Vincenzo and Vincenzo (Costs)
[2014] FamCA 476
•3 July 2014
FAMILY COURT OF AUSTRALIA
| VINCENZO & VINCENZO (COSTS) | [2014] FamCA 476 |
| FAMILY LAW – COSTS – Application by the husband for costs against the wife – Order that wife pay husband’s costs on a party/party basis |
| Family Law Act 1975 (Cth) ss 117(2), 117(2A) Woodley & Time and Anor [2008] FamCA 162 | ||
| APPLICANT: | Mr Vincenzo | |
| RESPONDENT: | Ms Vincenzo |
| FILE NUMBER: | MLC | 10204 | of | 2011 |
| DATE DELIVERED: | 3 July 2014 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | By way of written submissions filed the 18 February 2014 and 3 March 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Bartfeld QC |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Hevey |
| SOLICITOR FOR THE RESPONDENT: | Borchard Moore |
Orders
The wife pay the legal costs and disbursements of the husband in the sum of $27,230.76 in respect of the application in a case filed 16 December 2013 such costs to be paid within sixty (60) days of these orders.
All remaining and outstanding applications for the costs of or by the parties, not otherwise dealt with in these orders, are dismissed.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage senior counsel and counsel to attend.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Vincenzo & Vincenzo (Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT HOBART HOBART |
FILE NUMBER: MLC 10204 of 2011
| Mr Vincenzo |
Applicant
And
| Ms Vincenzo |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This is a cost application made by Mr Vincenzo (“the husband”) following orders being made on the 21 January 2014 and reasons being delivered by this Court on 7 February 2014. Each of the parties made written submissions in respect of costs.
Mw Vincenzo (“the wife”) is the applicant in the substantive proceedings for property and other orders which were commenced in November 2011 and are docketed to Bennett J. The wife is the respondent to the husband’s application for costs.
On the 16 December 2013 the husband filed an application seeking an order restraining the wife from instructing her solicitor, Mr Moore and her junior counsel, Mr Thompson. This application arose from the wife’s solicitor briefing Mr Ackman QC to represent her in various contexts. Mr Ackman QC had previously been briefed to provide advice to the husband and that circumstance was not apparent to either the husband or Mr Ackman QC until they met face to face at mediation. The husband did not press his objection in respect of the wife’s solicitor but was successful in restraining a continuation of the brief to Mr Thompson.
ORDERS SOUGHT
In his interlocutory application the husband sought orders that the costs be paid “by the wife and/or the firm trading under the firm name Borchard & Moore and or Mr Moore personally and/or Mr Thompson”. That application was not pressed by the husband.
In his written submissions filed the 18 February 2014 the husband sought orders that the Court “… fix the husband’s costs and make a gross sum costs order in the amount of $27,230.76” or in the alternative an order that the wife pay “such costs as may be assessed in default of agreement”.
In her response filed the 17 December 2013 the wife sought an order that the husband pay her costs of and incidental to the application. However, in written submissions filed on the 3 March 2014 the wife submitted that “having regard to the orders and reasons …, no costs order should be made on the conflict application”.
ISSUES
The costs are sought by the husband on a party/party basis. As a consequence the costs issue that this Court needs to determine is:-
a)Whether the wife should pay the husband’s costs of the application in a case filed by the husband on the 16 December 2014, and if so
b)Whether the wife should pay the costs of the application in a case filed by the husband on the 16 December 2014 on a fixed basis or as assessed in default of agreement.
BACKGROUND
In my substantive reasons[1] I set out the background which was:-
[1] Delivered 7 February 2014.
11.Senior counsel for the husband observed that there was little controversy as to the evidence before the Court.
12.In this case the husband had obtained a ‘second opinion’ in relation to the legal advice he was being provided in these complex proceedings. The husband had engaged Taussig Cherrie Fildes to act on his behalf in September 2011. In July 2012 the husband arranged with lawyers, other than Taussig Cherrie Fildes, to brief senior counsel to provide that second opinion. That senior counsel was Mr Ackman QC and on 31 July 2012 the husband had conference with senior counsel lasting about ninety minutes.
