Kain and Kain & Ors (No 2)
[2020] FamCA 747
•9 September 2020
FAMILY COURT OF AUSTRALIA
| KAIN & KAIN AND ORS (NO 2) | [2020] FamCA 747 |
| FAMILY LAW – COSTS – contested interlocutory injunction application and contested disjoinder application – injunction ordered to preserve the status quo – valid points raised by all parties that need to be determined at trial – by the making of the injunction it could not be said that any party has been wholly unsuccessful – that must await trial – s 117(2) enlivened – consideration of elements of s 117(2A) – costs order made reserving all parties’ costs. |
| Family Law Act 1975 (Cth) ss 79, 117(i), 117(2) and 117 (2A) Family Law Rules 2004 (Cth) ch 13 |
| Cachia & Hanes (1994) 179 CLR 403 In the Marriage ofJensen (1982) 8 Fam LR 594 Knight v F.P. Special Assets Ltd (1992) 174 CLR 178 Panwar & Panwar and Anor (No 2) [2020] FamCA 724 Re JJT; ex parte Victoria Legal Aid (1998) 195 CLR 184 |
| APPLICANT: | Ms Kain |
| FIRST RESPONDENT: | Mr Kain |
| SECOND RESPONDENT: | Mr B Kain |
| THIRD RESPONDENT: | Mr C Kain |
| FOURTH RESPONDENT: | Mr D Kain |
| FIFTH RESPONDENT: | The Proper Officer, E Pty Ltd |
| SIXTH RESPONDENT: | The Proper Officer, F Pty Ltd |
| FILE NUMBER: | MLC | 13891 | of | 2018 |
| DATE DELIVERED: | 9 September 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| DATE OF LAST SUBMISSION: | 4 September 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr T. D.O.J. North SC with Mr T. Puckey |
| SOLICITOR FOR THE APPLICANT: | Westminster Lawyers Pty Ltd |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr M. Bartfeld QC with Ms H. Renwick |
| SOLICITOR FOR THE FIRST RESPONDENT: | Lander And Rogers |
| COUNSEL FOR THE SECOND RESPONDENT: | Mr D. Brown QC with Mr D. Matta |
| SOLICITOR FOR THE SECOND RESPONDENT: | Kalus Kenny Intelex |
| COUNSEL FOR THE THIRD RESPONDENT: | Mr D. Brown QC with Mr D. Matta |
| SOLICITOR FOR THE THIRD RESPONDENT: | Kalus Kenny Intelex |
| COUNSEL FOR THE FOURTH RESPONDENT: | Mr D. Brown QC with Mr D. Matta |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Kalus Kenny Intelex |
| COUNSEL FOR THE FIFTH RESPONDENT: | Mr D. Brown QC with Mr D. Matta |
| SOLICITOR FOR THE FIFTH RESPONDENT: | Kalus Kenny Intelex |
| COUNSEL FOR THE SIXTH RESPONDENT: | Mr D. Brown QC with Mr D. Matta |
| SOLICITOR FOR THE SIXTH RESPONDENT: | Kalus Kenny Intelex |
Orders
I reserve all parties’ costs of and incidental to the wife’s application filed on 12 May 2020.
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 Kain & Kain 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 13891 of 2018
| Ms Kain |
Applicant
And
| Mr Kain |
First Respondent
And
| Mr B Kain |
Second Respondent
And
| Mr C Kain |
Third Respondent
And
| Mr D Kain |
Fourth Respondent
And
| The Proper Officer, E Pty Ltd |
Fifth Respondent
And
| The Proper Officer, F Pty Ltd |
Sixth Respondent
REASONS FOR JUDGMENT
Introduction
On 14 August 2020 I handed down reasons for judgment[1] on the return of the wife’s application to enjoin the respondents from various activities, inviting parties to make submissions on costs.
[1]Kain & Kain and Ors [2020] FamCA 650.
Senior and junior counsel for all parties provided written submissions in relation to the costs orders each urged. They were as follows –
a)the wife sought an order that all respondents pay her costs of and incidental to the application filed on 12 May 2020 to be assessed in default of agreement on a party/party basis;
b)the husband submitted that no order for costs should be made and that s 117(1) should prevail such that each party bears his, her or its own costs; and
c)the second to sixth respondents submitted that s 117(1) should apply or alternatively, that the wife’s costs of an incidental to the application filed 12 May 2020 be reserved.
