excluded. The Wife calculated this offer as effecting a split of 67.02% to the Husband and 32.98% to the Wife ($4,682,618 and $2,303,842 respectively). I note that the Wife's calculations on this point use a very high estimated value for the Suburb F Property. As best I can estimate based on the values I determined at trial, I make the split 61.53% to the Husband and 38.60% to the Wife ($4,256,672 and $2,670,755 respectively). The Wife's 11 September 2023 offer therefore represents a materially better outcome for the Husband than he achieved at trial, by over $100,000.
19. As with the Wife's 9 June 2023 offer, her 11 September 2023 offer purports to be made in accordance with the principles in Calderbank v Calderbank, but in my view again suffers from a material defect in that it does not set out a legal rationale for why the Husband should consider the Wife's offer compelling. It does however, once again, put the Husband on notice of the Wife's intention to seek indemnity costs.
20. The Wife states she did not receive any response to either the 9 June 2023 or 11 September 2023 offers. That is correct.
21. On 1 March 2024, the Husband filed a costs notice in advance of the upcoming final hearing. The Husband stated he had expended $497,966 so far on legal expenses and disbursements, and that he was anticipated to expend a further $76,160 at the final hearing. The total of those amounts is $574,126.
22. On 4 March 2024, the Wife filed a costs notice on the same date as the start of the final hearing. The Wife stated that, including the anticipated costs of the final hearing, the Wife's total costs were estimated to be $433,593.
23. On 4 March 2024, the property proceedings came before me for final hearing for three days.
24. On 6 December 2024, I made orders:-

(a) declaring that the total value of the property pool was $6,918,484;

(b) effecting a division of the property pool 60% to the Husband and 40% to the Wife (in dollar terms, $4,151,090.40 and $2,767,393.60 respectively);

(c) effecting that division by (among other things):-

(i) having the Wife assume responsibility for the mortgage over the Suburb C Property; and

(ii) the Husband making a payment to the Wife of $227,543.

1. In my reasons of 6 December 2024, I also stated:-
   1. Each party also seeks costs orders against the other. At this point there is no reason to think that the usual position pursuant to section 117 of the Family Law Act 1975 (Cth) ("the Act") should not apply, although the parties may make a formal costs application following the result of these proceedings, if they consider there are grounds.

1. The Wife's Costs Application was heard before me on 12 May 2025. Subsequently, on 10 June 2025, the Family Law Amendment Act 2024 (Cth) ("the Amendment Act") came into force, which included amendments to those sections of the Family Law Act 1975 (Cth) ("the Act") governing costs applications and orders. Pursuant to item 15 of Schedule 4 of the Amendment Act, the costs amendments do not apply to applications that had reached final hearing before 10 June 2025. Accordingly, I must deal with the Wife's Costs Application pursuant to the Act as it was on 12 May 2025.
2. As at 12 May 2025, costs orders were governed by section 117 of the Act, which then relevantly provided:-

(1) Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party's own costs.

(2) If, in proceedings under this Act, the court is of opinion [sic] that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

(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.

1. Counsel for the Wife stated that the Wife's application was made in reliance on section 117(2A)(f). That is a somewhat unusual framing of a costs application in this Court, as the factors in section 117(2A) do not grant an automatic entitlement to costs, but rather are factors for the Court to consider holistically to determine what order (if any) may be just pursuant to section 117(2). Indeed, rule 4.11(2) of the Rules as they were at 12 May 2025 compels each party to "make a genuine offer to settle to all other parties" by no later than "28 days after a conciliation conference or mediation" or, in cases without any such conference, "28 days after the first court date". Having made an offer in compliance with rule 4.11(2) would therefore seem to be the ordinary course of proceedings, and in the ordinary course of proceedings each party in this Court bears their own costs. Something more must be required for it to be appropriate for the Court to depart from the usual rule enshrined at section 117(1) of the Act.
2. Likewise, the mere fact of having succeeded at trial would not ordinarily be seen to justify a departure from section 117(1), because that would mean that costs followed the event, defeating the purpose of section 117(1).
3. The provisions of section 117(2A)(f) of the Act (as it was on 12 May 2025) do not make an award of costs dependent on whether a party achieves a more favourable result than they would have received under the offer, but rather require a consideration of the terms of the offer. In Pennisi v Pennisi [1997] FamCA 39; (1997) FLC 92-774, the Full Court discussed the relevance of offers to costs applications and said (at 84,547):-

The husband's submissions refer to Robinson and Higginbotham [1991] FamCAFC 5; (1991) FLC 92-209 as authority for the proposition that the fact than 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] FamCA 124; (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.

