BEHZADI & AGASSI
[2020] FamCA 1112
•24 November 2020
FAMILY COURT OF AUSTRALIA
| BEHZADI & AGASSI | [2020] FamCA 1112 |
| FAMILY LAW – COSTS – Application for costs by the applicant that the wife pay her costs of the proceedings as assessed or agreed – Order that wife pay 50 per cent of the applicant’s legal costs of the proceedings as agreed or assessed under the rules on a party/party basis |
| Family Law Act 1975 (Cth) s 117 |
| Penfold v Penfold (1980) FLC 90-800 PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158 Cachia v Hanes (1994) 179 CLR 403 |
| APPLICANT: | Ms Behzadi |
| RESPONDENT: | Ms Agassi |
| FILE NUMBER: | SYC | 5697 | of | 2016 |
| DATE DELIVERED: | 24 November 2020 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 24 November 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Cairns |
| SOLICITOR FOR THE APPLICANT: |
| COUNSEL FOR THE FIRST AND SECOND RESPONDENTS: | In Person |
| SOLICITOR FOR THE RESPONDENT: |
Orders
Ms Agassi (‘the respondent’) pay 50 per cent of the legal costs of Ms Behzadi (‘the applicant’).
Such costs be as agreed or as assessed under the Family Law Rules 2004 (Cth) and are to be calculated on a party/party basis.
Costs otherwise sought in relation to the Costs Application are discharged.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage counsel to attend.
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 Behzadi & Agassi 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 HOBART |
FILE NUMBER: SYC 5697 of 2016
| MS BEHZADI |
Applicant
And
| MS AGASSI |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
INTRODUCTION
Ms Agassi (‘the wife’), and Mr Ayari (‘the husband’), have been engaged in proceedings in this Court and/or the Federal Circuit Court since 2016. Those proceedings were heard by me over 16 March, 4, 6, 7, 8, 11 of May, 6 June and 8 July 2020. On 31 July 2020 I published Reasons for Judgment (‘the Reasons’) and made Orders as set out in those Reasons. Those Orders have not been the subject of any application or appeal to the Full Court.
On 28 August 2020, the husband filed an Application in the Case seeking orders that the wife pay his costs of these proceedings as agreed or assessed. That application was supported by an Affidavit the husband swore on 27 August 2020. I note in passing that that application for costs was filed within the time provided under the Family Law Rules 2004 (Cth) (‘the Rules’).
The husband has remarried and his present wife is Ms Behzadi (‘the applicant’), who on 4 November 2020, joined in the application commenced by the husband and sought orders that the wife pay her costs of these proceedings as agreed or assessed. The applicant relied upon her affidavit of 28 August 2020. It is not clear to me whether that falls within the time limit provided under the rules or not, given the application filed by the husband, however, if not, I would have, in any event, granted leave given the circumstances and the proximity of that date to the expiry of 28 days.
The matter came before me on 4 September 2020 in Chambers, and the costs proceeding was listed for hearing on 12 August 2020 at Hobart. The wife was directed to file material in reply. The parties were given leave to appear through Microsoft Teams.
The matter was the subject of an adjournment application by the wife from October 2020 until today, and that adjournment application was successful. This was to give the wife time to obtain Legal Aid. The wife did not receive legal aid in that time. Subsequently, the wife has now filed a Response to the Application in a Case on 23 November 2020, together with her affidavit filed and sworn on the same date. It is clear from Exhibit E1, the wife has not yet received Legal Aid and has had difficulties obtaining legal advice. Given the notation in the most recent of my adjournment orders, had the wife had applied for an adjournment, I would not, in all of the circumstances, have granted it for various reasons. One of the reasons is that these proceedings have been on foot for almost three months.
Significant time was given to the wife to file material, and whilst she has done so without significant input from the legal profession, these proceedings must, at some time, come to an end. So therefore, the question I have to determine today is whether a cost order should be made on the applications to which I have referred, and if so, on what basis those costs ought to be paid if I determine costs ought to be paid.
