NIKAHD & NIKAHD

[2010] FamCA 930

FAMILY COURT OF AUSTRALIA

NIKAHD & NIKAHD [2010] FamCA 930

FAMILY LAW – INJUNCTIONS – “Serious issue to be tried” – Costs

Family Law Act 1975 (Cth)

APPLICANT: Ms Nikahd

RESPONDENT: Mr Nikahd

FILE NUMBER: SYC 1886 of 2010

DATE DELIVERED: 13 October 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Ainslie-Wallace

HEARING DATE: 24 August 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richardson SC

SOLICITOR FOR THE APPLICANT: Pearson Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Kearney

SOLICITOR FOR THE RESPONDENT: Watts McCray Lawyers

Orders

1. The wife pay the husband’s costs of and incidental to the application for injunctions filed by her on 27^th May 2010 on a party and party basis.

2. The quantum of the costs to be agreed or taxed.

3. The payment of the ordered costs to abide the finalisation of the property matters between the parties or as otherwise agreed between the parties.

IT IS NOTED that publication of this judgment under the pseudonym Nikahd and Nikahd is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1886 of 2010

MS NIKAHD

Applicant

And

MR NIKAHD

Respondent

REASONS FOR JUDGMENT

costs application

background

1. Ms Nikahd (the wife) and Mr Nikahd (the husband) married in 1979 in Iran.  They separated in November 2009.  In March 2009 the husband moved to Dubai to work and remains there.

2. In March 2010 the wife filed an application for final property orders in relation to the property of the parties.  The husband filed a response on 28^th May 2010.

3. In 1985 the husband founded a company, C Company.  He holds 99 per cent interest in that company and the wife 1per cent. 

4. At the date of hearing, the main asset of C Company was a 51per cent interest in D Company.  The interest in D Company was purchased in July 2004 and held through a company of which the husband is a director, A Company Pty Ltd later renamed B Company Pty Ltd.  Mr F and Mr W are shareholders in B Company with the husband.  B Company held 4.271 million shares in D Company.

5. In May 2010 G Holdings proposed an off-market take-over bid for D Company at 80c per share.  Before the announcement D Company shares had been trading at about 40c and after the announcement the share price rose to 69c.

Applications

1. By application filed on the 27^th May 2010, the wife sought orders against the husband and B Company restraining the company from encumbering, disposing or otherwise dealing with the D Company shares other than by sale on the open market through a registered broker at the prevailing market price; that any sale be not to any person or entity associated with the husband or company and any proceeds of sale to be held in the husband’s solicitor’s trust account.  The application further sought to restrain the husband from dealing in any way with any other shares held by him.

2. The wife sought that the orders be made ex parte in the first instance.

3. In her affidavit filed 27^th May 2010, the wife said that she was afraid that if the injunctions were not made, the husband would sell the D Company shares and move the money out of Australia to defeat any claim that she might have to property adjustment between them.

4. The wife said that she believed the husband had transferred about $3.2 million in cash from Australia into off-shore accounts and any cash held by him had already been transferred out of the jurisdiction.  The wife said that the husband had money in overseas accounts.

5. Of the other two shareholders in B Company, the wife said:

   “I believe that both Mr [F’s] and Mr [W’s] interests are either held in trust for, or otherwise controlled by, the husband.

   I have never known the husband to gift shares in companies or amounts of money to non-family members and as [B Company’s] interest in [D Company] was acquired through the husband’s resources, I believe that she shares which Mr [F] and Mr [W] hold in [B Company] are ultimately controlled by and owned by the husband.”

6. The basis of the wife’s assertion that the shares in D Company were acquired through the husband’s resources was her understanding that in 2006 the husband sold his interest in a company DX Pty Ltd to D Company Ltd for $9 million of which $2 million of that sum was given in shares in D Company.

7. The application was listed without notice to the husband before a judge on the 31^st May 2010 who made orders in terms of the wife’s application.

8. The matter was returned to Court on 7^th June and the husband was ordered to file any affidavit in response to that of the wife (in support of the injunction) and the wife ordered to make any reply thereafter. 

9. The husband filed an affidavit sworn on 28^th June 2010.  In it he outlined the circumstances of the acquisition of DX Company in July 2004 including the capital contribution of Mr F and Mr W to the purchase and the incorporation of A Pty Ltd to hold the share in DX Company.  The shareholding of A Pty Ltd (and B Company as it later became) reflected the contribution of the shareholders to the acquisition. C Pty Ltd holds 51per cent of the shares, Mr F 40per cent and Mr W 9per cent.

10. According to the husband’s affidavit, in 2006 DX was sold to D Pty Ltd for a sale price comprising both cash and shares in D Ltd.  The cash was applied to the partners in accordance with their shareholding.  B Company held the shares and has since then taken up further share offers by D Ltd to the extent that before participating in the G Holdings offer it held some 4.67 million shares.

11. After B Company sold the D Company shares, the husband’s share of the sale price was approximately $2.421 million.

12. On 23^rd July 2010, the matter was again before the Court.  On that day orders were made joining Mr F and Mr W to the proceedings and the injunction of 31^st May 2010 was varied to allow B Company to accept the buy out offer of the D Company shares.

13. The matter returned to Court on 24^th August 2010 when, by consent, the orders made against B Company, Mr F and Mr W were discharged, the wife’s applications against them dismissed and the wife was ordered to pay their costs.

14. The wife filed an affidavit on 8^th September 2010 in which she did not respond to or challenge the husband’s assertions as to the formation of the company and the acquisition of the shares.

15. On 13^th September 2010 so much of the injunctions made on 31^st May as were still extant were discharged and the question of the husband’s costs reserved.  Both parties provided written submissions on the issue.

16. In none of the affidavits filed by the wife did she provide any evidence in support of her asserted beliefs that led to the making of the injunctions.

