Masih & El Saeid (No. 2)
[2021] FamCA 292
•12 May 2021
FAMILY COURT OF AUSTRALIA
Masih & El Saeid (No. 2) [2021] FamCA 292
File number(s): SYC 2986 of 2012 Judgment of: HARPER J Date of judgment: 12 May 2021 Date of corrigendum: 17 May 2021 Catchwords: FAMILY LAW – COSTS – Where the wife sought to join a number of third parties in attempt to widen the asset pool – Where the issue of the joinder was considered as a threshold issue – Where the wife was wholly unsuccessful in her claims regarding the third parties – Where the wife changed her points of claim on a number of occasions – Where the third parties sought indemnity costs – Turns on own facts.
FAMILY LAW – COSTS – Where the wife pressed interim applications for spousal maintenance and partial property settlement – Where the matter was listed for interim hearing – Where the husband put on his evidence – Where the wife withdrew her application the morning of the hearing – Where the husband sought indemnity costs – Turns on own facts.
Legislation: Family Law Act 1975 (Cth) ss106B, 117(2), 117(2A), 117(2A)(a), 117(2A)(c)
Family Law Rules 2004 (Cth) rr 1.04, 1.06, 1.07,1.08
Cases cited: Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873
Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26
Atkins & Hunt [2017] FamCAFC 131
B v J (2006) FLC 93-259
Bell Lawyers Pty Ltd v Pentelow (2019) 372 ALR 555
Bhatt & Acharya (Costs) [2017] FamCAFC 71
Cachia v Hanes (1994) 179 CLR 403
Company v Cussons Pty Limited (1993) 46 FCR 225
El Saeid & Masih and Ors [2015] FamCA 516
El Saeid & Masih and Ors [2019] FamCA 497
Harris & Dewell (No.2) [2018] FamCAFC 180
Kohan and Kohan [(1993) FLC 92-340
Latoudis v Casey (1990) 170 CLR 534
Masih & El Saeid and Ors [2020] FamCA 238
Northern Territory v Sangare (2019) 265 CLR 164
Oshlack v Richmond River Council (1998) 193 CLR 72
Parke & Estate of the Late A Parke (2016) FLC 93–748
Paysen & Laukien (2020) FLC 93-960
Penfold v Penfold (1980) 144 CLR 311
Prantage & Prantage (2013) 49 Fam LR 197
Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184
Number of paragraphs: 93 Date of last submission/s: 22 January 2021 Place: Sydney Solicitor for the First Applicant: Bruce Cameron Counsel for the Second Applicant: Peter Campton SC ORDERS
SYC 2986 of 2012 BETWEEN: MR A MASIH
First Applicant
MR B MASIH AS DIRECTOR OF E PTY LTD
Second Applicant
AND: MS EL SAEID
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
12 MAY 2021
THE COURT ORDERS THAT:
1.Within 30 days:
(a)The Respondent Wife pay the Second, Third and Fourth Respondent’s (collectively the “third parties”) costs of and incidental to the proceedings on a solicitor/client basis, (less the costs order awarded in favour of the third parties in July 2015), with such costs to be fixed in the sum of $175,012.72;
(b)The Respondent Wife pay the Applicant Husband’s costs of and incidental to 7 November 2016 and 20 February 2017 on a solicitor/client basis with such costs fixed in the sum of $16,674.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Masih & El Saeid has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
CORRIGENDUM
SYC 2986 of 2012 BETWEEN: MR A MASIH
First Applicant
MR B MASIH AS DIRECTOR OF E PTY LTD
Second Applicant
AND: MS EL SAEID
Respondent
JUDGMENT OF:
HARPER J
CORRIGENDUM:
17 MAY 2021
1.On 12 May 2021 I published these reasons and made orders. This was done in the absence of the respondent wife, who filed no evidence and made no submissions in respect of any of the applications the subject of this judgment.
2.There was a long and complex history of outstanding costs applications in this matter, some of which dated back to 2016.
3.As a result, in attempt to streamline these proceedings, I made the following order on 11 December 2020:
5. The Applicant [Husband] file and serve written submissions in support of all outstanding applications for costs, with such submissions to identify precisely the applications that are relied upon and the precise orders sought in relation to each application, by close of registry 18 December 2020.
4.The husband filed written submissions dealing with one Application in a Case for costs filed on 13 November 2020. In those submissions the husband did not address any other outstanding applications. As a result, it was assumed that the husband only pressed the Application in a Case filed on 13 November 2020.
