TON & VU
[2020] FamCA 957
•18 November 2020
FAMILY COURT OF AUSTRALIA
| TON & VU | [2020] FamCA 957 |
| FAMILY LAW – COSTS – litigation funding – where the matter is listed for final hearing with respect to parenting matters and the threshold issue as to the Court’s jurisdiction to make orders pursuant to s 90SM – where the applicant seeks that the respondent pay to her the sum of $250,000 to cover the costs of her legal fees – where the respondent seeks the applicant’s application be dismissed – where the applicant’s claims as to the duration of the parties’ de facto relationship and her entitlement to make a claim pursuant to s 90SM are arguable and well-founded – where it is just that there be an interim costs order made pursuant to s 117 to ensure that the applicant is represented at the final hearing – order that the respondent pay to the applicant the sum of $85,000 to cover the costs of counsel fees at the final hearing. |
| Family Law Act 1975 (Cth) ss 90SF, 90SM, 117 |
| Parker v Parker (1992) 16 Fam LR 458 Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4 Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 144 |
| APPLICANT: | Ms Ton |
| RESPONDENT: | Mr Vu |
| FILE NUMBER: | MLC | 7739 | of | 2019 |
| DATE DELIVERED: | 18 November 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Johns J |
| HEARING DATE: | 13 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Renwick |
| SOLICITOR FOR THE APPLICANT: | Lander and Rogers |
| COUNSEL FOR THE RESPONDENT: | Mr Dickson QC |
| SOLICITOR FOR THE RESPONDENT: | Xianyi Tan Barrister & Solicitor |
Orders
That within 14 days from the date of this order, the respondent pay or cause to be paid into the trust account of the applicant’s solicitors the sum of $85,000.00, which monies are only to be used to meet the applicant’s legal costs of these proceedings.
That the Application in a Case filed 24 September 2020 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 Ton & Vu 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 7739 of 2019
| Ms Ton |
Applicant
And
| Mr Vu |
Respondent
REASONS FOR JUDGMENT
Introduction
By Application in a Case filed on 24 September 2020 the applicant, Ms Ton, sought injunctive relief and orders for litigation funding in the sum of $250,000.
The respondent, Mr Vu, opposed that application and further sought that he be excused from filing a financial statement in accordance with orders directing him to do so made 12 June 2020.
Those applications were heard by me in a Judicial Duty List on 13 October 2020.
Following submissions by senior counsel and counsel, I ruled that an injunction ought be granted as sought by the applicant, to restrain the respondent from dealing with the net proceeds of sale of the property at B Street, Suburb C (“the Suburb C property”) pending final hearing. I also ruled that the respondent should file a financial statement in accordance with the orders made 12 June 2020.
Counsel for both parties confirmed that they would not require written reasons for judgment in respect of those determinations. It was agreed between senior counsel and counsel that they would draw and submit the form of the injunction to be made by the Court. Notwithstanding that agreement, that has not occurred, with each filing separate and differing forms of the order. Accordingly, the matter will be listed for further mention before me in order to resolve that aspect of the dispute.
These are my Reasons for Judgment with respect to the applicant’s application for litigation funding.
Background
The applicant, Ms Ton, is aged 35 and is a student. The applicant currently has the primary care of the parties’ child Z, who is aged 11.
The respondent, Mr Vu, is aged 45 and is a director of a number of entities.
The parties commenced cohabitation in 2009. The date of separation is disputed; the applicant deposes separation occurred in June 2019 whilst the respondent contends that separation occurred in August 2011.
It is common ground between the parties that in about April 2016 the respondent paid to the applicant the sum of $200,000, albeit that the reasons for that payment are disputed. The applicant deposes that that sum has been depleted and she is no longer able to meet her legal expenses.
These proceedings commenced upon the respondent filing an Initiating Application in the Federal Circuit Court of Australia on 11 July 2019 seeking parenting orders.
The applicant filed a Response to Initiating Application on 26 July 2019 seeking final parenting and property orders.
On 15 August 2019 the respondent filed an amended Initiating Application seeking a declaration pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”) that no de facto relationship existed between the parties after August 2011, and an order that the applicant’s application for financial relief be dismissed.
On 16 August 2019, Judge Carter made orders transferring the matter to this Court.
On 12 June 2020 the matter came before me for a First Day hearing. Trial directions were made providing for the filing of trial material, including a financial statement by both parties. The matter was listed before me for a four day hearing in respect of the contested parenting matters and the threshold issue as to the Court’s jurisdiction to make property orders, commencing 7 December 2020.
