Binns and Binns - [2011] FMCAfam 358

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BINNS & BINNS

[2011] FMCAfam 358

FAMILY LAW – Dispute over costs – applicant filing notice of discontinuance – misunderstanding by both parties of status of proceeding in Indonesian Court – appeal in Indonesia – forum arguments – decision adjourned.

Family Law Act 1975, ss.69E(1)(b)(c), 117
Federal Magistrate Court Rules 2001, r.13.01

SZFOZ v Minister for Immigration and Citizenship [2007] FCA 1137
MZXRL v Minister for Immigration and Citizenship [2009] FCA 114
Applicant A26 of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1050

Applicant:

MS BINNS

Respondent:

MR BINNS

File Number:

LNC 153 of 2010

Judgment of:

Burchardt FM

Hearing date:

9 March 2011

Date of Last Submission:

9 March 2011

Delivered at:

Melbourne

Delivered on:

21 April 2011

REPRESENTATION

Counsel for the Applicant:

Mr Werner

Solicitors for the Applicant:

Nicholes Family Lawyers

Counsel for the Respondent:

Ms Vohra

Solicitors for the Respondent:

Forte Family Lawyers

ORDERS

The costs of each of the parties of this proceeding to date be fixed at $3,000.
The proceeding be adjourned to 11 August 2011 at 9.30 am for mention.
There be general liberty to apply to the parties.

IT IS NOTED that publication of this judgment under the pseudonym Binns & Binns is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

LNC 153 of 2010

MS BINNS

Applicant

And

MR BINNS

Respondent

REASONS FOR JUDGMENT

In this matter the respondent, who was married to the applicant until they were divorced by a divorce order made on 21 June 2010 and coming into final effect a month later, seeks his costs of the proceeding on an indemnity basis. The applicant resists this application and seeks, by way of contrast, to withdraw (probably more accurately set aside) a notice of discontinuance she filed in the proceeding on 1 October 2010. Nonetheless, she does not oppose the proceeding thereafter being stayed pending the result of an appeal in an Indonesian Court, to which I shall come.
This is a most unusual case and its disposition cannot be understood without a full recitation of the relevant facts.

The facts

Both the applicant and the respondent were born in Tasmania. They were married at [location omitted] in Tasmania in 2003. It appears that they separated in 2008.
The parties both worked in the education industry at a number of overseas [organisations omitted] during almost all of their marital relationship. They worked for some time in Kuwait where their elder child, [X], was born in 2005. Thereafter, in July 2006, they moved to Jakarta, where both were employed in the education industry, full-time at the [organisation omitted]. The respondent continues to live in Jakarta with the two children.
The mother returned to Australia in January 2010 to obtain and undergo treatment for what appears to have been significant depression. She has re-partnered in Australia and remarried in January 2011.
This remarriage was only possible because on 10 March 2010 the applicant filed for divorce. The application was served on the respondent in Jakarta on 28 March 2010, as is plain from the affidavit of service filed with the Court.
On 3 May 2010 the applicant filed an initiating application seeking parenting orders in the Family Court of Australia. The matter was subsequently transferred to this Court. On 24 May 2010 the respondent filed an address for service and on 21 June 2010, a divorce order was made, as I earlier indicated, which became final on 22 July 2010.
On 8 July 2010 the respondent filed in this Court his response and an affidavit in support. In his response he sought that the mother’s application be permanently stayed and dismissed and that she pay his costs and that the Court decline to exercise its jurisdiction to entertain and hear the matter.
In his supporting affidavit the father confirmed the dates of birth of the parties, how they met and when they married and confirmed the birth of [X], also confirming the birth of [Y] in Jakarta on 19 August 2007. At paragraph 6 of his affidavit he said:
“The children are Australian citizens by descent although they have never lived in Australia. Their passports were issued in Kuwait and Jakarta.”
He went on to depose that the children had been living in his full-time care since the mother returned to Australia in January 2010.
The use of the phrase “The children are Australian by descent” is, in my opinion, a curious one. They are born as Australian citizens of Australian parents. There is no suggestion that they would be seeking to exercise Kuwaiti or Indonesian citizenship. The father in fact is only in Indonesia pursuant to a temporary residence visa, as is shown by his court application in Indonesia. The phrase “Australian by descent” was plainly meant to minimise the children’s connection with Australia.
The affidavit went on to annex MB1, what was said to be a copy of an application filed in Indonesia. The application (the English version) shows that, as I have said, the respondent is the “holder of a limited stay permit card…valid until July, 2011.” The document is in fact a power of attorney permitting the appointed Indonesian lawyers to take steps to appear before the Indonesian courts in “a divorce lawsuit at the District Court of South Jakarta”.
The exhibit MB3 is a letter dated 20 May 2010 from the respondent’s solicitors to the applicant’s then solicitors. Inter alia that letter asserts:
“We have instructions to file a Response to your client’s application on the basis that the Family Court of Australia lacks jurisdiction to hear the application. One of the orders that we will be seeking is a costs order. Before we do this we will give your client seven days from the date of this letter in which to explain the basis upon which the Family Court of Australia has jurisdiction to make orders with respect to the children.”
Exhibit MB4 is the applicant’s solicitor’s reply dated 31 May 2010. That letter referred to s.69E(1)(b) and (c) of the Family Law Act 1975 (“the Act”). It is clear, instantly in my opinion, that those references were correct. Section 69E, in the circumstances where the applicant and the respondent are both Australian citizens and the applicant is ordinarily resident in Australia, plainly does grant the Court jurisdiction.
Indeed, exhibit MB5, the reply by the respondent’s solicitors dated

