Zha & Wun (No 9)
[2024] FedCFamC1F 792
•22 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zha & Wun (No 9) [2024] FedCFamC1F 792
File number: SYC 4269 of 2020 Judgment of: SCHONELL J Date of judgment: 22 November 2024 Catchwords: FAMILY LAW – COSTS – Where each of the parties sought a costs order against the others – Where costs were sought on an indemnity basis or alternatively costs in accordance with scale or as assessed – Consideration of factors under s 117 of the Family Law Act 1975 (Cth) – Where the Court is satisfied there are exceptional circumstances warranting indemnity costs given findings of non-disclosure– Costs ordered on an indemnity basis – Where costs for some discrete applications are excluded – Where the conduct of the second and fourth respondent was such that the Court found it disentitles them to a costs order. Legislation: Family Law Act 1975 (Cth) s 117 Cases cited: Bant & Clayton (Costs) (2016) 56 Fam LR 31; [2016] FamCAFC 35
Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123; [2005] FamCA 158
Kohan and Kohan (1993) FLC 92-340
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029
Zha & Wun (No 6) [2024] FedCFamC1F 519
Zha & Wun (No 8) [2024] FedCFamC1F 648
Division: Division 1 First Instance Number of paragraphs: 62 Date of hearing: 7 November 2024 Place: Sydney Counsel for the Applicant: Mr Reynolds Solicitor for the Applicant: Pickering Pendleton Counsel for the First Respondent: Mr Gray Solicitor for the First Respondent: York Law Counsel for the Second, Third and Fourth Respondents: Mr Turnbull Solicitor for the Second, Third and Fourth Respondents: David H Cohen & Co ORDERS
SYC 4269 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ZHA
Applicant
AND: MR WUN
First Respondent
MR A WUN
Second Respondent
MS YANG (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
22 NOVEMBER 2024
THE COURT ORDERS THAT:
1.The first respondent pay the wife’s costs of the proceedings on an indemnity basis up until the joinder of the second and fourth respondents and thereafter the first, second and fourth respondents jointly and severally pay the wife’s costs of the proceedings on an indemnity basis with the exception of the wife’s costs in relation to the applications filed by the wife on 25 August 2023 and 23 July 2024, the tax invoice issued by EO Valuers dated 14 July 2024 and the costs of the single expert engaged by the wife to value a property in China.
2.For the purposes of the determining the quantum of costs payable:
(a)Within 28 days of the date of these Orders, the wife serve upon the first, second and fourth respondents an Itemised Costs Account for the costs claimed by the wife on an indemnity basis in accordance with Order 1, prepared in accordance with Rule 12.35 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“Rules”).
(b)Within 28 days of service of the wife’s Itemised Costs Account, the first, second and fourth respondents serve any Notice Disputing Itemised Costs Account upon the wife.
(c)If the parties are unable to resolve any dispute with respect to the wife’s Itemised Costs Account, within 42 days the parties file with the Court the Itemised Costs Account and any Notice Disputing Itemised Costs Account, and that the costs payable in accordance with Order 1 be assessed in accordance with Division 12.8.2 of the Rules.
3.I certify for the attendance of senior and junior counsel for the final hearing.
4.The wife’s Application in a Proceeding filed 29 October 2024 and the husband’s Response filed 4 November 2024 are otherwise dismissed.
5.The husband’s Application in a Proceeding filed 29 October 2024 and the wife’s Response filed 4 November 2024 are otherwise dismissed.
6.The second, third and fourth respondent’s Amended Application in a Proceeding filed 24 October 2024 and the wife’s Response filed 4 November 2024 are otherwise dismissed.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Zha & Wun has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 25 September 2024, the Court made final property orders. The reasons for judgment were delivered on the same day and published as Zha & Wun (No 8) [2024] FedCFamC1F 648. The orders provided for any party wishing to make an application for costs to file an application within 28 days. Consistent with that order, each of the applicant and respondents have filed applications as to costs.
In broad terms, the wife seeks that the husband, second and fourth respondents jointly and severally pay her costs of the proceedings on an indemnity basis, alternatively on a party/party basis or in such amount as otherwise determined by the court. The exact terms of the order sought is contained in Paragraphs 2.1–2.3, 4 and 8 of Exhibit 1.
