Pelton and Banbury and Anor (No 2)

[2020] FamCA 17

FAMILY COURT OF AUSTRALIA

PELTON & BANBURY AND ANOR (NO. 2) [2020] FamCA 17

FAMILY LAW – COSTS – indemnity costs – where an application was made by the wife and second respondent for indemnity costs and an anti-suit injunction – where the wife and second respondent sought orders that the husband dismiss proceedings pending in the Supreme Court of Victoria commenced by him on behalf of a business entity owned by the parties – where the husband is restrained by previous orders from exercising any decision making ability in relation to the business entities – where the husband ultimately consented to an anti-suit injunction but opposed any order for costs – where the circumstances of this case merit the awarding of costs on an indemnity basis – where the husbands conduct in instituting proceedings in the Supreme Court of Victoria and the way in which he conducted himself in relation to the application that follows justifies an order for costs on an indemnity basis – where orders are made for a specified sum of costs to be paid to both the wife and second respondent

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 (Cth) r 19.18

Colgate Palmolive Co v Cussens Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Fountain Selected Meats Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Kohan and Kohan (1993) FLC 92-340; 16 Fam LR 245
Munday v Bowman (1997) FLC 92-784; 22 Fam LR 321
Ragatta Developments Pty Ltd v Westpac BankingCorporation (Unreported, Federal Court of Australia, Davies J, 5 March 1993)
Re Wilcox; Ex parte Venture Industries Pty Ltd and Others (No 2) 72 FCR 151; 141 ALR 727
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court of Australia, French J, 3 May 1991)

APPLICANT: Ms Pelton

FIRST RESPONDENT: Mr Banbury

SECOND RESPONDENT: Mr Hellis

FILE NUMBER: MLC 10051 of 2018

DATE DELIVERED: 17 January 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 11 December 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Matta

SOLICITOR FOR THE APPLICANT: Hargreaves Family Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Kirkham SC and Mr Willee

SOLICITOR FOR THE FIRST RESPONDENT: Madgwicks Lawyers

COUNSEL FOR THE SECOND RESPONDENT: Mr Panayi

SOLICITOR FOR THE SECOND RESPONDENT: Gadens Lawyers

Orders

IT IS ORDERED THAT

1. By 4pm on 17 March 2020 the husband pay the wife’s costs of and incidental to the Application in a Case filed 3 December 2019 fixed in the sum of $14,088.

2. By 4pm on 17 March 2020 the husband pay the second named respondent’s costs of and incidental to the Application in a Case filed 3 December 2019 fixed in the sum of $14,274.

3. The applications for costs be otherwise dismissed.

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 Pelton & Banbury and Anor 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 10051 of 2018

Ms Pelton

Applicant

And

Mr Banbury

First Respondent

And

Mr Hellis

Second Respondent

REASONS FOR JUDGMENT

1. This matter is listed for final hearing commencing 28 January 2020. On 3 December 2019, the wife filed an Application in a Case seeking orders requiring the husband to do all acts and things, sign all such documents and take such steps necessary to dismiss proceedings pending in the Supreme Court of Victoria (“the Supreme Court”) instituted by the husband on behalf of C Pty Ltd and T Pty Ltd, that the husband be restrained both in his personal capacity and is capacity as an officeholder of C Pty Ltd and T Pty Ltd from instituting any further proceedings in the Supreme Court  or any other court, by or on behalf of those two entities and costs on an indemnity basis. Mr Hellis, the second named respondent in his capacity as trustee of S Super Fund filed a Response to and Application in a Case filed on 6 December 2019, in which he sought orders in similar terms. Both the wife and the second named respondent filed Affidavits in support of their respective applications. The husband did not file any material. In those circumstances, the evidence of the wife and the second named respondent is unchallenged and I accept that evidence.

2. Although at the commencement of the hearing, the proceedings in the Supreme Court had been discontinued, there was no agreement as to the Court making an anti-suit injunction and the issue of costs remained outstanding. Both the wife and second named respondent were seeking orders that the husband pay their costs on an indemnity basis. The husband ultimately consented to an the anti-suit injunction sought by the wife and the second named respondent, but opposed any order for costs or if the Court were of the view that there were circumstances justifying an order for costs, that those costs be  party and party costs rather than indemnity costs.  

Background

1. C Pty Ltd was established by the husband and wife in 2004. C Pty Ltd has 200 issued shares which are beneficially held by T Pty Ltd. T Pty Ltd has 100,000 issued shares of which 3,347 are held by the second named respondent, as trustee of S Super Fund and the balance are held by the C Trust Pty Ltd as trustee of the C Trust. 

