Justin Dowd, Partner, Watts McCray

As offers of settlement are made only in proceedings relating to property, offers of settlement are only relevant to costs orders in property proceedings.

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

In considering what orders as to costs should be made, one of the matters the court must take into account is whether either party has made an offer to settle the matter in writing to the other party.

Written offers of settlement can therefore be a critical factor in persuading a court to make, or not make, a costs order.

The Family Law Rules 2004 provide for occasions during the litigation process at which written offers of settlement must be made: see Compulsory offers of settlement in property cases. These occasions are designed by the court to focus the minds of the parties and their legal representatives on the resolution of the proceedings and to assist in the identification of any issues still in dispute.

Apart from compulsory offers of settlement, a party may make a proposal to settle proceedings at any time, before or after the proceedings have commenced. Such offers can be verbal or in writing.

Practice Tip: Practitioners should read Farmer v Panshin which looked at offers to settle and costs orders.

Offers of settlement can also be withdrawn at any time: see Withdrawal of offers of settlement.

All offers of settlement should be made in writing to afford maximum protection to the client under s 117(2A)(f) of the Family Law Act 1975. It is best practice that the client has either signed the offer of settlement or has seen it and specifically authorised the making of the offer in the terms proposed and at the time it is proposed the offer be made.

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