As to the costs applications, the process I have to adopt in respect of each of the application is whether I ought to make a cost order, and if so, what order I ought to make in the circumstances of this case.
It is a little more difficult in terms of the cost application of the applicant, as she joined in the proceedings and engaged in them from probably 2017, but last year when the matter came before me, she withdrew the proceedings and her evidence was given as part of the proceedings brought by the husband. The applicant now seeks leave to re-engage to seek the cost orders that are set out in her application. I will deal with that later.
THE EVIDENCE
It is worthwhile for me to outline the material before me. Firstly, I have the Reasons for Judgment delivered on 31 July 2020 (‘the Substantive Reasons’) and the Orders made pursuant to that.
I have the applicant’s Costs Application to which I have earlier referred, and her Affidavit sworn on 28 August 2020 and filed that day.
From the wife, I have her Costs Response, filed 23 November 2020 and her affidavit sworn on 23 November 2020 and filed the same day. And I have those emails from 23 November sent at 13.51. And I think I said earlier 6.26, but it was in fact 2.48 pm.
BACKGROUND
In relation to the background and history to the Substantive Proceedings they are set out in paragraphs 30 through to 71 of the Substantive Proceedings, which I repeat here:-
30. The wife is aged 45 and was born in Country E. As to her health, she has the difficulties to which I have described elsewhere in these reasons. She is currently working as a manager of her business in Sydney.
31. The husband is aged 41 and was born in Country E. There no evidence that he has health problems. He is employed as a public servant and earns about $110,000 per year.
32. The [applicant] was born in … 1976 and is now aged 43. She immigrated to Australia in 2000. She commenced dating with the husband in about mid 2014 (she believed that the husband and wife were separated). The husband and [applicant] were married on … 2019. There is one child of that relationship, a daughter who was born in … 2020.
33. The husband and wife met in City C in 1997. They married and commenced cohabitation on 1 October 2001. There are no children of the marriage.
34. I have determined that the parties finally separated in about September 2015.
35. I have determined that the husband acquired an apartment in City J in March 2000 using funds provided by his father. The parties at times lived in that apartment and at times received income in the form of rent from City J.
36. The wife asserts that she was entitled to a one third interest in City J as part of her dowry. Further, she says she was not paid her one third interest at the time City J was sold in 2011. I have considered the acquisition, contributions and the like in respect of City J in the overall determination of this property proceeding.
37. City J was sold in 2011 and I accept that the proceeds of sale of City J were used to acquire the parties’ interests in the two ‘off the plan’ apartments in the K Building in City C, Country E (the ‘City C apartments’). I have discussed the acquisition and dealings with the City C apartments later in these reasons.
38. The husband immigrated to Australia in 2006 and the wife in June 2008. They have primarily resided in Australia since that time.
39. In May 2008 the parties each acquired a farming property in Town L in Country E. I have referred to those properties later in these reasons.
40. In November 2009 the wife purchased a business. There is evidence that the wife’s business was relocated in September 2014 and the wife undertook an expensive fit out and borrowed money for that purpose. I have discussed that acquisition elsewhere in these Reasons.
41. The parties applied for Country JJ visas in 2011 and after a short period these visas were granted. Neither party has taken up that offer of residence in Country JJ.
42. In 2012 the husband commenced a business called M Company and I have determined that he ended that business in 2014. I have detailed the reasons in that regard later in these Reasons.
43. In 2013 the parties seemingly were involved with a company called N Company. There is no cogent or reliable evidence that the parties have or had some equity in this business, nor is there evidence that they made any significant income from their association with it.
44. In 2014 the husband purchased and occupied Suburb H. There is a dispute as to the funding of the acquisition. I have discussed that issue later in these Reasons.
45. I mid 2014 the husband met [the applicant] and soon commenced a relationship with her. I am satisfied he did not inform the wife of that relationship until in or after September 2015.
