Easom and Burhan (No. 2)

[2020] FamCA 14

FAMILY COURT OF AUSTRALIA

EASOM & BURHAN (NO. 2) [2020] FamCA 14

FAMILY LAW – INDEMNITY COSTS – unsuccessful applicant on a stay application pressed to pay wife’s costs of resisting stay application, such costs to be on an indemnity basis to be taxed in default of agreement – relevant principles examined – indemnity costs ordered.

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Goodridge & Beadle (No 2) [2019] FamCA 786
Horne (in his capacity as trustee of the Bankrupt Estate of Narain) v Narain [2017] FCCA 1190
Medlon & Medlon (No. 6) (2015) 54 Fam LR 1

APPLICANT: Ms Easom

RESPONDENT: Mr Burhan

SECOND RESPONDENT: Ms Burhan

THIRD RESPONDENT: C Pty Ltd

FOURTH RESPONDENT: C Family Trust

FIFTH RESPONDENT: C2 Pty Ltd

SIXTH RESPONDENT: C2 Unit Trust

FILE NUMBER: MLC 11409 of 2018

DATE DELIVERED: 15 January 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: The Honourable Justice Wilson

HEARING DATE: 15 January 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D Brown of One of Her Majesty's Counsel

SOLICITOR FOR THE APPLICANT: DSA Law

COUNSEL FOR THE FIRST RESPONDENT: Ms R Stoikovska of Senior Counsel

SOLICITOR FOR THE FIRST RESPONDENT: Lander & Rogers

COUNSEL FOR THE SECOND RESPONDENT: Ms C Devine

SOLICITOR FOR THE SECOND RESPONDENT: Pigdon Norgate Family Lawyers

COUNSEL FOR THE THIRD RESPONDENT: Ms C Devine

SOLICITOR FOR THE THIRD RESPONDENT: Pigdon Norgate Family Lawyers

COUNSEL FOR THE FOURTH RESPONDENT: Ms C Devine

SOLICITOR FOR THE FOURTH RESPONDENT: Pigdon Norgate Family Lawyers

COUNSEL FOR THE FIFTH RESPONDENT: Ms C Devine

SOLICITOR FOR THE FIFTH RESPONDENT: Pigdon Norgate Family Lawyers

COUNSEL FOR THE SIXTH RESPONDENT: Ms C Devine

SOLICITOR FOR THE SIXTH RESPONDENT: Pigdon Norgate Family Lawyers

Orders

1. The wife’s costs of and incidental to the husband’s application for a stay of my orders of 25 November 2019, including the costs of today are to be taxed on an indemnity basis in default of agreement.

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 Easom & Burhan 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 MELBOURNE

FILE NUMBER: MLC 11409 of 2018

Ms Easom

Applicant

And

Mr Burhan

First Respondent

And

Ms Burhan

Second Respondent

And

C Pty Ltd

Third Respondent

And

C Family Trust

Fourth Respondent

And

C2 Pty Ltd

Fifth Respondent

And

C2 Unit Trust

Sixth Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Consequent upon my decision dismissing the application in a case dated 8 January 2020, the wife has sought an order that by reason of the dismissal of the stay application an order should be made requiring the husband to pay the wife’s costs of and incidental to the application in the case that I dismissed on an indemnity basis.  In debate this afternoon, the circumstances of the bringing of the stay application, the relevance of the letter of 20 December 2019 and the failure of the stay application provoked argument about the application of the observations concerning indemnity costs as adumbrated by Sheppard J in Colgate-Palmolive Co v Cussons Pty Ltd.[1]

   [1] (1993) 46 FCR 225.

2. Having encountered applications for indemnity costs previously, I wrote on the subject in Goodridge & Beadle (No 2)[2] between paragraphs [42] to [51].  At paragraph 46 of that decision I said the following –

   [2] [2019] FamCA 786.

   Any consideration of an application for indemnity costs must have regard to what seems to be the most off-cited and authoritative Australian decision of the subject being the decision of Sheppard J in Colgate–Palmolive Co v Cussons Pty Ltd (“Colgate-Palmolive”).[3]  In Horne (in his capacity as trustee of the Bankrupt Estate of Narain) v Narain[4] I examined the principle doctrine of the circumstances in which indemnity costs might be awarded as relevantly distilled by Sheppard J and held as follows –

   [3] (1993) 46 FCR 225.

