Baghti and Baghti (No. 2)

[2012] FamCA 1112

FAMILY COURT OF AUSTRALIA

BAGHTI & BAGHTI (NO. 2) [2012] FamCA 1112

FAMILY LAW – MISCELLANEOUS MATTERS – stay application – costs application.

APPLICANT: Ms Baghti

RESPONDENT: Mr Baghti

INTERVENERS: Mr B and Mrs B

INDEPENDENT CHILDREN’S LAWYER: Legal Aid NSW

FILE NUMBER: SYC 2145 of 2009

DATE DELIVERED: 27 November 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Fowler J

HEARING DATE: 27 November 2012 and written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lawson

SOLICITOR FOR THE APPLICANT: Pigott Stinson

COUNSEL FOR THE RESPONDENT: Mr Gruzman

SOLICITOR FOR THE RESPONDENT: Di Gregorio

COUNSEL FOR THE INTERVENERS: Mr Gould

SOLICITOR FOR THE INTERVENERS: McDonnell Milne Toltz

INDEPENDENT CHILDREN’S LAWYER: Ms Connor, Legal Aid NSW

Orders

1. Leave is granted to the husband to make an oral application that his application for a stay be dealt with first.

2. The husband’s oral application is dismissed.

3. The husband is to pay the interveners’ costs of and incidental to the proceedings as agreed or assessed, such costs to be on an indemnity basis for the purpose of the hearing, that is to say, from the date of the commencement of the hearing to the conclusion of it, otherwise the costs be on a party and party basis.

4. The husband is to pay to Legal Aid NSW the sum of $12,254.40 representing his half share of the costs associated with the Independent Children’s Lawyer’s representation of the child N and the payment of those costs is deferred until such time as effect is given to my judgment or effect is given to any appellate judgment whichever is the later.

5. The husband is to pay of the wife’s costs of and incidental to the parenting proceedings the sum of $15,000.  That sum will be added to the sum next payable and be paid at the time hereinafter specified.

6. The husband is to pay 25 per cent of the wife’s costs of the hearing of the other issues as agreed or assessed.  That payment of those costs is deferred until such time as effect is given to my judgment or effect is given to any appellate judgment whichever is the later.

1. Orders and notations are made in terms of paragraphs 1 to 5 of a document titled “Amended Form of Orders sought by the wife and [Ms B]” dated 29 August 2012 (as amended), as set out hereunder:

   1.That the wife do all acts and things necessary so as to cause a sale of the business known as “[D Business]” (“the business”) with her sister, [Ms B] for the best price reasonably obtainable in the following manner:

   a.list the business for sale with a business broker as she and [Ms B] may agree to appoint and in default of agreement within 14 days as to a business broker then, at the request of either of the wife or [Ms B], the proper officer of the Australian Institute of Business Brokers (New South Wales) will appoint (“the broker”) the cost of and incidental to such appointment to be borne equally by the wife and [Ms B] as and when they are payable

   b.the sale price at which the business is listed shall be mutually agreed upon by the parties or, in the absence of agreement within 14 days of the business being listed then, at the request of either of the wife or [Ms B], the proper officer of Australian Institute of Business Brokers (New South Wales) (“the valuer”), shall nominate a valuer to determine the fair market value, the costs of and incidental to such appointment and the valuation to be borne equally by the wife and [Ms B] as and when they payable

   c.the wife and [Ms B] shall co-operate in every way with the broker including (without limiting the generality of the foregoing):

   i.making keys available to the broker

   ii.allowing inspection of the business at all reasonable times requested by the broker and

   iii.signing all documents requested by the broker relating to the listing for sale of the business except a contract or agreement for sale which has not been authorised by the solicitor acting on the sale

   d.the wife and [Ms B] shall execute a contract for sale in the form prepared by the solicitors having conduct of the sale at a price agreed on by the wife and [Ms B] or, in the absence of agreement, at or above the price nominated by the valuer in accordance with sub-orders (a) and (b) of these Orders.