Material Relied Upon
The applicant relied upon the following material:-
· Further Amended Response to Initiating Application filed 24 September 2020;
· Application in a Case filed 24 September 2020;
· Affidavit of the applicant filed 24 September 2020;
· Affidavit of Lee Formica filed 24 September 2020; and
· Financial statement of the applicant filed 23 September 2020.
The respondent filed an affidavit in response to the applicant’s Application in a Case on 12 October 2020, the day before the hearing.
Orders Sought
The applicant pressed the following parts of her application:-
· That within 14 days of the date of these orders the respondent pay or cause to be paid to the applicant’s solicitors on record, the sum of $250,000 to be used on account of costs of the applicant in prosecuting her entitlements in these proceedings.
· That pending determination of the Court's jurisdiction to hear the respondent's application for relief pursuant to s 90SM, the respondent is restrained both personally and in his capacity as a director, shareholder and secretary of D Pty Ltd from dealing with, transferring or disposing of the net proceeds of sale of the real property situate at and known as B Street, Suburb C, upon settlement of the sale.
The respondent opposed orders in those terms and sought that the applicant’s Application in a Case be dismissed. Senior counsel for the respondent also sought that the respondent be excused from filing a financial statement in accordance with the trial directions made by me on 12 June 2020.
The Hearing
Both parties were represented by counsel at the interim hearing. The matter proceeded via Microsoft Teams and was conducted on the papers. Each party relied upon the material referred to above and their counsel’s oral submissions.
The onus of proof lies with the applicant and the standard of proof is the balance of probabilities. However, given the nature of the hearing, contentious facts cannot be determined without the evidence being properly tested. Accordingly, in determining the matter, I have relied upon only those facts which are agreed or not in issue.
Litigation Funding
The applicant sought litigation funding in the sum of $250,000 to fund her legal costs up to and including the final hearing, listed to commence on 7 December 2020 and proceed over four days.
That application is made pursuant to s 117 of the Act which provides:-
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
In determining what, if any costs order the court should make, s 117(2A) of the Act requires that it 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.
That the Court has power to make an order for litigation funding is not in dispute. The substantive proceedings concern parenting matters, the question of whether the parties were in a de facto relationship and if so, whether the applicant is entitled to an adjustment of property and periodic spousal maintenance.
The High Court in Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4 at 315 held:-
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.
The Full Court recently considered the circumstances in which the Court may make a litigation funding order in Salvage & Fosse (2020) FLC 93-966 (“Salvage”). That matter concerned the decision of the trial judge to make a litigation funding order in the sum of $100,000 in favour of an applicant seeking to set aside a cohabitation agreement and obtain a division of property.
The majority (Ryan and Aldridge JJ) confirmed at paragraph 8 of the judgment that even in matters where the operation of s 79 or its equivalent s 90SM are not yet enlivened because of the operation of the cohabitation agreement, “…s 117 of the Act empowers the Court to make such orders as to costs and is of sufficient width to empower the making of the order sought” by the applicant in the proceedings.
The issue for determination was what circumstances would invite the exercise of the power to make an interim costs order, particularly where such orders for costs may never be recovered or otherwise taken into account, as is the case in proceedings under ss 79 and 90SM of the Act.
The majority held that:-
[14]The critical question…is whether the applicant has “any real prospects of obtaining justice unless the order sought is made” (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant’s case and the effect of the order upon the respondent.
As to circumstances that might justify an order for costs or otherwise, the majority held:-
[15]It would not be just, for example, for the respondent to have to pay the legal expenses of the applicant, where the case to be taken was weak, fanciful or misguided or where the effect on the respondent of such an order would work an injustice. We do not consider it helpful, however, for there to be a need to identify the applicant’s case as strong, persuasive or such like to justify an order. That invites a descent into semantics and an artificial characterisation of the strength of the proposed proceedings. The consideration should be whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order.
…
In considering the application for litigation funding the majority found that it was essential in that case for the trial judge to have considered:-
·The quality and nature of the claim to set aside the Cohabitation Agreement;
·The likely result that would ensue if a subsequent property division was undertaken; and
·The likely costs of such a course.
The majority of the Full Court held that the trial judge had not undertaken that assessment as he was not asked to do so. As a result, that part of the appeal was allowed and the issue was remitted for rehearing.