   [4] [2017] FCCA 1190.

   The genesis of modern learning, at least in the Federal jurisdiction, in respect of indemnity costs is attributable to the decision of Sheppard J in Colgate-Palmolive v Cussons Pty Ltd (“Colgate-Palmolive”).  That was an intellectual property case. Sheppard J addressed an award of costs on an indemnity basis.  Relevantly, his Honour said that costs on an indemnity basis could be awarded –

   (a)where a party made allegations of fraud knowing them to be false or where that party made irrelevant allegations of fraud;

   (b)where evidence of misconduct existed causing loss of time to the court and the other parties;

   (c)whether the proceeding was commenced for some ulterior motive;

   (d)whether the proceeding was commenced or continued with wilful disregard of known facts or clearly established law;

   (e)where allegations were made that ought never to have been made;

   (f)where the proceeding was unduly prolonged by groundless contentions; and

   (g)where there was an imprudent refusal of an offer of compromise.

3. In this case it seemed to me that the principles governing indemnity costs may have been enlivened for either of two reasons.  The first was that the stay application was brought for an ulterior motive.  The second was that the stay application ought never to have been made.  Ms Stoikovska SC and Ms Devine, separately for their respective clients, argued that a paucity of evidence existed about any allegation of ulterior motive in the bringing of the stay application.  They argued that no proper basis existed for the drawing of an inference about the motive, ulterior or otherwise, in the bringing of the stay application.

4. It is necessary to retrace the chronology of events.  The loan deed is the first relevant event.  Then came the wife’s application that I determined on 25 November 2019.  At that stage there was no suggestion that the loan deed was otherwise than valid, effective and subsisting.  Then after the husband was ordered to pay the wife $170 000 his sister terminated the loan facility.  Mr Brown QC said those events smacked of illegitimacy.  Ms Stoikovska SC and Ms Devine said there was nothing nefarious in the sister terminating the loan facility.

5. In order to determine all aspects of the creation of the loan facility, its execution, whether any funds were drawn down under it and its termination, I will need to hear from several witnesses none of whom have addressed key aspects of the evidence on point especially the sister.  In the absence of that evidence I am unable to make findings that would enable me to safely conclude that the stay application was brought for the ulterior motive of thwarting the effect of my 25 November 2019 decision.

6. Whether the stay application should have been brought in the first place is quite different.  Such an issue was considered in Medlon & Medlon (No. 6).[5]  The issue here is the chronology of events set out above.  The starting point is that the trial judge’s reasons are presumed correct until set aside on appeal.  Further, the filing of a notice to appeal does not operate as a stay nor does the fact of the bringing of a stay application.

   [5] (2015) 54 Fam LR 1.

7. Here the only new event beyond 25 November 2019 when I handed down my reasons and 8 January 2020 when the stay application was brought was the notice of termination dated 20 December 2019.  That was not before me up to 25 November.  It was an entirely new item of evidence.  Had it been before me in the lead-up to the 25 November decision the upshot of the case may very well have been different.  Whether the appeal court even allows it as evidence in the appeal is a moot point because the document was not before me in my determination of the issues and therefore represents fresh evidence.

8. There is no certainty that I would have allowed the document into evidence on this application at all.  It was readily apparent that the husband only made the stay application because the loan facility to which I directed his attention as a source of funds to meet the $170 000 was terminated.  I did not impermissibly draw any inference in saying that.  Had the evidence on the stay been as it was before me at 25 November 2019, this application was utterly doomed.  Whether the appeal Court allows into evidence the notice of termination 20 December 2019 as evidence on this interlocutory application before me in late November 2019 remains to be seen.

9. In any event, it remains for the husband to procure the sale of any of the items of real estate that I have referred to previously in order to meet the $170 000 previously ordered.  I will not order costs to be determined after the trial despite the urgings of Ms Stoikovska SC to that effect.  In those circumstances, it seems to me that it is entirely appropriate to invoke the authority of Sheppard J in Colgate-Palmolive in reliance on the proposition that the stay application ought never to have been made.  Indemnity costs should be paid by the husband. 

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 15 January 2020.

Associate: 

Date:  17 January 2020