   2.On settlement of the sale of the business, the proceeds of sale thereof shall be paid in the following manner and priority:

   a.all costs and expenses of sale including legal costs and disbursements, agents commission and valuers fees

   b.in payment of the monies required to discharge the loan to [WS] Mortgage Management (now secured against [T] Street, [Suburb A])

   c.in payment of the monies owed jointly and severally by the wife and [Ms B] to the interveners, [Mr and Mrs B]

   d.in payment of any tax, including capital gains tax, income tax and sales tax associated with the sale

   e.in payment of any outstanding invoices to suppliers and

   f.the balance (if any) to be paid to the wife and [Ms B] in equal amounts.

   3.Upon receiving her share (if any) of the net proceeds of sale as referred to in Order 2(f) of these Orders, the wife shall pay 45% of same to the husband.

   Notation

   4.The Court notes that [Ms B] has read these draft terms and has been offered the opportunity to obtain independent legal advice.  She is prepared to comply with these orders notwithstanding she is not a party to the proceedings.

   5.The interveners, as the registered proprietors of the real estate situate at [T2 Street, Suburb A], being the premises from which the business operates shall negotiate and grant a lease on the terms set out in paragraph 720 (page 99) being exhibit 56 of His Honour’s Judgement dated 22 August 2012.

2. By consent, in any contract for the sale of the business the wife is to appropriately covenant not to enter into the business of a similar business within a radius of five kilometres from the business sold for a period of three years.

3. The husband’s application for a stay upon the parenting orders is refused.

4. The Court declines to make an order for the stay of proceedings on its judgment on financial issues.

5. The husband is to sign within seven days those documents necessary to implement Order 34 of the Orders made on 24 August 2012 and in the absence of the husband signing the said documents within that time a Registrar of this Court is appointed pursuant to section 106A of the Family Law Act to execute all such documents in the name of the husband and do all acts and things necessary to give validity and operation to Order 1 of those Orders.

6. The Court notes there is an application for an order for security for costs.  That application is referred to the Full Court for determination.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Baghti & Baghti (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: SYC 2145 of 2009

Ms Baghti

Applicant

And

Mr Baghti

Respondent

And

Mr B and Mrs B

Interveners

And

Independent Children’s Lawyer

Legal Aid NSW

REASONS FOR JUDGMENT

1. I decline the application of the husband to have his application for stay dealt with first for the reasons referred to in discussion.  I think the reasons to which I have referred it is appropriate to deal with it the other way around and as to the question of the transcript that is an application you will have to make to the appellate Court.

(Recorded:not transcribed)

Application for costs of the interveners

1. Before the Court is an application by the second and third respondents for orders for costs in relation to proceedings conducted between the parties to a marriage which was the subject of a judgment made by this Court.

2. The application for an order for costs made by them is one which arose as a consequence of the second and third respondents becoming parties to the proceedings.

3. The proceedings were ones in which the applicant husband sought to have declared that the wife had an interest in certain property of the second and third respondents and that in addition that certain monies which were found ultimately to be due to them, both in relation to the advances made to their daughter in respect of the acquisition of a business and also monies which were provided by them to the daughter for the purpose of acquisition of a house and borrowed by them, not to be repaid to them.

4. Since the judgment has been made the monies borrowed for the purchase of the house which had been sold have now been substantially repaid from a controlled monies account to the second and third respondents.  A further amount had to be found by them of $14,000 to discharge their loan.

5. The interveners were joined in these proceedings in early 2011.

6. The husband has been totally unsuccessful against the interveners.

7. The interveners are not parties to the marriage and although related to one of the parties to the marriage they intervened to protect their property rights and their rights as a creditor.

8. Those rights were found in their favour and they are entitled to the benefit of the verdict.

9. It seems to the Court that particularly having regard to the conduct of the husband in failing to adduce any evidence of any significance in relation to the claim made against them concerning the ownership of property that there is a clear case for the exercise of a discretion in their favour in relation to an order for costs, and in part indemnity costs.

10. It is not a case where legal aid has been procured either by the interveners or by the husband against whom the order is sought.