46. The husband’s parents visited from Country E in December 2014 and stayed for about three months.
47. On 5 January 2015 the husband and [the applicant] set up a self-managed superannuation fund, Super Fund 1. The Trustee of the Fund was P Pty Ltd. The husband rolled over about $49,000 from his existing superannuation fund (Super Fund 2) to the self-managed fund.
48. Q Pty Ltd purchased a property at Suburb R for $501,000. This company borrowed about $390,000 from S Bank to fund the purchase. Q Pty Ltd apparently owns the property as specific property trustees for the Super Fund 1. In addition, I have determined and accepted that [the applicant] lent the trustee of this superannuation fund and Q Pty Ltd (as specific trustee for Suburb R) $37,071 to enable the purchase of Suburb R.
49. I accept that in addition to the $37,071 loan [the applicant] contributed a lump sum of her superannuation to this self-managed fund and made regular payments to that fund for about two years.
50. In May 2015 the husband and the wife vacated Suburb H and moved into rented accommodation.
51. On 9 August 2015 the husband travelled overseas and in September 2015 informed the wife that their marriage was over and that he had commenced divorce proceedings in Country E. He commenced those proceedings in Country E on 21 September 2015. The wife participated and engaged in those proceedings. Ms T (‘the wife’s elder sister’) represented her interests in that proceeding and employed legal practitioner/s.
52. On … 2016 the City C Family Court dissolved the marriage of the parties and delivered judgment and verdict for a property settlement in respect of the parties’ Country E property.
53. A translation of the City C Family Court judgment was tendered in evidence. It noted:-
a) The divorce was an ‘agreed divorce’.
b) There were no children of the relationship.
c) The husband’s apartment in the City C apartments was to be transferred to the wife.
d) The wife ‘had no claim with respect to her dowry, outstanding alimony, compensation and other assets in Country E’.
54. I have concluded from this judgment that it related only to property in Country E.
55. As a consequence of the judgment, the husband transferred his interest in one of the City C apartments to the wife, who employed her elder sister (as her power of attorney) to undertake and complete that transfer. That apartment was registered in the name of the wife.
56. The husband returned to Australia on 9 October 2015, having been away about three months. He again departed Australia about two or three weeks later, on 26 October 2015.
57. On 26 November 2015 the wife’s solicitors lodged a caveat on the title to Suburb H. There was subsequent lapsing notice before the matter was raised again as a consequence of the commencement of these proceeding.
58. The [applicant] gave evidence that her family had offered to financially assist her and that she had an expectation of receiving about $500,000 from them in 2015. The [applicant] said that there were difficulties in arranging for this family money to be transferred from Country E to Australia and as an interim measure the [applicant] borrowed $535,000 from Mr U. That loan and the transfer of the funds is supported by bank and loan agreement records and evidence by Mr U. There was confusion as to whether this loan was $535,000 or $525,000. In her affidavit filed 2 February 2018 it was said to be $525,000. In her affidavit filed 8 June 2017 it was said to be $535,000. Mr U deposes that it is $535,000. I have accepted the veracity of the evidence of Mr U and [the applicant], in that regard. It is likely that the confusion arose because [the applicant] had repaid over $10,000 against that loan.
59. On … 2016 the husband married another person in City C. They subsequently divorced. The husband incurred a debt for her dowry. This marriage had little bearing on the property issues between the parties. Although, I have no doubt that the husband’s relationship with [the applicant], before formal separation, and his marriage to another woman in … 2016 has in part at least, fuelled the conflict between the husband and the wife.
60. In May 2016 [the applicant] transferred $470,000 to the husband’s Commonwealth Bank home loan off-set account. This payment substantially reduced the mortgage on Suburb H.
61. In August 2016 the husband and [the applicant] jointly purchased property at V Street Suburb W (‘Suburb W’) for $870,000. The funding for that purchase came from a registered first mortgage over Suburb W and drawings of $132,824 made against the Suburb H mortgage offset account. In addition, [the applicant] spent a further sum of about $129,000 on renovations to Suburb W.