1. That issue of uncertain and unequal knowledge was plainly relevant to this case, given the ongoing disputes as to valuations and the inclusion of the H Street Property in the property pool, as I shall discuss below.

1. A number of the considerations set out at section 117(2A) can be dealt with quickly.
2. The financial circumstances of the parties are that they both earn significant incomes and have significant assets, but do not necessarily have substantial cash holdings or easily liquidated assets. Both are facing very substantial costs from the substantive proceedings (over $400,000 for the Wife and over $500,000 for the Husband). Neither is so wealthy or on such a high income that they will be able to absorb their own costs (let alone the other party's) without some financial pain. However, neither is in such a precarious position to raise concerns that they will not be able to meet their own costs, or a costs order in the other party's favour if needed.
3. Neither party received a grant of legal aid.
4. Both parties sought to argue that I should take a dim view of the other's conduct in the proceedings. The Wife alleged the Husband unreasonably failed to make reasonable offers. I disagree. The Husband made a series of offers roughly in line with the orders he sought at Final Hearing, and I noted to the parties at the Final Hearing of the substantive proceedings that I did not think the proposals of either party were necessarily outside the range of judicial discretion, notwithstanding that I considered each party's proposal likely sat at the respective limits of the range of my discretion. The Husband recounts a series matters he asserts amounted to failures of discovery and/or unjustified attempts by the Wife to dispute valuations of real properties. The matters the Husband raises were discussed at the Final Hearing of the substantive proceedings before me in March 2024. I remain of the view that nothing before me at that time justified a costs order.
5. Prior to the commencement of the substantive proceedings, there were no previous orders of this Court in effect for this family. Therefore, the proceedings were not necessitated by a breach of any orders of this Court.
6. The Wife asserts that the Husband was wholly unsuccessful at trial. I disagree. The Wife was successful in that I made an order for the Husband to make a payment to her, rather than the other way around, and in that I did not consider that the H Street Property should be included in the property pool. However, the Husband was successful in that I ordered that the Wife should be responsible for the full mortgage over the Suburb C Property. While the overall financial values of the split for each party pursuant to my orders appears to have been reasonably close to the overall values of the Wife's 9 June 2023 and 11 September 2023 offers, those offers were not the position that the Wife advanced at trial. At trial, the Wife pursued a more ambitious claim. That is a forensic decision, and it is not necessarily unreasonable for a party to take that approach, as the party may be willing to forego a significant portion of their claim in order to settle a matter early. I do not criticise the Wife for taking a more ambitious position at trial. It does however mean that it is simply not true to characterise the Wife as wholly successful or the Husband as wholly unsuccessful at trial. Based on the positions each took to trial, the final result was squarely in the middle of what each party proposed.
7. I also do not consider there are any matters falling under section 117(2A)(g) in this case.