11. The husband has asked for a consideration to be given to two things:  firstly, that it was not until the judgment was made that he was in a position to finally accede to the proposition that certain monies were due to the interveners certainly that allegation could not be, he says, acceded to until such time as he had had the opportunity of testing the evidence.

12. The orders made by the Court are in the event on all fours with the proposal by the interveners made by letter to the husband’s solicitors on 26 August 2011 and it seems to me that it is a proper case but for the husband’s financial position to make an order for costs.

13. As to that I am asked to take into account that he is impecunious.  He said that he is on Centrelink benefits and has no monies.

14. The questions of what monies he may or may not have, have to abide either the implementation of my orders or the implementation of any orders that might be made on an appeal.

15. It seems to me in the circumstances that I can make an order for costs the payment of which is deferred until the benefit of the decision made by me comes into fruition or the benefit of an appellate decision varying that decision comes into fruition.

16. In the circumstances I think it is proper that costs be paid.

17. I am asked to assess the costs or to direct that the costs be assessed on an indemnity basis and I have some sympathy for that particular approach.

18. This is a case in which the husband has not only been wholly unsuccessful but that the deficiencies particularly in relation to his claim for the interveners to be declared trustees of certain property was the subject of a concession during the course of the case that there was “not much in that argument”.  Indeed there never was and certainly there was nothing produced on the hearing which really was of any evidentiary weight that could justify the claim ever having been made.

19. It seems to me that clearly it is also a case where the husband knew that the purchase price of the property had been funded and it certainly was not funds that were available either to him, in particular, nor to his wife, and it is asserted that those funds were provided by the parents on a borrowing made by them against property which they owned and I have so found.

20. In the circumstances I propose to make an order that the husband pay the interveners’ costs of and incidental to these proceedings as agreed or assessed such costs to be on an indemnity basis for the purpose of the trial that is to say from the date of the commencement of the trial to the conclusion otherwise the costs be on a party and party basis.

(Recorded:not transcribed)

Application for costs of the Independent Children’s Lawyer

1. Before the Court is an application by the Independent Children’s Lawyer with respect to costs incurred in their representation of the interests of the child the subject of the proceedings between the husband and wife.

2. Those costs have been assessed and partly paid by the wife and an order is solely sought at this time against the husband;  that is the orders set out in the application filed by the Independent Children’s Lawyer on the 12th September 2012 and numbered 1.

3. There is no dispute as to the reasonableness of the quantum of costs.

4. There is a dispute in effect that the costs should be paid at all and that is based it seems solely upon the husband’s lack of present ability to pay.

5. This is a case in which orders have been made for settlement of property and on the details given to the Court at the time of trial the husband would rely upon realisation of the property at certainly the values he’s put on them, would provide for him a fund from which these costs should be paid.

6. I am mindful however of his present position.  He apparently is in receipt of social security, and has little income.

7. In those circumstances whilst I think it is entirely proper to make an order for the Independent Children’s Lawyer’s costs given the assistance they have been to the Court, the fact that the cost is really a cost of the promotion of the welfare of the child which is a parental responsibility, I think however that the payment of those costs should be deferred until the husband gets the benefit of the orders made in these proceedings.

8. Consequently I propose to make an order in favour of the Independent Children’s Lawyers for costs as sought subject to the fact that payment of those costs is deferred until such time as my judgment is given effect to or any appellate judgment is given effect to.

(Recorded:not transcribed)

Application for costs of the wife

1. Before the Court is an application by the wife in proceedings between the husband and wife in relation to parenting and property issues.

2. I intend to deal with those two issues and the costs of those issues separately.

3. The parenting Orders made by the Court are ones which place the child living with the mother but spending time with the father.

4. The approach to the parenting issues by each of the parties was certainly not perfect and the litigation was attenuated by the angst, if I can call it that, that existed between them.  The Court’s ultimate decision was assisted by the Independent Children’s Lawyer and in the view of the Court best promoted the welfare of the child.

5. It is true as Mr Lawson points out that it was not until the final day of the hearing however that the husband indicated that he might adopt a position other than a position in which the child would live with him and spend only two hours with the wife each week.