5.On 22 December 2020, the solicitors for the husband wrote to the Court via email in order to “ensure that all documents in relation to outstanding costs application [could] be located”. They thereafter proceeded to list a number of outstanding Applications in a Case in which costs were sought, as well as the written submissions relating to such applications. This included an Amended Application in a Case filed on 23 August 2019 which amended an Application in a Case filed on 21 August 2019.
6.This email was sent prior to the judgment being reserved.
7.This email was not drawn to my attention, and judgment was delivered without regard to the correspondence from the husband’s solicitors.
8.Prior to entry of judgment, the husband’s solicitors corresponded with the Court pointing out that the husband’s Amended Application in a Case filed on 23 August 2019 was pressed.
9.This judgment made no reference to that Amended Application in a Case. For the avoidance of doubt it has been rectified pursuant to Rule 17.02A to remove references of the husband’s Application in a Case dated 21 August 2019. Supplementary reasons in relation to the Amended Application in a Case will follow.
10.Under Rule 17.02 the orders of 12 May 2021 will be varied to remove reference to the otiose Application in a Case filed on 21 August 2019.
I certify that the preceding ten (10) paragraphs are a true copy of the Corrigendum of the Reasons for Judgment herein of the Honourable Justice Harper.
Associate:
Dated: 17 May 2021
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
The protracted proceedings between Mr A Masih (“the husband”) and Ms El Saeid (“the wife”) have a long and complex history in this Court, involving both parenting and financial disputes. They also involved Mr B Masih (“Mr B Masih”), the husband’s father, in his capacity as director of E Pty Ltd, as trustee for the D Family Trust, and as co-trustee of the C Unit Trust (“the entities”).
Throughout the history of this matter, a number of interim and final judgments have been delivered on discrete issues. A number of orders have been made reserving the costs of the husband, but these specific questions of costs remain to be determined.
During a mention on 11 December 2020, where both parties were present, I invited the husband to file written submissions specifying precisely the orders sought in relation to the costs of the proceedings to date which had been reserved, but had not yet been determined.
From his submissions filed 15 December 2020, he makes it clear that he pressed for orders for costs in relation to the reserved costs of 7 November 2016 and 20 February 2017.
In addition, there is an outstanding Application in a Case for costs, filed by Mr B Masih on behalf of the entities on 21 August 2019. This application relates to a judgment delivered by the Honourable Justice Loughnan on 25 July 2019 (El Saeid & Masih and Ors [2019] FamCA 497) dealing with a threshold question in the property proceedings of the value of the asset pool, where he dismissed a number of the orders sought by the wife on a final basis. As a result of this dismissal, the entities were discharged as parties to the proceedings.
SHORT PROCEDURAL HISTORY
This matter was commenced on 23 May 2012 by an Initiating Application filed by the husband, seeking parenting orders only. On 13 July 2012, the financial aspect of the proceedings were joined by the wife upon the filing of her Response to the Initiating Application.
On 17 June 2014, the wife filed an Application in a Case seeking a number of declarations which would join a number of third parties to the proceedings, being the C Unit Trust, and D Family Trust, G Family Trust, as well as Mr B Masih personally. By the time the matter came before Aldridge J in June 2015, it was clear the wife also sought to join E Pty Limited. The wife’s argument was essentially that assets belonging to these entities should be included in the asset pool available for distribution. These declarations were opposed by the husband and the third parties, and therefore became a discrete issue to be determined prior to further hearing of the financial proceedings.
Aldridge J delivered judgment in relation to the proposed declarations on 6 July 2015. For reasons given that day (El Saeid & Masih and Ors [2015] FamCA 516), the relief sought by the wife was struck out and costs were ordered against the wife, payable upon the completion of the proceedings.
According to the third parties, the quantum of these costs is still in dispute, however I have not been asked to rule on those aspects of the dispute. Therefore, it is sufficient to simply note this history of the matter.
Additionally, as part of this tranche of the proceedings there seems to be a number of costs Applications filed by Mr B Masih which are yet to be determined by a Registrar. Again, these are not the subject of this judgment. I simply note them.