13.Sometime later the wife’s solicitors briefed Mr Ackman QC to act on behalf of the wife. Mr Ackman QC did not recall providing advice to the husband and accepted a brief. He appeared for the wife at a defended subpoena hearing before Registrar Sikiotis on 14 August 2013. The husband was not present on that day.
14.Mr Ackman QC also appeared for the wife before Bennett J at an interim hearing on 23 August 2013. That application was resolved by consent orders after negotiation with the parties.
15.Whilst the husband was present he did not see Mr Ackman QC until the consent orders were made and even then did not observe Mr Ackman QC as he was facing the Court.
16.The parties arranged for the Hon. Mr Peter Young to conduct a mediation to see whether some or all issues between the parties could be resolved. Mr Ackman QC was briefed to appear for the wife with Mr Thompson at the mediation.
17.On the day of the mediation the parties and their solicitors, junior counsel and senior counsel were together in a conference room and Mr Ackman QC made a comment to the effect that there may be some concern that he may have previously acted for one of the husband’s brothers. At that time the husband noted that Mr Ackman QC looked familiar to him.
18.Enquiries were made and Mr Ackman QC reviewed his records and determined that he had seen the husband in 2012. It is not in issue that Mr Ackman QC had no recollection of ever conferring with or providing advice to the husband and it was only when he checked his documents that he saw that he had advised the husband on 31 July 2012.
19.The evidence of Mr Ackman QC, which was not in issue, was that he returned to the mediation and advised the wife, senior counsel for the husband and the mediator of those facts.
20.Mr Ackman QC went on to say, and I accept, that he had not informed Mr Moore or Mr Thompson of any matter of fact or circumstance in relation to the husband’s case as he has no recollection of having acted for him.
21.The mediation continued with Mr Ackman QC remaining involved, with the consent of all parties, but that after the mediation concluded, Mr Ackman QC withdrew from the proceedings and no longer acts for the wife.
22.There is some dispute as to what happened next. The husband asserts in his affidavit that:-
… an agreement was reached (to which I consented) pursuant to which Mr Moore and Borchard Moore would continue to act for the wife on the condition they undertake not to brief or otherwise consult or engage Messrs Ackman and Thompson in relation to these proceedings (“the conflict agreement”). I consented to the conflict agreement on the wife’s representations … although I remained very concerned regarding Mr Moore’s conflicted position, I consider it less likely that he was affected by Mr Ackman’s conflict than was Mr Ackman’s junior counsel.
23.In relation to the same issue, Mr Moore says:-
6.The husband made it known at the mediation that Mr Ackman has previously given advice, the husband’s solicitors produced an ‘memorandum of agreement’. Annexed hereto and marked with the letters “BJM1” is a copy of the said memorandum. This memorandum was never signed or agreed to by me or the firm and to the best of my knowledge it was not agreed to by Mr Thompson, although Mr Ackman acknowledged that he would no longer represent the wife at the conclusion of the mediation.
24.This is not a determination which I need to make in respect of this matter. I am satisfied that, given the nature of confidentiality at mediation, that the mediation continued with Mr Ackman QC, Mr Thompson and Mr Moore continuing to represent the wife but without there being an acquiescence or agreement on the part of the husband that Mr Ackman QC, or for that matter Mr Thompson, could continue to act. It is clear that the husband, despite his concerns, acquiesced that Mr Moore should be entitled to continue to act for the wife.
25.After the mediation concluded the husband’s solicitors sent a letter to the wife’s solicitors. In that letter it was said:-
We confirm that [the husband] consented to your firm continuing to act for [the wife] on the basis that you undertake not to brief, accept advice from, or otherwise communicate with, Messrs Ackman and Thompson (or either of them) in relation to this matter. Please provide a written undertaking to that effect forthwith.
