H, AW v K, S [2023] SASCA 26
On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (THE HONOURABLE AUXILIARY
JUSTICE BOCHNER) SCCIV-19-144
Applicant: H, AW Counsel: MR S OWER KC WITH MS L GAVRANICH - Solicitor: OMNIAD LEGAL
Respondent: K, S Counsel: MR RJ WHITINGTON KC WITH MR J MARSH - Solicitor: ANGELA
FERDINANDY
Hearing Date/s: 10/11/2022
File No/s: CIV-22-006300
A
SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply
to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach
any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated.
H, AW v K, S
[2023] SASCA 26
Judgment of the Court of Appeal
(The Honourable President Livesey, the Honourable Justice Doyle and the Honourable Justice Bleby)
16 March 2023
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS
- COSTS - OFFERS OF COMPROMISE, PAYMENTS INTO COURT AND
SETTLEMENTS - PAYMENT INTO COURT - ACCEPTANCE
APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - POWERS
OF COURT - COSTS
ESTOPPEL - ESTOPPEL BY JUDGMENT - RES JUDICATA OR CAUSE OF
ACTION ESTOPPEL - PARTICULAR CASES
In 2014, the appellant met the respondent and the two commenced a relationship. Over the course
of the relationship, the appellant transferred large sums of money into the respondent’s bank account,
allowing her to rent a house for herself and her son, cut back on the hours she worked, pay for her
son’s school fees, and live a more luxurious lifestyle than she would be able to afford on her own
earnings. The relationship broke down between October 2018 and January 2019.
The appellant brought proceedings seeking a declaration that the respondent held $87,000 on trust
for him, and delivery up of a Mercedes Benz motor vehicle. The respondent denied the claim,
arguing that the money was provided to her by way of financial support, and that the car was a gift.
The respondent brought a cross claim in which she sought a declaration that the two of them had
been in a de facto relationship.
On 11 November 2020, the respondent filed an offer in the Supreme Court proceedings to “settle the
entire matter (all claims between the parties)”. In relation to costs, the offer provided that the offeror
(the respondent) would submit to any order the Court may make in the exercise of its discretion. The
appellant did not file a formal response to the offer.
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At trial, the judge dismissed the claim, finding that the money and motor vehicle were gifts and not
subject to a claim in restitution. However, the judge also dismissed the claim for declaratory relief in
the cross claim.
Following the delivery of judgment, each party sought orders for costs in their favour. The judge
found that costs should follow the event. Although both the claim and cross claim had been
unsuccessful, her Honour found that the cross claim did not significantly add to the costs incurred on
the claim and so should not result in any reduction to the respondent’s entitlement to costs.
The judge held that these costs should be paid on an indemnity basis pursuant to r 132.10(2) of the
Uniform Civil Rules 2020 (SA), on the basis that the appellant had obtained a judgment that was less
favourable to them than the offer.
The appellant appeals on the ground that the judge erred in holding that the judgment dismissing the
respondent’s cross claim provided no benefit or advantage to the appellant over a judgment based
upon the offer to consent to an order dismissing that cross claim. The appellant argued that the latter
would not have prevented the respondent from pursuing her Family Court claim for relief predicated
upon the existence of a de facto relationship, whereas the former had that effect.
Held (per the court), dismissing the appeal:
1. it is undesirable that the Court attempt to reach a definitive resolution of the issues raised by
the appellant for the purposes of resolving a costs dispute;
2. even if there was some potential advantage to the appellant from the judgment obtained, there
was nevertheless a proper basis to order indemnity costs against the appellant.
Family Law Act 1975 (Cth) ss 4AA, 90RD, 90RE, 90SB, 90SE, 90SM; Jurisdiction of Courts (Cross-
vesting) Act 1987 (SA) s 5(1); Supreme Court Act 1935 (SA) s 31; Uniform Civil Rules 2020 (SA) rr
132.4, 132.7, 132.8, 132.9, 132.10, referred to.
A Hudson Pty Ltd v Legal & General Life of Australia Ltd (1985) 1 NSWLR 701; Australian
Competition and Consumer Commission v Australian Safeway Stores Pty Ltd (No 2) [2001] FCA
1861; Australian Securities Commission v Aust-Home Investments Ltd (1993) 44 FCR 194; Badge
Constructions Pty Ltd v Penbury Coast Pty Ltd [1999] SASC 6 ; Blair v Curran (1939) 62 CLR 464;
Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502; Clayton v Bant (2020) 272
CLR 1; Coles v Wood [1981] 1 NSWLR 723; Craigcare Group Pty Ltd v Superkite Pty Ltd [2014]
NSWSC 467; Ekes v Commonwealth Bank of Australia (2014) 313 ALR 665; Energy Global
Logistics Pty Ltd v Zigga Zagga (Australia) Pty Ltd [2021] NSWSC 348; Formosa v Eminent Forms
Pty Ltd [2005] SASC 35; H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208; H, AW v K, S
[2021] SASC 128; H, AW v K, S (No 2) [2022] SASC 49; Kowalski v Stanley & Partners [2014]
SASC 198; Mandeville v Better Lending Pty Ltd [2021] SASCA 28; McDonald v State of South
Australia [2011] FCA 297; Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC
8; Mensink v Registrar of the Federal Court of Australia (2022) 402 ALR 279; Mohamed v State of
Victoria [2007] VSC 538; Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84; Port of
Melbourne Authority v Anshun (1981) 147 CLR 589; Potts v Frost (No 2) [2012] TASSC 32; Rasch
Nominees Pty Ltd v Bartholomaeus [2012] SASC 70; Re Minister for Immigration and Ethnic
Affairs; Ex parte Lai Quin (1997) 186 CLR 622; Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198;
Rogers v Legal Services Commission of South Australia (1995) 64 SASR 572; State Bank of New
South Wales Ltd v Stenhouse (1997) Aust Torts Rep 81-423; Stateland Developments Pty Ltd v Princi
[2007] NSWSC 709; UBS AG v Tyne (2018) 265 CLR 77; Walton v Gardiner (1993) 177 CLR 378;
Webuildem Pty Ltd v Arab Bank of Australia Ltd (2013) 300 ALR 99; Zavarco plc v Nasir [2022]
Ch 105; Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) (2018) 265 FCR 290, considered.
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H, AW v K, S
[2023] SASCA 26
Court of Appeal – Civil: Livesey P, Doyle and Bleby JJA
1 THE COURT: The appellant brought proceedings against the respondent
claiming that money and a motor vehicle he had given to the respondent were his.
The respondent cross claimed seeking a declaration that they had been in a de facto
relationship.
2 The primary judge dismissed both the claim and cross claim.1 The respondent
had filed an offer in which she offered to consent to a judgment that she pay a sum
of money in respect of the claim, and that her cross claim for a declaration be
dismissed. On the basis that the judgment obtained by the respondent was less
favourable to the appellant than the judgment that would have followed acceptance
of the respondent’s filed offer, the judge ordered that the appellant pay the
respondent’s costs of the claim and cross claim on a standard basis until 14 days
after the date of the offer, and thereafter on an indemnity basis.2
3 The appellant was granted leave to appeal on grounds which in essence allege
that the judge erred in failing to hold that the appellant achieved a benefit or
advantage from the judgment on the cross claim following a contested trial that
would not have been available in the event of a consent judgment based upon the
filed offer. On the appellant’s argument, the latter would not have prevented the
respondent from pursuing her Family Court claim for relief predicated upon the
existence of a de facto relationship, whereas the former had that effect.
4 For the reasons which follow, it is undesirable that this Court attempt to
provide a definitive answer to the difficult propositions of law, and mixed fact and
law, inherent in the appellant’s argument on appeal for the purposes of resolving a
costs dispute. However, even if it may be accepted that there was some potential
benefit or advantage to the appellant from the judgment obtained, as opposed to a
consent judgment, the appeal should be dismissed on the basis that the costs order
made was nevertheless the appropriate order.
Background
5 The appellant is a dual Australian American citizen, who travels extensively
for his work. In May 2014, he visited a European car dealership in Adelaide where
he met the respondent, an employee of that dealership. They engaged in a series
of text messages and telephone calls, and a relationship developed between them.
