Issa and Jabr

[2015] FamCA 19

FAMILY COURT OF AUSTRALIA

ISSA & JABR [2015] FamCA 19

FAMILY LAW – COSTS – father previously initiated proceedings for the return of the child to Malaysia – where mother seeks indemnity costs – father has not filed a response to the mother’s application for costs – father’s application had no basis in fact and was doomed to fail – orders made awarding the mother costs on an indemnity basis.

Family Law Act 1975 (Cth) s 117(2A)

Family Law Rules 2004 (Cth) r 19.08, 19.18

Kohan & Kohan (1993) FLC 92-340
Prantage & Prantage (2013) 49 Fam LR 197

APPLICANT: Ms Issa

RESPONDENT: Mr Jabr

FILE NUMBER: ADC 1940 of 2014

DATE DELIVERED: 27 January 2015

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 5 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Pyke QC

SOLICITOR FOR THE APPLICANT: Norman Waterhouse Lawyers

COUNSEL FOR THE RESPONDENT: Dr Ingleby

SOLICITOR FOR THE RESPONDENT: Howe Jenkin

Orders

1. That the husband pay the wife’s costs fixed in the sum of THIRTY THREE THOUSAND NINE HUNDRED AND NINETY EIGHT DOLLARS ($33,998) on or before 28 days from the date of this order.

2. That if the husband shall fail to pay the costs sum as provided for herein, then interest shall run on the outstanding amount of such payment from the date of default to the date of payment as prescribed by the Family Law Rules.

3. That the application for costs do otherwise stand dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Issa & Jabr has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: ADC 1940 of 2014

Ms Issa

Applicant

And

Mr Jabr

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1.On 5 September 2014, the following orders were made:-

(1)That the orders of 5 June 2014 be discharged.

(2)Save as to the wife’s application for costs, the Initiating Application filed 2 June 2014 and the Response filed 6 June 2014 do stand dismissed.

(3)The wife do file and serve submissions as to costs on or before 4pm on 14 November 2014.

(4)The husband file and serve a response to those submissions on or before 4pm on 5 December 2014.

(5)The wife’s application for costs is adjourned.

(6)The name of the child L born 8 November 2009 be removed from the Airport Watch List.

2.Pursuant to those orders, Ms Issa (“the wife”) by Application in a Case filed 13 November 2014 seeks an order that Mr Jabr (“the husband”) pay her costs to be fixed in the sum of $33,998.

3.In support of the wife’s application, she relies upon an affidavit and financial statement both filed 14 November 2014.

4.The wife seeks that her costs be assessed on an indemnity basis.  However, a consideration of the schedule of costs being Annexure B to the wife’s affidavit suggests that taking into account a significant fee discount of $16,843 (by reference to Annexure A), the indemnity costs as to solicitors fees represent a modest increase of only $1,250.

5.Notwithstanding the leave given to the husband, he has not filed a response to the wife’s submissions.

BACKGROUND

6.The husband commenced the proceedings by the filing of an Initiating Application on 2 June 2014 seeking final orders for the return of the child to Penang within a short period of time.

7.The proceedings first came before the Court on 5 June 2015 on an ex-parte basis.  Notwithstanding that there were extensive interim orders sought which if granted would see the child return forthwith to Malaysia, at the hearing the solicitor for the husband only sought orders restraining the wife from removing the child from South Australia and the Commonwealth of Australia without the consent of the father or further order of the Court.

8.The matter was then adjourned to 26 June 2014 with orders made as to the method and manner by which the application, affidavit in support and a copy of the order made 5 June 2014 to be served on the wife.

9.Whilst not directly relevant to the wife’s application for costs, an unfortunate aspect to the proceedings was the instigation by the husband of significant media attention and involvement.

10.In his affidavit, the husband sets out that both he and the wife are Malaysian citizens and healthcare professionals.  The parties were married in Penang in January 2009 and the child was subsequently born  in November 2009.  The parties soon separated on 19 April 2010 and save for the circumstance which brought the wife to Australia, the parties had lived their married life in Malaysia.

11.In January 2011, the parties obtained a divorce in the Syariah Lower Court in Penang.