26.The effect of this letter was to acquiesce to the continuation of Mr Moore and his firm to act as solicitors for the wife but object (in a timely way) in relation to Mr Ackman QC and Mr Thompson continuing to accept briefs.
27.On 29 November 2013 the solicitors for the wife informed the husband’s solicitors that they intended to continue to act for the wife and that they would continue to brief Mr Thompson on behalf of the wife.
28.The reason for this seems to fall into a number of areas. Firstly, it was asserted that:-
(a) no information had been provided to Mr Thompson by Mr Ackman QC, at least in a conscious sense;
(b) that Mr Thompson had been briefed in this matter and had provided considerable legal advice and had spent considerable hours in respect of these proceedings; and
(c) the wife had expended considerable monies in relation to obtaining legal advice from both a junior barrister and solicitor.
29.The husband then sought orders restraining the wife from instructing the solicitors Mr Moore and his firm and restraining the wife from briefing Mr Thompson.
THE LAW
Section 117 of the Family Law Act 1975 (Cth) (“the Act”) sets out the general rule in relation to costs, that is, that each party to the proceedings should bear his or her own costs. This general rule is subject to s 117(2), s 117AA, and s 118 of the Act. The Court may make such orders as to costs, whether by way of interlocutory order or otherwise, as the Court considers just. The Court has the discretion to make an order for costs if there are circumstances which justify the making of costs orders, having regard to s 117(2A) which sets out an inclusive list of the matters the Court should have regard to.
I repeat the comments I made in Woodley & Time and Anor [2008] FamCA 162 where I said:-
30.In Brown v Brown (1998) FLC 92-882, Kay J said at pp 85,346 to 85,347:
The obligation under s 117(2A) is that the court shall have regard to the various matters set out thereunder. This is in contrast to the previous provisions under which costs orders were made, namely, under the Family Law Regulations and in particular reg 173 which required that the court may in making an order take into account various matters. The movement from a discretionary consideration to a mandatory consideration is a matter in my view of some substance.
31.In the absence of their being circumstances that justify the court making an order for costs, then s 117(1) provides that each party will bear his or her own costs of the proceedings under the act.
32.The interpretation to be applied to s117 and the inter relationship of s 117(1) and s 117(2) was considered by the High Court in Penfold v Penfold (1980) FLC 98-800. In this case Stephen, Mason Aickin and Wilson JJ, said at 75,053-75,054:
It is an accurate description of sec. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to sec. 117(2). As subsec, (1) is expressed to be subject to subsec. (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.
Subsection (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…we do not agree with the suggestion…that an order can only be made under sec. 117(2) in a ‘clear case.
Subsection (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when the costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised.
Moreover, the transcript shows that it was only after the respondent’s financial position had been investigated at the hearing that, in answer to questions put by the judge in cross-examination, he admitted that he could afford to pay the increased maintenance which was ultimately ordered. The respondent had filed a Form 19… (which) presented a picture of the respondent as an insolvent, a man whose liabilities exceeded his assets. It made no mention of the very valuable assets which he owned and in which he had an interest... (at 75,054).
Consequently, there was ample material from which the judge could find that there were circumstances justifying the making of an order for costs. The facts that the appellant failed in relation to the trust and the matrimonial home, and that the vacation judge dismissed the interlocutory application, though matters which are of relevance, are not of sufficient strength to deny the conclusion that there were circumstances justifying the making of the order.”
33.The case of Penfolds was discussed by Justice Wilson in the High Court decision of Mallet v Mallet (1984) FLC 91-507 (with whom Gibbs CJ, Mason, Dean and Dawson JJ agreed at pp 79,123-79,124). Penfolds case also made it clear that s 117(2A) “requires a finding justifying circumstances as an essential preliminary to the making of an order”. It is clear that the court has a wide discretion and that beyond this there is no “additional or special onus” on the applicant for costs which requires the court to make a preliminary finding that special or exceptional circumstances exist before making an order for costs.[2]
[2] Jensen and Jensen (1982) FLC 91-263.