1. I wish to start by returning to the Husband's assertion of a dearth of evidence as to the detailed breakdown of the Wife's legal costs, and his argument that I could not rely on the Wife's costs notice as sufficient evidence to support the making of any costs order. I noted above that I was not entirely persuaded by this argument. That said, the Husband's argument is a sound and important rebuttal to the Wife's claims in one regard: I do not consider that I can reasonably give weight to the Wife's written offers prior to 6 June 2023. Before that point, the parties' parenting proceedings were still on foot. Those proceedings settled, and no party has argued that I ought to include the costs of the parenting proceedings in any costs order I might make. I do not have evidence to separate the Wife's costs of the parenting proceedings from her costs of the pre-6 June 2024 property proceedings, and any attempt to do so would be impermissible speculation. Therefore, my consideration of the Wife's written offers is limited to 9 June 2023 and 11 September 2023 offers.
2. The Wife notes that both those offers would have been financially advantageous to the Husband in comparison to the result in my orders of 6 December 2024. That is a relevant factor, but it is one I must approach cautiously, in two ways. First, as noted above, I am not persuaded that the contents of the Wife's offers are as readily comparable to my 6 December 2024 orders as she might wish. The items in those offers do not align with the items presented to me as constituting the property pool at final hearing, and the valuations upon which the Wife relied were materially different to the values I determined at the Final Hearing. I therefore wish to repeat what I said above about my efforts to estimate the value of the Wife's offers based on my determinations at the Final Hearing, and how those efforts are at best a rough estimate. I note that the Husband's affidavit filed in these costs proceedings made an effort to create a similar estimate based on my determinations. The Husband did not reach quite the same values and percentages I did (although his figures were close to mine). That is no criticism of the Husband; rather it is an indication of the difficulty of comparing the result at trial with the terms of the Wife's offers. I do not think it is impossible to make such a comparison, but it must certainly be undertaken with caution.
3. My second caution is that, at least in property proceedings in this Court, the fact that the Husband would have been better off had he accepted the Wife's offers of settlement does not necessarily mean that he was acting unreasonably when he refused those offers. I noted above that one of the requirements for a Calderbank offer is that it must set out the legal rationale why the offeror considers the offeree should accept the offer. I do not consider the Wife in fact made a Calderbank offer on either 9 June 2023 or 11 September 2023. The reason a Calderbank offer must include that rationale is because without such a rationale it is not necessarily clear that the offeree should consider the offer compelling or reasonable. In property proceedings under the Act, the ambit of judicial discretion is very wide, and the Husband's case (while ambitious) was arguable. The mere fact of the Wife having bettered her offer at trial does not automatically mean that the Husband's refusal was unreasonable.
4. Two key factors weighing against a conclusion that the Husband's refusal was unreasonable were that: (1) there were still valuation issues at large until the morning of the first day of trial; and (2) the parties had not reached a resolution as to whether the H Street Property should be included in the property pool. Both of those issues spoke directly to the Husband's ability to assess whether he ought to accept the Wife's offer. Even if the Husband could have known in advance that I would conclude that a 60/40 split was appropriate (and I do not suggest he could have had such knowledge, although he certainly ought to have had in contemplation that I might reach such a conclusion), the make-up of that split would vary quite significantly depending on whose asset valuations I accepted and whether I included the H Street Property in the asset pool.
5. Counsel for the Wife put that the Husband should have known his argument about the H Street Property was unlikely to succeed once the Wife's mother made an affidavit (in 2023) attesting to the circumstances and intentions when the H Street Property was purchased. Counsel for the Wife relied on my findings that both parties at trial misunderstood the effect of the High Court's decision in Bosanac regarding the presumption of advancement. Specifically, the Husband's case relied on treating the presumption of advancement as a strong presumption, verging on a principle of law, and requiring weighty evidence to rebut. By contrast, and as I discussed in my reasons of 6 December 2024, Bosanac indicates that the presumption of advancement should be considered an evidentiary presumption only, not a rule of law, and that it is only to be applied where there is no better evidence of the relevant persons' actual intentions at the time of purchase/gift/loan of the relevant property. Bosanac indicates that the threshold to 'rebut' the presumption of advancement (or, rather, the amount of evidence required before there was no proper role for the presumption) was lower than had often been assumed. As such, the maternal grandmother's affidavit was ample evidence to displace any role for the presumption of advancement because it spoke to her, the maternal grandfather's, and the Wife's actual intentions at the time of purchase of the H Street Property. Once Senior Counsel for the Husband in the substantive proceedings made a forensic decision not to require the maternal grandmother for cross-examination, that meant that a proper understanding of Bosanac foreclosed any ability for the Husband to assert that the H Street Property should be included in the property pool.
6. There are two problems with the Wife's argument that the Husband should have known that he would not succeed on the H Street Property issue. First, the Husband's argument was only foreclosed once the forensic decision was made not to cross-examine the maternal grandmother. For a reasonable portion of at least the first day of trial, it was still anticipated that the maternal grandmother would be required for cross-examination. Had cross-examination occurred, it might have been possible for Senior Counsel for the Husband to challenge the maternal grandmother's account successfully, and persuade me to reject her assertion as to actual intentions at the time of purchase of the H Street Property. It would be inappropriate for me to take a forensic decision during the trial itself as evidence that the Husband's argument should have been clearly hopeless nearly two years earlier.
7. Second, the Wife is bound by the conduct of her case at trial. Her Counsel in the substantive proceedings appeared to accept (in my view, reasonably expressly) the interpretation of the presumption of advancement proposed by Senior Counsel for the Husband - being that it was a strong presumption of law that required material evidence to rebut. Counsel for the Wife in the substantive proceedings ran this portion of the case on the basis that the maternal grandmother's affidavit was strong evidence, not on the basis that the presumption was weaker than Senior Counsel for the Husband had asserted. The Wife cannot now argue that the Husband should have known his case was premised on a flawed interpretation of the law when it was an interpretation her Counsel accepted at trial, notwithstanding that I disagreed with both Counsel and Senior Counsel.
8. Nevertheless, I do accept that it is relevant that the Wife made serious attempts to settle the proceedings, in that her 9 June 2023 offer was a material improvement on her previous offers (being an offer to share responsibility for the Suburb C Property mortgage, and her 11 September 2023 offer was a marked improvement again (being an offer for her to assume a significant majority of the Suburb C Property mortgage). While the Wife did not articulate a legal rationale for the Husband to consider those offers reasonable or compelling, they were not only clearly within the range of available outcomes at trial, but realistically favourable to the Husband within that range. He ought not have lightly disregarded them. In my view, but for the H Street Property issue, there would have been force to the Wife's argument that the Husband was unreasonable to have continued the litigation after at least the 11 September 2023 offer and quite possibly the 9 June 2023 offer, as he faced a real prospect that any improvement on those positions he secured at trial would have been erased by his increased legal costs. However, with the H Street Property issue still on foot, I consider that the range of outcomes was sufficiently wide that I am not prepared to say that the Husband's refusal of the Wife's offers was clearly unreasonable.
9. The question then is whether there was a time when it can be said that the H Street Property issue was no longer on foot or at least no longer realistically arguable for the Husband. I consider such a point came when Senior Counsel for the Husband decided not to require the maternal grandmother for cross-examination. At that point, even on the stronger interpretation of the presumption of advancement used by both sides' representatives, Senior Counsel would have faced an uphill battle to persuade me that I should disregard evidence of the actual intentions at the time of purchase of the H Street Property. From that point on, I consider the Husband's case no longer can be described as reasonable, and in light of the Wife's repeated and genuine attempts to settle the case earlier, on terms favourable to the Husband, I consider it is just that she should have some measure of her costs from that time onward, and I consider that the circumstances of the case warrant a departure from the position at section 117(1).