62. These proceedings were commenced on 6 September 2016 by the wife.
63. In December 2016 the husband changed the Suburb H mortgage to interest only as he was unemployed around that time.
64. There were a number of costs orders made against the husband, of which I have had regard.
65. There was a tsunami of papers produced in these proceedings by each of the parties. They were tendered as tender bundles and exhibit bundles. There were certified and translated copies of documents from Country E including real estate valuations and title transfers of the City C apartments.
66. In 2017 [the applicant] intervened in these proceedings claiming an equitable interest in Suburb H. She later discontinued a claim of an equitable interest in Suburb H, but pressed the liability for the advance she made against the Commonwealth Bank mortgage offset account.
67. The wife re-married on … 2019. Her husband, Mr X (the ‘wife’s present husband’) provide affidavit evidence for the wife.
68. The hearing commenced on 16 March 2020 and concluded on 11 May 2020. The proceedings came back before the Court for further evidence and submissions on 6 June and 8 July in 2020.
69. At the conclusion of this hearing on 11 May 2020 there were two areas where there was a lack of clarity namely:-
a)the exchange rate in relation to the value of the properties (if in fact they were property of the wife or a financial resource of the wife) having regard to the exchange rate of the local currency; and
b)the superannuation fund or funds of the husband.
70. The superannuation material, provided on 6 June 2020 and admitted into evidence, enabled determinations to be made as to the values of the husband’s various superannuation funds.
71. The parties provided further evidence and submissions on 8 July 2020 as to the exchange rate etcetera, as I have mentioned earlier in these Reasons.
(Footnotes omitted)
THE LAW IN RELATION TO COSTS
Costs orders generally
The law regarding costs is clearly set out in s 117 of the Family Law Act 1975 (Cth) (‘the Act’), which relevantly provides:-
(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
I note the approach of the majority in the Full Court in Hawkins & Roe [2012] FamCAFC 77, and Wrensted & Eades [2016] FamCAFC 46. I also note the decision of Deputy Chief Justice McClelland in Baum & Lokare (No.2) [2019] FamCA 292, and, of course, the decision in Penfold v Penfold (1980) FLC 90-800 in terms of the tension between section 117(1) and 117(2) of the Act where the majority of the High Court expressed the general rule that s 117(1) is not paramount to s 117(2) of the Act. A court must make a finding that there are circumstances justifying the making of a costs order before proceeding to make the orders.
There is no guidance in the legislation between the two sub sections nor any additional special onus on the applicant for an order as to costs.
It is necessary to consider the facts in the light of the provisions set out in s 117(2A) of the Act. While the list in s 117(2A) gives rise to a wide range of factors there is nowhere in s 117(2A) that says any one factor provides a hierarchy in relation to the other factors, it is a matter of weight that is accorded to each of the relevant factors in the Court’s discretion (see Medlon and Medlon (No.6) (Indemnity Costs) (2015) FLC 93-664 per Strickland J). One factor may be enough. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & Ors [2005] FamCA 158, the Full Court held:-
41. Nowhere in subsection 2(a) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
As such the Court has a broad discretion in determining costs.
It is of value to repeat what I have said in earlier judgments that the Court needs to consider the difference between the various types of unquantified costs orders available under the Act. There are many variations of types of costs orders, but they generally fall into three types:-
Party and party costs - which are calculated having regard to the schedule of costs under the Family Law Rules 2004 (Cth);
Lawyer and client costs – these are essentially indemnity costs, with the onus upon the costs applicant to satisfy the taxing authority that such costs are on balance fair, reasonable and proportionate; and
Indemnity costs - these are essentially lawyer and client costs, with the onus upon the costs respondent to satisfy the taxing authority that such costs are on balance not fair and reasonable and not on balance proportionate, that is the reversal of the onus of proof.