The husband for his part concedes that he should pay 50 percent of the wife’s costs of the proceedings on a party and party basis as agreed or assessed, excluding the costs incurred by her in relation to a number of identified matters. He seeks his costs in respect of certain discrete applications. The exact terms of the orders sought is contained Exhibit 2.
The second, third and fourth respondents seek orders for costs from either 19 February 2024 or 19 April 2024 on a party and party basis and thereafter on an indemnity basis or in such other amount as is determined by the court. The exact terms of the orders sought is contained in paragraphs 26–28 of Exhibit 3.
The wife opposed the cost order as sought by the husband and second to fourth respondents.
The parties agreed that if a cost order was to be made then the form of the wife’s order 2.2 in Exhibit 1 was acceptable.
BACKGROUND
In view of the ambit of the respective cost’s applications, the determination as to costs needs to be viewed in the context of discrete findings I made in the reasons for judgment. That is so because as between the husband and wife, the husband conceded that a costs order was warranted. The ambit of dispute as between them was as to basis, percentage and whether in respect of the totality of the proceedings or in respect of certain parts. Astonishingly, despite findings made as to the second respondent’s conduct, he pursued an order for his and the fourth respondent’s costs.
In my reasons, I record that I found the husband had breached undertakings given to a Chinese court at [83], had “attempted to transfer his shares in [KK Pty Ltd]… notwithstanding injunctive orders” at [83], and that “by a process of obfuscation and failure to comply with his obligations as to disclosure the husband has sought to obscure the true extent of his wealth” at [84]. In relation to the second respondent, I found him to be “perfidious” at [93] and that he gave false evidence in the Country AD proceedings at [94].
A central issue in the proceedings was whether a company registered in Country WW (“the company”) was the alter ego of the husband. I ultimately made a finding that it was. In doing so, I found the husband’s evidence “demonstrates his preparedness to lie and mislead” at [122], was satisfied that “the only logical and plausible explanation is that the husband caused the creation of [the company] putting in his brother as his mere puppet” at [137] and was satisfied that the husband and second respondent had not “given a frank explanation of the husband’s interest in [the company]…that the husband has failed in his obligation to fully and frank disclose the true extent of his wealth and in particular his interest in [the company]” at [147].
I did not find, contrary to the case prosecuted by the wife, that the assets of the second and third respondents were sourced from the company, or for that matter, that their property was impressed with a trust in favour of the husband at [149]. I was also not satisfied that the wife had established as against the second and third respondents that property at Suburb P was held on a resulting trust for the husband.
Having determined that the pool of assets totalled at least $565,000,000, I made an adjustive order in favour of the wife as to $10,000,000. In relation to matters under s 75(2), the wife urged that the Court make an adjustment in her favour for a number of factors, including the husband’s non-disclosure. In relation to that submission, my reasons record as follows:
285I do not know what the true extent of the husband’s wealth is. I accept that the husband’s non-disclosure is significant and egregious. To the extent to which the wife was put to significant cost in determining the pool is a matter more properly considered in the context of costs as opposed to s 75(2).
286I am conscious of the authorities that the wife’s senior counsel has referred to in support of a s 75(2) adjustment. There is however a difference between a robust approach to findings and the factors going to a consideration of the matters under s 75(2). The notion that an adjustment under s 75(2) is warranted because of a failure to disclose must be principled, not reactive, and must also have regard to the ultimate findings at the contribution stage.
I now turn to consider the application for costs.
RELEVANT LAW
An application for costs is governed by the provisions of s 117 of Family Law Act 1975 (Cth) (“the Act”) which provides a general rule that each party to the proceedings should bear their own costs.
Section 117(2) of the Act reposes in the Court a discretion to make a costs order if the Court determines there are circumstances that justify this and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A) of the Act.
In Penfold v Penfold (1980) 144 CLR 311 at 315, the plurality in the High Court determined that to make an order under s 117(2) of the Act, the Court needs to make a finding of “justifying circumstances” as a preliminary prerequisite to the making of an order. Their Honours also observed that a term such as “a clear case” is not necessarily a determiner of whether an order for costs should be made. All that is required or necessary is that there are justifying circumstances.