By 20 May 2016, the wife filed a Response to an Application in a Case of the husband seeking a number of orders, including urgent spousal maintenance, periodic spousal maintenance, orders that the husband serve her with the financial statements of a number of entities, an order pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”) to set aside any instrument appointing Mr B Masih as trustee of the D Family Trust, and that a number of documents be produced in compliance with the husband’s disclosure obligations. Significantly, the wife additionally sought the joinder of a number of third parties, including the husband and Mr B Masih in their capacity as trustees of the C Unit Trust, the husband and Mr B Masih in their capacity as trustees of the D Family Trust, and Mr B Masih in his capacity as trustee of the G Family Trust.
In response, the husband filed a lengthy affidavit on 1 August 2016, as well as an updated Financial Statement.
The application of the husband and response of the wife described above came before the Court on 8 August 2016. At this hearing, according to the husband, it was noted that the wife would amend her response, but still sought the joinder of third parties to the proceedings. Following this hearing, on 30 September 2016, Rees J ordered the wife to file and serve an Amended Response setting out the relief which she sought against the husband and against each third party, as well as a document articulating the basis of her claim against each third party.
On 31 October 2016, the wife filed an Amended Application in a Case. She, once again, sought to join the following parties;
a.the husband and Mr B Masih in their capacity as trustees of the C Unit Trust;
b.Mr B Masih in his capacity as Director and Shareholder of the D Family Trust, as well as TT Pty Limited; and
c.Mr B Masih in his capacity as trustee of the G Family Trust.
In addition, she sought orders for a number of specific documents to be delivered upon her solicitor, for spousal maintenance as described above, that the husband pay to her solicitors the sum of $150,000 by way of partial property settlement, and that the husband pay the wife’s solicitors the sum of $200,000 in respect of legal costs with such amount to be taken into account at final hearing.
On 7 November 2016, Rees J joined the entities as parties to the proceedings, against the objection of those parties and the husband. The wife’s application insofar as it sought to join other parties was dismissed. According to the husband, on this date Rees J made specific comments to the wife along the lines of; “I do not understand [your] claims against the entities” (Husband’s Affidavit filed 13 November 2020, paragraph 18). Costs were reserved on this date.
The matter was otherwise adjourned to 20 February 2017 for interim hearing of a number of outstanding applications, including the wife’s Amended Application in a Case filed 31 October 2016.
Prior to the commencement of the hearing and in the precincts of the Court on 20 February 2017, the wife’s solicitors informed the husband’s solicitors that they did not intend to press the interim applications for partial property settlement, interim costs and spousal maintenance. The hearing did not proceed, and costs were reserved.
On 20 February 2017, however, the Court made orders that it would “determine as a threshold issue the contentions of the Applicant Wife in the Points of Claim prior to determination of the final hearing”. As a result the asset pool would be defined prior to the matter being heard on a final basis.
The wife then further amended her points of claim on 15 May 2017 and 1 March 2018.
The matter eventually proceeded to hearing across seven days in March 2018 and July 2019 in relation to the threshold issue. According to the entities, the wife also filed a further amended points of claim on 16 August 2018, which would have been while judgment was reserved. They claim this became “Exhibit X”. No document to that description can be found on the file. There is also no mention in the judgment of a points of claim dated August 2018 being considered.
As mentioned, judgment was delivered by Loughnan J on 25 July 2019. His Honour dismissed a substantial portion of the wife’s application for financial relief, and the remaining entities were discharged from the proceedings as a result.
ORDERS SOUGHT BY THE PARTIES
On 21 August 2019, Mr B Masih, on behalf of the entities, filed an Application in a Case for costs against the wife (“the Entities’ Costs Application”), as well as an affidavit in support of their application. Specifically, they sought the following;
(1)That within 14 days from the date of these Orders the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to the proceedings on an indemnity basis being indemnity costs referrable to the costs and disbursements paid by the 2nd, 3rd and 4th Respondents to their lawyers, York Law Family Law Specialists, (less the cost order awarded in favour of the third parties in July 2015), being an amount fixed in the sum of $260,215.71.
(2)That in the alternate to Order 1 hereof but without concessions, within 14 days from the date of these Orders the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to the proceedings on an indemnity basis as agreed or assessed and pay the same within 14 days of any agreement or assessment.
(3)That in the alternate to Orders 1 and 2 hereof but without concession, within 14 days from the date of these Orders, the Wife pay the 2nd 3rd and 4th Respondent’s costs of and incidental to the proceedings on a solicitor/client basis, (less the cost order awarded in favour of the third parties in July 2015), with such costs to be fixed in the sum of $175,012.72.