It should be borne in mind that costs orders are restorative and not punitive, and costs cannot exceed the amount actually incurred. They are an indemnity or partial indemnity. In Cachia v Hanes (1994) 179 CLR 403 the plurality of the Court, comprising Mason CJ, Brennan, Deane, Dawson and McHugh JJ observed:-
Whilst the restricted basis upon which party and party costs are awarded may be debated as a matter of policy, it is to be borne in mind that party and party costs have never been regarded as a total indemnity to a successful litigant for costs incurred, let alone total recompense for work done and time lost. Putting to one side the question posed by the relatively rare exception of a solicitor acting in person, there is no inequality involved: all litigants are treated in the same manner. And if only litigants in person were recompensed for lost time and trouble, there would be real inequality between litigants in person and litigants who were represented, many of whom would have suffered considerable loss of time and trouble in addition to incurring professional costs. The partial indemnity which the law allows represents a compromise between the absence of any provision for costs (which prevails as a matter of policy in some jurisdictions) and full recompense. In these days of burgeoning costs, the risk of which is a real disincentive to litigation, the proper compromise is a matter of both difficulty and concern.
This costs application was considered and determined under the provisions of s 117 of the Act.
In considering what order, if any, I should make under s 117(2A) of the Act I have had regard to:-
(a) the financial circumstances of each of the parties to the proceedings;
All three of these parties have suffered terrible expense in relation to these proceedings, particularly the wife who has spent, on her evidence, in excess, I think, of $300,000 in legal costs. She has left her business in Sydney which is burdened with debts, and as I determined in these proceedings, she owns two apartments in City C. The wife has limited money and some ability to earn money, but I am conscious that this is in the middle of a pandemic and her capacity to earn an income would also be significantly reduced.
The applicant borrowed significant monies, I think about $530,000 or five $535,000 dollars, which she invested in the husband’s property at Suburb H, and also a property in Suburb W. The evidence and finding that I made was that those monies were a valid debt.
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
Neither party was in receipt of Legal Aid.
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection,
There are arguments as to the conduct of the proceedings and those arguments are reasonably sound. .
From the point of view of the applicant, the wife was entitled to make enquiries as to her financial involvement with the husband, and did so. However, when it became clear, and it was clear, the source of the monies, the wife took extraordinary steps and made almost Trumpian-type comments as to the reality of that loan. Whereas the money was clearly lent to the applicant by the family friend and that money was produced. So the wife was entitled to enquire, but at some stage she ought to have realised that that argument was gone.
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
I make no comment in relation to factor (d) in relation to the failure of the party to comply with the orders of the Court.
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
The wife was entirely unsuccessful.
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
There is no evidence of me in relation to offers of settlement of any meaningful kind.
(g) such other matters as the Court considers relevant.
I have regard to the findings of fact in the Substantive Reasons. A
In terms of the application by the applicant, the wife, as I said, was entitled to make inquiry as to the source of those funds. Once that inquiry was made and once it had been determined, it was open for the wife then to accept that circumstance. She did not do so. The wisdom of that decision, or otherwise, became clear when the matter came before me, and the overwhelming evidence as to that loan and the use of those funds became clear. However, of course, the applicant left the proceedings and I am not satisfied that she ought to receive the whole of the costs, but she should receive some of the costs.
I intend, given the circumstances, to order that the wife pay 50 per cent of the applicant’s party costs as agreed, or as determined on assessment. I comment that the parties are entitled to look at the other party’s case and investigate. However it should not mean that that they continue blindly into the litigation and run cases, as was this case, for some six days, and then the issues that arose following that in respect of the valuation of the Iranian rial and a few other matters. In respect of the costs of the Application for Costs, each of the husband and the applicant were unrepresented, so therefore they would not normally be entitled to costs.
However, they have briefed Mr Cairns on a direct brief basis for the purpose of this hearing. I have ordered the wife to pay Mr Cairns fees in the husband’s costs application.
Accordingly, I will make two sets of orders.
I certify that the preceding thirty four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 24 November 2020.
Associate:
Date: 22 December 2020
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