Synopsis
For the reasons that follow, I order that all parties’ costs of and incidental to the application filed on 12 May 2020 are reserved. It seemed to me that several significant presently unresolved issues in this case must be determined by the trial judge especially the s 79 point, notwithstanding my willingness to proceed on the hearing of the injunction application on the basis that the s 79 point was arguable. If the first respondent ultimately succeeds in his contentions on point then a legitimate costs argument will undoubtedly follow. It is not appropriate to shut out the prospects of that application being later agitated by making an order dismissing the wife’s application for costs or by making a costs order in her favour at this stage when the case has travelled such little distance.
Relevant legal principles
As recently as last Friday, 4 September 2019, I handed down reasons for judgment[2] in a costs contest in which I examined applicable legal principles to the determination of costs where neither party sought indemnity costs. The observations in that case in paragraphs 11 to 28 should be taken as being incorporated into these reasons. The High Court has made a collection of observations about costs in family law litigation as the cases of Latoudis v Casey,[3] Knight & FP Special Assets Ltd[4] and Cachia & Hanes[5] attest. A reading of the applicant’s written submissions would lead to the erroneous conclusion that only in Penfold v Penfold[6] has the High Court pronounced on point. In Re JJT; ex parte Victoria Legal Aid[7] Kirby J held that since the commencement of the Family Law Act, the only applicable considerations in relation to costs in litigation under the Family Law Act are those reposed in s 117(1), 117(2) and 117(2A). Hence, in Penfold it was held that whenever a trial judge finds in a particular case that circumstances justify the making of a costs order, then that costs order renders the usual presumption recorded in s 117(1) as having been displaced.
[2]Panwar & Panwar and Anor (No 2) [2020] FamCA 724.
[3] (1990) 170 CLR 534.
[4] (1992) 174 CLR 178.
[5] (1994) 179 CLR 403.
[6] (1980) 144 CLR 311.
[7] (1998) 195 CLR 184, 201.
In my view, in this case there are circumstances that justify the making of an order for costs. Even an order reserving costs is an order for costs. As a result, the combined operation of subsection 117(2) and s 117(2A) require me to examine the circumstances justifying the making of the reservation of costs order, having regard to the specific matters enumerated in s 117(2A). Of s 117(2A), in In the Marriage of Wilson[8] the court held that direct evidence of those matters is required, not merely submissions.
[8] (1989) 13 Fam LR 205.
As already mentioned, even an order reserving costs is a costs order for the purposes of s 117(2).
It is necessary to go to the evidence of the matters set out in the subsection of s 117(2A).
As for s 117(2A)(a), some insight has already emerged from the affidavit material already filed about the financial circumstances of the parties. Their financial circumstances are very considerable. The wife’s counsels’ concession was entirely appropriate where in paragraph seven of the applicant’s written submissions on costs they recorded that the wife has significant resources at her disposal. When compared with the financial resources controlled by the husband, the wife’s financial resources may well be modest, as Mr North SC and Mr Puckey contend.
The two further contentions made in relation to subsection (2A)(a) seemed to be directed to some point other than the financial resources of the parties. The wife’s counsel submitted –
a)she is “alone” (her counsels’ words) “in this proceeding, opposed by the husband and his sons who act in concert to oppose her at every step and on every issue” (their words); and
b)she “has been forced to incur significant costs in order to protect her position by this interim application, which constitute a significant and unnecessary impost upon her” (their words).
In my view, if relevant at all, those matters do not address the financial circumstances of each of the parties. The matters raised in the immediately preceding paragraph may be relevant to the matters to be addressed under s 117(2A)(c), namely “the conduct of the parties”.
For the purposes of s 117(2A)(a), in my view the evidence reveals that each party has at its disposal a very significant financial base, well capable of sustaining each party in meeting his, her or its costs.
As to s 117(2A)(b), no party made submissions in relation to it.
The most contentious arena of debate concerned subsections (c) and (e), which were argued concurrently by counsel for the second to sixth respondents. It is true that on the facts of this case the considerations to be addressed in the two subsections overlap to some extent. Yet they are separate, one involving conduct alone and the other involving success or otherwise.
To my mind it is necessary to address each separately.
As for s 117(2A)(c), it is necessary to distil the submissions made by the wife, of the one part, by the husband of another part and by the second to sixth respondents of yet another part.