2. On  30 April 2019 Johns J made the following order:

   Until further order the Husband be restrained by himself, his servants and agents from exercising or purporting to exercise any decision making authority in relation to C Pty Ltd, T Pty Ltd or C Trust Pty Ltd, including in relation to C Pty Ltd’s day to day operations and management of staff members of C Pty Ltd and the wife be permitted to make any such decisions historically reserved for the Husband, on the Husband’s behalf.

3. On 7 October 2019 orders were made for the sale of C Pty Ltd. Notwithstanding those orders the second named respondent deposes that he first became aware of the Supreme Court proceedings at 9.35 am on 28 November 2019, when Gadens Lawyers (“the second named respondent’s solicitors”) were served with a copy of the husband’s trial Affidavit filed 28 November 2019.

4. At 10.11 am on 28 November 2019, Hargreaves Family Lawyers (“wife’s solicitors”) were served with a copy of the husband’s trial Affidavit in which he deposed at paragraph 92 as follows:

   Specialists and C Pty Ltd is filing a Supreme Court proceedings against Mr Hellis and Mr U to recover the losses caused by their actions and suffered by T Pty Ltd and C Pty Ltd as a result (as per the original).

5. Upon receipt of the husband’s trial Affidavit, the wife instructed her solicitors to write to Madgwicks (“the husband’s solicitors”) advising them that she did not consent to proceedings being commenced by or on behalf of C Pty Ltd or T Pty Ltd in another jurisdiction, seeking confirmation by 4.00 pm that day that the husband would not commence Supreme Court proceedings and further advising that failing receipt of that confirmation, she had instructions to issue an urgent application and would be seeking indemnity costs.

6. At 3.56 pm on 28 November 2019, both the wife’s solicitor and the second named respondent’s solicitors received an email from the husband’s solicitor to the effect that a Writ and Statement of Claim had been mistakenly filed that morning and as it had been sealed could not be withdrawn. That letter also advised that the husband would be filing an urgent application in this Court seeking to vary the order made by Johns J on 30 April 2019, to allow the husband to proceed in the Supreme Court. Catherine Ballantyne, the solicitor having the conduct of the matter on behalf of the husband’s solicitor provided her undertaking that she would not to take any further steps in the Supreme Court proceedings until the husband’s application for variation of the orders made by Johns J had been heard and determined and that in the event that this Court did not accede to the husband’s application, her undertaking to forthwith dismiss the Supreme Court proceedings.

7. By way of further background and relevant for the purposes of this application, at the conclusion of the hearing in this Court on 3 September 2019, the husband stood outside the room in which the second named respondent was conferring with his legal practitioners and held up a piece of paper on which he had written the words “Supreme Court”. 

8. As a consequence of the husband’s conduct on 3 September 2019, the second named respondent solicitor wrote to Morgan Legal who were acting for the husband at that time confirming that the second named respondent had been joined as a party to the proceedings on 18 December 2018, following a concession being made by counsel for the husband to the effect that the Family Court of Australia (“the Family Court”) was the most appropriate forum and advising that as the matter was already before this Court, in the event that the husband commenced proceedings in any other court, the second named respondent would file an urgent application for an anti-suit injunction and seek an order for indemnity costs.

9. The wife also instructed her solicitors to write to the husband’s solicitors confirming her instructions to join in any application for an anti-suit injunction and similarly seek an order for indemnity costs. 

10. On 4 September 2019, the husband’s solicitors sent a letter to the solicitors for the wife and the second named respondent advising that “your letters are noted and our Client has been cautioned.”

11. On 29 November 2019, the wife’s solicitors forwarded a letter to the husband’s solicitors advising that they had attended at the Family Court that day to file an urgent application and enclosing unsealed copies of the Application in a Case and the Affidavit sworn by the wife. They further advised that they were awaiting a date and would serve sealed copies of the application and the Affidavit upon the husband’s solicitors as soon as they were returned by the Court. The application was sealed by the court on 3 December 2019 and returnable on 11 December 2019.

12. On 4 December 2019, the husband’s solicitors wrote to the solicitors for the wife and the second named respondent advising (inter alia) as follows:

    We refer to the application returnable on next Wednesday 11 December 2019.

    We write to inform you that today the Supreme Court has allowed the proceeding to be discontinued. In light of my email of 28 November 2019 undertaking not to take any further steps in the Supreme Court (including service) until the issue was heard and determined by the Family Court, we consider that the application made by the wife was premature and unnecessary.