The majority also confirmed that the fact that an interim costs order may never be repaid is not a bar to one being made; it is however, a consideration in determining whether it is just to make such an order.
Accordingly, having regard to the principles enunciated by the majority of the Full Court in Salvage, I must consider:-
·The nature and quality of the applicant’s claim that the parties were in a de facto relationship within the meaning of the Act;
·If a declaration were to be made that the parties were in a de facto relationship as contended by the applicant, what is the likely result of her subsequent property and maintenance claims;
·The costs of such a course and are such costs justified taking into account the orders that may be made in property proceedings;
·Whether any interim costs order could be taken into account, adjusted or reversed at the final hearing.
Discussion
Counsel for the applicant, relying on the majority judgment in the matter of Salvage, submitted that an interim order for litigation funding should be made in this case as a result of the following:-
·The strength of the applicant’s case that the parties were in a de facto relationship, thus enlivening the Court’s jurisdiction to entertain her application pursuant to s 90SM of the Act;
·The fact that the respondent holds substantial funds;
·The likelihood that the applicant will receive a significant property settlement;
·The failure of the respondent to disclose his financial circumstances;
·The need to ensure a “level playing field”, particularly in circumstances where the respondent has significant funds at his disposal, is represented by senior and junior counsel and where English is the applicant’s second language.
As to the threshold issue as to whether the parties were in a de facto relationship, the applicant’s evidence is that:-
·the parties commenced cohabitation in 2007 and their daughter was born in 2009;
·the parties had a brief separation between May and July 2012;
·in about December 2013 the parties and the child travelled to Australia for a holiday;
·a second separation occurred in early 2014 following the applicant learning that the respondent had a relationship with another person;
·in July 2015 the applicant contends that both parties and the child commenced living in Australia;
·the parties separated on a final basis in June 2019.
The applicant and the child of the relationship continue to live in Australia. Currently, the respondent provides periodic financial support to them by way of $6,500 per calendar month, which sum is made available to the applicant via a credit card facility. In addition, the applicant and the child live in a property owned by the respondent.
It is the applicant’s contention that the parties lived in Melbourne, Australia for more than one third of the period of the relationship, which based on the applicant’s evidence spanned a period of approximately 10 years.
Further, even if the applicant’s contentions as to the duration of the parties’ relationship are not accepted by the Court, the applicant contends that she has made substantial contributions to the relationship pursuant to s 90SM(4)(c) of the Act by way of her contributions to the welfare of the family constituted by the parties and their child. It is the applicant’s case that she has been the child’s primary care-giver for most of the relationship. Further, it is common ground that during the post-separation period, the applicant has been almost solely responsible for the welfare of the child, the respondent spending much of that post-separation period in China and spending no time with the child during that period.
It was also submitted on behalf of the applicant that having regard to the duration of the relationship, the fact that there is a child of the relationship and the significant contributions made by the applicant to the care and welfare of the child, that any refusal by the Court to permit her to seek orders pursuant to s 90SM of the Act would result in a serious injustice to her.
The respondent challenges most of the applicant’s contentions, both as to the duration of the cohabitation, the nature of the relationship and the care arrangements for the parties’ child. It is his evidence that the parties were in a de facto relationship from 2009 to August 2011. He alleges that the child lived with him and his mother in an apartment in China between July 2012 and mid-2014.
Whilst he concedes that the parties obtained a sub-class 163 visa to travel to Australia on 31 May 2013, he contends that the fact that the applicant, the respondent and the child were included in the same visa application was an administrative error.
Although the respondent concedes that the applicant travelled to Australia to live with him from July 2015 and that she travelled on the valid 163 visa, it is his evidence that the applicant did so to act as the child’s nanny and that she was remunerated for that role.
Whilst there is a significant dispute between the parties as to the nature of their relationship in Australia, the fact that there is a child of the relationship and that the applicant has had the primary care of that child for significant periods, are factors that are likely to weigh heavily in favour of the applicant’s claim that the Court’s jurisdiction to entertain her property application is enlivened. That position is bolstered somewhat by the fact that the parties travelled to Australia on the one visa and lived together in a shared household, albeit noting that it is the respondent’s contention that the applicant was there as a nanny and not as his domestic partner.
Having regard to all of those matters, and doing the best I can in circumstances where the evidence is yet to be tested, I am satisfied that the applicant’s contentions as to the existence of the de facto relationship and further her entitlement to make a claim pursuant to s 90SM are arguable and well-founded.