9 June 2010, resiled from the earlier assertion and states:
“We note that under Section 69E of the Family Law Act, your client has jurisdiction to file an application in the Family Court of Australia. However, our client disputes that the Family Court of Australia is the appropriate forum. Our client considers the Indonesian Courts to be the appropriate forum to determine the arrangements for the children. The children live in Indonesia. They have never lived in Australia and are not ordinarily resident in Australia. The children have spent limited time during their school holiday periods in Australia. Your client relocated to Australia, leaving the children in our client’s care in Indonesia.”
The letter went on to say that the respondent does not propose to return to Australia in the foreseeable future and refers to the fact that a letter from the applicant’s then solicitor, 6 January 2010, expressed a firm view on the part of the applicant that the children should remain in Indonesia, as previously agreed. It should be noted in passing that that firm view was expressed in the context of proposed further relocation by the father to China.
On 8 July 2010 the respondent’s Indonesian solicitor filed an affidavit confirming that proceedings had been filed in the South Jakarta District Court on 4 June 2010. The affidavit confirms that:
“the proceedings will determine all matters regarding the legal dissolution of my client’s marriage. As a matter of course this will include a determination of custody of the children of the marriage. The Court will also exercise its jurisdiction in relation to issues of contact (“access”). Indonesian courts make and enforce orders deemed appropriate to protect the children and to serve their best interests.”
On 3 March 2011 the applicant filed an affidavit which recounts a number of matters regarding the history of the parties’ relationship, which is not necessary to traverse for present purposes. More relevantly for present purposes, she annexed a train of correspondence passing between the parties’ solicitors. This shows that by as early as August 2010, in the context of mediation (a proposal which waxed and waned from time to time), the applicant’s solicitors wrote to those of the respondent offering to discontinue the proceedings in Australia, provided that the respondent agreed not to pursue a cost order against her. That offer followed advice given to her by Nicholes Family Lawyers (her current solicitors), whom she engaged on or about

9 August 2010. They confirmed (see paragraph 18 of the applicant’s affidavit) that Australian Courts would have jurisdiction to make orders but that it was likely that the Court would find that the more appropriate forum to hear and determine a parenting case at that time (May 2010), given the children were resident in Jakarta, would be Indonesia and not Australia.
Further exchanges of correspondence passed between the parties and on 31 August 2010 (ABN 4) the respondent’s solicitors wrote saying:
“Our client agrees not to pursue a costs order against your client at this time if she discontinues her proceedings filed in the Launceston Registry and does not issue fresh proceedings in Australia. However, our client seeks that his costs be fixed and reserved pending any new application filed by your client.”
That proposal was in the ultimate agreed to and the parties fixed the respondent’s costs, said to have been as much as $16,700, at a lower figure of $12,000. On 30 September 2010 the applicant’s solicitors wrote to the Court (ABN 14) stating relevantly:
“The parties have agreed to a discontinuance of these proceedings and, accordingly, we enclose herewith a Notice of Discontinuance, signed and dated 30 September 2010, for your attention.
The parties have also agreed that there be no order as to costs and that the husband’s costs be fixed and reserved at $12,000 pending any new application filed by our client. Please also find enclosed herewith consent orders signed by the parties respective legal practitioners for your attention.
Could you please consider the enclosed documents and if you are agreeable to those orders, please return to us a sealed copy of the proposed consent orders and Notice of Discontinuance as soon as practicable.”
The Notice of Discontinuance on the Court file is date stamped