    We also confirm that we have been instructed to file a cross application seeking that order 6 of the orders made on 30 April 2019 be varied to allow the Husband to proceed with a Supreme Court proceedings. Given that the hearing of this issue is likely to take up to a day of the Court’s time, we consider that on Wednesday (or before if consent orders can be agreed) there should be timetabling orders made for all parties to file material and the matter listed for a full day.

13. On 6 December 2019 the wife’s solicitors replied as follows:

    We refer to the letter from Madgwicks of 4 December 2019, and the reply of Gardens Lawyers of 6 December 2019.

    The Application in a Case brought by our client was not premature. Notwithstanding the Orders made in the Family Court of Australia at Melbourne, by consent, on 30 April 2019 (the Orders), and notwithstanding that the issue of the appropriate forum and jurisdiction having been agreed before the Honourable Chief Justice Alstergren on 18 December 2018, Mr Banbury sought fit to commence proceedings in the Supreme Court of Victoria on behalf of T Pty Ltd and C Pty Ltd.

    Our client is entitled to issue an Application in a Case to enforce the Orders. She otherwise echoes the comments made on behalf of Mr Hellis in the correspondence from Gadens Lawyers.

    In circumstances where Mr Banbury has now remedied the contravention of the Orders by discontinuing the Supreme Court proceedings, we hold instruction to withdraw our clients’ Application in a case on the basis that Mr Banbury confirms (and pays) by 12.00 pm on Monday 9 December 2019:

    1.That he will not file proceedings in the Family Court of Australia seeking to discharge or vary paragraph 6 of the Orders; and

    2.That he will pay our client’s solicitor client costs of $4,500 to our client’s bank account, by 12.00pm on Monday 9 December 2019:

    ….

    If we do not hear from you by 12.00pm on Monday, our instructions are to proceed to the interim hearing on Wednesday, 11 December 2019 at which time our client will seek those Costs, including the costs of Counsel, against Mr Banbury in accordance with paragraph 5 of her Application in a Case.

14. Paragraph 5 of that the wife’s Application in a Case seeks an order for costs on an indemnity basis.

15. The letter from the second named respondent’s solicitors referred to by the wife said inter alia as follows:

    Our client does not agree that it is appropriate for orders to be timetabled with respect to the determination of the issues to be determined at the Interim Hearing. The Interim Hearing should proceed as listed, noting the following:

    1.The issues pertaining to Ms Pelton’s Application in a Case filed on 3 December 2019 (Application) (emphasis in original) were enlivened by Mr Banbury’s giving notice of having issued proceedings in the Supreme Court of Victoria in his Affidavit filed in the Family Court of Australia on 28 November 2019.

    2.Ms Ballantyne’s email of later that day advised that Mr Banbury would shortly be bringing his own urgent application in the Family Court of Australia in relation to the same substratum of facts.

    3.The filing of an application to bring the Supreme Court of Victoria proceedings to the attention of the Family Court of Australia as soon as possible was clearly necessary, particularly so as to avoid any potential delay that could flow-on to the Final Hearing listed to commence in the Family Court of Australia on 28 January 2020.

    4.Had the Wife not filed an urgent application to bring these matters to the attention of the Family Court of Australia, our client would have done so.

5.The Family Court of Australia has granted an abridgment of time to determine the Application on 11 December 2019, such is the seriousness of the situation.

6.We do not agree that a full day of the Court's time will be required for the determination of submissions made on behalf of each of the parties.

7.Our client’s material in response to the Application will be filed and served this afternoon, and we would expect Mr Banbury to be filing his material within the same timeframe, given the contents of both his most recent Affidavit and Ms Ballantyne's email of 28 November 2019.

Should Mr Banbury truly wish to avoid an unnecessary hearing in the Family Court of Australia on 11 December 2019 together with all the attendant cost, it is open to him to consent to orders to the effect that he be restrained by injunction by himself, his servants and agents both in his personal capacity and in any other capacity (as an officeholder, shareholder or otherwise) that he may hold in C PTY LTD ACN … (C Pty Ltd), T PTY LTD ACN … and/or C TRUST PTY LTD ACN … from instituting and/or prosecuting proceedings by or on behalf of C PTY LTD, T PTY LTD and/or C TRUST PTY LTD in the Supreme Court of Victoria or any other Court except for the Family Court of Australia in proceeding no. MLC10051/2018.