Turning then to the question of whether the applicant would have an entitlement to a property adjustment, the applicant submits that the respondent has substantial property interests. In support of that contention she relies upon the statement of assets held by him in Australia and submitted on his behalf in support of his visa application on 23 December 2016. That statement estimated the value of his assets in 2016 to be $6,739,894.41.[1]
[1] Applicant’s affidavit filed 24 September 2020, para 12.
Further, at paragraph 16 of her affidavit filed 24 September 2020, the applicant lists the respondent’s legal and equitable interests held by or on his behalf in Australia. She estimates the total value of his Australian interests to be approximately $9,920,541.03.
In addition to those interests, the applicant contends that the respondent holds significant assets in China and Hong Kong. She lists those interests at paragraph 17 of her affidavit and estimates their value to total approximately $33,828,304.
Further, at paragraph 21 of her affidavit the applicant deposes that she and the respondent hold on trust for the child three shops in E Street, F City China which have an estimated value of $5,032,143. The respondent does not challenge that evidence.
The respondent denies the applicant’s contentions as to the value of his interests. It is his position that the statement made by him in support of his visa application does not include his liabilities at that time and therefore is inaccurate. Nonetheless, he does not challenge his statement as to the value of his interests held in Australia as at the date of that statement in 2016. Further, he does not depose as to what his liabilities were at that time.
At paragraph 12 of his affidavit filed 12 October 2020, the respondent alleges that as at September 2015 he had borrowed a total of $3 million from his mother and further that he borrowed an additional $7.8 million from her in May 2017. At paragraph 13 of that affidavit he deposes that he repaid $3 million to his mother in October 2019.
The respondent discloses that he holds, either personally or through his entities, the following property interests:-
· The Suburb C property, which has an estimated value of $750,000 to $825,000;
· G Street, Suburb H, purchased by him in 2016 for $2.8 million;
· Property at 2 J Street, Suburb K (held by entities controlled by him), purchased in 2018 for $1.7 million;
· $1 million held in a Westpac Bank account;
· Property at 4 J Street, Suburb K, purchased in 2019 for $2.23 million.
In addition to the properties held by the respondent or his entities, he deposes that the parties’ daughter is the registered proprietor of the property at L Street, F City, China, currently valued at approximately $2.3 million. Further, he deposes that he holds the property at M Street, N City upon trust for the parties’ child. The applicant contends that that property is valued at approximately $11,062,681. The respondent provides no evidence as to that property’s purchase price (it having been purchased in 2012) nor its current value.
Senior counsel for the respondent conceded that based on the respondent’s affidavit the respondent has interests in property valued at approximately $8.4 million. He also submitted that the respondent has a loan from his mother in the sum of $7.8 million. The terms of the alleged loan from the respondent’s mother are not disclosed.
It is clear, even on the respondent’s own evidence that he has significant property interests in Australia. Further, his own evidence supports a finding that he holds on behalf of the parties’ daughter property interests in China and Hong Kong which also have substantial value. An issue for determination at any property hearing will be what, if any, is the extent of his liability to his mother. Absent a financial statement from the respondent it is difficult for the Court to assess the extent and value of the respondent’s property interests.
The respondent concedes in his affidavit that the applicant has been primarily responsible for the care of the parties’ child, particularly since December 2019 when he has been in China. The respondent also acknowledges that he has been providing accommodation for the applicant and the child as well as financial support for them.
Those matters are likely to be significant in the assessment of the applicant’s claim for property relief and spousal support.
The difficulty at this time with the respondent’s evidence is that nowhere does he articulate the identity and value of his assets and liabilities with any particularity.
The applicant contends that the respondent has refused to make disclosure and further that he has refused to comply with orders that he file a financial statement. It is her position that that approach has compromised her ability to particularise her claim. Given the nature of the respondent’s evidence to date, there is much force in that submission.
At paragraph 22 of her affidavit the applicant estimated the value of the respondent’s legal and equitable interests of which she is aware to be at least $46,264,916. At paragraph 28 of his affidavit the respondent denied that estimate but provided no evidence as to what he asserts to be the value of his interests.
The respondent has maintained a position to date that the nature and extent of his financial interests are irrelevant to the Court’s determination of the threshold issue; he has not complied with orders that he file a financial statement. As a result of that approach, the Court’s ability to assess the applicant’s property claim is compromised. The respondent is well-resourced, represented by senior counsel and solicitor. In contrast, absent an order for litigation funding the applicant will be unrepresented at the final hearing; were that to occur the Court’s ability to ensure that justice is done as between the parties will be inhibited.