6. It seems to me that adopting so unreasonable a position and so obviously unreasonable position for so long must have incurred additional costs and for that reason I propose to make an order for some of the costs to be paid but the amount will be small and I propose in the circumstances that the husband pay to the wife on account of her costs of and incidental to the parenting proceedings the sum of $15,000.

7. That sum will be added to the sum next payable and be paid at the time hereinafter specified.

8. In relation to the proceedings before the Court for orders adjusting property interests neither party was a model litigant;  neither party was a model business- man or woman.

9. The proceedings before the Court concerned a number of properties.

10. Much of the proceedings was devoted to the valuation of a shop.

11. It is true that the wife did not keep and maintain continuing records of the takings of that shop and assessing its value was more difficult thereby however the husband applied for and procured an order in the nature of an Anton Piller order which permitted of the firm Messrs LL Partners to undertake a survey of the shop income and as a result of that survey the wife lodged amended tax returns.

12. There is no issue as between the parties that the wife was responsible for the operation of that particular business.

13. I make no comment about the assertion that the wife deliberately destroyed documents.

14. I did not find sufficient evidence to establish that and I think the assertion of Mr Lawson that the wife used the documents as she thought was appropriate and then discarded them is probably correct.

15. Certainly however the ferocity with which the husband continued to push for various orders when it was made clear that the valuation of the shop was best determined by offering it for sale and allowing the purchaser to spend some time in it to assess its turnover and that sale would be the way to discover the value in those circumstances was not justified in my view.  Nor was he justified in taking the time that was taken in pursuing claims against the third parties which of necessity involved the wife in these proceedings.

16. There was no provable basis for his claim that the wife had an interest in her parents’ property and it ought to have been obvious from the outset that that was so.

17. It certainly became very apparent very early that that was so and indeed that matter was raised with counsel and he was asked to abandon the claim by

    
    

    Mr Lawson.

18. He declined to do so on instructions.

19. So the pressing of that matter incurred costs which in the Court’s view were unnecessary and unreasonably incurred and the wife had to deal with that particular matter and bear the costs herself of having to sift through unsustainable assertions.

20. As to the matters that relate to the monies said to be due to the third party on an agreement with the wife, the wife has been vindicated in her assertions as to the existence of those monies.

21. There is an argument that the husband has however not been in a position to come to that conclusion until the evidence was tested given the absence of some of the documentation.

22. Each of the parties points the bone at the other in relation to their conduct during the proceedings.

23. Litigants in this Court never behave, one finds, in an ideal way and these parties were no exception to that general rule.

24. It is a case where I think, on balance the broad discretion reposed in me in relation to making an order for costs ought to be exercised and ought to be exercised in favour of the wife, however, having said that, I think there should be a limitation on the amount of the costs that she is awarded.

25. In that regard I believe that the trial was necessitated by, amongst other things, the failure of either party to reasonably disclose and I think in the circumstances that of the property proceedings before the Court the husband should pay 25 per cent of the wife’s costs of the hearing and I order accordingly.

26. I direct that the sum be paid upon the husband getting the fruits of the litigation.

(Recorded:not transcribed)

Order for the sale of the business “D”

1. There is an application before the Court pursuant to leave given by me in the judgment in this matter for the parties to address the Court on the terms upon which an order for sale of the business D might be made.

2. The husband has submitted a draft outline order.

3. That draft outline order is completely contrary to the findings in the case in terms of the way in which the business will be sold.

4. He continues to propose a situation where the Court would order servitude, which the Court has firmly set its face against.

5. The Court declines to make the order sought by the husband.

6. The wife has submitted in her amended application in a case a proposed form of order and the Court is minded to make that order but it will add the following terms (given her consent thereto) that:  in any contract for the sale of the business the wife is to appropriately covenant not to enter into the business of a similar shop within a radius of five kilometres from the business sold for a period of three years.

(Recorded:not transcribed)

Husband’s application for stay of proceedings pending appeal

1. Before the Court is an application by the husband seeking a stay of proceedings on orders of this Court in parenting and in property proceedings between himself and the wife.

2. The parenting orders are sought to be stayed by the husband relying largely upon an order which required the child to attend upon a dietician and the evidence of a report from a Dr F who advises against that course.