(4)That in the alternate to Orders 1, 2 and 3 hereof but without concession, within 14 days from the date of these Orders, the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to the proceedings on a solicitor/client basis as agreed or assessed and pay the same within 14 days of any agreement or assessment.
(5)That in the alternate to Orders 1, 2, 3 and 4 hereof but without concession, the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to the proceedings on a party/party basis with such costs to be fixed in the sum of $169,140.21.
(6)That in the alternate to Orders 1, 2, 3, 4 and 5 hereof but without concession, the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to the proceedings on a party/party basis with such costs as agreed or assessed and pay the same within 14 days of any agreement or assessment.
(7)That the Wife pay the 2nd, 3rd and 4th Respondent’s costs of and incidental to this Cost Application.
In addition to their application, the third parties filed written submissions on 17 December 2019. In these submissions, they outlined the documents they rely upon, being;
(a)Orders made by Aldridge J on 20 October 2014;
(b)Reasons for Judgment of Aldridge J delivered 6 July 2015, including the Orders made;
(c)Reasons for Judgment of Loughnan J delivered 25 July 2019, including the Orders made;
(d)The Affidavit of Mr B Masih filed 21 August 2019; and
(e)Reasons for Judgment of Loughnan J delivered 23 October 2019.
The orders sought by the father were not as clearly articulated, due to the number of outstanding costs applications or costs reserved throughout the history of this matter. As a result, on 11 December 2020 I made an order in the following terms;
5. The Applicant [Husband] file and serve written submissions in support of all outstanding applications for costs, with such submissions to identify precisely the applications that are relied upon and the precise orders sought in relation to each application, by close of registry 18 December 2020.
The husband filed a document titled “Applicant Husband’s Submissions in support of Application In a Case seeking Orders for Costs in relation to the reserve costs of the day of 7 November 2016 and 20 February 2017” on 15 December 2020. The husband states that “[t]hese submissions are filed at the same time as the Husband’s Application in a Case and Affidavit in support filed pursuant to Order 3 of the Orders of the Honourable Justice Harper dated 20 October 2020.”
No Application in a Case was filed at the same time as the submissions, however there was an Application in a Case filed 13 November 2020 and sealed on 24 November 2020 in compliance with previous orders from 20 October 2020 (“the Husband’s Costs Application”). I infer that the husband presses such Application in his submissions.
In his Application in a Case filed 24 November 2020, the husband sought;
(1)That within 21 days from the date of these Orders the Wife pay the Respondent Husband’s costs of and incidental to 7 November 2016 and 20 February 2017 on an indemnity basis being indemnity costs referable to the costs and disbursements paid by the Respondent Husband to his lawyers, Diamond Conway being an amount fixed in the sum of $23,820.
(2)That in the alternative to Order 1 hereof but without concession, within 21 days from the date of these Orders the Applicant Wife pay to the Respondent Husband costs of and incidental to the 7 November 2016 and 20 February 2017 on an Indemnity basis as agreed or assessed and pay the sum within 14 days of any agreement or assessment.
(3)That in the alternative to Order 1 and 2 hereof but without concession, within 14 days from the date of these Orders the Wife pay the Respondent Husband’s costs of and incidental to the proceedings on a solicitor/client basis with such costs fixed in the amount of $16,674.
(4)That in the alternative to Orders 1, 2 and 3 hereof but without concession, within 21 days from the date of these Orders the Wife pay to the Respondent Husband costs of and incidental to the proceedings on a solicitor/client basis as agreed or assessed and pay the same within 14 days of any agreement or assessment.
(5)That the Wife pay the Husband’s costs of and incidental to this costs application.
As made clear by his submissions, the husband additionally relies upon his affidavit sworn on 10 November 2020, and filed with his Application in a Case.
THE WIFE’S FAILURE TO PARTICIPATE
The wife has not engaged with the Court processes relating to applications for costs. It seems she has been self-represented since some point early in 2020. Solicitors appeared and filed an affidavit for her in January 2020, but no Notice of Address for Service was ever filed. Thereafter the wife was either self-represented or appeared, with leave, through her partner Mr P.
The entities’ Costs Application first came before the Court on 3 October 2019. On this date, orders were made by consent for the parties to file further materials. Relevantly, the wife was ordered to file a Response to the Application in a Case and accompanying affidavit by no later than 15 November 2019, as well as submissions by no later than 7 February 2020.
The wife failed to file a Response.