1 October 2010, is completed pursuant to the Family Law Rules and asserts that it was filed in the Family Court of Australia. It indicates that both the initiating application and response to initiating application are being discontinued. This was, of course, the purport of the consent orders as forwarded to the Court as well.
The use of the Family Law Rules form ignored the transfer to the Federal Magistrates Court, which appears to have been effected by Registrar Weidmann on 21 June 2010.
Rule 10.11 of the Family Law Rules is not in identical form to rule 13.01 of the Federal Magistrate Court Rules 2001 (“the Rules”) but in substance the relevant parts are identical. It is clear that the parties intended to bring their case in this Court to an end as though they had in fact complied with this Court’s rules.
Since the matter was already transferred to this Court, in my opinion, it is appropriate to treat the adoption of the Family Law Rules form as an irregularity and to deal with it on the footing that the parties are deemed to have properly complied with rule 13.01 of this Court’s rules. They plainly intended to do so.
Notwithstanding that the letter from the applicant’s solicitors dated

30 September 2010 was sent to the Registry of the Family Court of Australia in Launceston and that the draft orders taken out and forwarded with the correspondence proceeded as though the proceeding was in the Family Court, it is clear that the matter had already been transferred to this Court.
The applicant has deposed that on or about 2 November 2010 she was advised by her Indonesian lawyers that, since the Federal Magistrates Court of Australia had made a divorce order, it was likely that the Jakarta Court would determine that Australia was the appropriate jurisdiction to hear the proceedings in relation to the children (paragraph 23 wife’s affidavit).
It is certainly clear that she was not aware of this possible impediment to the Indonesian proceedings at the time she filed the Notice of Discontinuance. It would clearly have been wholly foreign to her interests to file the notice if she was aware that the Indonesian Court would decline jurisdiction, and indeed the footing on which she plainly did sign the Notice of Discontinuance was that it was more probable than otherwise that the Australian Courts would decline to hear the matter.
It would appear from exhibit ABN 1 that the Jakarta Court heard the matter on 29 December 2010 “with the agenda of the reading of verdict of exception on absolute jurisdiction”. It may well be that judgment was simply delivered, although it is also possible that the proceeding was simply a short one, lasting from 1.30 pm until 2.10 pm. I incline to the view that this was merely the delivery of judgment from the terms of the exhibit, which is a letter from the applicant’s Indonesian lawyers. What does seem clear to me, however, is that the issue of the jurisdiction of the Indonesian Court was actively agitated by the applicant. The exhibit reads:
“Whereas the Council of Judges read out the verdict of case (number and reference omitted) as follows:
(a) Accept the exception regarding absolute jurisdiction from the Defendant;
(b) Declared that South Jakarta District Court have no authority to examine and hear the case.”
Thus, while I do not know whether the Court would have taken the jurisdictional issue of its own motion, it is clear that the rejection of the case in Indonesia was occasioned by an objection pressed by the applicant. Counsel on her behalf did not seek to persuade me that I could properly construe exhibit ABN 1 in any other way.
The respondent has lodged an appeal to the Indonesian Supreme Court, which he did on 8 January 2011, and I understand that the best estimate is that that decision will take about six months from then, i.e. being determined by about the middle of this year.
At this point it is necessary to go back a step. The matter was eventually mentioned before Roberts FM on 11 October 2010 and again on 16 November 2010. There is some dispute between the parties as to exactly what occurred on those dates, but the one thing that can be said is that his Honour referred the matter for hearing (ultimately it happened before me) on the husband’s application for costs.

