Safi & Rafiq (No 5)
[2024] FedCFamC1F 117
•5 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Safi & Rafiq (No 5) [2024] FedCFamC1F 117
File number: SYC 436 of 2022 Judgment of: CAMPTON J Date of judgment: 5 March 2024 Catchwords: FAMILY LAW – COSTS – Where the wife seeks costs pursuant to s 117 of the Family Law Act 1975 (Cth) of the husband’s Application for Review of a registered arbitral award on an indemnity basis – Where the husband did not make submissions as to the costs order – Where the husband was placed on notice that his relief in his Application for Review and Amended Application for Review was likely incompetent and was provided with three opportunities to amend – Where the husband did not adequately amend his relief sought – Costs ordered in a fixed sum. Legislation: Family Law Act 1975 (Cth) ss 13E, 13J, 13K, 45A, 79, and 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.13 and 12.17
Cases cited: Graham & Squibb (2019) FLC 93-892; [2019] FamCAFC 33
Harris & Dewell (No 2) (2018) FLC 93-863; [2018] FamCAFC 180
Munday v Bowman (1997) FLC 92-784
Safi & Rafiq (No 2) [2023] FedCFamC1F 917
Safi & Rafiq (No 4) [2024] FedCFamC1F 49
Safi & Rafiq [2023] FedCFamC1F 692
Sfakianakis& Sfakianakis (2019) 59 Fam LR 419; [2019] FamCAFC 54
Division: Division 1 First Instance Number of paragraphs: 30 Date of last submission/s: 16 February 2024 Date of hearing: Determined in chambers Place: Sydney Solicitor for the Applicant: Benchmark Conveyancing Lawyers Solicitor for the Respondent: Double Eight Legal ORDERS
SYC 436 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SAFI
Applicant
AND: MR RAFIQ
Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
5 MARCH 2024
THE COURT ORDERS THAT:
1.The husband pay the wife’s costs in the fixed sum of $62,500 within 21 days of the date of this order.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Safi & Rafiq has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
These reasons determine the application for costs of Ms Safi (“the wife”) of and incidental to:
(a)The Application in a Proceeding of Mr Rafiq (“the husband”) filed 31 July 2023 seeking that the wife’s Application to register an arbitral award be dismissed. The husband’s application was dismissed and the arbitral award registered on 22 August 2023. These reasons assume familiarity with that judgment (see Safi & Rafiq [2023] FedCFamC1F 692); and
(b)The Application in an Arbitration pursuant to ss 13J and 13K of the Family Law Act 1975 (Cth) (“the Act”) of the husband filed 19 September 2023, as amended 8 November 2023, seeking to vary or set aside a registered arbitral award (“the Award”). The husband’s applications for review were summarily dismissed on 8 February 2024. These reasons assume familiarity with that primary judgment (see Safi & Rafiq (No 4) [2024] FedCFamC1F 49).
For the reasons that follow, the husband is ordered to pay the wife’s costs fixed in the sum of $62,500 within 21 days.
BACKGROUND
The husband was born in 1953 in Country O and is 70 years old. The wife was born in 1967 in Country Q and is 56 years old. They married in 2004 and separated on 2 December 2020. They are not yet divorced. Their child, X was born 2006 and is currently 17 years old. X and the wife live in Australia. The husband lives in Country B.
The wife commenced proceedings in the Federal Circuit and Family Court of Australia (Division 2) seeking orders for property adjustment pursuant to s 79 of the Act. By way of a Response to an Initiating Application filed on 8 March 2022, the husband sought different orders as to the adjustment of property. On 22 November 2022 a consent order was made pursuant to s 13E of the Act referring the totality of the matter to arbitration and transferring it to the Federal Circuit and Family Court of Australia (Division 1). The arbitration was conducted by Mr C on 26 and 27 April 2023. The Award was made and published on 21 June 2023. The Award provided for the wife to receive 57.5 per cent of the property of the parties, and for the husband to received 42.5 per cent.
Orders were made registering the Award on 22 August 2023. On 19 September 2023, the husband filed an Application in an Arbitration for review of the Award and for a stay of the enforcement of the Award until determination of the review. The stay was determined on 24 October 2024 (see Safi & Rafiq (No 2) [2023] FedCFamC1F 917). It was partially successful on condition. Additional orders were made that permitted the husband to amend his Application in an Arbitration.
The husband filed an Amended Application in an Arbitration on 8 November 2023. A hearing of that Amended Application occurred on 6 February 2024. Reasons were delivered on 8 February 2024. Findings were made that the husband had been afforded three opportunities to amend his application, that his ss 13J and 13K reviews as amended had no reasonable prospects of success and that the husband had failed to identify a competent order he would seek should he be successful in reviewing the Award. Orders were made pursuant to s 45A of the Act on 8 February 2024 that the husband’s Application in an Arbitration, as amended, be dismissed. Other orders were made:
3. On or before 15 February 2024 the wife file and serve any minute of order as to costs, affidavit in support thereof and written submissions of no more than three pages.