It is well-settled law that no one factor in s 117(2A) is determinative, and the Court may give such weight as it considers relevant to any factor (Fitzgerald (as Child Representative for A (Legal Aid Commission of Tasmania)) v Fish (2005) 33 Fam LR 123).
The Case Outlines, affidavits and oral submissions of the parties addressed what each of them regarded to be the relevant subsections under s 117(2A) of the Act.
(a) The financial circumstances of each party to the proceedings
Neither the husband, the wife or the fourth respondent can be described as impecunious. Each have significant wealth and are able to meet their own costs and a costs order of the magnitude sought.
The second and third respondents have elected to place no evidence before me as to their financial position. In those circumstances, it is unknown whether the making or not making of a costs order would cause them some financial hardship, or whether their financial circumstances are a factor justifying or not justifying consideration in the making of a costs order.
(c) The conduct of the parties to the proceedings
The wife contends that the husband’s, the second and fourth respondents’ conduct is a relevant consideration in the context of the relief she seeks, notwithstanding the husband’s concession that costs should be ordered in favour of the wife as to 50 percent on a party and party basis.
The second to fourth respondents contend that the conduct of the wife is relevant to the issue of costs as between them.
What is relevant is conduct of a party which in some way or other leads to an increase in costs by the other party. Such factors may include uncooperative behaviour, obstruction, prolonging litigation or the bringing of unreasonable or unmeritorious applications. It may include non-disclosure or a failure to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) in relation to disclosure.
I am satisfied, for the reasons referred to in my judgment, that the conduct of the husband and the second and fourth respondent was such as to be a relevant consideration in relation to the making of a costs order in favour of the wife. Each of them conducted the proceedings in a manner designed to mislead and to conceal the true ownership of the company. They sought to mislead the Court, and their conduct was designed to cause a miscarriage of justice by attempting to deprive the Court of a true understanding of the extent of the husband’s wealth. In doing so, they both put the wife to significant cost in the proceedings which is measured in excess of $3,800,000.
It is conduct deserving of the strongest rebuke and is, in my view, conduct that calls for consideration as disentitling conduct regarding the orders sought by the second and fourth respondents. In that respect, Murphy J observed in Penfold v Penfold (1980) 144 CLR 311 at 583:
Presentation of a false statement of financial circumstances which puts the other party to the trouble and expense of disproving it is a circumstance which justifies an order for costs. Courts should regard such circumstances which tend to undermine the integrity of proceedings with great concern and should do everything in their power to determine who is responsible in order to maintain that integrity.
His Honour’s observations are not just apposite to a false statement of financial circumstances but to the entire conduct of the litigation on the part of the first, second and fourth respondents.
I am satisfied that such conduct is a circumstance that warrant consideration of an order for costs against the husband and the second and fourth respondents and similarly is conduct that militates against the making of an order as sought by the second and fourth respondents.
The wife does not seek an order against the third respondent. No findings were made against the third respondent in respect of her conduct of the litigation.
(e) Whether any party to the proceedings has been wholly unsuccessful in the proceedings
The second to fourth respondents sought to contend that the wife was unsuccessful in the relief she sought against them. In their case outline, they submitted as follows:
10.As a starting point, the Wife should pay the Third Parties’ costs because she failed to obtain any relief against them, despite seeking orders against each of them.1 Where the non-parties to the marriage have been wholly successful, they are entitled to be paid their costs by the applicant: Conrad & Conrad (2020) 61 Fam LR 301, 43 (Strickland, Ryan and Watts JJ); E Pty Ltd & Ors & Zunino & Anor (No 2) [2020] FamCAFC 272, 17 (Ainslie-Wallace, Ryan & Tree JJ).
The cases are not as absolute as suggested, a point conceded by their counsel in oral submissions. The submission, if reliant on this subsection, misunderstands the import of it. The term “wholly unsuccessful” refers to a situation in which proceedings as a whole have been unsuccessful, rather than necessarily an application or a form of relief (Bant & Clayton (Costs) (2016) 56 Fam LR 31).
While the wife was not successful in obtaining all of the orders that she sought against the second to fourth respondents, it is incorrect to describe her as wholly unsuccessful in the proceedings. In so far as she contended the company was the husband’s alter ego, she was wholly successful.
(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
Neither the husband nor the wife made any offer in accordance with the Rules to settle the proceedings. The husband’s counsel submitted from the bar table that the husband had made an offer in 2019, before the commencement of the proceedings. Apart from an assertion from the bar table, no document was tendered nor was I taken to the terms of it.