On 16 January 2020, the matter came back before the Court and further consent orders were made. The wife was given until 13 March 2020 to file and serve any affidavit she relied on, as well as submissions in response to the other parties. The question of costs was then reserved before Loughnan J, pending written submissions.
Again, the wife failed to file a Response to the Application in a Case.
On 19 August 2020, it was brought to the Court’s attention that the entities’ Costs Application had not been properly dealt with. There appeared to be some confusion relating to a separate costs application, with a judgment being handed down on 16 April 2020 (Masih & El Saeid and Ors [2020] FamCA 238).
As a result, on 24 August 2020 my Chambers wrote to the parties, requesting that the husband and wife provide the documents they sought to rely upon, noting that the entities had already done so. In addition, an explanation was sought from the wife for her failure to file any responsive material.
The husband provided his documents on 25 August 2020. No response was received from the wife.
Again, on 6 October 2020 my Chambers requested a response from the wife via email. Nothing was received.
As a result of this, the matter was listed before me on 20 October 2020, with such hearing to proceed by telephone. Unfortunately, despite the Court’s best efforts to inform the wife of such hearing, the wife did not attend. Efforts were made to contact her prior to the hearing, however her partner notified my Associate that neither he nor the wife would be participating in the hearing.
Orders were made for the wife to file responsive materials to the husband’s costs application by no later than 27 November 2020. The wife filed no material.
Finally, the matter came back before me on 11 December 2020. The wife appeared in person by telephone, and was assisted by her partner.
On this date, orders were made for the husband to file specific submissions, as outlined above, and allowing the wife until 22 January 2021 to file any responsive submissions. Nothing was filed by the wife.
I am satisfied the wife has been afforded ample opportunity to engage with the Court processes necessary to bring the outstanding costs disputes to finality. She has not filed any material in opposition to the claims for costs by the husband and the entities. I am satisfied the wife is aware of the applications but has chosen not to contest them, and I should proceed to determine the outstanding costs applications in the absence of material from the wife.
THE LAW
The relevant principles with respect to costs are well settled, and are set out in detail in the Full Court decision of Parke & Estate of the Late A Parke (2016) FLC 93–748; (2016) 314 FLR 322; [2016] FamCAFC 248 and Atkins & Hunt [2017] FamCAFC 131.
In proceedings to which the Act applies, the starting point is that each party shall bear his or her own costs. If, however, the Court is of the opinion that there are justifying circumstances, the Court may make such order as to costs and security for costs as the Court considers just.
It is not necessary to establish extraordinary or exceptional circumstances, however there must be circumstances which, at the absolute discretion of the Court, justify a costs order. As the High Court made clear in Penfold v Penfold (1980) 144 CLR 311; (1980) 28 ALR 213; (1980) FLC 90-800; (1980) 5 Fam LR 579; [1980] HCA 4, s 117(2) requires a finding of justifying circumstances before any costs order can be made.
In determining whether a costs order should be made and in what form, the Court has regard to the considerations set forth in s 117(2A), namely, the Court shall have regard to:
(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 that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to 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, admissions of facts, production of documents and similar matters;
(d)whether the proceedings 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 matters as the Court considers relevant.
It is well-settled that no one factor has priority under s 117(2A), nor must more than one factor to be satisfied; any one factor may be sufficient. There may be a dominant or outstanding feature that makes an order for costs appropriate; thus although any one factor may be sufficient, no one factor is essential.
DISCUSSION
The Entities’ Costs Application
Conduct of the Wife
It is a basic principle that an order for costs is compensatory and not to be used to punish: Latoudis v Casey (1990) 170 CLR 534; (1990) 97 ALR 45; [1990] HCA 59; Cachia v Hanes (1994) 179 CLR 403; (1994) 120 ALR 385; [1994] HCA 14. In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [1] (“Oshlack”), Brennan CJ said “[c]osts are awarded to indemnify a successful party in litigation, not by way of punishment of an unsuccessful party”. In Bell Lawyers Pty Ltd v Pentelow (2019) 372 ALR 555; [2019] HCA 29 at [33], the majority said “costs are awarded by way of indemnity; they are not awarded as compensation for lost earnings, much less as a reward for a litigant's success”. In Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184; (1998) FLC 92-812; [1998] HCA 44, the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s 117(2) referred to costs in the conventional sense. This position has been followed in the Full Court: B v J (2006) FLC 93-259; (2006) 35 Fam LR 222; [2006] FamCA 256. Thus, putting aside for the moment the question of indemnity costs, which is evaluated according to some different considerations, concepts of punishment or reward should be avoided in considering the factors in s 117(2A).