The applicant’s application to withdraw the Notice of Discontinuance

There is a wealth of authority in the Federal Court (and indeed in other courts) as to the effect of a Notice of Discontinuance. Whether made under this Court’s rule 13.01 or under the relevant Family Law Rule under which it was purported to be made, prima facie a Notice of Discontinuance brings the proceeding to an end. Ryan J considered this matter in SZFOZ v Minister for Immigration and Citizenship [2007] FCA 1137. At [15] his Honour said:
“The learned Federal Magistrate appears to have regarded the question of whether to set aside the discontinuance as involving an exercise of discretion. As a result, his Honour adverted to considerations, to some of which I have already referred, including the appellant’s prospects of success on the application for review if it were reinstated, the reasons for the discontinuance and whether it occasioned any injustice to the appellant. However, in my view, the orders of the learned Federal Magistrate can be supported on the narrower ground of an absence of power to set aside a discontinuance which has been regularly effected. Rule 13.01 of the Federal Magistrates Court Rules provides a mechanism for discontinuance by stipulating;
A party may discontinue an application or a response by filing a notice of discontinuance in accordance with the notice set out in Part 1 of Schedule 2.
Rule 13.02 in turn allows another party in the event of a discontinuance to apply for costs, usually within 28 days after the filing of the notice. Rule 13.02.3 deals with the situation where a further proceeding on the same, or substantially the same, matter is brought. That subrule provides:
If an order for costs is made against a party and the party brings against the party to whom costs are payable a further proceeding on the same or substantially the same matter, the Court may stay the further proceeding until the costs are paid.
There is nothing in the relevant provisions of the Federal Magistrates Court Rules which empowers the Court to set aside a notice of discontinuance or to reinstate proceedings which have been regularly discontinued in accordance with Rule 13.01. That accords with the traditional understanding of the effect of discontinuance which has been exemplified by Neill LJ in ROFA Sport Management AG v VHL International (UK) Limited [1989]) 2 All ER 743 (extract omitted).
Rarely, the discontinuance may involve an abuse of process. In those cases the Court may accede to a request by a party affected by the abuse to have the discontinuance set aside. See for example Castanho v Brown & Root (UK) Limited [1981] AC (passage quoting Lord Scarman omitted).
In Applicant A26 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1050, to which I was referred by Ms Burnett who appeared for the Minister, Mansfield J noted an acknowledgement by the respondent Minister that a notice of discontinuance filed by the former solicitor for the applicant without the knowledge or consent of the applicant can be set aside in the discretionary exercise of the Court’s inherent power to prevent injustice.”
Ryan J continued at [20]:
“In the present case, by contrast, the Minister does not acknowledge the existence of any circumstances which would enable the filing of a notice of discontinuance by the appellant himself to be characterised as an abuse of process or otherwise to enliven the inherent power of the Court to prevent injustice. Castanho v Brown & Root and Applicant A26 were exceptional cases and, it seems to me, it cannot lie in the mouth of a party like the present applicant who knowingly and voluntarily filed a notice of discontinuance to assert that his own act should be set aside as an abuse of process. Courts also probably have an inherent power to set aside a discontinuance which has been procured by fraud or duress but that power, likewise, is not available to be invoked in the present case.” (emphasis added).
I would refer also briefly to the case of MZXRL v Minister for Immigration and Citizenship [2009] FCA 114, a decision of Tamberlin J, which arose in the context of an appeal from the Federal Magistrates Court to the Federal Court. At [7]-[10] his Honour set out Reasons why in that case, where there had been a notice of discontinuance, there was no power to allow it to be withdrawn. His Honour referred at [7] to Akbar v Minister for Immigration and Multicultural Affairs [2002] FCA 209, which his Honour regarded as authority for the proposition that “once a notice of discontinuance has been filed, then the automatic effect of that filing is to abandon the proceedings”.
From these authorities, I would conclude that once a properly executed Notice of Discontinuance is filed, then absent abuse of process, fraud, duress or the like, there is no power in the Court to set aside a otice of discontinuance. I have noted the passage, however, emphasised above, taken from Ryan J’s judgment, which finds a certain resonance in Applicant A26 of 2002 v Minister for Immigration and Multicultural and Indigenous Affairs [2003] FCA 1050 at [5], where a notice of discontinuance had been filed without instructions and Mansfield J said:
“In my judgment the respondent sensibly and appropriately acknowledged that the Court has power to set aside the discontinuance in its discretion, as part of its inherent power to prevent injustice, if the circumstances alleged are made out. Thus, it is not necessary to explore in any detail the concept of the abuse of process in the present context. It was accepted by the respondent that the allegations, if made out, fell within its reach.”

Even assuming that the Court has an inherent power to prevent injustice (those observations were made in the context of the Federal Court which, unlike this Court, is a superior court of record), I do not think that the applicant comes within even the broadest ambit of the exceptions to the general proposition.
The reason that the applicant filed the notice of discontinuance was that her then lawyers had told her that she was more likely than otherwise to be unsuccessful in her application. It turned out subsequently that that advice was wrong. The fact that a party acts on a misunderstanding of the law is not, in my view, such as to give rise to fraud, still less duress, nor to abuse of process. The respondent after all himself did nothing wrong. He merely asserted erroneously through his solicitors that the Australian courts did not have jurisdiction, but rapidly resiled from that proposition. He then advised in effect the argument that the applicant’s own solicitors advised, namely that the Australian courts would find the Indonesian courts to be an appropriate forum.
In my view, subject only to the issue as to the wrong form and rule being used, the notice of discontinuance must be taken to have brought the proceeding to an end. I do not now have power to resuscitate it.