17. On 8^th September 2010 the wife’s solicitor requested the husband give undertakings that he take no step to deplete the equity in two pieces of jointly owned real estate and not deal with $1.38 million of cash assets in C Company without giving the wife 21 days notice.  The husband’s solicitor swore an affidavit in which he said his instructions were that, had the wife sought undertakings similar to those proposed in her solicitor’s letter of 8^th September at a time before seeking the injunctions, the husband would have “approached the wife in good faith and may have provided undertakings of a like kind”.  The time specified in the letter of 8^th September for giving the requested undertakings was inadequate to obtain instructions from the husband in Dubai.

18. When the matter returned to Court on 13^th September the husband undertook to take steps to cause the trustee of the Nikahd Superannuation Fund to invest $1.2 million in certain specified deposits and bonds or other investment after giving the wife 21 days notice and that he will cause the Trustee of the Superannuation Fund to make no distributions from the fund that would deplete the fund below $1.2 million.

19. The husband seeks an order for costs in the sum of $73,903.21 in relation to meeting the wife’s application for injunctions. 

Discussion

1. The starting point for a consideration of whether to make an order for costs against a party to proceedings is section 117(1) of the Family Law Act which states that, subject to other subsections and sections of the Act, each party is to bear his or her own costs.

2. An order for costs against a party may be made where the Court is of the opinion that the circumstances justify the making of such an order.

3. Whether a costs order is made is a matter of discretion albeit one exercised mindful of section 117(1). Section 117(2A) sets out some matters to be considered in the exercise of the discretion together with “such other matters as the Court considers relevant”. I will discuss such of those matters as are relevant to this matter.

   Financial Circumstances of each of the parties

4. There seems to be no dispute that the wife’s financial position is significantly inferior to that of the husband.  While they own property jointly, the wife has no income or source of funds from which a costs order could be paid.  While she has no apparent capacity to pay any ordered costs at this time, given the estimated size of the property pool and having regard to the competing applications for final property orders, the wife would have the ability to meet a costs order after the final disposition of the property proceedings.

   Conduct of the parties

5. The husband contends that the wife’s application for injunctions was “doomed to fail” and the allegations on which she relied were “clearly wrong”.   It was argued that in none of the affidavits filed by the wife after the granting of the injunctions did she provide any evidence in support of the assertions in her affidavit of 27^th May 2010.  It was argued that the wife had not produced any evidence at all to support her asserted fear that the husband would attempt to defeat her claim and move money out of the jurisdiction.

6. It was argued that, the wife ought properly to have sought undertakings before seeking the injunctions. 

7. It was argued for the wife that the husband’s claim that her assertions were “clearly wrong” was “presupposing findings that may be made at the final hearing in this matter.  The time for the testing of statements made by both parties is at a final hearing and this supports the wife’s submission that the husband’s costs ought to be reserved until after a final hearing.”

8. In my view, this argument lacks force.  It is an essential pre-condition for the making of an injunction that the applicant demonstrates a prima facie case or as differently expressed, a “serious question to be tried”.  The degree to which the court should be satisfied of that matter will vary from case to case, nonetheless the satisfaction of there being a serious question to be tried remains essential to the grant of an injunction.

9. On 31^st May 2010 the injunction was made.  The wife filed no material that demonstrated the basis for her fears and beliefs on which she sought the injunction.  Indeed, eventually she consented to the discharge of the orders.  Had there been evidence in possession of the wife that supported the maintenance of the injunction, the orders of 7^th June 2010 obliged that to be exposed.  That she did not do so compels the view that she had no evidence on which to press for the maintenance of the injunction.  What may or may not be shown at trial is not material to the question of whether the wife’s conduct in seeking the injunction bears on whether to make an order for costs.

   Whether a party has been wholly unsuccessful

10. It was argued for the wife that she had not been “wholly unsuccessful” because the husband ultimately gave undertakings not to deal with certain property pending further order.  It was further argued that the husband could at any time after notification of the orders, have offered the undertakings eventually given.   It is apposite to note that it was not until 8^th September that the request for the undertakings eventually given was made.  By that time the matter had come before the Court on a number of occasions on which the husband had consistently opposed the maintenance of the injunctions and the injunctions against the third parties had been dissolved.  True it is that the husband agreed to undertakings as set out above.  However, that the husband was prepared to enter into those undertakings is not in my view determinative of the issue of whether the wife has been unsuccessful in her application for injunctions. 

11. The asserted basis on which the injunction was obtained has not been demonstrated by the wife in any affidavit filed in these proceedings.  That the husband agreed to orders preserving assets against future orders does not persuade me that she has been other than unsuccessful in this application nor does the fact that the husband was prepared, in the result, to give undertakings.  Even if that view be incorrect, the other matters to which I have already referred are such that an order against the wife for costs is justified.

12. The wife argued that the husband’s conduct in opposing the injunction and his defence of the case flew in the face of the assertion that he would have consented to injunctions had they been sought before the wife approached the Court for orders.  The question is incapable of resolution.  However, the wife took the course no doubt advised her; to seek injunctions without notice to the husband.  The prospect that the husband, if notified of the intended action would have given undertakings and thus obviated the need for the injunction would have been contemplated by those advising the wife.  The wife chose to proceed to seek orders without first determining whether the husband would have offered undertakings.  That he subsequently did so, does not persuade me that the question, has the wife has been unsuccessful, should be answered in the negative.

13. In all of the circumstances of the case, I am of the view that it is appropriate that the wife pay the husband’s costs of meeting her claim to injunctions.  I will order that she pay those costs on a party and party basis and defer the payment of the costs until the conclusion of the property matters between the parties or as otherwise agreed between them.

I certify that the preceding thirty seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace.

Associate: 

Date: