Bahar and Sohrab (No 2)

[2017] FamCA 343

FAMILY COURT OF AUSTRALIA

BAHAR & SOHRAB (NO 2) [2017] FamCA 343

FAMILY LAW – Security for costs – Restraint from leaving Australia

Family Law Act 1975 (Cth) s – 117(2)

Luadaka v Luadaka (1998) FLC ¶92-830
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

APPLICANT: Ms Bahar

RESPONDENT: Mr Sohrab

FILE NUMBER: CAC 1429 of 2014

DATE DELIVERED: 24 May 2017

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 18 May 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Mr Farrar, Farrar Gesini Dunn

SOLICITOR FOR THE RESPONDENT: Self-represented

Orders

1. Within seven (7) days of the date of this order the respondent to this application shall pay to the applicant’s solicitors the sum of $50,000 to be held as security for any costs awarded to the applicant in relation to his applications filed on or about 6 March 2017, 12 April 2017 (other than those currently listed before Watts J), and 27 April 2017,

2. In the event that the respondent fails to comply with order (1) hereof then the said applications are stayed pending payment by the respondent of the said amount.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC1429/2014

Ms Bahar

Applicant

And

Mr Sohrab

Respondent

REASONS FOR JUDGMENT

1. There is a significant history of litigation in these proceedings, the relevant part of which is set out below.

2. Final orders were delivered by Watts J on 1 February 2017.  Two applications remain pending in relation to that matter, being an application for costs and an application for the disqualification of Watts J.  Both applications have been adjourned for the allocation of a further date in July 2017 before Watts J.

3. Other applications have been filed since the final determination of the matter as follows:

   a)The wife filed an application for contempt against the husband on 9 February 2017, alleging that the husband had dealt with his property in breach of injunction issued on 12 February 2016.

   b)The husband filed an application on 6 March 2017 seeking orders that the wife be required to comply with Order 16 of the 1 February 2017 final orders (pertaining to proceedings in Iran) and that she provide a binding document enforceable under Iranian law sufficient to prevent any current or future proceedings.  The husband also sought costs with regards to the application, and any legal costs in Iran.

   c)On 15 March 2017 the wife filed a response to the husband’s 6 March 2017 application, seeking that the husband’s application be dismissed, that the husband pay costs in relation to responding to the 6 March 2017 application, and seeking a s 106A order requiring the husband to execute the relevant transactions specified in the 1 February 2017 final orders.

   d)Orders were made on 3 April 2017 to provide for the Registrar to execute documents in accordance with the wife’s application. On the same date the proceedings in relation to the orders sought against the wife were adjourned. They were subsequently relisted in order to allow the parties to address the question of whether jurisdiction for the husband’s application could be found in s79A of the Family Law Act 1975.

   e)The husband filed an application on 12 April 2017 seeking a stay of proceedings on medical grounds, that Watts J recuse himself from hearing any further applications, that the husband be provided with transcripts in relation to the final hearings in February and December 2016, orders for costs, and extra time to file applications with regards to s 79A and with regards to costs incurred in Australia and Iran.

   f)The wife filed an application on 18 April 2017 seeking that all outstanding matters be consolidated to one date and time before Watts J.

   g)The husband filed an application on 27 April 2017 seeking an undertaking from the wife never to commence or recommence any legal action in relation to either himself or their two Australian-born children, anywhere in the world, and that this undertaking of the wife be delivered to the Iranian Embassy in Canberra. The husband sought that a Mareva Injunction be granted against the wife until both the husband’s current application and his application of 12 April 2017 were resolved. The husband sought orders that would satisfy his orders sought on 25 November 2016, 6 March, 10 April and 22 April. The husband also sought additional time to file an application with regards to setting aside or varying the 1 February 2017 final orders under s 79A of the Family Law Act 1975, leave to file additional materials in support of his applications, orders for costs, and an adjournment of the 29 May 2017 hearing to a date to be determined after his medical review.

   h)The wife filed an amended application on 11 May 2017, amending her 18 April 2017 application.  The amendments seek that the husband’s applications filed 22 November 2016, 6 March 2017, 10 April 2017, 20 April 2017 and 26 April 2017 be summarily dismissed, save for the applications for costs.  In the alternative, the wife seeks that the husband provide security for costs in relation to the above mentioned applications, and that the husband be restrained from leaving Australia.