12.Each of the parties were then and remain represented by Malaysian solicitors.  The husband alleges that on 8 January 2013 he was told by B Hospital where the wife was employed that she had taken leave from 1 January 2013.

13.The apparent concern of the husband is explained in paragraph 8 of his affidavit:-

About the same time I was informed by a friend that my former wife had left Malaysia and had taken herself and our daughter to Australia on 6 January 2013 through Kuala Lumpar International Airport.  My former wife obtained a passport for our daughter without my knowledge and consent.  She may have been able to do so by relying on the order she had obtained in the Malaysian Court for custody of our daughter on 19 December 2011.  No order was made at time for visitation rights as there was already in place an existing order for access and visitation.

14.The husband annexes a copy of the order made 19 December 2011 which provides that by consent order of the parties the wife has the custody of the child.

15.Following the husband allegedly learning that the wife had taken the child to Australia on 6 January 2013, he made a report to the Royal Police of Malaysia on 8 January 2013 which importantly includes the following statement:-

At the same time I was informed by a friend that my ex-wife had took away my child to Australia on 6 January 2013 at 10.30pm through KLIA while we still had a part-heard hearing on 16 January 2013 at the Syariah Court Penang.

16.The husband asserts that it was only after the wife had left Malaysia that he found a copy of a letter sent by the director of a unit of the hospital in Adelaide where the wife had taken up employment that he was informed for the first time as to why the wife left Malaysia and her whereabouts.

17.Apparently the parties remained in dispute as to the arrangements by which the husband would spend time with the child and proceedings were ongoing in the Syariah High Court.  Importantly it is alleged by the husband that the proceedings could not continue because the wife had without warning or advice left Malaysia.  It is suggested that she failed to attend the hearing.

18.At paragraph 24 of the husband’s affidavit he alleges that because the wife is now aware of his efforts to spend time with the child, that she will leave South Australia and possibly the Commonwealth of Australia with the child.  It is the allegation made in paragraph 24 that presumably underpinned the orders sought by the husband’s solicitor.

19.Paragraph 25 says:-

Because of my former wife’s previous conduct in abducting my daughter from Malaysia, I am concerned that she will leave South Australia if she receives notice of the application.  Accordingly, I seek to proceed on an ex-parte basis.

20.The clear assertion by the husband is that the wife has abducted the child and unless restrained and/or dealt with, is likely to repeat her conduct.  Paragraph 27 sets out the mischief allegedly arising from the wife’s conduct namely, that it has the effect of preventing the husband from spending time with the child.  The ancillary concern is that it “threatens the proper conduct of the Malaysian proceedings”.

21.In her written submissions, counsel for the wife refers to paragraph 26 of the affidavit where the husband does not seek to invoke the jurisdiction of this Court, but only seeks the return of the child to Malaysia.

22.At Annexure K of the husband’s affidavit a judgment delivered on 15 November 2013 following the hearing of an interlocutory application is annexed. It confirms that the Court was to consider the husband’s case to spend time with the child on 16 January 2013.  The judgment confirms that the proceedings were not heard on 16 January 2013 because the wife informed the Court (and by implication the husband) that she had since February 2013 taken up further studies at a hospital in South Australia pursuant to the approval of the Ministry of Health in Malaysia.

23.On 23 March 2013, the wife filed an interlocutory application which sought orders that the child live with the wife in Australia for the currency of her employment, but importantly, that the husband be allowed to visit the child in Australia subject to appropriate notice being given.

24.The husband’s counsel is referred to in the judgment as having “taken note of this matter and had time to reply to the plaintiff’s application affidavit and had agreed that the case for visiting rights (principal case) be postponed until the case issue is settled”.

25.Notwithstanding the notice clearly given to the husband and his legal representatives, he did not file a reply or any submissions to the matters raised by the plaintiff.  The Court considered that it should not adjourn the matter any further.

26.Ultimately the Court considered that a consent order cannot be amended except with the consent of the parties.  The interlocutory application of the wife was dismissed.

27.The proceedings however were not concluded. The wife disagreed with the dismissal of her interlocutory application and according to her affidavit filed 26 June 2014, an appeal remains before the Appeal Court in Penang.

