Banis and Anor and Baghti

[2016] FamCA 593

FAMILY COURT OF AUSTRALIA

BANIS & ANOR & BAGHTI [2016] FamCA 593

FAMILY LAW – COSTS – Indemnity costs –Consideration of the principles in Colgate-Palmolive Co. and Anor v Cussons Pty Limited – Where the respondent was wholly unsuccessful – Where the Court is of the view that there was never any basis for the relief being asserted by the respondent – Where the respondent is herself a legal practitioner – Where the circumstances warrant departure from the usual position of ordering costs on a party and party basis – Where the Court is of the view that costs should be paid on an indemnity basis – Order made that the respondent pay the applicants’ costs as assessed by the Court.

Family Law Act 1975 (Cth) – s 117(1)

Colgate-Palmolive Co. and Anor v Cussons Pty Limited (1993) 118 ALR 248

1st APPLICANT: Mrs Banis

2nd APPLICANT: Mr Banis

RESPONDENT: Ms M Baghti

FILE NUMBER: SYC 2145 of 2009

DATE DELIVERED: 17 June 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 13 May 2016 and 17 June 2016

REPRESENTATION

SOLICITOR FOR THE 1^ST & 2^ND APPLICANTS: Mr McDonell of McDonell Milne Toltz

FOR THE RESPONDENT: No appearance

Orders

1. That within 30 days Ms M Baghti pay to the applicants’ solicitors their costs assessed by the Court in the amount of $3520.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Banis & Anor & Baghti 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 SYDNEY

FILE NUMBER: SYC 2145 of 2009

Mrs Banis

1^st Applicant

And

Mr Banis

2^nd Applicant

And

Ms M Baghti

Respondent

REASONS FOR JUDGMENT

1. This is an application for an order that Ms M Baghti pay Mrs Banis and Mr Banis (“the applicants”) part of their costs in the Third Party Debt Notice proceedings on an indemnity basis. 

2. There was no appearance by the respondent Ms M Baghti.

3. On 14 November 2014 the applicants filed an application for an order for the issue of a Third Party Debt Notice which would require their daughter Ms A Banis (“the wife”) to pay to them the amount of $91 080 which she would otherwise be required to pay to her former husband Mr Baghti pursuant to order 43 of the orders of this Court of 22 August 2012.  Those orders were substantive property orders which brought about a property settlement between the wife and the husband.

4. I am satisfied that reasonable endeavours have been made to serve notice of this costs application on Ms M Baghti.  This application came before me for hearing on 13 May 2016 and I had mistakenly thought that Ms M Baghti had been served.  But subsequently Mr McDonell, solicitor for the applicants, notified my Chambers indicating that a letter which he had referred to and which had formed the basis of my satisfaction about service on Ms M Baghti could not be located amongst the relevant files in his office.  In those circumstances I relisted the matter for hearing on 17 June 2016 and made some directions for service.

5. It is unnecessary to refer to those orders in detail but subsequently the Registry was informed that it had not been possible to personally serve Ms M Baghti although reasonable endeavours in that regard had been made.  I read in chambers affidavits by process servers, firstly an affidavit by Mr JK in which the process server indicated that on 18 and 19 May 2016 he attended at what he understood as being the offices of Ms M Baghti at CS Street, Sydney.  The process server attended the following day and in respect of each of those attempts at service the process server indicated that he was unable to achieve service.

6. There was also an affidavit of attempted service by Mr FH, licensed process server.  Mr FH indicated that he called at an address at HA Street, Suburb HU on 20 May 2016 at 5.30 pm.  He was unable to gain access to the property.  He made some enquiries which confirmed that in fact Ms M Baghti lived at that residence.  In any event, he was unable to serve the process on that occasion.

7. In those circumstances I considered the application for an order for substituted service and made an order for substituted service.  I am satisfied that a letter forwarding the relevant documents, including the application and material in support was sent by mail to the office address for Ms M Baghti and more significantly to an email address for her at ….  I am satisfied that Microsoft Outlook has provided confirmation that the email went through to that email address.  In those circumstances I am satisfied that reasonable endeavours have been made to achieve service on Ms M Baghti. 

8. In the substantive proceedings, this Court made an order that the husband pay to the applicants certain of their costs.  Such costs were subsequently assessed by the Senior Registrar in the amount of $109 160.  By seeking issue of the Third Party Debt Notice the applicants are endeavouring to enforce the costs order.

9. The Third Party Debt Notice application was returnable on 4 December 2014.  On that occasion there was no appearance by the husband, but his sister, Ms M Baghti appeared and informed the Court that she was mentioning the matter for him.  But of relevance to the costs application, Ms M Baghti informed the Court that she proposed to file an application for leave to intervene in the proceedings.  I ordered that Ms M Baghti file such an application and all affidavits in support not later than 24 December 2014 and adjourned the proceedings to 23 February 2015.

10. On that occasion, that is 23 February 2015, Mr Levet of counsel appeared for Ms M Baghti.  I accepted that she had filed her application and supporting material on 24 December 2014 but this had not been served on the applicants.  To provide opportunity for the applicants to consider Ms M Baghti’s material I adjourned the proceedings for hearing on 7 April 2015.