34.By virtue of s 117(2A), in considering what order (if any) should be made under s 117(2), I am required to have regard to the matters set out in s117(2A) (a)-(g) in so far as they are relevant. The factors set out in the subparagraphs do not comprise of a closed list of factors, because s117(2A)(g) includes “such other matters as the court thinks relevant”. I need to consider each of the various factors, subject to their relevance, however, in PBF (as Child Representative for AF (Legal Aid Commission of Tasmania) v TRF and LKL (2005) FamCA 118 the Full Court held at paragraph 41:
… Nowhere in subsection 2(A) or elsewhere in section 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subsection 2(A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
35.In the matter of I and I (No 2) FLC 92-625, the Full Court at p 82,277 said:
that the relevant matters in s 117(2A) “must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs.
36.In this case Nicholson CJ, Ellis and Baker JJ declined to follow the approach adopted in the decision of McDonald and Mc Donald (1994) FLC 92-508 in relation to the question of costs. In that earlier case his Mushin J had said at p 81,271;
In the first instance it is important to note that the principal proceedings concerned questions of custody. As between parties in the strict sense of that word, it is rare for an order for costs to be made in such proceedings. Circumstances such as a totally unmeritorious case on one side, an attempt to vary a custody order which does not even establish a prima facie case, the withholding of evidence, the giving of false evidence and like matters are common bases for such an order. However, where no factor of this type exists, there would usually need to be a very significant disparity in financial circumstances between the parties before a costs order was made.
37.The Full Court in I and I (No 2) above, declined to follow this approach and held at p 82,277;
With respect ... we see nothing in the provisions of s 117 to justify the approach to the question of costs in custody or any other proceedings suggested by him. The matters to which he referred are matters which, in an appropriate case, would be taken into account in determining whether the circumstances justified the making of an order for costs in a particular case. However, whether such matters exist or not, the other relevant matters referred to in s 117(2A) must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs. The financial circumstances of the parties are but one of those matters and those circumstances must be taken into account whether or not there is a very significant disparity in financial circumstances between the parties.
In written submissions filed the 18 February 2014 counsel for the husband contends that the most significant matter supporting the Court making a costs order is that the husband was entirely successful in upholding the previous agreement on the issue of representation.
In written submissions filed 3 March 2014 counsel for the wife submitted that this assertion highlighted the weakness of the husband’s application for costs. Counsel asserted that there was no evidence of any agreement before the Court, and says there was evidence to the contrary. Counsel for the wife said that:-
to assert that the eventual finding was in accordance with some previous position asserted, without evidence, by one party fails to consider the reasoning of the Court in coming to its conclusion as to the merits of the application.[3]
[3] At paragraph 17 of the wife’s written submissions filed the 3 March 2014.
Counsel for the wife submitted that there was no finding in relation to any agreement and relied upon paragraph 46 of the Reasons in support of this assertion.
I do not accept those submissions on behalf of the wife. The husband consented to Senior Counsel, Junior Counsel and the wife’s solicitor to continue with the mediation once it was discovered that Mr Ackman QC had previously advised the husband. There was clear agreement that Mr Ackman QC’s involvement would end with the mediation that the husband objected to Mr Thompson’s continued involvement and agreed or acquiesced to the wife’s solicitor continuing to remain involved.
In his written submissions counsel for the wife contended that the main features which the Court should have regard to in determining whether a costs order should be made are:-
(a)the husband maintaining his claim to restrain the wife from using her solicitor Mr Moore, his firm and Mr Thompson until and during the hearing.
(b)the fact that the husband was not totally successful in that he was unsuccessful as to two of the three parties whom he sought to be restrained.
(c)there was a valid reason for defending the application given the large amount money expended by the wife in respect of Mr Moore and Mr Thompson’s professional services; including the professional services of Mr Thompson (separate and apart from Mr Moore).
