Bestari & Henley (No 2)
[2022] FedCFamC1F 1055
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Bestari & Henley (No 2) [2022] FedCFamC1F 1055
File number: CAC 2301 of 2021 Judgment of: GILL J Date of judgment: 22 December 2022 Catchwords: FAMILY LAW – COSTS – Indemnity costs in relation to an aspect of the proceedings – Conduct – Where the husband agitated parallel proceedings in Country B – Where husband’s conduct has been vexatious, oppressive and abuse of process – Where the wife has been largely successful in her application – Consideration of factors in s 117 of the Family Law Act 1975 (Cth) – Costs awarded to the wife on an indemnity basis. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Anison & Anison [2019] FamCAFC 108
Bant & Clayton (Costs) [2016] FamCAFC 35
Parke & The Estate of the Late A Parke (2016) FLC 93-748
Penfold v Penfold (1980) 144 CLR 311
Prantage & Prantage [2013] FamCAFC 105
Quickley & Pelissier [2016] FamCAFC 124
Robinson & Higginbotham (1991) FLC 92-209
Division: Division 1 First Instance Number of paragraphs: 41 Date of last submission/s: 16 December 2022 Place: In Chambers Counsel for the Applicant: Dr J Behrens Solicitor for the Applicant: Hosking & Gosling Legal Solicitor for the Respondent: Delaney Lawyers ORDERS
CAC 2301 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BESTARI
Applicant
AND: MR HENLEY
Respondent
order made by:
GILL J
DATE OF ORDER:
22 december 2022
THE COURT ORDERS THAT:
1.The husband pay the wife’s costs, as agreed or assessed, in relation to the forum/stay/anti-suit injunction aspects of the wife’s Amended Application in Proceedings dated 31 October 2022 and the husband’s Response to an Application in Proceedings dated 8 November 2022 on an indemnity basis calculated in accordance with the terms of the Costs Disclosure and Costs Agreement between the wife and her legal representatives.
2.In calculating the quantum of the indemnity costs, costs that are incurred unreasonably, or in an unreasonable amount are to be excluded.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bestari & Henley has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J:
This judgment concerns an application for costs, on an indemnity basis, made by the mother following interim proceedings that were the subject of a judgment of 8 December 2022. In those proceedings, the mother, as the applicant, successfully obtained anti-suit injunctions to restrain the husband from litigating in Country B, and obtained orders pursued by her in the alternative to make funds available for litigation. The husband, as respondent, pursued anti-suit injunctions and a stay to restrain proceedings in Australia, and sought that Australia be determined to be an inappropriate forum for parenting and property proceedings between the parties. He was unsuccessful in this pursuit.
MATERIAL RELIED UPON
Applicant Wife
As per the wife’s written submissions filed 14 December 2022, she relies upon the following:
(1)Material relied upon at trial on 11 November 2022 and listed in the Reasons for Judgment of Justice Gill at paragraph 17 on 8 December 2022;
(2)Costs Notices filed on behalf of the parties on 11 November 2022;
(3)Reasons for Judgment made 8 December 2022;
(4)Affidavit of Ms Bestari filed 11 November 2022; and
(5)Costs Agreement between Hosking and Gosling Legal and Ms Bestari dated 14 October 2021.
Respondent Husband
As per the husband’s written submissions filed 16 December 2022, he relies upon the following:
(1)Affidavit of Ms Bestari filed 7 October 2022;
(2)Affidavit of Mr Henley filed 11 November 2022; and
(3)Affidavit of Ms Bestari filed 11 November 2022.
Context
The general circumstances and background of the parties is set out in the judgment of 8 December 2022.
The procedural history of the matter is set out at paragraphs 19–55 of that judgment. It will not be repeated in this judgment, although it ought to be recognised that the history set out there is of considerable significance in the determination of this matter.
Principles
The starting point, as set out at s 117(1) of the Family Law Act 1975 (Cth) (“the Act”), for the consideration of costs is that each party bear their own costs. However, subject to the balance of s 117, where there are “circumstances to justify it doing so” the court may make such order for costs as it considers just. In Penfold v Penfold,[1] the High Court observed that all that is required as a prerequisite to the making of a costs order is that there be justifying circumstances, there being no additional or special onus beyond this.
[1] (1980) 144 CLR 311.
In determining the issue, the court is mandated to consider the matters set out at s 117(2A) which are as follows:
(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 will deal with each of those matters below.