However, s 117(2A)(c) makes the conduct of the parties a necessary consideration, being conduct “in relation to 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, admissions of facts, production of documents and similar matters”.
On the role of conduct in the exercise a discretion to order costs, in Oshlack, McHugh J at [69] referred to “some sort of misconduct” which disentitles a party to the beneficial exercise of the discretion, citing the formulation of Devlin J in Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd [1951] 1 All ER 873, 874. McHugh J explained:
“Misconduct” in this context means misconduct relating to the litigation, or the circumstances leading up to the litigation. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation; unnecessarily protracts the proceedings; …
(footnotes omitted)
More recently in Northern Territory v Sangare (2019) 265 CLR 164; (2019) 60 Fam LR 71; [2019] HCA 25 at [25] (“Sangare”), the High Court referred to unreasonable delay or a want of the cooperation required of litigants to ensure the "just resolution of the real issues in civil proceedings with minimum delay and expense", citing Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175, (2009) 258 ALR 14; [2009] HCA 27 at [90] and Supreme Court Rules 1987 (NT), r 1.10.
The decisions in Oshlack and Sangare, while relevant, dealt with litigation in jurisdictions where generally “costs follow the event” (Oshlack at [67]; Sangare at [166]). However, it must be remembered that, when the conduct of the parties is being examined, the position regarding costs in this Court differs from those jurisdictions where costs follow the event. Recently in Paysen & Laukien (2020) FLC 93-960; [2020] FamCAFC 101, the Full Court cited Sangare with apparent approval but said at [41]:
It bears emphasis that in this jurisdiction, s 117(2A)(c) of the Act prescribes that conduct be considered against the background that s 117(1) directs the starting position that costs do not follow the event and usually each party to proceedings bears his or her own costs.
Nonetheless, Sangare makes clear that not only delay and expense but the relevant Court Rules should be examined by the Court when exercising its discretion on costs, against the general circumstances of the case. In this Court, Rule 1.04 of the Family Law Rules 2004 (Cth) (“the Rules”) specifies a “main purpose” of the Rules, which is “to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case”. The Court is to apply the Rules to promote and achieve the main purpose: rr 1.06 and 1.07. Rule 1.08 of the Rules imposes an obligation on, amongst others, the parties to promote and achieve the main purpose of the Rules, including readiness for Court events, assisting the just, timely and cost effective disposal of cases, and being satisfied there is a reasonable basis for alleging, denying or not admitting a fact.
In this matter, the entities argue that the wife was “afforded more than ample opportunity” to properly put her case forward, as she sought and was given leave to amend her points of claim on a number of occasions. The entities were compelled to meet an evolving and changing formulation of her claims, which, as regards them, ultimately failed.
They point out that the wife produced voluminous affidavits, exhibits, and pleadings which were “in large part inadmissible, repetitive, often absent particulars, and replete with self-serving statements.” As a result, the entities argue that the wife’s conduct in the proceedings caused them substantial cost.
Additionally, they point out that the wife, until recently in the proceedings, was assisted by experienced solicitors, counsel and senior counsel. Properly advised, she ought to have known her prospects of success were poor, considering the absence of a “material evidentiary foundation” for her claims against the entities. Despite this, the wife continued to press for the entities to be joined, and continuously opposed any application that they be removed from the proceedings.
Finally, the entities point to the fact that the wife at no time made any complaint as to their disclosure. From this it should be inferred that she at all times had all relevant material in her possession to enable her to formulate an arguable claim.
I accept that the wife persisted with claims against the entities in circumstances where, properly advised, it should have become evident to the wife, even before her failure on the threshold issue, that she had limited prospects of success.
There is force in this argument.
Wholly Unsuccessful
The entities submit that, by Loughnan J’s judgment on 25 July 2019, the wife was wholly unsuccessful as the entirety of her claim against them was dismissed as a threshold issue. They suggest that this factor alone is sufficient to justify an order for costs.
Specifically, in Loughnan J’s judgment he found the following;
[202] Save in respect of the treatment of [paid legal fees], the wife cannot sustain any of the arguments she makes in her Points of Claim. Those of the applications contained in the Points of Claim will be dismissed.
I accept there is force in this argument.