28.The husband’s application to spend time with the child remains ongoing.  In April 2014 the husband gave evidence and on 6 May 2014 the husband’s Malaysian lawyer advised the wife’s lawyer that he intended to spend time with the child in Adelaide between 19 May 2014 and 25 May 2014.  The wife asserts that this was the husband’s first request since January 2013.

29.Notwithstanding a favourable response from the wife, the husband did not reply preferring instead to involve the media and then issue proceedings.  It is notable that the husband’s affidavit is silent as to the ongoing proceedings and the communication passing between the solicitors for the parties as to arrangements for the husband to spend time with the child.

30.The wife alleges that it was her intention to return to Malaysia to give evidence in the Court proceedings on 23 July 2014 if required.

31.The husband alleges that the wife abducted the child from Malaysia.  The wife’s position is as set out in paragraph 63.6 namely:-

[It is argued] that I sought retrospective permission to take [the child] out of Malaysia. This is not correct.  My understanding was I had permission by virtue of the 19 December 2011 consent order.  I sought clarification of the 19 December 2011 following a request by the Australian Immigration Department.  The application was dismissed and is the subject of an appeal.  My understanding is the Court determined it dealt with similar matters as the principal application.

32.Following the media coverage, the wife obtained an ex-parte order on 5 June 2014 from the Chief Judge of the Syariah High Court of Pulau, Penang that:-

(1)The father is prohibited from interfering with the mother at work, home or at the child’s nursery until she has completed her studies at the hospital in Adelaide.

(2)That the father shall not approach the mother closer than a distance of 50 meters.

(3)That the father shall not engage in any form of “provocations” including the use of media.

(4)That the mother is at liberty to take the child to any part of Australia without interference or disturbance from the father.

(5)The father is restrained from issuing or providing false or misleading information to the media in respect of the Malaysian proceedings.

33.The husband has apparently taken no action in respect of the ex-parte orders and it is submitted by the wife’s counsel that the husband must have known that the wife and the child were in Australia at all relevant times and importantly, with the permission and consent of the Malaysian Court.

34.The husband’s application appears to be ill-conceived and without any real or genuine basis for concern.  There is no suggestion that the wife was not attending either personally, by her legal representatives or by electronic means to the proceedings in Malaysia.  There was no need for the husband to bring proceedings in Australia and it could not be said that the wife had “abducted” the child. The wife argues that the extent of the significant inaccuracies in the media reporting suggests that the mindset adopted by the husband is inconsistent with the clear factual matrix as set out in the extracts and orders from the Malaysian Court.

35.In summary, the wife considers that the husband’s application and its continuation was “ill-conceived, inappropriate and in all of the circumstances, vexatious and oppressive”.

APPLICATION FOR COSTS

36.Pursuant to Rule 19.08 (1) of the Family Law Rules 2004 (Cth) (“the Rules”) the wife applied for an order that the husband pay her costs. The application is made by an application in a case. The mother also seeks an order for costs payable by the husband on an indemnity basis. Rule 19.08 (3) provides:-

A party applying for an order for costs on an indemnity basis must inform the Court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.

37.The method of calculation of costs is referred to in Rule 19.18:-

(1)The Court may order that a party is entitled to costs:-

(a)Of a specified amount;

(b)As assessed on a particular basis (eg lawyer and client, party/party or indemnity);

(c)To be calculated in accordance with the method stated in the order; or

(d)For part of the case, or part of an amount, assessed in accordance with Schedule 3.

38.Sub-Rule 19.18 (3) provides that the Court may consider:-

(a)The importance, complexity or difficulty of the issue;

(b)The reasonableness of each party’s behaviour in the case;

(c)The rates ordinarily payable to lawyers in comparable cases;

(d)Where a lawyer’s conduct has been improper or unreasonable;

(e)The time properly spent on the case or in complying with pre-action procedures; and

(f)Expenses properly paid or payable.

39.In considering what order should be made, if any, in respect of the wife’s costs s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”) requires the Court to have regard to the following:-

(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 assistance to that party;

(c)The conduct of the parties to the proceedings in relation 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, admission of facts, production of documents and similar matters;

(d)Whether the proceeding 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 matter as the Court considers relevant.