1. Since my conclusion that it is just and appropriate to depart from the usual position at section 117(1) depends on the forensic decisions of Senior Counsel for the Husband at trial, I propose to limit the costs I will award her to her trial costs.
2. The Wife has sought to argue that this is a case in which I should order indemnity costs. The principles governing indemnity costs are appropriately summarised in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 231, 233-4, and in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 400-401. What both parties have correctly acknowledged regarding indemnity costs is that they are rare, requiring some form of serious defect in one party's case. The Wife's case hinges on the descriptor of an "imprudent" refusal of an offer of compromise being one category in which indemnity costs may apply. In my view, the word "imprudent" should be understood in conjunction with the well-accepted position that indemnity costs are for exceptional circumstances. To refuse an offer is hardly exceptional, and even where that offer turns out to be more generous than the result at trial, I would consider it still necessary to show that the refusal was clearly unreasonable at the time of the refusal. Where a case has significant uncertainties (as this one had), I do not consider it appropriate to conduct that assessment of reasonableness with the benefit of hindsight. I am not persuaded the Wife has shown that this case has the exceptional features warranting a full indemnity order.
3. I must therefore turn to the more difficult question as to whether party/party or special costs should be ordered for the Wife's trial costs. The Court is not bound or confined to ordering either party/party costs or costs on an indemnity basis. As the Full Court pointed out (per Aldridge, Watts and Austin JJ) in Sfankianakis & Sfankianakis [2019] FamCAFC 54 at [10]:-

10. ...It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words "such order as to costs... as the court considers just" permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order. For convenience, in these reasons we shall refer to such orders as a "special costs order".