If having discontinued the Supreme Court of Victoria proceedings, Mr Banbury now seriously intends to pursue the making of an application to the Family Court of Australia seeking that Orders previously made by that Court restraining Mr Banbury be varied such that he may institute proceedings against our client in the Supreme Court of Victoria (or indeed, in any other Court), then our client will seek the Family Court of Australia make Orders in the above terms. Our client will additionally be seeking indemnity costs against Mr Banbury, at which time our client will produce a copy of this letter and the previous correspondence exchanged between the parties relating to these issues.

1. Although after the close of business on 10 December 2019, the wife’s solicitors received a letter from the husband’s solicitors with respect to the sale of a motor vehicle, there was no reference to or any response to the wife’s offer.

Legal Principles

1. There is a general principle that each party to proceedings in this court shall each bear their own costs. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”). However s117(2) of the Act provides that the court may make such order for costs as it considers just if it is of the opinion that there are circumstances that justify it doing so.

2. Section 117(2A) of the Act sets out the matters the court must have regard to in determining what if any order for costs it should make. Those matter are as follows:

   (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.

3. There is also a general principle that when the court makes an order for costs that those costs be payable on a party and party basis and that the court “should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying a departure should be of an exceptional kind”   Kohan and Kohan (1993) FLC 92-340 at 79,614. In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 at page 233 (“Colgate-Palmolive”) Shepherd J having considered the earlier authorities said that there should be some “special or unusual feature in the case to justify the court in departing from the ordinary practice.”  

4. In Munday v Bowman (1997) FLC 92-784 at 84,660 Holden CJ referred to various examples of circumstances which might justify a departure from the general principles discussed by Shepherd J in Colgate-Palmolive as follows:

   a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success.  In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected MeatsPty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397)

   b)Making allegations of fraud, knowing them to be false, and the making of the relevant allegations of fraud (see Fountain Selected Meats Pty Ltd (supra).

   c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, (unreported, Federal Court of Australia, 3 May 1991)).

   d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty Ltd v Westpac banking Corporation (unreported, Federal Court of Australia, 5 march 1993)).

   e)An imprudent refusal of an offer to compromise.

Discussion

1. None of the parties in this case are in receipt of Legal Aid. Although none of the counsel made submissions directed to the parties financial circumstances, I refer to my reasons already delivered this day with respect to this issue. I am satisfied that there is nothing about the parties’ financial circumstances that would militate against an order requiring the husband to pay the costs of the wife and/or the second named respondent.  

2. Counsel for the husband submitted, the Supreme Court proceedings having mistakenly been filed, that the husband had not wilfully disobeyed the order made by Johns J on 30 April 2019.  Although reference was made to the large number of documents provided to the husband’s solicitor by his previous solicitor suggesting that the mistake may have been made by the husband’s solicitor, the letter from the husband’s solicitor did not indicate and counsel for the husband had not been given specific instructions as to either what that mistake was or whose mistake it might have been. Counsel for the husband submitted that in these circumstances the appropriate course for the Court to take would be to reserve the costs for determination at the final hearing giving the husband and/or his solicitor the opportunity to file an Affidavit with respect to this issue.  This is a discreet application and in circumstances where the husband is legally represented and I am satisfied had sufficient time to file answering material had he chosen to do so, in my view the proper course is for the Court to determine the question of costs.

3. In any event, whether or not the husband’s solicitors were aware of the order made by Johns J on 30 April 2019, the husband consented to that order and I am satisfied, having regard to the history of these proceedings and the Affidavits he filed, was aware of his obligations pursuant to the order. The husband in his trial Affidavit, which I note was prepared by his current solicitor, makes his intention clear and it makes no mention of any application to vary the order made by Johns J. It is reasonable to infer in these circumstances that the husband instructed his solicitors to institute the proceedings in the Supreme Court notwithstanding the order made by Johns J restraining him from exercising or purporting to exercise any decision making authority in relation to C Pty Ltd or T Pty Ltd. I am also satisfied that it would have been clear to the husband based upon the correspondence passing between his then solicitor and the solicitors for the wife and the second named respondent that if he did so, that he would face an urgent application for an anti-suit injunction.

4. Counsel for the husband also submitted that given the husband’s solicitor’s undertaking, the wife’s application was premature and that the orders sought by the wife and the second named respondent were superfluous having regard to the order made by Johns J. The husband was on notice as to what would occur if he did seek to institute proceedings in another jurisdiction and yet he went ahead and did so. Significantly in my view, the husband had recently changed solicitors and this was not the first time he had done so. His current solicitors undertaking would in these circumstances have provided little reassurance to the wife and the second named respondent. In circumstances where the husband had already ignored the order made by Johns J, I do not accept as submitted by counsel for the husband that the orders sought by the wife and the second named respondent were superfluous. In my view they were entitled to seek orders in specific terms leaving in no doubt that the husband was restrained from bringing any further proceedings.