Over the period of their relationship, the appellant transferred large sums of money
into the respondent’s bank account, allowing her to rent a house for herself and her
son, cut back on the hours of her work, pay for her son’s school fees, and live a
more luxurious lifestyle than she had been able to afford on her own earnings. As
1 H, AW v K, S [2021] SASC 128 (primary reasons).
2 H, AW v K, S (No 2) [2022] SASC 49 (costs reasons).
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[2023] SASCA 26 The Court
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the appellant continued to travel widely, and spent only a limited amount of time
in Adelaide, much of the parties’ relationship was conducted through text
messages and telephone calls.
6 The relationship broke down between about October 2018 and January 2019.
The appellant’s claim
7 On 7 February 2019, the appellant brought an urgent application in this Court,
seeking a freezing order over the respondent’s bank accounts. He sought a
declaration that the respondent held the sum of $87,000 on trust for him, and
delivery up of a Mercedes Benz motor vehicle, furniture and jewellery, all of which
were in her possession. In the alternative, he sought restitution of the sum of
$87,000, and damages for conversion or detinue of the other items mentioned.
8 In his statement of claim, the appellant pleaded that he and the respondent
had made an arrangement in 2014 whereby he would make payments to her, with
which she would lease a house where she and her son would reside, and where he
could stay when he visited Adelaide and store some belongings. He would also
purchase a motor vehicle which would be kept at the house, and which the
respondent would be able to use when the appellant was not in Adelaide. He
further pleaded that, in December 2018, he and the respondent mutually agreed to
terminate the arrangement, at which time it was agreed between them that the
respondent would vacate the house by 1 February 2019, and return to him the
balance of funds in her bank account, the car, and the furniture in the premises. He
pleaded that the respondent had retained the money, the car and the furniture, and
had not vacated the premises.
9 At trial, the appellant did not press his claims in respect of the furniture and
jewellery. He confined his claim to the money and the motor vehicle. It was
agreed that the respondent had vacated the premises shortly after the court
proceedings were commenced.
10 In respect of his claim of a trust over the $87,000, the appellant argued that
the money he advanced to the respondent was the subject of a Quistclose trust, as
it had been advanced to her for a specific purpose, and so remained beneficially
his.
11 The appellant argued that the primary question underlying each of his causes
of action was one of intention, in respect of both the money and the motor vehicle.
On his case, he did not ever intend that the money or the motor vehicle be a gift to
the respondent.
12 In her defence of this claim, the respondent pleaded that she and the appellant
met in May 2014, and commenced an intimate relationship in about August 2014.
She pleaded that the appellant established a place of residence in Adelaide with
her and her son, and maintained that joint residence until the breakdown of their
relationship in January 2019. During their relationship, the appellant represented
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[2023] SASCA 26 The Court
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to the respondent that he would meet all of the costs associated with renting a house
on their behalf, which house would be rented in her name alone. He further
represented that he would support her financially and, to this end, did so by making
substantial deposits into her bank account at various times throughout their
relationship.
13 In relation to the motor vehicle, the respondent pleaded that it was a gift to
her, made by the appellant on Valentine’s Day in 2017.
14 The respondent further pleaded that the appellant was estopped from seeking
repayment of any of the money, given the representations that he had made to her
that he would support her financially. She pleaded that she had relied on the
representations made to her, and would suffer detriment if the appellant were
permitted to resile from them.
The Family Court proceedings
15 On 6 March 2019, the respondent instituted urgent proceedings in the Family
Court of Australia, seeking interim and final relief.
16 The final relief sought by the respondent included orders: (i) pursuant to
s 90RD(1) of the Family Law Act 1975 (Cth) for a declaration that a de facto
relationship existed between the parties between July 2014 and January 2019; (ii) a
division of the parties’ property pursuant to s 90SM of the Family Law Act; and
(iii) the payment of a lump sum and spousal maintenance pursuant to s 90SE of
the Family Law Act.
17 Sections 90RD, 90SE and 90SM of the Family Law Act are contained within
Part VIIIAB of that Act, which is entitled “Financial Matters relating to de facto
relationships”. A “de facto relationship” is defined in s 4AA of the Family Law
Act. It is not necessary to refer to the detail of that definition. It is enough to note
that it requires consideration of whether, having regard to all of the circumstances
of their relationship, the parties were in a relationship as a couple living together
on a genuine domestic basis. The definition includes, in s 4AA(2), a non-
exhaustive list of the circumstances or indicia to which the court may have regard
in undertaking this evaluative judgment.
18 Sections 90SM and 90SE provide that, “after the breakdown of a de facto
relationship”, the Court may make orders for either the maintenance of one of the
parties (s 90SE), or altering the interests of the parties in their property (s 90SM).
19 In order to obtain an order under ss 90SE or 90SM, it is necessary to establish
that there was a “de facto relationship” withing the meaning of the Family Law
Act, that the “length of relationship” requirements of s 90SB have been met, and
that the relationship has “broken down”.
20 There is no prerequisite under either ss 90SE or 90SM that the Court make
any formal declaration as to the existence of the de facto relationship. However,
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s 90RD provides that, where an application is made under ss 90SE or 90SM, the
Court may also “for the purposes of the proceedings” declare that a de facto
relationship existed, or never existed, between the parties. Under s 90RE, a
declaration under s 90RD takes effect as a judgment of the Court.
21 In his response to the respondent’s claim, the appellant sought dismissal of
the proceedings for want of jurisdiction. He did not, as is sometimes done, seek a
positive declaration pursuant to s 90RD that there was never a de facto relationship.
Cross-vesting application
22 The respondent made an application in the Supreme Court to transfer the
proceedings in that Court to the Family Court. At that stage, she had not made any
cross claim in the Supreme Court for relief that depended upon a finding of a de
facto relationship (see below); indeed, she had not yet filed her defence in the
Supreme Court proceedings.
23 By judgment dated 3 May 2019,3 Parker J dismissed the application,
declining to exercise the discretion conferred by s 5(1) of the Jurisdiction of Courts
(Cross-vesting) Act 1987 (SA) to transfer the proceedings from the Supreme Court
to the Family Court. The essence of his Honour’s reasoning was that the Family
Court’s jurisdiction to resolve the disputes between the parties depended upon a
finding that they had been in a de facto relationship, yet this was a matter of contest
between them. If the matter were transferred to the Family Court, but it were to
be determined that the parties were not in a de facto relationship, then it would be
necessary to transfer the matter back to the Supreme Court to resolve the matters
raised in those proceedings. In those circumstances, Parker J was not satisfied that
it would be in the interests of justice that the proceedings be transferred to the
Family Court.4
The respondent’s cross claim
24 Following the dismissal of her application for transfer, the respondent filed
her defence to the appellant’s Supreme Court claim (summarised above), and a
cross claim.5
25 In her cross claim, the respondent sought declarations that overlapped to
some extent with the relief she had sought in the Family Court proceedings. She
sought declarations: (i) that she and the appellant were in a de facto relationship
with one another within the meaning of s 4AA of the Family Law Act; (ii) pursuant
to s 90RD(1) of the Family Law Act, that she and the appellant were in a de facto
relationship between mid-2014 and January 2019; and (iii) that she was the sole
owner of the motor vehicle in law and in equity. Given that s 90RD contemplates
a declaration being made in proceedings seeking relief such as that which is
3 H, AW v K, S [2019] SASC 67.
4 H, AW v K, S [2019] SASC 67 at [44]-[45] (Parker J).
5 Referred to when filed as a counterclaim, but which became a cross claim upon the commencement of
the Uniform Civil Rules 2020 (SA).
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[2023] SASCA 26 The Court
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available under ss 90SE or 90SM, there was an issue whether the Supreme Court
could have made a declaration under s 90RD. However, it would seem that the
other declarations were sought pursuant to this Court’s general power to make
declarations of right under s 31 of the Supreme Court Act 1935 (SA).
The offer
26 On 11 November 2020, the respondent filed an offer (the Offer) in the
Supreme Court proceedings. The Offer was marked to indicate it was an offer to
“settle the entire matter (all claims between the parties)”.6 It was expressed to be
a “judgment offer”. The terms of the Offer were that the offeror (the respondent)
offered to consent to judgment:
1. That with respect to the claim:-
a. There be Judgment for the plaintiff in the sum of $21,769, inclusive of interest;
b. That the said sum be paid by the defendant to the plaintiff;
c. That the claim be otherwise dismissed.
2. That with respect to the counterclaim:-
a. A declaration that the defendant is the owner of [the Mercedes Benz motor
vehicle];
b. That the counterclaim be otherwise dismissed.
27 In relation to costs, the Offer provided that the offeror (the respondent) would
submit to any order the Court may make in the exercise of its discretion. The Offer
was expressed to expire if and when withdrawn, and in any event, unless the Court
otherwise ordered, seven clear calendar days before the first day of trial.
28 As explained later, it is not in dispute that the Offer was a formal offer within
the meaning of r 132.4 of the Uniform Civil Rules, and a relevant offer as defined
in r 132.10(1). Acceptance of the Offer would have permitted the Court to enter
judgment in accordance with its terms pursuant to rr 132.8 or 132.9.
29 The appellant did not file a formal response to the Offer pursuant to r 132.7,
however nothing turns on this for the purposes of this appeal. There is no
complaint about the Offer complying with the Rules.
Adjournment of the Family Court proceedings
30 The Family Court proceedings were adjourned from time to time pending the
outcome of the Supreme Court proceedings.
6 As opposed to ticking the box in the prescribed form to indicate that the offer was one to settle only, for
example, the claim or cross claim, or indeed to settle part only of the claim or cross claim.
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[2023] SASCA 26 The Court
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31 On 30 March 2021, the Family Court proceedings were adjourned to
August 2021, noting the imminent trial of the Supreme Court proceedings.
The trial of the Supreme Court proceedings
32 The trial of the Supreme Court proceedings commenced on 21 April 2021.
33 The trial proceeded over some nine days. At trial, the ownership of the
money and the motor vehicle were the issues in dispute between the parties on the
appellant’s claim. The main issue in contention on the cross claim was the
existence of a de facto relationship.
34 On 11 November 2021, the primary judge handed down her judgment. Her
Honour made orders dismissing the claim and cross claim.
35 In relation to the claim, the judge determined that the money and the motor
vehicle that the appellant gave to the respondent were gifts, and not subject to a
claim in restitution.7 Her Honour also held, however, that the respondent’s defence
on the basis of estoppel had not been made out. Nor was there any merit in any
positive claim the respondent had sought to mount in that respect through her cross
claim.8
36 In dismissing the cross-claim, the judge held that the parties were not in a de
facto relationship.9 In so concluding, her Honour made findings as to each of the
indicia of a de facto relationship under s 4AA(2) of the Family Law Act,10 before
stating:11
On the basis of all of the factors set out above, I consider that the parties’ relationship was
not that of a couple living together on a genuine domestic basis. The evidence does not
demonstrate “the merger of two individual lives into life as a couple”. Rather, it
demonstrates two individuals living their separate lives and coming together seven or eight
times each year for some shared time. In my view, it is the time that was shared, rather
than their lives.
The parties were not in a de facto relationship.
The primary judge’s costs reasons
37 Following the delivery of judgment, each party sought orders for costs in
their favour. On 18 May 2022, the primary judge delivered her costs reasons. Her
Honour ordered that the respondent was entitled to her costs in respect of the claim
and cross claim on the standard basis from 7 February 2019 to 25 November 2020;
and, from 25 November 2020,12 on an indemnity basis.
7 Primary reasons at [292].
8 Primary reasons at [293].
9 Primary reasons at [293].
10 Primary reasons at [129]-[192].
11 Primary reasons at [193]-[194].
12 Being 14 days after the date of the Offer.
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38 The judge commenced her costs reasons by observing that she had found
neither party to be an impressive witness.13
39 In relation to the appellant, she referred to her findings that he was evasive
and unhelpful; that his evidence contained inconsistencies, which had caused her
to doubt the truth of much of his evidence; that he had lied to the respondent on a
number of occasions; and that he had deliberately sought to mislead the Court at
the commencement of the proceedings. In particular, the judge referred to her
finding:14
I conclude that the applicant’s evidence was unreliable in many respects, and that he
deliberately downplayed many aspects of the relationship to assist his claim. In other
respects, his answers were evasive and calculated to obfuscate.
40 In relation to the respondent’s evidence, the judge referred to her finding that
she had also told lies on oath, including in her evidence to the effect that she studied
at university during their relationship, and as to the appellant’s proposal of
marriage to her. In particular, the judge referred to her finding:15
I had considerable concerns about the respondent’s evidence. In my view, she lied on oath
on a number of occasions, and this has led me to view her evidence with caution.
Starting point that costs follow the event in the context of unsuccessful claim
and cross claim
41 Against that background, the primary judge noted the ordinary starting point
that costs follow the event, the effect of which would be to entitle the respondent
to an order that the appellant pay her costs of the claim, and to entitle the appellant
to an order that the respondent pay his costs of the cross claim. However, in
applying that starting point in circumstances where both a claim and cross claim
had been unsuccessful, her Honour accepted that this meant that the appellant
would only be entitled to an order for costs to the extent that, as a matter of
substance, the issues raised on the cross claim resulted in additional costs.16
Cross claim did not add significantly to the matters in issue
42 With that approach in mind, the primary judge turned to consider the issues
that arose on the claim and the cross claim, with a view to determining whether the
cross claim had given rise to any additional costs. Her Honour commenced by
detailing the breadth of the issues raised on the appellant’s claim:17
The issues raised by the applicant on the claim were broad and wide ranging. They covered
questions relating to gifts, special purpose trusts, unjust enrichment, and restitutionary
13 Costs reasons at [5]-[8].
14 Primary reasons at [14].
15 Primary reasons at [15].
16 Costs reasons at [42]-[43], applying the approach indicated by Medway Oil & Storage Co Ltd v
Continental Contractors Ltd [1929] AC 88, as applied in this jurisdiction in Badge Constructions Pty
Ltd v Penbury Coast Pty Ltd [1999] SASC 6 at [10] (Debelle J) and Formosa v Eminent Forms Pty Ltd
[2005] SASC 35 at [17]-[19] (Bleby J).
17 Costs reasons at [45]-[47].
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relief. The respondent’s defence covered issues such as estoppel, unconscionable conduct
and the law of gift.
In determining whether the motor vehicle and the money were gifts, I was required to
undertake a wholesale examination of the relationship between the parties. Because of the
elements which the respondent was required to prove to establish that they were gifts, I was
required to analyse the words that the parties used in their text message correspondence,
and to undertake a careful review of their interactions with each other. I was required to
do this for the entirety of their relationship, because of the ongoing transfers of money
through the relationship, as well as the fact that he gave her not one but two motor vehicles
over its course. In the course of my consideration, I took into account text messages and
other correspondence throughout the entirety of their relationship, as well as their oral and
affidavit evidence.
In determining whether a Quistclose trust had been created, I was required to examine in
detail the words that the parties used in communicating with each other. The text messages
between the parties, and other correspondence that the applicant wrote to the respondent
were the key to determining whether the applicant made out this claim.
43 The judge then explained her conclusion that the cross claim did not
significantly add to the costs incurred on the claim, and so should not, in her view,
result in any reduction in the costs to which the respondent was entitled:18
The respondent’s cross claim for a declaration in respect of the motor vehicle overlapped
entirely with the applicant’s claim for its return. It raised no issues that were not raised in
the claim.
The respondent’s cross claim that the parties were in a de facto relationship clearly raised
issues that were broader than those raised in the claim. I do not, however, consider that it
significantly increased the length of the trial or required the consideration of significantly
more evidence than the issues raised in the claim.
The history of the parties’ relationship was relevant to the applicants’ claims; it was not
adduced merely for the purpose of determining whether they were in a de facto relationship.