11. As I indicated in my judgment of 29 April 2015, on 7 April 2015 Mr Levet of counsel appeared for Ms M Baghti and filed in Court an Amended Application in a Case seeking orders additional to those in Ms M Baghti’s original Application in a Case.  In her original application, Ms M Baghti sought leave to intervene in the proceedings and sought an order that the proceedings be stayed pending final determination of proceedings which had been commenced by her in the Supreme Court of New South Wales against the husband and the wife.  In the Amended Application, in addition to those orders, Ms M Baghti sought an order that the proceedings be stayed pending final disposition of the husband’s appeal against orders of Rees J.  In addition the Amended Application sought the following orders:

    4.A declaration that the orders sought by [the applicants] amounts to an acquisition of property on other than just terms. 

    5.An order permanently staying these proceedings consequent on the declaration above. 

12. Ms M Baghti sought leave to intervene in the proceedings on the basis that she asserted that she had loaned the husband $150 000 to assist him to fund his legal costs in the substantive proceedings.  Ms M Baghti had commenced proceedings in the Supreme Court of New South Wales seeking to rely on a purported Deed of Mortgage between the husband and herself dated 6 October 2011 evidencing their agreement about this loan and seeking to secure the alleged debt by what was said to be a charge over the husband’s property including the $91 080 required.

13. On 7 April 2015 Mr Levet sought an adjournment.  I declined the adjournment application for the reasons set out in my judgment of 29 April 2015.  Amongst other matters Mr Levet submitted that the application raised a constitutional issue and that this gave rise to the need for notices to be given to the Commonwealth and State Attorneys-General.  I rejected this submission for the reasons also included in my 29 April 2015 judgment.  I heard Ms M Baghti’s application for leave to intervene in the proceedings and ordered that it be dismissed.  I was then informed that Ms M Baghti proposed to appeal from my order.  On 16 April 2015 I ordered that the order on 7 April 2015 which dismissed Ms M Baghti’s application for leave to intervene be stayed pending the hearing of her appeal filed that day.  On 10 December 2015 the Full Court dismissed Ms M Baghti’s appeal.

14. The usual position in relation to costs in proceedings under the Family Law Act 1975(Cth) is that pursuant to s 117(1) of the Act each party to proceedings shall bear their own costs. 

15. Ms M Baghti has been declined leave to intervene in the proceedings to become a party thereto.  The parties to the proceedings are the applicants, the wife and the husband.  Ms M Baghti has been wholly unsuccessful in her application.

16. It is submitted on behalf of the applicants that not only has Ms M Baghti been wholly unsuccessful in the proceedings but her conduct has been such that this Court should make an indemnity costs order against her.

17. In Colgate-Palmolive Co. and Anor v Cussons Pty Limited (1993) 118 ALR 248 Sheppard J considered circumstances in which an indemnity costs order has been made. His Honour said at page 256-257 as follows:

    …

    2. The ordinary rule is that, where the Court orders the costs of one party to litigation to be paid by another party, the order is for payment of those costs on the party and party basis.

    …

    4. In consequence of the settled practice which exists, the Court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the Court in departing from the usual course. That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v. Barnes (39 Ch D at 141) said the Court had a general and discretionary power to award costs as between solicitor and client "as and when the justice of the case might so require." Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v. Preston ((1982) 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the Court in departing from the ordinary practice. Most judges dealing with the problem have resolved the particular case before them by dealing with the circumstances of that case and finding in it the presence or absence of factors which would be capable, if they existed, of warranting a departure from the usual rule. But as French J said (at 8) in Tetijo, "The categories in which the discretion may be exercised are not closed". Davies J expressed (at 6) similar views in Ragata.

    5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v. Weekes (1989) 92 ALR 131 at 152; evidence of particular misconduct that causes loss of time to the Court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp); the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v. Hutchinson (1987) 10 NSWLR 525, Maitland Hospital v. Fisher (No. 2) (1992) 27 NSWLR 721 at 724 (Court of Appeal), Crisp v. Keng (Supreme Court of New South Wales, 27 September 1993, unreported, Court of Appeal) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.

18. In the present case, not only has Ms M Baghti been wholly unsuccessful in the proceedings but, in my view, she has acted unreasonably.

19. Ms M Baghti is a solicitor and she had previously been on the Court record as representing her brother, the husband, in these proceedings.  On the return date of the application, namely 4 December 2014, Ms M Baghti appeared at Court and informed the Court that she had only become aware of the proceedings the previous evening.  This appears to be extraordinary in the above circumstances and where she and her brother, the husband, were then living at the same address.  So the matter was adjourned to 23 February 2015 as I have said.

20. Had Ms M Baghti not involved herself in the proceedings the Court would have been able to hear the Third Party Debt Notice application on 4 December 2014 on an undefended basis, the respondent husband not having been present and the respondent wife not opposing the application.  Instead, what has occurred is that the applicants have been caused the cost of the further appearances by their solicitor Mr McDonell on 23 February 2015 and 7 April 2015 and 13 May 2016.  I am satisfied that the time involved was at least eight hours.

21. In my view, it is clear that there was never any basis for the relief being asserted by Ms M Baghti.  Her conduct in involving herself in proceedings to which she was never rightfully a party has had the effect not only of causing the applicants to sustain unnecessary cost, but also delay in being able to achieve the fruits of their litigation.  Ms M Baghti is an officer of this Court and should have been more careful in the manner of her involvement.

22. In all the circumstances, in my view, it would be most unfair for the applicants not to be paid in full for the costs lost due to Ms M Baghti’s involvement in their case.

23. In my view, therefore, this is a case where the Court should depart from the usual position of ordering costs on a party and party basis.  In my view costs should be paid on an indemnity basis.

24. I assess the costs at $3520.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 17 June 2016.

Associate:     

Date:              23 June 2016