4. The proceedings, other than those before Watts J, those pertaining to the security for costs application and the application to restrain the husband from leaving Australia, were adjourned to 2 June 2017 for hearing.

The application for security for costs

1. The basis of this application on behalf of the wife relies upon the following matters:

   a)Findings made by Watts J in the trial of the matter that the husband holds property to the value of $1.9 million;

   b)Lack of merit in the husband’s applications;

   c)Reliance by the husband on inadmissible material; and

   d)The likelihood that any order for costs in favour of the wife, in relation to the upcoming proceedings on 2 June 2017, would be frustrated by the inability to enforce against the husband’s property in Iran.

2. The husband resisted the application primarily on the basis that he asserts a lack of resources, the implication being that he would be locked out of the legal proceedings by a security for costs order.

3. The power to make an order for security for costs is contained in s 117(2).  The basis for the making of the order is that there “are circumstances that justify it in doing so”.  The Court is required to consider the matters identified at s 117(2A).

4. The Full Court in Luadaka[1] set out both the principles underlying the exercise of the discretion and a number of potential considerations. Similar considerations are listed at Rule 19.05 of the Family Law Rules 2004. The underlying purpose is:

   to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.

   [1] Luadaka v Luadaka (1998) FLC ¶92-830

5. Of the matters contained at s 117(2A), the financial circumstances of the parties are best assessed by reference to the final judgment given by Watts J that resulted in the parties each being entitled to property of approximately $3 million.  For the husband this includes an amount of approximately $1.8 million in notional add-backs.  Watts J found that the husband has “alienated and secreted significant funds”[2]. Neither party appears to be in receipt of legal aid. The conduct of the husband is relevant, in that he has made multiple overlapping applications, in circumstances where final orders are in place, without yet identifying by application the jurisdiction for doing so. While he has sought further time to make an application pursuant to s 79A (there being no requirement to seek further time) no application has been forthcoming. There is both a genuine question as to whether a jurisdiction is available for the applications he makes and, assuming that there may be pursuant to s 79A, that there is a sufficient reason for the exercise of the discretion.

   [2] See Bahar & Sohrab [2017] FamCA 40 at [102-103],[327], [331].

6. As to whether the proceedings were necessitated by the failure of a party to comply with previous orders of the Court, the contention of the husband is that the wife has not complied with the restraint imposed by Watts J at order 16 of the orders of 1 February 2017, in that she has not sought a permanent stay of proceedings in Iran.  Her position is that she cannot seek a permanent stay because she has withdrawn all proceedings in Iran and is restrained from instituting any other proceedings.  It is, as yet, an open question as to whether there has been non-compliance by the wife.

7. Section 117(2A)(e) and (f) do not appear to be applicable.

8. Of the matters identified in Luadaka the key matters identified for the wife are the question of the prospects of the husband’s applications and the prospects of being able to recover costs if ordered against him, on the basis that the property of the husband is held in Iran.  She further alleges that the proceedings are a sham.  The key matter identified for the husband is the stifling of the litigation.

9. While there is no application that specifically identifies the jurisdiction relied upon, the husband has asserted during the proceedings that he relies upon s 79A. I am, at present, unable to discern with clarity the prospects for success. However, the current state of the husband’s evidence, replete with assertions, does not lead to a conclusion that he has strong prospects for success. Ultimately, this will be a matter for hearing.