For the wife, her points may be simply stated. They were as follows –
a)the husband and his sons forced her to bring her interlocutory application;
b)prior to bringing that application the wife had gone to great lengths in order to reach agreement with the husband to secure her financial circumstances and to be heard in relation to the management of the couple’s wealth as well as the family trusts;
c)several transactions occurred between the husband and his sons without the wife’s knowledge until after she made challenges to those transactions;
d)the husband and his sons offered only limited explanations about those transactions and, so the wife contended, the wife’s challenges raised serious issues that have been held to require investigation at trial;
e)according to the wife the husband and his sons have “relentlessly pursued the realisation of trust assets and the distribution of the proceeds despite the wife’s complaints”;
f)even in the face of the wife’s interlocutory application the Lifestyle proceeds were distributed while the wife’s interlocutory application was part-heard;
g)according to the wife, the husband and his sons have taken every available point in opposition to the wife’s application;
h)the husband’s sons elected not to file evidence in response to the wife’s material and chose instead to rely on affidavit material from their solicitor to contend that the wife’s application should be summarily dismissed and to contend that their joinder be disjoined; and
i)the cost of the injunction application “ballooned” (the word of the wife’s counsel) on account of three hearing days and voluminous submissions.
Counsel for the husband addressed the elements of s 117(2A)(c) in their written submissions. Relevantly distilled, those submissions were as follows –
a)the wife’s contention that she was “alone” was wrong and the second to sixth respondents were not “in concert” with the husband;
b)the husband disputed the wife’s submission that the husband and his sons had forced the wife to bring her interlocutory application and, in the face of her application, the respondents continued to manage the Kain Group;
c)the type of conduct illustrated in the subsection, namely, conduct in relation to pleadings, particulars, discovery,[9] inspection, directions to answer questions of fact, production of documents and similar matters, had no application on the facts of this case
d)the construction of “conduct” in s 117(2A)(c) given by Nygh J in In the Marriage ofJensen[10] addresses such matters as prolongation of the litigation or obstructiveness, none of which is applicable here;
e)the husband’s evidentiary objections to the wife’s material had been held to be proper[11] and so they could not be properly characterised as “ambitious” in the manner characterised by the wife;
f)it was relevant to take into account how the wife altered the course of her application between 20 May 2020 when she pressed only paragraphs 1, 3(a), (b) and (c) whereas on 17 July 2020 the wife pressed for the entirety of her application; and
g)the husband’s conduct could not support an order departing from the prescription in s117(1).
[9] That wording is curious as Chapter 13 of the Family Law Rules speaks of “disclosure”.
[10] (1982) 8 Fam LR 594.
[11]Kain & Kain and Ors [2020] FamCA 650 (at [68]).
On behalf of the second to sixth respondents, submissions were advanced that addressed both subsections (c) and (e) without differentiation. Those submissions were as follows –
a)the wife adopted an approach of an 11th hour joinder of all respondents other than the husband;
b)the second to sixth respondents were entitled to resist the injunction sought against them as well as resisting their joinder;
c)knowing that the husband had relinquished control of the three trusts by 21 March 2019, the wife did not then seek to enjoin the respondents nor did she seek to join the husband’s sons and trustees and instead she attended a mediation with the husband culminating in the entry into heads of agreement;
d)only after negotiations with the husband broke down did the wife seek the joinder of the second to sixth respondents;
e)after joining the second to sixth respondents it became apparent that the wife sought an in specie payment of $48,000,000 which she later altered by seeking an equal division of assets as between husband and wife;
f)the second to sixth respondents said no basis existed by which the wife could seek an equalisation of the parties’ assets because, among other reasons, M Company was established in 1974, cohabitation commenced in 1988 and the husband sold M Company in 1997 for $270,000,000;
g)it could not be said that the relief sought by the wife was “inevitable” as the wife contended, having regard to –
i)the details in the heads of agreement;
ii)the wife’s concession of the husband’s significant contributions; and
iii)the inconsistency between the heads of agreement and the relief sought by the wife in her amended initiating application;
h)genuine questions had been raised about the bona fides of the wife in seeking to join the second to sixth respondents;
i)the three day hearing was rendered necessary by reason of the inclusion of an additional silk to argue evidentiary matters and the debate that followed;
j)conversely, in aggregate the time occupied in relation to matters urged on behalf of the second to sixth respondents took no more than half a day of the three days over which the wife’s application was heard; and
k)the amount of court time referrable to the second to sixth respondents needs to be apportioned and separately recognised in any costs order.