3. Dr F did not so advise at the time of the hearing and it seems to the Court that if in fact there is a sound evidentiary base to change the order in light of either advice or events that have occurred subsequently then that can be made the subject of an application to the Court for an order varying the order made.

4. It is not in my respectful view a matter which the Court would take into account in an application for a stay.

5. What needs to be taken into account is that the child’s interest in that regard can be served by alternative process.

6. In relation to the general question of stays upon parenting orders the issue primarily and paramountly is the welfare of the child.

7. The Court embarked on a very long and heartily contested hearing and after sifting the evidence has come to a conclusion as to what is in the best interests of this child and its view has not changed and it is in the Court’s view in the best interests of this child that the Orders made by the Court be sustained.

8. The Court has considered the Grounds of Appeal but does not in relation to parenting matter find appellate intervention in relation to that decision probable.

9. The decision was clearly one made upon the proper exercise of discretion after taking into account all those matters which it was required to take into account.

10. In the circumstances the application for a stay upon the parenting orders is refused.

11. In relation to the property orders there seems to be a lengthy Notice of Appeal which has been filed.

12. The Court has considered that Notice of Appeal and takes it into account in determining its attitude to the stay.

13. The Court is faced with the argument of the husband that the failure to grant a stay would render nugatory his application for an order that the property at Suburb H (one of the subjects of the dispute between the parties) should be transferred. That will not occur if it is sold and the appeal would be rendered nugatory in respect of that property were a stay not granted.

14. It is true that if a stay is not granted and the order is implemented then that property will be sold.

15. The husband would have a right to buy it but he points out that he will not absent other benefits from the dispute be able to purchase the property.

16. The property is the subject of a mortgage in respect of which there are substantial arrears exceeding some $83,000.

17. The husband has today in various applications before the Court argued that he is impecunious.

18. He has an obligation pursuant to orders made of this Court in due course to make payments to a number of the parties in these proceedings for costs.

19. The only possible source of costs are the proceeds of the action between the husband and wife and the proceeds of the judgment.

20. Having read the Grounds of Appeal I again find that they are not such as are likely to attract appellate intervention and given the inconvenience to the parties of failing to meet the liabilities from the sale of assets all that can be looked forward to is an increasing diminution in the available assets to each of them and in the circumstances of this case it would not be considered by the Court to be fair to all parties to require that stay to be made.

21. Each of the parties has competing rights I suppose but the position is that a person who has been engaged in litigation and procured a judgment is prima facie entitled to the benefit of that judgment and the onus is on the applicant for a stay to demonstrate that it is appropriate to grant it.

22. In relation to therefore the application for  a stay, noting that the parties’ interests in property will be realised in cash and that those interest can be adjusted between them if percentages are adjusted on that basis, the Court declines to make an order for the stay of proceedings on its judgment.

(Recorded:not transcribed)

Wife’s application for implementation of orders

1. Orders were made by this Court on 22 August 2012 for the sale of a certain property of the parties at Suburb H.

2. The orders define a regime for the implementation of the order which affords in the Court’s view security for each of the parties.

3. There was a requirement that both parties co-operate and do all such acts and things necessary to sell the property for the best price reasonably obtainable.

4. Documents have been submitted to the husband and he has thus far declined to sign them.

5. What the Court proposes to do is to give him an opportunity to do so within seven days and absent that being done the Court will make an order that the documents be signed by the Registrar in his stead.

(Recorded:not transcribed)

1. I propose to make an order in the following terms: that the husband sign within seven days those documents necessary to implement Order 34 of the Orders made on 24 August 2012 and in the absence of the husband signing the said documents within that time a Registrar of this Court is appointed pursuant to section 106A of the Family Law Act to execute all such documents in the name of the husband and do all acts and things necessary to give validity and operation to Order 1 of those Orders.

2. I note there is an order for costs but I do not propose to make an order for costs at this stage.

(Recorded:not transcribed)

1. The application for security for costs of the appeal is referred to the Full Court.

I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on

27 November 2012.

Associate: 

Date:  18 January 2013