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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
- Whether either party should be awarded indemnity costs.
- Whether the wife knowingly instituted proceedings based on falsehoods.
- Whether the husband’s application for summary dismissal was frivolous or unjustified.
- 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
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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
- Honesty is critical in family law litigation. Misleading the court can backfire catastrophically.
- Litigants must consider the strength and foundation of their claims — costs can be significant if the court finds claims baseless.
- Courts are increasingly willing to penalise misuse of process, especially when proceedings are pursued with ulterior motives.
- Financial disparity doesn't guarantee immunity from costs orders if serious misconduct is proven.