4. In the event the wife complies with Order 3, the husband on or before 22 February 2024 file and serve any minute of order as to costs, affidavit in support thereof and written submissions of not more than three pages.
5. The costs judgment is otherwise reserved to chambers.
THE RELIEF SOUGHT AS TO COSTS
In a Response to an Application in an Arbitration filed 22 November 2023, in addition to seeking that the husband’s Amended Application in an Arbitration filed 8 November 2023 be dismissed, the wife also sought for the husband to pay her costs as assessed or agreed. The wife in the costs application relied upon her affidavit in support of her Response filed on 22 November 2023 and on an affidavit of her solicitor filed 16 February 2024.
Pursuant to Order 3 made 8 February 2024, on 16 February 2024 the wife filed an affidavit and a document entitled “Itemised Costs Accounts” containing a minute of order and written submissions, seeking:
Orders Sought
3.That the Wife be granted leave to rely upon these written submissions, drafted in excess of the orders of 8 February 2024.
4.The Respondent Husband pays the Applicant [wife’s] costs on the indemnity basis fixed in the sum of $70,641.00.
5.In the alternative, the Respondent Husband pay the Applicant Wife’s costs on the ordinary basis (but on a fixed sum) of $52,980.75.
The husband did not file any material in accordance with Order 4 made 8 February 2024.
LEAVE TO RELY ON THE WRITTEN SUBMISSIONS
Order 3 made 8 February 2024 required the wife’s minute of order as to costs, affidavit in support thereof and written submissions of no more than three pages to be filed on or before 15 February 2024. The wife’s material was filed one day out of time. The written submissions were six pages in length.
In circumstances where the husband has not filed any material in response as to costs pursuant to Order 4 made 8 February 2024, I am not satisfied that any prejudice is occasioned by granting the wife leave to rely on her material as filed. The wife is granted leave to rely on her affidavit and document entitled “Itemised Costs Accounts”, and her solicitors affidavit filed 16 February 2024, in support of her application for costs.
THE LAW
The relevant principles as to costs are well settled. While the starting position established by s 117(1) of the Act is that each party pays their own costs, s 117(2) allows the Court to make such orders as to costs as it considers just if there are circumstances which justify it doing so. In considering what order for costs, if any, should be made, the Court is required to have regard to the matters set out in s 117(2A) of the Act and give weight as it considers appropriate to any relevant factor. It is well settled that no single factor in s 117(2A) has priority, nor must more than one factor be satisfied. Rather, any one factor may be sufficient.
The wife bears the onus to establish circumstances which justify departing from the position that each party pay their own costs, for the making of a costs order in her favour. If the wife establishes there are circumstances justifying a costs order, the next consideration is on what basis should costs be paid.
The Full Court has made clear that it is unnecessary to spell out detailed reasons for decisions in costs matters. I shall refer to such s 117(2A) matters as are relevant and engaged here.
CONSIDERATION
Pursuant to the Award, each party has the benefit of property of not dissimilar value, in the range of $922,000 to the husband and $1,247,000 to the wife. The wife submits that the husband has not, as required by paragraph 4 of the Award, paid to her the determined adjusting sum of $128,499. She has the sole care and responsibility of X. The husband’s legal fees are being paid “from an unknown source”. The parties’ financial circumstances are a factor to be given some weight.
The wife identified that “all of the husband attempts to object to the registration of, set aside of and/or vary” the Award have been wholly unsuccessful. I accept that submission.
The unsuccessful objection to registration of the Award was misconceived and doomed to fail. The summary dismissal of the husband’s Application for Review was because it had no reasonable prospect of success. As constructed, his review applications were also misconceived. These considerations, in and of themselves, are a very significant, if not determinative, factor in establishing a justifying circumstance to order the husband pay the wife’s costs.
On 2 February 2024, the wife wrote the husband by way of offer requesting that the husband withdraw his Further Amended Application in an Arbitration, or that he pay the wife’s costs “thrown away” by reason of the amendment. By way of response on 5 February 2024, the husband’s solicitor indicated that they would be relying on the Further Amended Application.
I find that for the above reasons, the wife has established circumstances which justify departing from the position that each party pay their own costs and the making of a costs order in her favour.