It was necessary to review all aspects of their relationship to determine whether any of the
applicant’s claims were made out; whether the money given over a relatively lengthy period
of time and the car were gifts was entirely dependent on the context in which they were
given to the respondent. This context was only determined by a close examination of the
parties’ relationship, including their communications with each other from its
commencement through to its demise. I consider that Mr O and Mr R provided little, if
any, relevant evidence; their evidence, however, occupied a very small period of time and
did not add extensively to the length of the trial. Nor did the evidence of IK and DFM.
It is true that each party was questioned extensively about the nature of their relationship.
As I have already said, however, I consider that the applicant’s claims required a close
investigation of the nature of the relationship between the parties; thus, I decline to
conclude that the respondent’s cross claim added significantly to the length of the trial, or
led to the consideration of issues that would not have been considered otherwise.
Because of the broad issues raised by the applicant’s claim, I do not consider that there
should be any reduction in the costs to which the respondent is entitled because of the
failure of the cross claim. The cross claim in respect of the motor vehicle was defensive to
18 Costs reasons at [48]-[52].
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the applicant’s claim. The cross claim in respect of the existence of a de facto relationship
did not lead to a greater examination of the parties’ relationship than that required by the
claim.
44 The judge next considered whether the respondent was entitled to recover her
costs on an indemnity basis, based upon an application of rules of court relating to
the costs consequences of filed offers.
Rules governing filed offers
45 As mentioned, it was accepted that the Offer filed by the respondent was a
“formal offer” for the purposes of r 132.4 of the Uniform Civil Rules, and a
“relevant offer” for the purposes of r 132.10(1).
46 As to the former, a “formal offer” is a filed document in the prescribed form
which contains an offer to resolve a proceeding or part of a proceeding. It must be
served on all other parties as soon as practicable after being filed, and must contain
a term dealing with the costs of the action. Otherwise, r 132.4 is not very
prescriptive as to the terms that a formal offer must contain. A formal offer may
be either a judgment offer or a contract offer; the respondent’s Offer was a
judgment offer.
47 As to the latter, a “relevant offer” is a formal offer that contains certain
specific features prescribed by r 132.10(1). Not all formal offers are relevant
offers; but a relevant offer must be a formal offer. A relevant offer, in the form of
a judgment offer, must:
(a) be filed and served at least 21 days before the commencement of the
trial;
(b) remain open for acceptance for at least 14 days after service;
(c) relate to the entirety of the action;
(d) involve a genuine compromise; and
(e) make an offer in respect of costs on one of two specified bases, one of
those being that the parties will submit to any order that the Court may
make in the exercise of its discretion.
48 The primary judge held19 that the respondent’s Offer was both a formal offer,
and a relevant offer, in that it was filed in the prescribed form; it offered to settle
the entirety of the claim and cross-claim; it offered to submit to any order made by
the Court in its discretion on the question of costs; it was filed and served well
prior to 21 days before the commencement of trial; and it remained open for
acceptance for well in excess of 14 days.
19 Costs reasons at [56].
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49 As the judge then explained, having determined that the respondent’s Offer
was a formal and relevant offer, it became relevant to consider the costs
consequences of the Offer under r 132.10. The terms of the relevant sub-rules
132.10(2) and (3) are as follows:
(2) When—
(a) a relevant offer is made by an applicant in an action;
(b) the offer is not accepted by a respondent; and
(c) the applicant obtains judgment that is no less favourable to the applicant than
the terms of the offer,
then—
(d) the costs incurred in respect of the action up to 14 days after service of the
formal offer are unaffected by the making of the formal offer; and
(e) subject to the overriding discretion of the Court, the applicant is entitled to an
order against the respondent for the applicant’s costs of the action to which
the relevant offer relates thereafter on an indemnity basis.
(3) When—
(a) a relevant offer is made by a respondent in an action;
(b) the offer is not accepted by an applicant; and
(c) either—
(i) the respondent obtains judgment dismissing the action; or
(ii) the applicant obtains judgment that is less favourable to the applicant
than the terms of the offer,
then—
(d) the costs incurred in respect of the action up to 14 days after service of the
formal offer are unaffected by the making of the formal offer; and
(e) subject to the overriding discretion of the Court, the respondent is entitled to
an order against the applicant for the respondent’s costs of the action to which
the relevant offer relates thereafter on an indemnity basis.
50 It can be seen that, while expressed in equivalent terms, r 132.10(2) addresses
offers filed by an applicant, and r 132.10(3) addresses offers filed by a respondent.
In the case of the former, the trigger for a right to indemnity costs (subject to an
exercise of the Court’s overriding discretion) is that the applicant obtains judgment
that is “no less favourable to the applicant” than the terms of the offer. In the case
of the latter, the equivalent trigger is that the applicant obtains judgment that is
“less favourable” to the applicant.
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51 On one view, both rr 132.10(2) and (3) were relevant here. Whilst the Offer
was made by the respondent, she made that Offer both in her capacity as the
respondent to the appellant’s claim, but also as the moving party, or applicant, in
respect of her cross claim. As such, it might have been argued that r 132(10)(3)
was relevant so far as the claim was concerned, and r 132.10(2) was relevant so far
as the cross claim was concerned.
52 The primary judge, however, confined her attention to r 132.10(3). Her
reason for doing so is not entirely clear. She might justifiably have done so on the
basis that, because she had concluded that the costs of the cross claim did not add
significantly to the costs of the claim, there was no need to separately address any
entitlement to indemnity costs in respect of the costs of the cross claim. But as the
judge later addressed whether the judgment obtained on the cross claim was less
favourable to the appellant, we do not think this was her Honour’s reason for
confining her attention to r 132.20(3). Rather, we think her Honour’s reason for
confining her attention to r 132.10(3) was an approach that involved construing
reference to “an action” in the relevant sub-rules as covering both the claim and
cross claim; in effect treating the one offer as addressing the overall action.
53 In any event, the precise reason for, and indeed correctness of, her Honour’s
approach did not affect the parties’ approach to this appeal. Both approached the
appeal on the basis that it was to be accepted that the relevant issue was whether
the judgment obtained was less favourable to the appellant, and that, in order to
succeed on appeal, it was necessary for the appellant to establish that the judgment
obtained on the cross claim provided the appellant with some benefit or advantage
so as to avoid the conclusion that the (overall) judgment was less favourable to the
appellant.
The judgment was less favourable to the appellant than the offer
54 The primary judge commenced her consideration of whether the judgment
was less favourable to the appellant by addressing the claim. Her Honour said that
there could be no doubt that, in respect of the claim, the formal offer was more
favourable to the appellant than the judgment.20 Had the appellant accepted the
formal offer, he would have received a judgment in his favour on the claim, and a
payment of $21,769. The judgment in fact entered dismissed his claim. As the
judge observed, on this basis, the appellant was prima facie liable to pay the
respondent’s costs in respect of the claim, on the standard basis until 25 November
2020, and thereafter, on an indemnity basis.
55 The judge then addressed what she described as the more difficult issue of
comparing the Offer and judgment on the cross claim.21
56 Her Honour began by dealing with the aspects of the cross claim based upon
allegations of equitable estoppel and unconscionable conduct, in respect of which
20 Costs reasons at [60].
21 Costs reasons at [61]ff.
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the respondent sought relief in the form of (i) a declaration that she owned the
motor vehicle, (ii) equitable relief in respect of outstanding rent and other
expenses, and (iii) damages. Focussing upon the issue that arose in respect of the
motor vehicle on the cross claim, the judge held that the cross claim for this relief
was “neither here nor there” given its overlap with the issues on the claim itself.22
In substance the respondent had succeeded on those issues, albeit in the context in
which they arose in the claim.
57 The more important issue, her Honour reasoned, was the significance of the
dismissal of the cross claim for a declaration that the parties were in a de facto
relationship. As her Honour framed the issue, the question was whether a
judgment by consent (that is, based upon acceptance of the Offer) dismissing the
respondent’s claim for a declaration of a de facto relationship would have had the
same effect as a judgment dismissing that claim after a contested trial. The
appellant argued that the latter was of benefit or advantage to him in that, by
succeeding after a contested trial, he obtained a judgment that had the effect of
barring the respondent from continuing with her Family Court proceedings. On
the appellant’s argument, a judgment by consent based upon acceptance of the
Offer would not have had that effect.