(d)there was no impropriety found in relation to Mr Thompson’s knowledge of the husband’s case. Instead the finding was that there was “some realistic sense of impropriety about the circumstances in that it is possible that some of the information gleaned by Mr Ackman QC at … conference in July 2012 could well have been passed on to Mr Thompson” based on a possibility that information could have been passed unconsciously to Mr Thompson.
(e)there was no impropriety found in relation to the actions of Mr Moore or his firm.
(f)the fact that Court found this was an exceptional case evidences that the application was one that was properly defended and as a consequence the wife should not be liable for costs purely on the basis that the Court has chosen to exercise its discretion in one way rather than another.
In respect of Mr Moore, counsel for the husband submitted that the following matters should be taken into account in respect of any attempt being made by the wife to diminish the husband’s success by the failure of the Court to make an order against Mr Moore:-
(a)“an agreement was reached between senior counsel for the husband and the wife at the conclusion of mediation by the Honourable Peter Young QC to the effect that if Mr Ackman QC and Mr Thompson ceased acting for the wife the husband would not object to her solicitor continuing to act.”
(b)the agreement was confirmed by the husband’s solicitors in an open letter, dated 21 November 2013, to the wife’s solicitors;
(c)the wife’s solicitor’s reneged upon that agreement in a letter to the husband’s solicitors dated 29 November 2013;
(d)the husband acted to his detriment in acquiescing to the solicitor continuing to act. He thought he had an agreement;
(e)the husband had no choice but to seek the assistance of the Court to enforce the agreement;
(f)in a letter dated 4 December 2013, the husband’s solicitors made an offer of compromise to the wife’s solicitors;
(g)the cost of running or defending the case was not diminished or increased by reason of the application being made in respect of Mr Moore and Mr Thompson;
(h)the husband made appropriate concessions and relied upon paragraph 31 of the reasons for judgement.
(i)there is no issue as to the capacity of the wife to meet any costs order;
(j)the interim proceedings, the subject of these submissions, were not related to a previous order of the Court;
(k)the substantive orders made by the Court on 21 January 2014 are identical to the agreement reached between the parties at mediation which the wife subsequently resiled from;
(l)a subsequent written offer was made by the husband to continue with the agreement before he issued the proceedings. The wife should have accepted that offer.
The exchange in the transcript[4] was as follows:-
[4] Transcript of Proceedings dated 15 January 2014 at page 10, lines 5 to 34.
MR BARTFELD: He has, your Honour, but on the basis of an agreement that has been reached. And that agreement has been repudiated, but I …
HIS HONOUR: Does that make any difference?
MR BARTFELD: It probably doesn’t, your Honour, and if the outcome of this case was that Mr Moore were to continue, then there’s nothing more I would say about that. We were prepared to do it as a means of progressing the matter and we stand, I think, still prepared to do it.
HIS HONOUR: Yes.
MR BARTFELD: And finally, your Honour, the application is not directed against the lawyers, but rather against the wife, seeking to restrain her from engaging the people we seek to have removed; that is, we think, a more professional approach than seeking injunctions against lawyers when there is no allegation made of anything other than a theoretical problem and no allegation of impropriety. If there was impropriety, then of course we would be seeking injunctions against the lawyers themselves. Your Honour, the case that I handed to your Honour of Grieves & Tully, represents a nice summary by Young J of how the law is to be applied in proceedings where the complaint is one of not a fiduciary relationship, but a personal relationship and inappropriate behaviour.
So again, it is slightly different in fact to the present case, but nevertheless, a reading of the section commencing under the heading of Legal Principles at paragraph 69 clearly indicates the way his Honour saw the application of these principles to the case that was before him, which was a family law case. Your Honour, you can see what I mean about buzzing. The test that is now well and truly enshrined is one of theoretical harm, rather than actual harm. In other words, in the commercial sphere and other litigation, you’ve got to show more than something theoretical. In family law, because of the nature of family law, because of the nature of proceedings as identified by Bryson J in D & J Constructions, there is a higher test which is applied and it is the higher test, we say, which is not met by the wife’s solicitor and counsel. So I commend that the legal principles are part of that judgment, and voice a complaint that his Honour found differently to Mullane J in Kossatz ...