1. I am not persuaded that costs at scale would do sufficient justice to the Wife. There is a material gap between the actual costs the Wife incurred as opposed to the costs available to her if assessed at scale. I also note that she retained Counsel who was opposed to Senior Counsel (both of whom behaved collegiately and were of great assistance to the Court in narrowing the issues of dispute in an efficient manner). It would seem to defeat the purpose of awarding the Wife her costs of the trial if she were left out of pocket for significant proportion of those costs, which would be the outcome if I awarded costs at scale. The just outcome must be between those two options of indemnity and scale.
2. Regarding what amount would be just in this case, I note the comments of the Full Court in Hitch & Hitch [2012] FamCAFC 124 outlining the discretionary nature of a costs consideration, and the difficulties it poses. The Full Court said:-

116. It is also essential to appreciate the breadth of the language employed in s 117(2), which provides that the Court may make such order as to costs as it considers "just". There is arguably no more imprecise word in the legal lexicon. As McHugh J said in Perre v Apand [1999] HCA 36; (1999) 198 CLR 180, at 211-212, and in his dissent in Mann & Carnell [1999] HCA 66; (1999) 201 CLR 1 at 41, at [130] (footnotes omitted):

...almost everyone would agree that courts should not impose a duty of care on a person unless it is fair, just and reasonable to do so. But attractive as concepts of fairness and justice may be in appellate courts, in law reform commissions, in the academy and among legislators, in many cases they are of little use, if they are of any use at all, to the practitioners and trial judges who must apply the law to concrete facts arising from real life activities. While the training and background of judges may lead them to agree as to what is fair or just in many cases, there are just as many cases where using such concepts as the criteria for duty would mean that "each judge would have a distinct tribunal in his own breast, the decisions of which would be as irregular and uncertain and various as the minds and tempers of mankind". Lord Devlin was surely right when he said:

"For a judge to decide fairly and convincingly every case that comes before him in the light only of his own sense of justice, he would have to be a superman. I doubt if there have ever been more than a handful of men on the Bench who could do it, though doubtless there are slightly more who think that they could."

117. For better or for worse, the legislature has determined that decisions about costs in the family law jurisdiction are to be made on the basis of the judicial officer's sense of what is "just", albeit guided by reference to prescribed factors. Regrettably this means that, having resolved the substantive issue, the trial judge is then often faced with a second dispute about who should bear the costs. The judges of the Appeal Division are saddled with the same burden, albeit protected to a much greater extent by the limited avenue of appeal. In my view, it is important that judges are able to deal with costs disputes knowing that their exercise of discretion will be respected, save in those cases where they have demonstrably erred or where, to adopt Stephen J's expression in Gronow [Gronow v Gronow [1979] HCA 63; (1979) 144 CLR 513], there has been no proper exercise of judicial discretion.

1. Referring to the scale of costs set out at schedule 3 of the Rules, as they were in March 2024 (the time of the Final Hearing in the substantive proceedings), I estimate scale costs for the Wife would have been $2,175 per day of hearing for Counsel, with a further 50% advocacy loading, which for a three day hearing is $9,787.50. Counsel's preparation time appears to be charged at $452.51 per hour. Allowing two days of preparation at 8 hours per day, that would be a further $7,240.16. Finally, allowing the instructing solicitor's attendance for 3 days of trial at 7 hours per day, at $276 would be $5,796. The total of those amounts is $22,823.66.
2. I was informed by Counsel for the Wife in this Costs Application that her actual costs of the trial in the substantive proceedings was $37,190. However, that amount included the costs of a second instructing solicitor attending, at approximately $4,935. I consider it appropriate to exclude the cost of that second solicitor as not properly necessary for the running of the trial, which brings the total down to $32,255. That still leaves a gap of nearly $10,000 between scale costs and the Wife's actual costs (as modified). Both parties have firmly indicated they do not wish me to send this matter to a taxation of costs to determine exactly what the Wife's costs specific to the trial itself were, and exactly which portions of those costs are referrable to which of the two instructing solicitors who attended. I shall therefore instead fix a number that I consider reflects a just and appropriate outcome, incorporating the reduction I noted above.
3. I consider that the Wife's costs of the trial in the substantive proceedings should be fixed in the sum of $32,250 as a round figure. I consider this is an appropriate number between scale costs and indemnity costs, and is appropriately quarantined in the manner I have discussed above. I shall make orders to that effect.

I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Stewart.