40.Accordingly, I have a wide discretion in respect of matters relating to a potential costs order.

41.The wife has filed a financial statement on 14 November 2014 which provides that her average weekly income is in the sum of $2,884 with personal expenditure of $2,713.  Her income arises from her short-term employment as a healthcare professional.  It is common ground that the wife is employed for a period of three years.  Thereafter the wife will return to Malaysia and resume employment.  It would appear that she owns property to the value of $264,000, but this is offset by total liabilities in the sum of $211,833 of which $27,000 is outstanding to the wife’s sister for the payment of her legal fees and a further outstanding sum of $13,833 payable to Norman Waterhouse Lawyers.

42.The husband has not filed a response to the wife’s application for costs.  An opportunity was given to him to file and serve a response to the wife’s submissions as to costs on or before 5 December 2014. No submissions have been filed on behalf of the husband.

43.The wife’s costs were reserved by order 5 September 2014.  Accordingly, I know nothing of the financial circumstances of the husband, but in respect of the wife, her financial circumstances are modest and accordingly this is not a factor that would speak against an order for costs.

44.Neither party is in receipt of assistance by way of legal aid and accordingly, this consideration is not relevant.

45.In her submissions, the wife is vociferous in her criticism of the husband’s conduct in contacting the media and placing the wife and the child under intense public scrutiny.  It is submitted that both the resultant media attention and the husband’s promotion of same was entirely unwarranted.  Whilst I accept the wife’s submission in that respect, the involvement of the media occurred prior to the filing of the initiating application of the husband.  It is a more relevant consideration that I have found the husband’s application to be without merit.  There was no mystery or uncertainty in respect of the state of the proceedings in Malaysia.  The husband knew of the circumstances by which the wife and child were in Australia and for him to allege that the child was the victim of an abduction is entirely without support on any objective basis.  It is not overly emotive to suggest that the husband’s conduct is “vexatious”.

46.The husband withdrew his application not because of any concession by the wife but because his application lacked merit. In terms of the uncontroversial history, the husband has made demonstrably false allegations in respect of the wife and I agree with the submission of counsel that his assertions were “baseless”.

47.The withdrawal of the proceedings enables the Court to find that the husband has been wholly unsuccessful pursuant to s 117(2A)(e) of the Act. The balance of s 117(2A) is not applicable and does not require further consideration.

48.Accordingly, I find that the wife’s application for costs has merit and an order should be made requiring her costs to be paid by the husband.

INDEMNITY COSTS

49.Whilst tempered by the manner in which the wife’s solicitors have calculated her costs, the wife seeks an order that her costs be paid on an indemnity basis.

50.The explanatory guide to the Rules has been accepted by the Court as an accurate definition of “indemnity basis”; namely:-

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.

51.The discussion of the Full Court in Prantage & Prantage (2013) 49 Fam LR 197 is of considerable assistance in determining whether and in what circumstances an order for indemnity costs should be made. The Court referred extensively to the decision of Kohan & Kohan (1993) FLC 92-340 and noted that whilst there is nothing in the Act which in any way “inhibits” a consideration of indemnity costs, the following is said at page 79,605:-

…it is fundamental to the exercise of that discretion in the Family Court that the Judge should not only understand that such an order is a very great departure from the normal standard, but also that the Judge should know what the terms of the agreement are, to what extent it exceeds the parameters set by the scale and what its likely impact will be on the financial position of each of the parties.  This impact is a relevant matter to which the trial Judge should have had regard, when considering the financial circumstance of each of the parties to the proceedings under s117(2A)(a), or perhaps even more as a relevant matter under paragraph (g).  The degree to which a costs agreement departs from the established norm and the actual financial significance of such a departure may itself be a reason for not ordering costs on an indemnity basis.

52.In Re Wilcox, Ex parte Venture Industries Pty Ltd (1996) 72 FCR 151, Cooper and Merkel JJ said:-

The issue whether costs should be ordered on a party and party basis or on an indemnity basis has acquired increasingly greater significance as the gap between the two bases appears to have grown.