Financial Circumstances
There is little evidence of the wife’s financial circumstances. The most recent financial statement provided by the wife is from 23 November 2016. In it, she claimed a personal average weekly income of $457.45 and expenditure of the same. She recorded a liability of $1,000, but no assets, no superannuation and no financial resources.
The wife did not inform the Court, by evidence or updated financial statement, whether this position has changed since 2016. I note that the wife now accepts that she is in a relationship with Mr P, and has given birth to his child.
The entities have not filed a financial statement, however it is undisputed that they are in a stronger financial position than the wife.
The entities point to the legal fees the wife herself incurred, presently being $1.5 million including parenting proceeding fees, to suggest that the wife is reckless and not financially responsible as a litigant. When viewed in light of the absence of information concerning the wife’s financial position, the entities suggest that the financial circumstances of the parties is either irrelevant or of little weight in determining this application.
I do not fully accept this submission. It is true that there is no cogent evidence of the wife’s actual financial position. But according to the argument of the entities themselves, it seems likely that the wife is insolvent and the entities are in a stronger financial position. I have considered this likelihood but I also note that impecuniosity is not itself a bar to a costs order: Bhatt & Acharya (Costs) [2017] FamCAFC 71 at [20]. Nonetheless, in the absence of any evidence from the wife about her financial circumstances, this is not a persuasive factor against making a costs order against her.
Other matters to consider
The entities argue that the motives of the wife should be considered in assessing whether costs should be awarded. Specifically, they suggest that the wife was solely financially motivated, attempting to inflate the parties’ property pool whilst “goug[ing] property, opportunistically, from the [entities], for her perceived gain.”
In making this point, the entities stress that they were strangers to the marriage, and as such the wife ought to have been advised that they may suffer cost implications in the event of failure of her application to join such parties.
I am unable to form a view about these submissions. It can be assumed that any litigant for property adjustment orders under s 79 of the Act is motivated at some level by a perception of financial gain. But this is not necessarily a basis for criticism. Part VIII of the Act gives parties to a marriage rights to make claims in respect of assets and financial resources. Lack of success is taken into account specifically as a matter to be considered under s 117(2A)(c).
Conclusion as to the Entities’ Costs Application
The wife has made no argument to contest the third parties’ claims for costs. The considerable cost to which the entities were put in meeting the claims of the wife, and her entire lack of success justify making a costs order against her. The third parties seek costs on an indemnity basis. This raises additional matters for consideration, which I deal with later in these reasons.
The Husband’s Costs Application
Conduct of the Wife
I repeat the statements of principle above at [50] to [55].
In his submissions, the husband focussed on the wife’s conduct in the proceedings.
He specifically points to the fact that the wife amended the relief she sought on a number of occasions, specifically on 20 May 2016 and 31 October 2016. He points to the previous costs judgment of Aldridge J, which made comment on the amount of times the wife had changed her position, to suggest that this point should be given weight.
In addition, the husband points to the fact that the wife failed to comply with orders made by consent on 8 August 2016, as she failed to provide the husband with details and copies of bank accounts, to provide answers to the questions raised in the letter from Cameron Gillingham Boyd to Husseni Lawyers on 7 October 2014, and particulars of all funds sent overseas from the date of marriage until the present time. Additionally, the husband claims the wife failed to provide a certified copy of her Bachelor degree.
Although the husband provides a copy of these purported consent orders in his affidavit sworn 10 November 2020, a sealed copy of these orders does not appear on the file either electronically or physically.
On 31 October 2016, just prior to the listing before Rees J on 7 November 2016, the wife filed an Amended Application in a Case seeking a range of orders. The husband’s point is that just before 7 November 2016 the wife had changed her case, and the orders she was seeking against the husband.
As described above, the matter was listed for interim hearing before Rees J on 20 February 2017; however, on the morning of the hearing the wife abandoned her position without providing the husband with a reason. The husband argues that, notwithstanding this discontinuance, he was required to prepare for the interim hearing relating to spousal maintenance and partial property settlement.
I am satisfied that because of the conduct of the wife the costs of and incidental to 7 November 2016 and 20 February 2017 were incurred by the husband unnecessarily, and clearly appear to have been wasted. The wife put on no material to suggest otherwise.
Lastly, the husband points to the wife’s behaviour and secrecy around her partner, Mr P, as a reason for a costs order to be made. He claims that until August 2016, the wife denied being in a relationship with Mr P, or obtaining financial assistance from him. In August 2016, however, the wife accepted she was in an intimate relationship with Mr P, and gave birth to his child in 2016.