10. Given the findings made by Watts J, being findings central to his determination of the matter[3], that the husband has access to secreted funds and that the effect of the orders made is an allocation of approximately $3 million worth of property (including notional add-backs) to the husband, I do not consider that the litigation would be stifled by an order for security for costs.  The husband has the capacity to meet such an order, despite his assertions to the contrary.

    [3] See Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 597 per Gibbs CJ, Mason J and Aickin J.

11. It does appear that the wife is at risk of struggling to enforce any costs order that may be made against the husband as a result of his current applications.  It appears that there are limited resources in Australia against which a claim for costs could be secured.  The most significant source is a partial Superannuation interest held by the husband payable as a pension allocated to the husband in the orders of Watts J.  Assuming that costs could be secured against those periodic payments, it is unclear how long it may take for any costs order to be made good.

12. Given the uncertainty as to whether the proceedings have been necessitated by non-compliance by the wife, it is premature to consider that the proceedings are a sham.

13. Ultimately, the question of whether there ought to be an order for security for costs depends upon justifying circumstances that go to the prevention of injustice to a party. Here the litigation context, being repeated applications made by the husband following a final determination by Watts J, the questionable application of s 79A, the uncertain prospects, the strong risk that the wife would be deprived of the fruit of a successful costs application, combined with the satisfaction that an order for security for costs will not stifle the litigation lead me to conclude that it is appropriate to make an order for security for costs against the husband.

14. On the issue of quantum there is little evidence to establish the degree to which the wife is at risk.  She asserts that she has already paid almost $24,000 in legal fees since the handing down of the judgment by Watts J in enforcement costs and in dealing with the husband’s applications.  She owes her lawyers a further $24,000 for such work.  The matter has not yet gone to hearing, which is likely to incur further costs.  She seeks an order for $100,000 to be paid by way of security.

15. I am unable to assess with any precision the range of a potential costs award.  However, the objective of an order for security for costs is to protect from potential injustice.  Where a basis for assessing an amount has not been supported by evidence from the party seeking the protection, the discretion ought be exercised conservatively.  Recognising that the amount recovered pursuant to a costs order is usually less than that expended by the party, and that the amount already charged does not represent what will be incurred by the wife in dealing with the hearing of the application, the amount so far incurred at least represents identifiable costs incurred by the wife.

16. The security order will therefore be in a sum approximating that which the wife has already incurred, that is, in the sum of $50,000.

17. In the event that the security is not lodged, the husband’s applications will be stayed pending further order.

The application to restrain the husband form leaving the country

1. This application is supported by paragraph 10 of the wife’s affidavit of 10 May 2017.  It relies upon the upcoming proceedings for contempt that she has commenced against the husband, and upon the husband having available to him multiple passports and funds in Iran.  It relies on the husband’s non-disclosure of his address.  The husband opposes such a restraint.

2. The granting of such injunctive relief is predicated upon it being necessary to prevent the frustration of the Court’s processes.  It is key that the relief be necessary.  It is a significant matter to restrain the freedom of movement of an individual. 

3. While it is true that if the husband travelled to, and remained in, Iran the contempt proceedings could be frustrated, the mere identification of such a possibility does not justify the granting of the order sought.  In this case the wife has gone further, to note both a potential motivation (avoidance of gaol), along with the means to remain in Iran. 

4. No direct evidence of flight risk is led.  It is not suggested that the husband has made any preparatory steps to leave the country.  Against the risk alleged, the husband is an ongoing applicant in the litigation.  He seeks to depart from the final orders made by Watts J.  If the husband was to leave the country and remain in Iran, it is likely that this litigation would fail. 

5. The husband asserts that he has no intention to leave the country.  That would indicate that there is little inconvenience to him in the relief being granted.

6. However, the precursor to the question of the balance of convenience is the need to establish that the relief is necessary.  That has not been done in this case and the application to restrain the husband is refused.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 24 May 2017.

Associate: 

Date:  24 May 2017