58 The judge addressed this contended difference between a contested judgment
dismissing the respondent’s claim for declaratory relief, and a consent judgment
dismissing the respondent’s claim for declaratory relief, by reference to each of
three preclusionary doctrines: res judicata, issue estoppel and abuse of process.
59 Dealing with res judicata, the judge referred to decisions supporting the
operation of that principle in respect of judgments by consent: Chamberlain v
Deputy Commissioner of Taxation,23 Webuildem Pty Ltd v Arab Bank of Australia
Ltd,24 Kowalski v Stanley & Partners25 and Rogers v Legal Services Commission of
South Australia.26 Her Honour distinguished the decisions in Coles v Wood27 and
Rasch Nominees Pty Ltd v Bartholomaeus.28
60 The judge concluded that the authorities supported the conclusion that a
consent judgment dismissing the respondent’s claim would have given rise to res
judicata and hence operated as a bar to the respondent pursuing her Family Court
claim.29 Her Honour later put the point in terms that, upon acceptance of the Offer,
the respondent’s cause of action or claim for a declaration under s 90RD(1) of the
Family Law Act would have merged so that it no longer had any existence
22 Costs reasons at [63].
23 Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 at 508, 510-511 (Deane, Toohey
and Gaudron JJ).
24 Webuildem Pty Ltd v Arab Bank of Australia Ltd (2013) 300 ALR 99 at [61]-[63] (Foster J).
25 Kowalski v Stanley & Partners [2014] SASC 198 at [12]-[15] (Judge Dart).
26 Rogers v Legal Services Commission of South Australia (1995) 64 SASR 572 at 595 (Lander J).
27 Coles v Wood [1981] 1 NSWLR 723 at 724 (Moffitt P).
28 Rasch Nominees Pty Ltd v Bartholomaeus [2012] SASC 70 at [251]-[252] (Kourakis J).
29 Costs reasons at [66], [70].
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independent from the judgment based on the Offer.30 As such, a consent judgment
would have been just as beneficial or advantageous to the appellant as the judgment
he in fact obtained in precluding the respondent from pursuing her Family Court
proceedings.
61 The judge reasoned that, having reached this conclusion, there was no need
for her to consider whether an issue estoppel would also have arisen had the
appellant accepted the Offer. However, her Honour dealt with the matter for the
sake of completeness. After referring to some of the authorities addressing the
operation of the principles of issue estoppel,31 her Honour expressed the view that
acceptance of the Offer consenting to the dismissal of the respondent’s cross claim
would have given rise to a conclusion that the parties were not in a de facto
relationship. By consenting to the dismissal of her cross claim, the respondent
effectively abandoned any claim based on her contention that the parties were in a
de facto relationship, and would be estopped in the future from pursuing this claim
in the Family Court.32 The issue which the respondent would be estopped from
contesting would be whether a de facto relationship existed between the parties.33
62 The judge did not accept that any problem arose by reason of an inability to
identify the issues conclusively determined by the consent judgment.34 Her Honour
explained:35
… This is because, while s 4AA of the Family Law Act sets out a number of criteria to be
taken into consideration when determining whether or not a de facto relationship exists,
none of these criteria is an essential requirement; indeed, s 4AA(3) specifically provides:
No particular finding in relation to any circumstances is to be regarded as necessary
in deciding whether the persons have a de facto relationship.
The existence of a de facto relationship is not a multi-element cause of action, such as
negligence or breach of contract, where all of the necessary elements must be proven. Thus,
if the claim was in negligence, it could be dismissed because no duty of care was established
or because causation was not established or there was no loss. A consent judgment
dismissing the claim would not establish which element was not proven; thus an issue
estoppel in relation to the existence of a duty of care, for example, would not arise. When
a claim in negligence is dismissed without consideration of the merits of the claim, it cannot
be ascertained which elements were not established.
The existence of a de facto relationship is a state of fact, the existence of which does not
depend on the proof of any specific element or criteria. Thus dismissal of the claim of the
30 Costs reasons at [73].
31 Blair v Curran (1939) 62 CLR 464 at 531-532 (Dixon J); Ekes v Commonwealth Bank of Australia
(2014) 313 ALR 665 at [110]-[117] (Bathurst CJ, Beazley P and Emmett JA agreeing) (to the effect that
a consent judgment can found an estoppel).
32 Costs reasons [76].
33 Costs reasons at [81].
34 Costs reasons at [82], distinguishing Australian Competition and Consumer Commission v Australian
Safeway Stores Pty Ltd (No 2) [2001] FCA 1861 at [1148]-[1154] (Goldberg J).
35 Costs reasons at [82]-[84].
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existence of a de facto relationship would give rise to an issue estoppel in respect of its
existence.
63 The judge concluded her consideration of the preclusionary doctrines by
addressing the suggestion that it would have involved an abuse of process had the
respondent sought to pursue her proceedings in the Family Court, despite the
appellant having obtained a judgment based on her Offer. The judge reasoned that
it would offend the principles of finality and fairness to allow the respondent to
pursue her action in the Family Court after consenting to the dismissal of her claim
for a declaration that the parties were in a de facto relationship in the Supreme
Court.36
64 Based on the above analysis, the judge concluded that “the formal offer was
more favourable to the [appellant] than the judgment he received.”37 As we
understand it, her Honour was of this view because, so far as the claim was
concerned, the Offer was more favourable; and, so far as the cross claim was
concerned, she did not accept that the judgment after a contested trial provided the
appellant with any benefit or advantage over a consent judgment following
acceptance of the Offer.
65 It followed, on the judge’s reasoning, that the respondent was entitled to her
costs on an indemnity basis from 14 days after service of her formal offer on the
appellant.38 This was subject only to the court exercising its discretion to disturb
this result pursuant to the discretion conferred by the introductory words to
r 132.10(3)(e) (“subject to the overriding discretion of the Court”).
No reason to exercise overriding discretion
66 The primary judge did not consider that the respondent’s costs entitlement
should be reduced as a result of any discretionary factor.39 Her Honour reasoned
that, while the respondent had been untruthful in a number of respects, the
appellant had also been untruthful, unhelpful and evasive in his evidence. Further,
while the respondent had sought to tender all of the text messages between the
parties, this took up very little time. In particular, her Honour rejected the
appellant’s submission that this approach had increased his preparation time and
costs. She reasoned that the text messages were clearly discoverable, and both
parties referred to a substantial number of them in the prosecution of their cases.
Finally, while the respondent’s affidavit of evidence in chief contained
inadmissible material, this also took up very little time at trial.
67 The judge concluded her reasoning in this context by observing that there
were some other considerations that supported the respondent’s costs entitlement,
36 Costs reasons at [85].
37 Costs reasons at [86].
38 Costs reasons at [86].
39 Costs reasons at [87]-[88].
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namely the appellant’s unreasonable and disproportionate approach to settlement
and the proceedings more generally:40
I note that the respondent submitted that the applicant should suffer a costs penalty for his
failure to make any attempt to resolve the matter prior to trial, including refusing to make
any offer at mediation and failing to respond in any way to the formal offer. It is, in my
view, most regrettable that the applicant made no attempt to resolve this matter without a
trial. Such an attitude shows a disdain for UCR 3.1(1) and the objects of its predecessor
Supreme Court Civil Rules 2006, set out in Rule 3.
It also demonstrates a lack of proportionality between the costs associated with the trial of
the claim and the cross claim, and the value of the claim and the cross claims themselves.
Nonetheless, I do not consider that a further cost penalty is warranted. The applicant’s
failure to obtain a result not less favourable than the formal offer has led to an award of
indemnity costs in favour of the respondent from fourteen days after its service.