The financial circumstances of the parties were identified by them in the proceedings. They each hold significant assets. Between her income and monies received from the husband, the wife receives more than is necessary to support herself, having been able to acquire a motor vehicle through savings. The husband has a significant superannuation fund, and has the capacity to obtain funding from the corporate entities that he controls, in one manner or another.
Illustration of the capacity of the parties may be seen in the legal fees to date incurred and paid for by the husband, and in his proposed sources of funding to meet his legal fees. As noted in the primary judgment the husband has incurred $330,000 in costs, anticipates a further $300,000, and identifies that he will meet such fees (to the extent that he has not already done so) from a loan of $511,000 from a corporate entity he controls and the balance from earnings.
At present, the wife has incurred her legal fees (of approximately $100,000) on a deferred basis, but now has the benefit of an order facilitating the disposal of property to meet such fees.
Neither party is in receipt of legal aid.
The conduct of the parties in relation to the proceedings is a pivotal issue in this case.
The husband is critical of the wife in respect of disclosure. In particular, he notes her failure to disclose the acquisition of a motor vehicle in her financial statement, or of income received from a business entity in Country B, until prompted to do so by the husband’s lawyers. He points to a significant enough excess of income to enable the wife to save $50,000 over a period of twelve months, suggesting that this matter is indicative of inadequate disclosure as to income. He points to this as a matter directly relevant to the relief pursued by the wife.
It may be accepted that these defaults in respect of disclosure are properly to be taken into account when considering conduct in the proceedings. However, while of some significance, they were somewhat peripheral to the dispute between the parties.
The husband also complains that the wife did not raise with the husband the remedy that she was granted in relation to litigation funding, relating to the sale of Country B property to fund the litigation, prior to filing. Given the husband’s position in the hearing of the matter, this is of little significance.
Of greater significance is the conduct of the husband, as identified in the litigation history set out in the previous judgment.
In particular, after making an application to contest Australia as the appropriate forum for parenting and property, he declined to pursue such claims and instead conceded that Australia was not inappropriate as the forum. In the face of parenting and property proceedings in Australia that he was participating in, he then pursued and obtained parenting orders in Country B, and indicated his intent to also pursue property proceedings in Country B. It was in this context that he then sought to reagitate the issue of forum as to parenting and property by means of his response as dealt with by the substantive judgment.
The husband’s conduct within this litigation is particularly egregious. His conduct of the proceedings in Country B in the context of the litigation here, was conduct that was oppressive, vexatious and an abuse of process, in a manner which undermined the exercise of jurisdiction by this Court.
There is no apparent contention that the proceedings were necessitated by a failure on the part of a party to comply with a previous order of the court.
There is a live issue as to whether a party has been wholly unsuccessful in the proceedings.
This concerns each party’s argument about the success, or lack thereof, in their pursuit of relief.
While the wife, as the applicant, did not receive all of the relief that she pursued, she cannot be described as wholly unsuccessful. Rather, she was largely successful, obtaining relief from the prospect of the husband’s continued pursuit of Country B proceedings, and in obtaining orders in accordance with her fall-back position in respect of costs.
By his response, the husband sought substantive relief by the declaration of Australia to be an inappropriate forum for parenting and property, for a stay of the Australian proceedings, and an anti-suit injunction to prevent the wife from the pursuit of relief in Australia. He received no relief. While he also sought costs, that is a matter that reasonably he has not pressed.
If this ground is measured against the relief pursued by a party in the proceedings, then the husband may be taken to have been wholly unsuccessful.
It may, however, be seen that the preponderance of authority,[2] in relation to this s 117(2A)(e)relates to applicants or appellants. While it appears that the terms of the paragraph, as referring to a party being wholly unsuccessful in the proceedings, rather than wholly unsuccessful in an application, is broad enough to encompass the husband’s utter lack of success in the pursuit of his relief, I propose instead to take this matter into account pursuant to paragraphs (c) and (g) rather than (e) of s 117 of the Act, observing the husband’s position to have been unreasonable and one in relation to which he has pressed unsuccessfully.
[2] Anison & Anison [2019] FamCAFC 108, Parke & The Estate of the Late A Parke (2016) FLC 93-748, Robinson & Higginbotham (1991) FLC 92-209, Bant & Clayton (Costs) [2016] FamCAFC 35,
A further consideration is whether a party has made an offer to settle the proceedings and the terms of such. Here, there was an agreement struck between the parties for the resolution of the whole of their proceedings. After the passage of months that agreement has not been converted into orders to finalise the dispute, and the parties no longer hold a common intention to do so. Each lays the responsibility for such at the feet of the other.