On any view it would appear that the respondent has substantial assets and resources at his disposal. He concedes a significant property portfolio based in Australia. He also concedes that he has the sum of $1 million in a Westpac account. He also holds substantial properties in China and Hong Kong in which either he or the parties’ child has an interest.
The evidence of the applicant is that she is wholly reliant on the financial support provided by the respondent and that she lives in accommodation provided by him. As I have already observed, the respondent appears to have substantial property interests and an ability to access funds.
Having regard to those matters I am satisfied that if the applicant is permitted to proceed with her application for a property adjustment, given her contributions to the welfare of the family coupled with an assessment of the matters relevant to s 90SF(3) she is likely to have a compelling claim for a property division.
The applicant’s lawyer, Ms Formica deposes in her affidavit filed 24 September 2020 that the total cost of the parenting, threshold issue and property proceedings is estimated to be $250,000. Further, she deposes that that sum includes fees already incurred by the applicant totalling $104,719.
At paragraph 12 of her affidavit Ms Formica deposes that counsel’s fees, including senior counsel for the hearing listed in December 2020 are estimated to be approximately $107,200.
Further, at paragraph 14 of her affidavit she deposes that her firm is not prepared to act for the applicant without security for payment of costs and disbursements and the professional fees of counsel briefed in the matter. She confirms that the applicant is not eligible for a grant of legal aid.
It was submitted by senior counsel for the respondent that were I minded to make an interim costs order in favour of the applicant, such order should be limited to cover the reasonable costs of counsel for the applicant at the final hearing. It was submitted that approach was responsible and reasonable in circumstances where most of the parties’ trial material has already been filed. Hence the majority of the work necessary for the preparation for trial has already been completed. There is much force in that submission.
The applicant is placed in the invidious position of having to pursue her claims in circumstances where there is a significant power imbalance between the parties. She is a student dependent upon the respondent for her support. She also has primary responsibility for the care of the parties’ child.
To date, the respondent has not complied with orders that he provide a Financial Statement. In relation to the parenting matters, the respondent initially sought final orders that the child live with him, notwithstanding the fact that the applicant was and continues to be the child’s primary caregiver; that part of his application was only abandoned at the hearing before me on 12 June 2020. Those factors together with the respondent’s allegations with respect to the nature and duration of the parties’ relationship has cast a heavy burden on the applicant in the pursuit of her applications before the Court. On any view, given the apparent disparity in the parties’ financial circumstances, the playing field is not level.
Having regard to the above factors, I am satisfied that the applicant will have little prospect of obtaining justice without an order for litigation funding. This is so, notwithstanding the fact that there is a possibility that such order may not be capable of being taken into account, adjusted or reversed at the final hearing in the event that the respondent’s contentions with respect to the parties’ relationship are accepted.
Whilst I am satisfied that it is appropriate and just that there be an interim costs order to ensure that the applicant is represented at the final hearing, I am not persuaded that it is appropriate that that costs order be at the level sought by the applicant. In effect, the applicant is seeking an indemnity costs order to cover the totality of the proceedings. I am not satisfied that the evidence supports an order in those terms.
The reality is that much of the preparation for the final hearing has already been undertaken and completed; the applicant’s trial material has been filed and served. The principal concern raised by her solicitor and counsel is that the applicant have the ability to retain representation for the hearing. Ms Formica estimates the cost of counsel, including senior counsel to be approximately $107,000. That estimate makes allowance for four days preparation; given that the hearing is listed for four days, in my view such allowance is excessive.
Having regard to the complexity of the matter, including the factual dispute as to the nature and duration of the relationship, the fact that parenting issues remain on foot and that the evidence filed to date as to the respondent’s financial circumstances indicates that they are complex and extensive, in my view it is appropriate that the interim costs order be sufficient to ensure that the applicant has available to her, her counsel of choice for the final hearing. Accordingly, I am satisfied that the respondent ought pay to the applicant by way of litigation funding the sum of $85,000, which sum will enable the applicant to have senior and junior counsel represent her at the four-day hearing and provide additional funds for the preparation for that hearing.
I certify that the preceding seventy-five (75) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 18 November 2020
Associate:
Date: 18 November 2020
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Jurisdiction
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Remedies
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