Conclusion
68 The primary judge concluded, and ordered, that the respondent was entitled
to her costs in respect of the claim and the cross claim on the standard basis from
7 February 2019 to 25 November 2020; and that from 25 November 2020, the
respondent was entitled to her costs on an indemnity basis.
The appeal
69 Ground 1 in the appellant’s notice of appeal contends that the judge erred in
holding that the judgment dismissing the respondent’s cross claim for a declaration
of a de facto relationship provided no benefit or advantage to the appellant over a
judgment based upon the Offer to consent to an order dismissing that cross claim.
In the particulars provided in support of that ground, the appellant addresses each
of the three preclusionary doctrines considered by her Honour:
(i) In relation to res judicata, the appellant contends that the judge erred
in holding that res judicata applied to a judgment for dismissal of the
appellant’s claim for declaratory relief, regardless of whether the
judgment was one following a contested trial or one by consent
following acceptance of the Offer. On the appellant’s argument, a
claim for a declaration (whether under s 90RD(1) of the Family Law
Act, or s 31 of the Supreme Court Act) was not a claim for a cause of
action in the sense required for res judicata.
(ii) In relation to issue estoppel, while accepting that the judgment in fact
entered gave rise to an issue estoppel, the appellant contends that the
judge erred in holding that a judgment by consent following
acceptance of the Offer would have given rise to an issue estoppel.
On the appellant’s argument, this was so for two reasons. First,
because the operation of issue estoppel required a decision “on the
merits.” Secondly, because it would not have been possible to identify
40 Costs reasons at [89]-[90].
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the issues of fact or law that were necessarily resolved as a step in
reaching the determination made in a judgment by consent.
(iii) In relation to abuse of process, the appellant contends that the judge
erred in holding that, if there had been a consent judgment based upon
acceptance of the Offer, it would have been an abuse for the
respondent to have pursued the Family Court proceedings in
circumstances where no res judicata or issue estoppel arose, and
where no other findings or basis were identified to support this
conclusion.
70 Ground 2 in the appellant’s notice of appeal is merely consequential upon
Ground 1. It contends that, in light of the error identified in Ground 1, the judge
erred in the exercise of her discretion in making the impugned costs order. It
further contends that her Honour ought, in all the circumstances of the matter, to
have exercised the Court’s discretion to make an order that the respondent pay 40
per cent of the appellant’s costs of the claim and cross claim, including reserved
costs, on a standard basis.
Consideration
71 It is undesirable, if not inappropriate, for this Court to attempt to reach any
definitive resolution on a costs hearing of several of the issues raised by the
appellant’s submissions.41 They involve complex and contentious issues of law,
indeed mixed fact and law, that should be determined when they squarely arise,
having regard to the precise legal and factual matrix in which they arise. In
particular, it is undesirable for this Court to attempt a definitive resolution, merely
for the purposes of determining a costs dispute, of whether the relevant
preclusionary doctrines would operate, or would have operated, were the
respondent to attempt to pursue her Family Court proceedings in the face of the
judgment dismissing her cross claim, or to attempt to do so in the face of the
consent judgment that would have been entered following acceptance of the
respondent’s Offer.
72 However, before returning to the significance of this observation for the
disposition of this appeal, it is nevertheless appropriate to make some limited
observations about the operation of these preclusionary doctrines, essentially
reflecting our view that there is at least some arguable merit in several of the
contentions advanced by the appellant, and leading us to accept that it is at least
arguable that the appellant derived some benefit or advantage from the judgment
41 Energy Global Logistics Pty Ltd v Zigga Zagga (Australia) Pty Ltd [2021] NSWSC 348 at [62], [122]
(Ward CJ in Eq); Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 at [8]-[9] (Basten JA),
[31]-[32] (Payne JA, Meagher JA agreeing); Stateland Developments Pty Ltd v Princi [2007] NSWSC
709 at [3], [11] (Gzell J); Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Quin (1997)
186 CLR 622 at 625-626 (McHugh J); Australian Securities Commission v Aust-Home Investments Ltd
(1993) 44 FCR 194 at 201 (Hill J).
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he in fact obtained on the cross claim for declaratory relief, relative to a consent
judgment based upon acceptance of the Offer.
Res judicata
73 As set out in particular (i) of Ground 1, the appellant makes the point that the
judge appears to have assumed that a contested judgment for declaratory relief
would give rise to res judicata, with the only issue being whether a consent
judgment to the same effect would likewise give rise to res judicata. By
approaching the issue in this way, the judge focussed her attention upon whether a
consent judgment might give rise to res judicata, and concluded that it could. The
appellant’s argument, however, is that it is the declaratory nature of the judgment
– regardless of whether it is a judgment by consent or following a trial – that is the
obstacle to the operation of res judicata. On the appellant’s argument, it may be
that declaratory judgments generally are incapable of giving rise to res judicata;
alternatively, they will not do so where they relate only to the existence of a state
of affairs or status (as opposed to some cause of action, or at least some right or
obligation), or where the judgment involves a dismissal of the claimed declaration
(as opposed to the making of a declaration, whether positive or negative in its
terms).
74 It is true that there is some English authority that suggests that a purely
declaratory judgment may not give rise to res judicata.42 However, as was
recognised in Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2),43 it is appropriate
to be cautious in applying English authority in this area, given the differing
jurisprudence that has developed in relation to the operation of the preclusionary
doctrines in Australia.
75 At least in the context of a judgment declaring the existence of a fact or state
of affairs, as opposed to a right, obligation or cause of action, there may well be a
basis for contending that there is simply nothing to merge in the final judgment.
Alternatively, res judicata may not be available for historical reasons.44 However,
even if that be the case, there is a legitimate contest between the parties as to
whether what was sought by the respondent in the present case was in the former
or latter category. It is arguable that, because s 90RD contemplates a right to
declaratory relief of the nature sought here, this would be sufficient to enable
characterisation of the claim for declaratory relief as relating to a right or cause of
action. However, there is at least some room for doubt about this; and for the view
that a declaration that there is a de facto relationship is a declaration as to a state
of affairs or status that is merely anterior, or ancillary, to making out a right or
42 Zavarco plc v Nasir [2022] Ch 105 at [37]-[39] (Court of Appeal); cited with (tentative) approval in
Mensink v Registrar of the Federal Court of Australia (2022) 402 ALR 279 at [52] (Bromwich, Lee and
Thawley JJ).
43 Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) (2018) 265 FCR 290 at [16]-[17] (Allsop CJ,
Moshinsky and Colvin JJ).
44 Zavarco plc v Nasir [2020] Ch 105 at [37]-[39] (Court of Appeal).
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cause of action under the provisions of Part VIIIAB of the Family Law Act (for
example, under ss 90SE or 90SM).
76 Finally, as the appellant points out, similar reasoning may apply with greater
force in circumstances where there is no declaration made at all; that is, where the
claim for declaratory relief is dismissed. The appellant relies in this context upon
certain passages from the reasons of the New South Wales Court of Appeal in
Coles v Wood.45
77 The respondent did not address the operation of res judicata at any length in
her submissions. She put a submission to the effect that the expression “cause of
action” was a slippery one; that on one view it was simply a factual situation the
existence of which entitled a person to obtain a remedy from a court against
another person.46 The implication of this submission was that the Court should not
too readily conclude that what the respondent sought in her cross claim was a
declaration as to a mere state of affairs or status, as opposed to a right or cause of
action. She also put a submission to the effect that, even if there was a difficulty
with the judge’s reliance upon res judicata, the judge might alternatively have
reached the same conclusion based upon the principles governing cause of action
estoppel.
78 For completeness, we mention that the respondent’s counsel advanced
submissions to the effect that declaratory orders are generally final and binding in
their nature. However, in our view these submissions did not squarely address the
central complaint made by the appellant. They did not address the reasons given
for declaratory judgments not giving rise to res judicata.
Issue estoppel
79 As set out in particular (ii) of Ground 1, the appellant challenges the judge’s
conclusion that a judgment by consent following acceptance of the Offer would
have given rise to an issue estoppel.