The application for costs

The matter is not as simple as the respondent’s position puts it. The fact is that the applicant issued in a court in which she was perfectly entitled to issue. The arguments about which is the appropriate court have never been tested. I expressed the preliminary and prima facie view that there were strong practical reasons why the matter should be heard in Jakarta. That is where the children live and prospects of this Court endeavouring to compel the father to participate in a proceeding in Australia would be considerable. Such issues as family reports and the like would undoubtedly be problematic. However, that is not a concluded view.
There may well be arguments as to whether it might be thought that these children, not being citizens of Indonesia and not in all probability likely to live there for all of their lives, should be addressed and assessed as to their best interests pursuant to Australian rather than Indonesian law. These arguments may or may not yet remain to be heard in the Indonesian court in the event that the appeal in Indonesia is successful.
Furthermore, if the Indonesian superior courts hold that the Jakarta District Court was correct to decline jurisdiction, then ultimately the applicant’s position will have been vindicated. It should be emphasised that the divorce was all completed before the application in Indonesia was lodged (the 30 day period had not expired, but the divorce order had been made and the respondent was well aware that it was in train, even if he did not know that the order had actually been taken out at the time he applied in Indonesia).
The reality is that, with the exception of one discrete aspect, the ultimate success or failure of the parties’ competing propositions remains to be seen. If the Indonesian courts decline jurisdiction, it is plain that there will have to be a parenting case here in Australia. In these circumstances, in my view, the only practical and sensible way to proceed is to adjourn these proceedings to await the outcome of those in Indonesia.
Both parties made submissions as to the effect of s.117 of the Family Law Act 1975 (“the Act”). Those submissions did not concentrate upon the matters I have dealt with at some length above which are all, in my view, plainly relevant.
So far as the parties’ circumstances are concerned, I note that the wife has remarried, has a taxable salary of $40,000 a year and has substantial credit card debts, in excess of $60,000. Those debts must at least in part have arisen from the need for her to visit the children in Indonesia. That is so whether or not the applicant is correct to say that the respondent has reneged upon the prior agreement to bring the children to Australia.
It is in any event clear from the materials that the respondent will not allow the children to visit Australia until he has orders that they be primarily in his care. Such reluctance is, in the circumstances, perhaps understandable. If he returns the children to Australia, it is highly probable that the mother would immediately make and press further application to the courts.
The mother’s financial position is, therefore, parlous and it is further made more difficult for her, notwithstanding her re-partnering (nothing is said of her husband’s financial circumstances) by the fact that she owes her parents $50,000 for costs in this proceeding. They do not appear to be, on the face of it, so well off as to write that off and, although I do not think that for a moment they will bankrupt her, she will have to find that money in due course.
The respondent, by way of contrast, receives a tax free salary of $70,000 a year, together with health insurance and accommodation. Notwithstanding that he has the care of the children, he is clearly substantially better off than the mother.
To the extent that the parties’ circumstances and finances are revealed, they militate in a general way against the making of a costs order.
In the ultimate this is, as I said before, a very unusual case. On one view, the applicant made a bargain with the respondent in September/October 2010. She effectively acknowledged that she had issued proceedings in the wrong court and agreed to not pursue any further actions in Australia and to pay the respondent $12,000 by way of costs thrown away if she did. The condition precedent (namely the bringing of another application in Australia) has been met and the respondent’s case is that, therefore, the bargain should be enforced.
It should be noted that the Court has not ever taken out the orders now sought to be enforced. Roberts FM refused to do so. They represent a private bargain between the parties, rather than a Court enforceable order. It is a very messy situation.
In my view the ultimate determination of the $12,000 agreed upon can not be determined until the outcome of the proceedings in Indonesia is known. If the Indonesian courts do proceed to hear and determine the matter, then plainly the wife’s bringing of these proceedings was misconceived.
Nonetheless the fact is that the agreement entered into in September/October 2010 proceeded on a misunderstanding by both parties. In fact, as things presently stand, the Indonesian courts have been held not to have jurisdiction to entertain the application at all. The applicant was after all always entitled to have brought proceedings in Australia and the outcome of the dispute as to forum has never been determined.
For all of these reasons what I propose to do is fix the costs of the application (leaving aside the $12,000 originally agreed) at $3,000 for each side and I will adjourn the matter for further mention in August, by which time I presume that the results of the Indonesian case will be determined. I will provide liberty to apply, so that if the Indonesian court’s decision is given earlier, the matter may be brought on with short notice.

I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of Burchardt FM

Date: 21 April 2011