The gap has highlighted the conflict between two seemingly irreconcilable objectives.  The first is protecting access to justice by only exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis.  The second is relieving a successful litigant from the burden of costs which that litigant should not have been required to incur.  These and other policy factors have been considered by the courts over a very long period in order to arrive at the principles which govern the undoubted discretion of courts to depart from ordering costs on a party and party basis and ordering costs on an indemnity basis.  The principles were stated by Sheppard J in Colgate-Palmolive Company v Cussons Pty Ltd [1993] FCA 536;(1993) 46 FCR 225.

53.Whilst there has been judicial comment that the general or usual rule namely, that the Court should not depart from a costs order calculated upon a party party basis, nonetheless the balance between costs actually incurred for a litigant and the redress that reference to the scale may provide may now been unrealistic and inequitable.

54.It is reasonably well settled in this Court that the circumstances will be rare before deviating from the application of the usual rule and order costs to be paid on an indemnity basis.  In Prantage (supra) the Full Court said at [97]-[98]:-

In our view, once it is recognised that ensuring access to justice is one of the key objectives of the “usual rule”, the claimed increasing disparity between scale costs and those being charged by lawyers becomes as much an argument against the awarding of indemnity costs as it is in favour of costs being ordered on that basis.

With respect to the trial Judge, we are not convinced that there is a great deal of difference between current “commercial realities” and those prevailing at the time Kohan was decided.  It should be noted that the costs agreement in Kohan provided for a rate of payment three times in excess of the scale.  However, even if there have been changes in the market place for legal services, we are not persuaded this should have any impact on the application of the “usual rule” which seeks to balance competing public policy considerations.

55.The Court also considered other matters which might be relevant to the determination of the basis upon which costs should be ordered, highlighting that it is the party’s conduct as a litigant and not in respect of any past and/or antecedent behaviour.

CALCULATION OF COSTS

56.Annexure A to the wife’s affidavit filed 14 November 2014 annexes the costs agreement entered into by the wife.  Whilst clearly in excess of the relevant scale, it could not be said that the agreement demonstrates an excessive departure from the scale costs.  Annexure B to the said affidavit is a schedule which sets out the fees on an itemised basis representing a total of $46,124.  The wife’s solicitors however have calculated on the basis of a fee discount of $16,843 against the fees that they were entitled to charge pursuant to the costs agreement.  The summary is that the wife seeks legal fees of $21,175 which is $1,250 (plus GST) more than the wife’s costs as if they were calculated on a party party basis namely, $19,834.86.  Additionally, there were counsel fees which totalled $12,828.06 which were the subject of discount to $8,575.  It would appear that counsel fees including GST has been charged in accordance with the scale but subject to a further discount.  There would appear to be no adverse contention in relation to disbursement costs involving the costs of translation of Malaysian court documents.

57.In all the circumstances I do not consider that the amount sought to be charged by the wife’s solicitors at $33,998 to be unreasonable.

58.The circumstances of this case would warrant favourable consideration to a costs consideration on an indemnity basis.  The husband’s behaviour as a litigant was demonstrably vexatious in circumstances where at all material times he clearly understood the basis upon which the wife and child were in Australia and that there were either orders made in the Malaysian Court or there were no orders preventing the wife’s temporary residence in Australia. There was no basis in fact for the husband to allege that the child had been “abducted”. When challenged in the litigation, the only response by the husband was to effectively abandon his application.  It could be said that the application was doomed to fail from the first moment of instigation.

59.In those circumstances I consider it reasonable to bring to account a costs order calculated on an indemnity basis, but in this case the outcome is significantly more benign where the total amount sought by way of legal fees is only marginally more than the well-crafted itemised account based upon party party costs according to the scale.

CONCLUSION

60.Accordingly and in circumstances where the Court has received no response from the husband, it is reasonable that costs be fixed in the sum of $33,998 in order to save the parties the further expense of a taxation of costs.  The wife seeks an order that the costs be paid within 28 days and I propose to accede to that application.

61.I make orders as appear at the commencement of these reasons.

I certify that the preceding sixty one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 27 January 2015.

Associate: 

Date:  27 January 2015