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Costly Lies and Legal Consequences: The Reckoning in Curtain & Curtain (No 5)"

Introduction

In Curtain & Curtain (No 5) [2025] FedCFamC1F 124, the Federal Circuit and Family Court of Australia was faced with a convoluted battle over property settlement orders and indemnity costs. Spanning over seven years, this case culminated in a rare but decisive costs judgment that exposed misconduct, strategic deception, and the high price of pursuing a knowingly groundless claim. At the heart of this judgment lies the question: when do the courts deem it just to award significant cost penalties for egregious conduct in family law disputes?

Facts and Issues

Facts

  • The wife filed an Initiating Application in 2017 to set aside 2016 property settlement orders made by Berman J, under s 79A(1)(a) of the Family Law Act 1975, claiming the husband failed to disclose financial interests.
  • The husband filed for summary dismissal in 2021, which was dismissed by Mead J in 2022.
  • Both parties then sought indemnity costs: the wife for the husband’s failed dismissal attempt, and the husband for defending the wife’s overall claim.
  • Central to the wife’s application was her claim of ignorance regarding the husband’s interest in "Q Trust". This was later found to be knowingly false.

Issues

  1. Whether either party should be awarded indemnity costs.
  2. Whether the wife knowingly instituted proceedings based on falsehoods.
  3. Whether the husband’s application for summary dismissal was frivolous or unjustified.
  4. The relevance of financial disparity between the parties in making costs orders.

Application of Law to the Facts

Justice Mead applied several legal principles:

  • s 117(2) and (2A) of the Family Law Act 1975 (Cth): Courts may order costs if circumstances justify it. Factors include conduct, financial circumstances, offers of settlement, and the success or failure of parties.
  • Colgate-Palmolive v Cussons (1993) 46 FCR 225: Indemnity costs require special circumstances and egregious conduct.
  • Medlon & Medlon (No 6) (2015) FLC 93-664: Financial disadvantage alone does not prevent a costs order.

For the wife:

  • Although the husband’s summary dismissal failed, the court ruled that indemnity costs weren’t justified due to lack of bad faith or frivolous conduct, awarding party-party costs instead
  • .

For the husband:

  • The wife’s conduct — including concealing key documents and knowingly making false claims — was found to be reckless and misleading.
  • Despite the wife’s argument that financial disparity should limit her liability, the court found that her misconduct warranted a significant costs order against her.

Judgment and Reasoning

Justice Mead:

  • Awarded $27,500 to the wife for the husband’s failed summary dismissal — but only on a party-party basis due to the absence of misconduct and incomplete compliance with r 12.13 (re: indemnity costs)
  • Awarded $300,000 to the husband in costs for the wife’s baseless seven-year litigation, finding that:
  • The wife knew the husband’s interest in Q Trust but lied under oath (e.g., para [192]).
  • Her Initiating Application was “predicated on patently untrue evidence” (para [67]).
  • She acted with an “ulterior motive” and “recklessly” wasted court resources (paras [66]-[77]).
  • Set off the wife's $27,500 entitlement, leading to a net payment of $272,500 to the husband

Cited Precedents

  • Colgate-Palmolive v Cussons (1993) 46 FCR 225: Standards for indemnity costs.
  • Fitzgerald v Fish [2005] FamCA 158: No one s 117(2A) factor is determinative.
  • Medlon & Medlon (No 6) (2015) FLC 93-664: Indigence does not shield a party from costs.
  • Sfakianakis & Sfakianakis [2019] FamCAFC 54: Cited at [80] to justify fixed lump sum costs.

Take-Home Lessons

  1. Honesty is critical in family law litigation. Misleading the court can backfire catastrophically.
  2. Litigants must consider the strength and foundation of their claims — costs can be significant if the court finds claims baseless.
  3. Courts are increasingly willing to penalise misuse of process, especially when proceedings are pursued with ulterior motives.
  4. Financial disparity doesn't guarantee immunity from costs orders if serious misconduct is proven.

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