THE BASIS OF COSTS TO BE PAID – INDEMNITY OR ON AN ORDINARY BASIS - FIXED OR AS ASSESSED OR AGREED
An order for indemnity costs is a significant departure from the normal standard and requires something exceptional (see Harris & Dewell (No 2) (2018) FLC 93-863). Holden CJ in Munday v Bowman (1997) FLC 92-784. (“Munday v Bowman”) provided some examples of circumstances that might justify the awarding of indemnity costs being:
(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…
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud…
(c)Evidence of particular misconduct causing loss of time to the court and to other parties…
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions…
(e) An imprudent refusal of an offer to compromise.
By way of email on 1 August 2023, the wife’s solicitors placed the husband on notice that his Application in a Proceeding objecting to the registration to the Award was “both procedurally and legally unsound”. It further placed him on notice that they would “rely on this correspondence in support of an application for costs against him”. I accept that it is uncontroversial that the husband has brought multiple versions of his applications that were “doomed to fail”, that these applications have delayed the wife “from obtaining the fruits of the judgment”, and that they have been at a significant cost to her in unnecessarily incurred additional legal fees. The wife submitted that on that basis, the costs should be paid on an indemnity basis. These matters echo what was said in Munday v Bowman, being a circumstance where the husband knew, or ought to have known, that his relief as sought had no prospect of success, and accordingly his continuation may be attributed to an ulterior motive or was due to wilful disregard of advice.
The absence of competence of the husband’s application objecting to registration of the Award and seeking review of the Award once registered was repeatedly outlined and then highlighted in the series of reasons for judgment as delivered and by way of notations to orders. He did not seize the indulgences provided to amend his applications to rectify their deficiencies. I find that this implies his undue prolongation of a case by groundless contentions, as was said in Munday v Bowman.
Each of the above factors ground an exercise of discretion to award indemnity costs in favour of the wife. However, pursuant to r 12.13(4) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), a party applying for costs on anindemnity basis must inform the Court if that party is bound by a costs agreement in relation to those costs and the terms of that agreement. The wife has no done so. This failure of a mandatory requirement prevents the wife from achieving an order for indemnity costs.
I accept that the wife incurred has costs of $70,641 responding to the husband’s various applications since he filed his first Application in a Proceeding on 31 July 2023 seeking that the wife’s Application to register the Award be dismissed. She submitted that she did not put her “bills” into evidence “so as to not waive privilege”, noting that the husband’s time to appeal had not yet expired. She further submitted that to scale her costs would require additional time in circumstances where there are six months of invoices to itemise. By way of comparison, the husband’s costs notice filed 5 February 2024 records that his costs to 2 February 2024 are $172,678. This appears to include the costs of the arbitration. It estimates costs of $20,900 for the hearing on 6 February 2024. Broadly, the wife’s costs are not dissimilar to those of the husband. The husband had the opportunity to file material putting into issue the value of indemnity and ordinary costs sought by the wife. He did not. Implicitly, he accepts both values as claimed as reasonable.
I accept that there is no suggestion that the costs incurred by the wife are other than fair and reasonable in circumstances where there have been three judgments in these arbitration registration and review proceedings. The observations as recorded in Sfakianakis& Sfakianakis (2019) 59 Fam LR 419 are apposite to the circumstances in this case:
10It is, however, a mistake to think that if a costs order is made, that order can only be on a party and party basis or on an indemnity basis. The words “such order as to costs ... as the court considers just” permit the Court to fashion an order that is apt to the circumstances. One such well-known example is assessment on a trustee basis, which is more generous than party and party costs, but falls short of an indemnity. Orders for a partial indemnity or for a particular period are obvious possibilities. The Court may also fix costs in a particular sum, taking account of all relevant circumstances; that type of order too is neither one for party and party costs nor an indemnity costs order.
Rule 12.17(a) permits the Court to adopt a course to fix costs, although it is accepted that it is entirely a matter of discretion. I am further minded that in this case, in accordance with the wife’s submission, to order costs in a fixed sum avoids the expense, delay and aggravation arising out of an assessment of costs (Graham & Squibb (2019) FLC 93-892 at [92]).
The husband knew, or ought to have known by way of the calibre of his legal representatives, that continuing to press his multiple applications would likely lead to an order for costs against him. Litigants in this Court have an obligation to engage in litigation responsibly. He has not done so. Such election ought to be reflected in the quantum of the costs ordered.
Taking account of all relevant circumstances, it is just that the order for costs be neither one for party and party costs nor for indemnity costs. I am satisfied that this is a case in which it is appropriate to fix the costs of the wife in the sum of $62,500.
TIME TO PAY THE COSTS ORDERED
The wife did not specify a period for costs, if ordered, to be paid. The costs shall be ordered to be paid within 21 days.
For all the above reasons I made the orders as set out herein.
I certify that the preceding thirty (30) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 5 March 2024
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