80 The first reason proffered for this is that, even accepting that (some) consent
judgments may give rise to an issue estoppel, the judgment in question must
nevertheless be one that entails a judicial determination “on the merits”. Relying
upon the reasons of the Full Court of the Federal Court in Zetta Jet Pte Ltd v The
Ship Dragon Pearl (No 2),47 the appellant contends that there must be a judicial
determination on the merits “in the sense of being judicially assessed or evaluated
by a determination that involves finding the facts and applying the law to those
facts to reach a conclusion”.48 In this respect, issue estoppel is distinguishable from
45 Coles v Wood [1981] 1 NSWLR 723 at 724 (Moffit P) and 727 (Hutley JA); cf A Hudson Pty Ltd v
Legal & General Life of Australia Ltd (1985) 1 NSWLR 701 at 710, 712 (Kirby P), 716 (Mahoney JA),
718 (Priestley JA).
46 H Lundbeck A/S v Sandoz Pty Ltd (2022) 96 ALJR 208 at [117] (Edelman JA).
47 Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) (2018) 265 FCR 290.
48 Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) (2018) 265 FCR 290 at [14], [20] (Allsop CJ,
Moschinksky and Colvin JJ).
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res judicata, which is not necessarily reliant upon a decision on the merits in this
sense.49 Here, a consent judgment based upon acceptance of the Offer would not
have entailed any determination on the merits.
81 The second reason proffered is that an issue estoppel requires that it be
possible to identify the issues of fact or law that were necessarily resolved as a step
in reaching the determination made in the relevant judgment. Were it otherwise,
it could not be said that the relevant issue of fact or law must necessarily have been
decided by the judgment, such that the relevant party would be estopped from
agitating that state of fact or law in some other set of proceedings. The appellant
contends that because a finding that there was a de facto relationship depends upon
consideration of multiple matters, none of which is essential to the ultimate
conclusion, a consent dismissal would be inscrutable, and so could not give rise to
an issue estoppel.
82 We do not think there is likely to be any merit in the appellant’s second reason
for suggesting that a consent judgment based upon acceptance of the Offer would
not have given rise to an issue estoppel. Once it is appreciated that the issue to
which the estoppel is said to relate is the conclusion that there was a de facto
relationship, we do not think that there would be any difficulty in accepting that
this issue would have been necessarily determined by a consent judgment based
upon acceptance of the Offer. However, we accept that there may well be some
merit in the appellant’s first reason for suggesting that a consent judgment based
upon acceptance of the Offer would not have given rise to an issue estoppel.
Abuse of process
83 In relation to particular (iii) of Ground 1, the appellant complains that the
judge did not adequately identify the basis (beyond stating that “it would offend
against the principles of finality and fairness”50) for her conclusion that it would
have been an abuse of process for the respondent to have pursued the Family Court
proceedings in the event that the appellant obtained a consent judgment based upon
acceptance of the Offer.
84 The appellant accepts that it may be unjustifiably vexatious and oppressive,
and hence an abuse of process, to relitigate a case or issue which has been disposed
of in other proceedings.51 As for the principles that might govern the Court’s
intervention on such grounds, the appellant referred to the following summary
from State Bank of New South Wales Ltd v Stenhouse:52
49 Zetta Jet Pte Ltd v The Ship Dragon Pearl (No 2) (2018) 265 FCR 290 at [20], [27], [51] (Allsop CJ,
Moschinksky and Colvin JJ); Clayton v Bant (2020) 272 CLR 1 at [52] (fn 83) (Gordon J).
50 Costs reasons at [85].
51 Citing Walton v Gardiner (1993) 177 CLR 378 at 393-394 (Mason CJ, Deane and Dawson JJ).
52 State Bank of New South Wales Ltd v Stenhouse (1997) Aust Torts Rep 81-423 at 64,089 (Giles CJ);
applied in Rippon v Chilcotin Pty Ltd (2001) 53 NSWLR 198 at [32] (Handley JA, Mason P and Heydon
JA agreeing) and McDonald v State of South Australia [2011] FCA 297 at [43] (Besanko J). See also
UBS AG v Tyne (2018) 265 CLR 77 at [137]-[138] (Gordon J).
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… whether proceedings are, or an aspect of proceedings is, an abuse of process because a
party seeks to relitigate an issue already decided depends very much on the particular
circumstances. The guiding considerations are oppression and unfairness to the other party
to the litigation and concern for the integrity of the system of administration of justice, and
amongst the matters to which regard may be had are – (a) the importance of the issue in
and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate
issue; (b) the opportunity available and taken to fully litigate the issue; (c) the terms and
finality of the finding as to the issue; (d) the identity between the relevant issues in the two
proceedings; (e) any plea of fresh evidence, including the nature and significance of the
evidence and the reason why it was not part of the earlier proceedings; all part of – (f) the
extent of the oppression and unfairness to the other party if the issue is relitigated and the
impact of the relitigation upon the principles of finality of judicial determination and public
confidence in the administration of justice; and (g) an overall balancing of justice to the
alleged abuser against the matters supportive of abuse of process.
85 While not doubting that it would be an abuse of process for the respondent to
seek to pursue her Family Court proceedings in the face of the judgment in fact
obtained, the appellant argues that it is not clear that it would have been an abuse
to do so in the face of a consent judgment based upon acceptance of the Offer. In
support of the uncertainty that surrounds this issue, the appellant raised several
matters.
86 The appellant submitted that this Court should reject the respondent’s
contention that the Offer, by describing itself as an offer to settle “the entire matter
(all claims between the parties)” somehow directly purported to resolve the Family
Court proceedings. We agree with this submission. Read in the context of the
relevant form, and the Uniform Civil Rules, the references to “the entire matter”
and to “all claims” were to all of the matters in issue in the Supreme Court
proceedings, as opposed to merely the issues in the claim or cross claim or some
other aspect of those proceedings. They were not references to any proceedings in
other courts, such as the Family Court proceedings. As such, we accept that the
Offer did not purport to address the Family Court proceedings in any direct
manner.
87 The appellant also emphasised that the Offer was in terms of a dismissal of
the cross claim for a declaration that there was a de facto relationship, as opposed
to the making of a negative declaration that there was no de facto relationship. The
appellant submitted that it was open to construe the Offer as indicating that the
respondent was prepared to abandon pursuit of the declaratory relief in the
Supreme Court, but only so as to enable her to later litigate her claim in the Family
Court. The respondent contested this construction of the intention underpinning
the Offer, contending that it ought to have been apparent from the circumstances,
including the terms of the Offer and the fact that the respondent was of limited
financial means, that the respondent had no intention of pursuing the matter in the
Family Court if the Offer were accepted; that the Offer was intended to bring the
de facto relationship claim to an end once and for all. Both parties sought to draw
support for their respective positions from the repeated adjournments of the Family
Court proceedings. The appellant said that this was consistent with the respondent
intending to continue to pursue those proceedings; that, were the position
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otherwise, those proceedings would have been stayed. The respondent, on the
other hand, said that this was merely the position that prevailed while the Offer
was not accepted; leaving open the possibility of pursuing those proceedings if the
Offer were not accepted, and the claim for declaratory relief in the Supreme Court
were to succeed.
88 It seems to us that there would have been a real risk of the respondent being
found to have engaged in an abuse of process were she to attempt to pursue her
Family Court proceedings in the event of a consent judgment based upon
acceptance of the Offer. In our view, the terms of the Offer – which connoted an
intention to bring the claim for declaratory relief to a more permanent end, as
opposed to, for example, merely discontinuing that claim – would have provided
a strong foundation for a finding of abuse. However, there remains force in the
appellant’s submission that, given the myriad of considerations and circumstances
that would be relevant to any ultimate finding of abuse of process, it is difficult to
exclude as a realistic possibility that the respondent might have been permitted to
continue with her Family Court proceedings.
89 For completeness, we note that the respondent, through a notice of alternative
contention, sought to rely upon the species of abuse of process known as Anshun
estoppel.53 She argued that the judge’s conclusion to the effect that a judgment
based upon acceptance of the Offer would have precluded the respondent from
pursuing her Family Court proceedings could be sustained on the basis that it
would have been unreasonable for the respondent to seek to do so, and hence
grounds for the operation of an Anshun estoppel, that she had chosen not to pursue
that claim in the earlier Supreme Court proceedings. We do not propose to address
this alternative argument. It raises similar considerations to those raised by the
more general concept of abuse of process that we have already addressed (as well
as some issues of its own) and, as such, turns upon complex issues of law and fact.