I accept that an agreement or understanding was reached between senior counsel for the husband and the wife at the conclusion of mediation that if Mr Ackman QC and Mr Thompson ceased acting for the wife the husband would not object to her solicitor continuing to act and it was confirmed by letter 21 November 2013, to the wife’s solicitors. The wife endeavoured to repudiate or resile from that position, whether it be an agreement or understanding, as such the husband had little choice but to seek the assistance of the Court to enforce the agreement.
The letter from the husband’s solicitors of 4 December 2013 made an offer of compromise to the wife’s solicitors. I am satisfied that the legal costs of the application were neither increased or reduced by reason of the broad nature of the application made in respect of both solicitor and counsel.
The cost of running or defending the case was not diminished or increased by reason of the application being made in respect of Mr Moore and Mr Thompson.
The wife is well able to meet a costs order.
I otherwise accept the submissions made by senior counsel for the husband. The husband mounted a case which was ultimately successful. Taking all matters into account and exercising the broad discretion which I have in respect of costs I determine that there ought to be a costs order made in favour of the husband and I will make an order to this effect.
QUANTUM OF COSTS
The husband is seeking an order that the wife pay his costs on a party/party basis. The definition in respect party/party costs was described by McArthur J in Re Malleson, Stewart, Stawell and Nankivell[5] as:-
costs, charges and expenses as shall appear … to have been necessary or proper for the attainment of justice or for defending the rights of any party, but save as against the party who incurred the same no costs shall be allowed which appear to the taxing officer to have been incurred or increased through over-caution, negligence, or mistake, or by payment of special fees to counsel or special charges or expenses to witnesses or other persons, or by other unusual expenses.
[5] (1931) VLR 127 at 129.
In written submissions filed the 18 February 2014 counsel for the husband contended that the husband has thrown away costs on preparing his application and supporting evidence, and on legal representation in respect of the listings on the 19 December 2013 and 15 and 21 January 2014. This included detailed written submissions drafted by the husband’s senior and junior counsel. Counsel for the husband submitted that “the husbands costs could, and should, have been avoided”.[6]
[6] At paragraph 13, page 10 of the husband’s written submissions filed 18 February 2014.
In written submissions counsel for the husband asserted that the Court ought to fix the husband’s costs and make a gross sums costs order in the amount of $27,230.76.
The quantum of the husbands costs are set out at paragraph 14 of his written submissions filed the 18 of February 2014 and are as follows:-
(a)
Solicitors
$12,498.20
(b)
Counsel
$19,945.00
(c)
Auscript – Transcript of Proceedings of 12 Dec 2013
$285.72
Total
$32,728.92
At paragraph 15 of his written submissions filed the 18 of February 2014 the husband sets out his relevant costs pursuant to the scale in Schedule 3 to the Family Law Rules 2004 as follows:-
(a)
Solicitors
$7,000.04
(b)
Counsel
$19,945.00
(c)
Auscript – Transcript of Proceedings of 12 Dec 2013
$285.72
Total
$27,230.76
In fixing the quantum of costs I have had regard to the itemised scale of costs set out in Schedule 3 of the Family Law Rules 2004. I note that the fees for senior counsel are $19,945. I consider it appropriate that senior counsel’s fees in this matter are determined at the rate claimed. The rate gives proper recognition to the standing and experience of the counsel briefed in this matter together with the relative complexity of the issues raised in the litigation. I accept that the counsel’s fees incurred by the husband in the sum of $19,945 should be allowed in full.
For the reasons discussed herein I am satisfied that the orders set out at the commencement of these reasons are proper.
I certify that the preceding twenty nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 3 July 2014.
Associate:
Date: 3 July 2014
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