Notwithstanding this admission, the wife has failed to provide the husband with any information concerning Mr P’s financial involvement with her.
The father contends that Mr P is in fact financially contributing to the wife’s legal proceedings. Specifically, he claims that an affidavit filed in the Full Court suggests that Mr P acts as an interpreter for the mother, and additionally that he was paying her legal fees, albeit he appears to be in debt in relation to those. I am unable to make a finding about these assertions.
Financial Position of the Parties
Although this factor was not argued by the husband, I am required by s 117(2A)(a) to have regard to the financial position of both parties. Although, as pointed out already, impecuniosity is not in itself a bar to a costs order, it is a factor that may be relevant in the bigger picture.
The husband is a health professional. According to his Financial Statement filed 26 September 2019, the husband has a total average weekly income of $2,614. This is compared to his personal expenditure of $4,338 per week. Additionally, although he owns assets to the value of $3,898,097, he claims to have liabilities amounting to $2,626,470, and no financial resources.
I discussed the wife’s financial circumstances above, to the extent they can be known on the available evidence. Her financial positon seems to be parlous, although the Court cannot be satisfied of this on the evidence.
Conclusion as to the Husband’s Costs Application
I am satisfied the conduct of the wife in the proceedings justifies an order for costs in the proceedings. The husband’s financial position is stronger, but he seeks a limited costs order referrable to wasted costs. The wife has not explained her financial position to the Court through evidence or argument for the costs applications the subject of this judgment.
QUANTUM OF COSTS
The Entities’ Costs Application
The award of indemnity costs in this Court has regularly been called a significant departure from the normal standard. In Harris & Dewell (No.2) [2018] FamCAFC 180 the Full Court said at [23] – [25]:
[23] In Kohan and Kohan [(1993) FLC 92-340 (“Kohan”)], the Full Court held, in applying the principles expounded by Sheppard J in Colgate-Palmolive [Company v Cussons Pty Limited (1993) 46 FCR 225], that an order for indemnity costs represents a “very great departure from the normal standard”. In the later decision of the Full Court in Prantage & Prantage (2013) 49 Fam LR 197 (“Prantage”), Thackray and Ryan JJ referred to Kohan and other authorities in the Full Courts of both this Court and the Federal Court of Australia as well as the state appeal courts. Their Honours concluded ([86]) that the “usual rule” continued to apply in respect of awards of costs in this Court notwithstanding the Full Court accepting that the difference between party/party costs and a party’s actual costs has continued to grow significantly.
[24]. That proposition also derives support from what Callinan J said in Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [[2001] HCA 26; (2001) 179 ALR 406 at [40]]. His Honour said that an order for indemnity costs should “be exceedingly rare, as they have a tendency to encourage extravagance and put the quantum of legal fees beyond the effective scrutiny of the courts and their taxing officers”.
[25] The rarity of an order for indemnity costs can also be seen illustrated by the comments of Lindgren J in NMFM Property Pty Ltd v Citibank Ltd (No 2), referred to by their Honours in Prantage (at [102] – [103]). Lindgren J said that there is no rule that indemnity costs will be ordered “where the losing party was guilty of ethical or moral delinquency in the antecedent facts which have given rise to the litigation.
In Prantage, at [152] Murphy J pointed out that reference to “a great departure” is not a fetter on this Court’s discretion to award costs or indemnity costs if justice so requires it, citing Oshlack at [134]; “[r]ather it recognises that an order for indemnity costs, has a particular context in this jurisdiction”.
While the wife’s conduct and lack of success against the entities justifies a costs order in their favour, I am not satisfied the circumstances warrants the significant departure which indemnity costs would entail. However, an award of costs on a higher basis than party/party costs is warranted.
I accept the situation appropriate for a specific sum to be ordered. There is no utility in compelling the entities to undertake a further assessment of costs.
I will order the wife to pay the entities’ costs on solicitor/client basis, (less the cost order awarded in favour of the third parties in July 2015), with such costs to be fixed in the sum of $175,012.72
The Husband’s Costs Application
For the same reasons, I will decline the husband’s Application for costs on an indemnity basis, and order the wife to pay the husband’s costs of and incidental to 7 November 2016 and 20 February 2017 on a solicitor/client basis with such costs fixed in the amount of $16,674.
I certify that the preceding ninety-three (93) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 12 May 2021
3
20
2