Bonnel & Jephson (No 3)
[2023] FedCFamC1F 236
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Bonnel & Jephson (No 3) [2023] FedCFamC1F 236
File number(s): BRC 12366 of 2021 Judgment of: BAUMANN J Date of judgment: 4 May 2023 Catchwords: FAMILY LAW – COSTS – Application for costs by the Second Respondent against the Applicant – Applicant wholly unsuccessful in respect of her application against the Second Respondent – Applicant conceded the Court should make an award for costs on a party party basis – Applicant to pay the costs of the Second Respondent fixed in the sum of $85,000 Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Bonnel & Jephson [2022] FedCFamC1F 812 Division: Division 1 First Instance Number of paragraphs: 14 Date of last submission/s: 31 October 2022 Date of hearing: On the papers in chambers Place: Brisbane Counsel for the Applicant: Mr Tolton Solicitor for the Applicant: Jeff Horsey Solicitor Solicitor for the First Respondent: Small Myers Hughes Counsel for the Second Respondent: Mr Hackett Solicitor for the Second Respondent: Quinn Family Law ORDERS
BRC 12366 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BONNEL
Applicant
AND: MR JEPHSON
First Respondent
MS FAIRBURN
Second Respondent
order made by:
BAUMANN J
DATE OF ORDER:
4 MAY 2023
THE COURT ORDERS:
1.That the Applicant pay the costs of the Second Respondent, fixed in the sum of $85,000.
2.That noting, pursuant to Orders made 17 January 2023, the wife’s solicitors hold funds on behalf of the wife, in the absence of any agreement between the wife and the Second Respondent, the Court will hear further submissions on 6 July 2023 as to how funds held by the wife’s solicitors on her behalf are to be disbursed.
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 Bonnel & Jephson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
On 26 September 2022, Orders were made removing Ms Fairburn (“the Second Respondent”) from property proceedings between the Applicant wife Ms Bonnel (“the wife”) and Mr Jephson (“the husband”), commenced by the wife on 16 September 2021.
Earlier in the property proceedings, a Division 2 Judge had, on 10 February 2022, removed corporate entities associated with and controlled by the Second Respondent, from the proceedings.
Arising from the Orders made on 26 September 2022 (and for the Reasons given for those Orders – see Bonnel & Jephson [2022] FedCFamC1F 812), the Second Respondent filed written submissions as to costs on 30 September 2022. The actual application for summary dismissal and costs was filed on 16 March 2022, and sought the following orders:
2.That the Applicant of the substantive proceedings (i.e. [Ms Bonnel]) pay the Second Respondent’s costs of and incidental to these proceedings on an indemnity basis.
The written submissions relied upon by the Second Respondent concludes with a submission that “the non-parties to the marriage seek that their costs be fixed in this case” in the sum of $98,448 to avoid the cost and time involved in having costs assessed, and in the alternative, “the non-parties to the marriage seek that their costs be assessed on an indemnity basis.”
Counsel for the wife Mr Tolton authored written submissions dated 31 October 2022, conceding that the Court “should make an award for costs on a party party basis” and further “that there is no basis for the Court to [o]rder indemnity [costs]” as there “are no exceptional circumstances to justify a departure from the normal rule.”
Although the concession by the wife may of itself mean the Court does not need to give any reasons to depart from s 117(1), it is proper I do so, albeit briefly, with an eye to the factors identified in s 117(2A), namely:
(a)the Second Respondent is in a superior financial position to the wife;
(b)the wife failed to comply with some directions, but her conduct in persisting (it seems at significant cost to herself), in the face of the factual matrix asserted by the Second Respondent as to the control and the lack of legal interest of any significance held by the husband in his mother’s companies, was either naïve or at least ill advised. The only basis upon which the review application dealt with by Judge Vasta on 10 February 2022 did not remove the Second Respondent, appears (in the absence of reasons available to this Court) to arise from the wife’s assertion that the loan agreement between the husband and the Second Respondent was a sham or should otherwise be set aside under s 106B of the Family Law Act 1975 (Cth);
(c)the wife concedes she has been wholly unsuccessful in respect of her application against the Second Respondent and her corporate entities; and
(d)the submissions of the Second Respondent detail various offers and counter-offers, including an acceptance by the wife of the offer made by the Second Respondent, that the wife pay costs fixed in the sum of $80,000. The wife’s submissions in response confirm that the Second Respondent’s offer of 6 September 2022 “was accepted by the Applicant”. The Second Respondent contends “that agreement broke down on or about 8 September 2022”, for reasons unknown to the Court.
I am satisfied that the circumstances justify an order for costs being made against the wife.
QUANTUM OF COSTS
It is not apparent what costs on a party/party basis would be assessed as being proper in this case, however I am satisfied that when accepting costs at a level of $80,000 (as the wife says she did), she would have known the costs claimed exceeded a party/party calculation.
I am satisfied that exceptional circumstances do exist in this case to make an order for costs exceeding the likely party/party costs to be assessed. The submissions of the Second Respondent at paragraphs 39 to 44 refer to a number of relevant authorities, before submitting at paragraph 45, compellingly in my view, that:
45.Here it must be remembered that the [w]ife’s application was summarily dismissed. Properly advised, the [w]ife should never have brought proceedings against the non-parties to the marriage as it never had any prospect of success.
The wife contests the argument costs should be assessed on an indemnity basis, because:
(a)there is no fraud by the Applicant or that the Applicant “has acted in anyway other than appropriately”
(b)there has been no misconduct by the Applicant;
(c)there was no ulterior motive for the commencement of proceedings against the Second Respondent and her companies; and
(d)at important times, the Applicant was self-represented; not qualified or experienced in these matters; and any application of the law was purely accidental.
CONCLUSION
I find that the Applicant’s pursuit of the Second Respondent and her corporate entities was far from “accidental”. The Applicant held a belief that her husband had an interest in the corporate entities. She was wrong. The wife believed that the mortgage, in support of a loan made to the husband by his mother before the parties’ relationship commenced, was a complete sham. She was wrong.
That is essentially why the wife’s claims were summarily dismissed.
I will order that the wife pay the costs of the Second Respondent, fixed in the sum of $85,000 – being the costs she agreed to pay, together with an allowance for the application for summary dismissal and this costs application.
The orders at the commencement of these Reasons allow the parties an opportunity to negotiate terms of payment, and in the absence of an agreement, I will take further submissions on 6 July 2023, when the substantive proceedings return to my list. I am, of course, aware of the restraint upon the wife arising from Order 3 made 17 January 2023.
I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 4 May 2023