No party addressed submissions in relation to s 117(2A)(d).
As for s 117(2A)(e) the second to sixth respondent’s propositions have already been recorded yet the wife’s and husband’s have not so to them I now turn.
The wife said the husband was wholly unsuccessful –
a)in the evidentiary objections he took; and
b)on the injunction application.
The husband said the wife was wholly unsuccessful –
a)in orders compelling the husband to call upon his loan accounts; and
b)in the partial property settlement.
So far as s 117(2A)(f) was concerned, again, all three camps advanced contentions on point so it is necessary to record the propositions of each.
The wife annexed correspondence between her solicitors and the solicitors for the husband on 19, 20 and 25 November 2019. On the wife’s behalf it was said that orders were ultimately made in the form she sought.
On behalf of the husband counsel argued that the offers on which the wife relied did not include an undertaking as to damages which ultimately was given, after debate, on 14 August 2020, without which the injunction would probably not have been ordered.
The second to sixth respondents disputed that the correspondence annexed by the wife was in fact and in law an “offer of settlement” within the contemplation of s 117(2A)(f). They argued that they were well within their rights in declining the wife’s request.
Findings on each element of s 117(2A)
Having regard to the fact that the parties were at odds on almost every element within s 117(2A) it is necessary to state my conclusions in support of my orders in the form I have made for the reservation of all costs, such an order being made under s 117(2).
The parties’ financial circumstances are such that each is well capable of meeting his, her or its own costs and equally. He she or it is well capable of meeting an order for any party to pay another’s costs. In my view the issue raised by s 117(2A)(a) does not weigh heavily in my determination to reserve all parties’ costs.
No party was in receipt of legal aid so s 117(2A)(b) was irrelevant.
The conduct of the parties for the purposes of s 117(2A) (c) was unremarkable in my view. Faced with concerns about the husband’s capacity and the emergence of control over the trusts by his sons, the wife sought advice about her position and, after steps to resolve the developing impasse, she commenced this proceeding. She had every reason to be concerned about the role of the second to sixth respondents because to her, they were emerging as persons who the husband was directing or they, on their own accord, were actively immersing themselves in the deconstruction of the trusts, thereby occasioning the wife to step in to arrest those activities. To my mind that was entirely appropriate. It is going too far at this stage of the litigation to conclude that the husband and his sons have “relentlessly pursued the realisation of trust assets.” Suffice it to say that there was no impropriety or even dubious conduct in seeking the injunctive relief the wife sought.
The orders ultimately made do little more than preserve the status quo so that a full trial can be conducted. Precisely where that will lead is yet to be seen. Self-evidently, in making the orders I made I was persuaded on the balance of probabilities that one or more serious issues to be tried emerged from all the conflicting material. The serious issues must be resolved at trial.
It must not be overlooked that in the courts across this country administering the common law and equity, it is common – date I say usual in the absence of exceptional circumstances – to reserve costs after a contested interim or interlocutory injunction application. That is for the simple reason that the court has not had the benefit of full argument on all issues after all evidence has been fully challenged, including by cross-examination. Here, the s 79 point is very much alive. So is the wife’s knowledge of the activities concerning the trusts. So is the alleged settlement. All must be determined at trial. If I were to make an order under s 117(1), no party would have an opportunity to ventilate a costs entitlement arising out of the events leading to the commencement of this litigation. Each party should have that opportunity.
Section 117(2A)(d) was irrelevant
As to s 117(2A)(e), it is impossible to say who has been wholly unsuccessful in the proceeding. My orders were reflective of a need to preserve the status quo. It could not be said that by the making of orders enjoining a party then one particular party has been wholly unsuccessful “in the proceeding”.
That must await trial.
So far as s 117(2A)(f) was concerned, in my view the points raised by Mr Brown QC were correct, especially about the correspondence not taking the form of a settlement and the argument about the undertaking.
Conclusion
An order under s 117(1) is not appropriate. I consider that after the trial an order under s 117(2A) will probably be appropriate. To that end, I shall reserve all parties’ costs of and incidental to the wife’s application.
I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 9 September 2020.
Associate:
Date: 9 September 2020
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