5. Finally, I do not accept as submitted by counsel for the husband that the wife and the second named respondent should have known that in circumstances where no application had been filed, the husband was not intending to proceed with an application to vary Johns J’s order in order to pursue an application in the Supreme Court and that in those circumstances the hearing before me was not necessary. The letter from the wife’s solicitor’s dated 6 December 2019 made it clear that the wife would withdraw her application upon the husband confirming that he would not file proceedings in the Family Court seeking to discharge or vary Johns J’s order. There was no reply to this letter and it is common ground that the wife solicitors were not advised that the husband would not be filing an application seeking to vary the order until after the close of business on the day before the hearing.

6. The solicitor for the second named respondent similarly wrote to the husband’s solicitor on 6 December 2019 advising that the hearing could be avoided if the husband were to consent to an order restraining him from instituting proceedings in any court except this court. Although the husband ultimately consented to an order in these terms he did not respond to the offer made by the second respondent to resolve the matter without the need for a hearing.

7. There are in my view circumstances in this case which justify the Court making an order for costs and that those circumstances are of an exceptional nature.  Counsel for the wife referred me to the Full Court decision of Re Wilcox; Ex parte Venture Industries Pty Ltd and Others (No 2) 72 FCR 151. In that case Cooper and Merkel JJ referred to (at page 156) what they described as the irreconcilable objectives of “protecting access to justice by exposing an unsuccessful litigant in the usual course to an order for scale costs on a party and party basis” and “relieving a successful litigant from the burden of costs which that litigant should not have been required to incur” [concluding that it is these and other policy factors which govern the court’s discretion to depart from ordering costs on a party and party basis and which underlie the principles enunciated by Shepherd J in Colgate-Palmolive.

8. It is hard to see how in circumstances where having acceded to the jurisdiction of this Court and an order having been made restraining him from exercising any decision making authority in relation to C Pty Ltd and/or T Pty Ltd, that proceedings having been filed in the Supreme Court contrary to that order, even if that was my mistake, he could not have resisted the offers of compromise made by both the wife and the second named respondent. Or for that matter in circumstances where the final hearing is to commence in this Court on 28 January 2020, the husband has filed his Amended Response and his trial Affidavit and the basis of any proceedings in the Supreme Court are part of the matters to be ventilated in this court, that he, properly advised would have sought to vary the order made by Johns J, so as to enable him to bring proceedings in another court. And when put on notice that any such application would be opposed and confirmation sought that it would not be pursued, he did not indicate that he would not be pursing that application.

9. In all of the circumstances, I am satisfied that the wife and the second named respondent should not have to bear the burden of the costs they have been required to incur in this case, as a consequence of the husband’s conduct with respect to the institution of the proceedings in the Supreme Court and the way in which he has conducted himself in relation to the application which followed and that an order for costs on an indemnity basis is justified. Both the wife and the second named respondent have signed a Costs Agreement with their respective solicitors and I have been as required by the Family Law Rules 2004 (Cth) (“the Rules”) provided with a copy of those agreements. I have also been provided with a schedule of the costs they each claim.

10. Rule 19.18 of the Rules provides for the court to make and order for a specific amount, as assessed on a particular basis, in accordance with the method specified in the orders or in accordance with Schedule 3 of the Act. These proceedings will soon be complete and I am satisfied that I should make an order for a specified amount rather than the parties being potentially left with an ongoing dispute as to the quantum of costs. I am satisfied that the costs claimed by the wife in relation to this application on the basis of the costs agreement she has signed are reasonable and propose to make orders requiring the husband to pay her costs fixed in the sum of $14,088. I am also satisfied that the second respondents costs calculated in accordance with the costs agreement he has signed are reasonable save that I propose to only allow 4 hours preparation. Although counsel for the wife only allowed for 3 hours preparation I am mindful that he is somewhat more familiar with the matter than counsel for the second named respondent. On this basis, I propose to order that the husband pay the second named respondent’s costs fixed in the sum of $14,274.

11. None of the parties made any submissions with respect to when those costs should be paid. Cost are usually immediately payable unless provision is made in the order for time to pay. I have already discussed this issue in my reasons delivered this day with respect to the costs of the wife’s application for a sale of C Pty Ltd and in all of the circumstances for consistency I propose to make orders in the same terms with respect to the time for payment.  

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 17 January 2020.

Associate: 

Date: 17 January 2020