The wife asserts that the husband resiled from the agreement. The husband asserts that the wife, by her conduct resiled from the agreement. It is at present unclear to me who has departed from the agreement to settle the property proceedings. Even if it was the case, as submitted by the husband, that it was the responsibility of the wife, I consider it to be a matter outweighed by the other aspects of the case.
The court is also to consider such other matters as it considers relevant.
Discussion
The matters identified above indicate that an order that the husband pay the wife’s costs should be made, at least insofar as they relate to the stay/anti-suit/forum issue. In particular the husband’s conduct in the proceedings and his pursuit of relief in respect of the stay/anti-suit/forum issue justifies such an outcome.
There is insufficient justification for the husband to meet the wife’s costs in respect of her pursuit of litigation funding, in particular noting his successful resistance to her primary form of proposed relief.
The remaining issue is as to quantum in respect of the anti-suit/stay/forum issues.
The mother seeks her costs as agreed or assessed on an indemnity basis.
In Prantage & Prantage (“Prantage”),[3] the Full Court adopted the following definition of indemnity costs:
An entitlement to costs, including costs under a costs agreement, for all costs incurred, other than costs that are unreasonable in amount or that have been incurred unreasonably.
[3] [2013] FamCAFC 105.
The principles to be applied in relation to indemnity costs are neatly set out by the Full Court in Quickley & Pelissier,[4] (at [119]):
119We then turn to consider whether costs should be awarded on a party/party or indemnity basis.
120In Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 118 ALR 248 at 256, Sheppard J referred to the “settled practice” that where a court orders one party to pay another party's costs, the order is for costs to be paid on a party/party basis. His Honour also said “there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice” at 257.
121In an appropriate case the court has a discretion to order costs on an indemnity basis. An order made in the exercise of that discretion is a very great departure from the normal approach and the circumstances justifying the departure should be of an exceptional kind (Kohan and Kohan (1993) FLC 92-340).
122In the recent case of Madin & Palis (Costs) [2016] FamCAFC 25 this Court made reference to the increasing number of applications for indemnity costs and said at [23]:
Finally, we take the opportunity to observe that in so far as the appellant sought an order for indemnity costs, applications for such costs should only be made, and such costs will only be ordered, in the most extreme cases. This is particularly so having regard to the fact that the primary rule in this jurisdiction is that each party should pay their own costs.
[4] [2016] FamCAFC 124.
There are circumstances in this case that meet the description of “exceptional” as set out above. The prosecution of the parenting case to judgment in Country B in the face of parenting proceedings being conducted in this Court; the husband’s participation in the Australian parenting proceedings; the husband’s foreshadowed intention to apply for property orders in Country B; the husband’s participation in Australian proceedings in respect of property; the husband’s concessions as to forum and failure to pursue his earlier application in relation to forum; and the husband’s re-agitation of the forum issue after such conduct, mark out the husband’s conduct as exceptional so as to warrant a departure from the usual approach.
The husband is critical of the unquantified nature of the application, and it should be observed that the wife’s costs notice is devoid of any indication as to the costs associated with the interim proceedings the subject of this application.
However, the basis for the charging is identified by her annexed Costs Disclosure and Costs Agreement, and has not been identified to be in unreasonable terms. Where an order for indemnity costs is made in accordance with the definition set out by the Full Court above, that is, excluding unreasonable incurring or unreasonable amount, the process of agreement or assessment acts as an appropriate safeguard in relation to quantum.
When considering the impact of an indemnity order, as indicated in Prantage,[5] it may be observed that in the context of the resources of these parties, the limited nature of the application is not one that should be considered to have any substantial impact in the context of the pool of property and the financial positions of the parties.
[5] [2013] FamCAFC 105.
Costs in relation to the costs application
The wife seeks her costs in a fixed sum in relation to the costs application. However, the starting point that each party bear their own costs should not be departed from in relation to this aspect, noting the above circumstances, but also that the wife’s application was for the indemnity costs for her whole application, a relief that has not been granted.
Conclusion
Orders will be made for the husband to pay the wife’s costs, as agreed or assessed, in relation to her application in a proceedings, and his response to such, insofar as that application and response pertained to forum/stay/anti-suit injunction, on an indemnity basis, excluding costs that were unreasonable to have been incurred, or incurred to an unreasonable amount, calculated in accordance with the terms of the Costs Disclosure and Costs Agreement between the wife and her legal representatives.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 22 December 2022
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