We do not consider it appropriate to determine these matters for the purposes of a
costs dispute, particularly when they have been raised for the first time on appeal.
Summary
90 For the reasons set out, we consider that the primary judge went too far in
rejecting the appellant’s argument below that he obtained some benefit or
advantage from a judgment dismissing the claim for declaratory relief following a
contested trial, relative to a consent judgment to that effect following acceptance
of the respondent’s Offer. We do not think the prospect of that benefit or
advantage could properly be excluded for the purposes of determining the parties’
costs entitlements.
91 Because the judge erred in rejecting the prospect of the benefit or advantage
relied upon by the appellant, we are satisfied that the judge’s exercise of her costs
53 Port of Melbourne Authority v Anshun (1981) 147 CLR 589; as considered by this Court in Mandeville
v Better Lending Pty Ltd (2021) 139 SASR 1 at [94]-[109] (Doyle, Livesey and Bleby JJA), holding
that a default judgment, and hence, it would seem, a consent judgment, may found an Anshun estoppel.
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discretion miscarried. It thus falls for this Court to exercise that discretion afresh.
However, for reasons which will become apparent, it is our view that there remains
an ample basis, on the balance of her Honour’s findings and reasoning, to uphold
the order that her Honour made, and hence dismiss the appeal.
Exercising the costs discretion afresh
92 In exercising the costs discretion afresh, it is appropriate to adopt the same
starting point as the primary judge; namely, that costs follow the event, but that
because the costs of the cross claim did not add significantly to the overall costs,
there should be no separate order in respect of those costs. The respondent is
therefore entitled to recover her costs of the action. The only issue is whether those
costs should be payable on the standard basis, or on an indemnity basis.
93 At this point in her analysis, the judge turned to consider the operation of
r 132.10(3) and, in particular, whether the judgment obtained by the respondent
was “less favourable” to the appellant. In so doing, her Honour compared the
judgment that was obtained, and the judgment that would have been obtained upon
acceptance of the Offer, in respect of both the claim and the cross claim. However,
by this point in her reasons, the judge had already addressed the cross claim by
concluding that it did not add significantly to the costs of the claim, with the result
that it did not require separate recognition in the costs order; the respondent was
entitled to recover her costs of the action.
94 On one view, and it is the view we prefer, having dealt with the cross claim
in this way, it was not necessary for her Honour to address the cross claim in
undertaking the enquiry, for the purposes of r 132.10(3)(c)(ii), of whether the
judgment was “less favourable” to the appellant. It was enough to address the
claim and, so far as the claim was concerned, there was no doubt that the judgment
(claim dismissed) was less favourable to the appellant than the offered outcome
(payment to the appellant of $21,769). As the cross claim did not add significantly
to the costs of the claim, it was not necessary to rule on the many issues raised by
the appellant. On this analysis, the prima facie entitlement to indemnity costs from
25 November 2020 was triggered and, there being no reason to exercise the Court’s
overriding discretion under r 132.10(3)(e), the respondent was entitled to the order
made by the judge.
95 However, even if it was necessary to address the cross claim, with the result
that the entitlement to indemnity costs from 25 November 2020 under r 132.10(3)
was not triggered, we are satisfied that there was otherwise a proper basis, in the
Court’s general discretion as to costs, to make the order that the judge made. In so
concluding, we have had regard to several considerations.
96 First, as we have observed, the outcome on the claim (claim dismissed) was
plainly less favourable to the appellant than the offered outcome (payment to the
appellant of $21,769).
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97 Secondly, so far as the cross claim is concerned, we would not attach much
weight to the benefit or advantage claimed to have been achieved by the appellant
by reason of the judgment being one following a contested trial rather than one
obtained by consent following acceptance of the Offer. For the reasons set out
above, the existence of any such benefit or advantage is challenged, and relies upon
complex and contentious issues of law, and mixed fact and law, that are unsuitable
for definitive determination for the purposes of a costs argument. It is more a case
of it not being possible to exclude the existence of this benefit or advantage, than
it being a matter that weighs heavily in the appellant’s favour.
98 Thirdly, to the extent that the risk that the respondent would seek to litigate
her Family Court proceedings was a real concern to the appellant at the time he
came to consider the Offer, that is a matter that could and should have been taken
up with the respondent, whether by way of seeking clarification of the Offer,
further negotiations or a counter offer.54 While there is no direct evidence on the
issue, it seems inherently likely to us that, had the appellant sought clarification,
the respondent may well have indicated a preparedness to abandon her Family
Court proceedings in the event that the appellant was otherwise prepared to resolve
the matter on the basis set out in the Offer. If so, then an agreement or undertaking
to this effect could no doubt have been secured. In our view, it was
disproportionate and unreasonable for the appellant to choose to litigate, and hence
to incur and inflict the significant time and expense associated with that litigation,
simply because there was some (unexplored) prospect that the respondent might
wish to go ahead and litigate the Family Court proceedings in any event. Put
another way, we consider it unreasonable for the appellant to seek to rely upon the
chance that the respondent may have wished to litigate the Family Court
proceedings even if the Offer were accepted, without at least seeking clarification
at the time of whether that was the respondent’s position and intention.
99 Finally, it is also relevant to have regard to the other respects in which the
judge found the appellant to have acted unreasonably. There were two aspects to
this.
100 The first related to the appellant’s conduct in the trial itself. As summarised
earlier, the judge found the appellant to have been inconsistent, evasive, unhelpful
and untruthful in his evidence. Whilst the judge also took a dim view of the
respondent’s evidence, and her attempt to tender all of the couple’s text messages,
her Honour was not persuaded that this added in any significant way to the costs
of the trial, or otherwise provided a reason not to award indemnity costs in the
respondent’s favour.
101 The second aspect of the appellant’s unreasonableness related to his approach
to settlement more generally. As mentioned earlier, the judge criticised the
54 Mohamed v State of Victoria [2007] VSC 538 at [37] (Harper J); Potts v Frost (No 2) [2012] TASSC
32 at [17] (Porter J); Craigcare Group Pty Ltd v Superkite Pty Ltd [2014] NSWSC 467 at [77] (Hallen J)
addressing a failure to seek clarification of a purported ambiguity in an offer.
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appellant’s unreasonable and disproportionate approach to the proceedings
generally:55
I note that the respondent submitted that the applicant should suffer a costs penalty for his
failure to make any attempt to resolve the matter prior to trial, including refusing to make
any offer at mediation and failing to respond in any way to the formal offer. It is, in my
view, most regrettable that the applicant made no attempt to resolve this matter without a
trial. Such an attitude shows a disdain for UCR 3.1(1) and the objects of its predecessor
Supreme Court Civil Rules 2006, set out in Rule 3.
It also demonstrates a lack of proportionality between the costs associated with the trial of
the claim and the cross claim, and the value of the claim and the cross claims themselves.
102 The judge went on to say that she did not consider that the above warranted
the imposition of a further cost penalty upon the appellant. However, that was in
circumstances where the judge had already held, for other reasons, that the
appellant should pay indemnity costs. In circumstances where this Court is
considering the costs discretion afresh, we consider that the above provides support
for an order for indemnity costs.
103 For the reasons set out, we are persuaded that it was appropriate that the
appellant pay the respondent’s costs of the action on an indemnity basis. Because
the failure to accept the Offer, or to seek clarification of the Offer, is central to our
reasoning in that respect, we consider it appropriate that the appellant pay the
respondent’s costs on the standard basis up to 25 November 2020 (being 14 days
after the Offer was filed and served), and thereafter on an indemnity basis. In other
words, we are persuaded that the costs order made by the judge was the appropriate
order.
Conclusion
104 Leave to appeal having already been granted, we dismiss the appeal.
55 Costs reasons at [89]-[90].
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