The second to fourth respondents point to offers having been made by them. In that respect, in their Case Outline it is submitted as follows:
11.Secondly, the Third Parties should have their costs, because they made two offers of compromise on 19 February 2024, and 19 April 2024, each of which, if accepted, would have been given the Wife a more favourable outcome than the outcome she achieved at trial. An offer is a relevant consideration for the Court in exercising its costs discretion: Family Law Act1975 (Cth) (“FL Act”), s 117(2A)(f). Offers of compromise will be given very significant weight: Brown v Green (2002) 29 Fam LR 428, 439.
12.Thirdly, the Court should take into account the Wife’s failure to make an offer to the Third Parties to resolve the proceedings: Peake v Benedict (Costs) (2014) 53 FamLR 476, 171; Lenova & Lenova (2011) FLC 93–467, 11. That failure bespeaks an unreasonableness in the Wife’s conduct of the proceedings, which is inconsistent with the Wife’s statutory obligation to conduct the proceedings with a mind to the overarching purpose under section 68(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCAFCOA Act”). The Wife’s failure to make an offer is a relevant consideration in the exercise of the costs discretion: FCAFCOA Act, s 68(4).
…
14.First, she failed to achieve an outcome more favourable than the two offers of compromise. It was unreasonable for her to reject those offers because:
(a)By February 2024 she can safely be seen to have had a good understanding of the Third Parties’ evidence because by that time they had filed affidavits in 2023 in this Court and in [Country AD], in relation to the Wife’s injunction applications in both jurisdictions, as well as the Wife having received extensive disclosure;
(b)By April 2024, the Wife had the benefit of the above material, and the Third Parties’ trial affidavits, and further disclosure; and
(c)She failed to discharge her burden of proof at trial to support her tracing claim to the [Suburb P] properties, which was the only reason for keeping the Third Respondent joined to the proceedings.
15.Both of those offers, if accepted, would have given real value to the Wife, namely:
(a)A cash payment to the Wife of $500,000 or $450,000 respectively;
(b)Release from any liability arising from the undertaking as to damages she had given; and
(c)Release from any costs liability, both here and in [Country AD].
16.Secondly, even if the Wife had accepted those offers, because the offers made by the Third Parties were not tied to the proceedings between the Wife and the Husband, it was still open to her to pursue, and obtain, the relief she ultimately obtained against the Husband. It was therefore unreasonable to keep the Third Parties in the proceedings, when the Wife was offered a way to let them out, for which she would be paid, and released from an obligation to pay the costs orders made against her in the [Country AD] courts
The offers made by the second to fourth respondents need to be measured against the findings as to conduct (with the exception of the third respondent). Further, counsel for the second to fourth respondents conceded that if the wife had discontinued her relief against them, then she would not have been able to proceed with her case of alter ego in which she was ultimately successful. Looked at in that context, the offers take on a completely different complexion. It takes a special kind of hubris to rely on an offer of settlement as a justifying circumstance for a costs order in light of the findings made about the second and fourth respondent’s conduct.
(g) Any other matter the court considers relevant
There is no other matter that I consider relevant to the determination as to costs.
DISPOSITION
The husband concedes that a costs order should be made against him. He submits that it should be limited to 50 percent of the wife’s costs on a party and party basis. The reasons advanced as to why it should be 50 percent are that it represents a measure of compromise in circumstances where the proceedings involved relief sought against others and where the wife was not totally successful in the relief that she sought.
I am not satisfied in the circumstances of the husband’s egregious non-disclosure and his conduct throughout the proceedings that a costs order against him should be limited to 50 percent of the wife’s costs. I am satisfied that an order should be made against the husband and the second and fourth respondent that they be jointly and severally liable for her costs. They each engaged in a deception of the Court and the wife as to the true nature and extent of the husband’s interest in the company. But for their conduct, these proceedings would have been shorter in duration and less in cost. The extent of the deception was profound, deliberate and brazen. It continued throughout the litigation from start to finish. It is conduct that seeks to undermine the integrity of the judicial process and goes to the very heart of a just and equitable determination. I am comfortably satisfied that the husband, second and fourth respondent should jointly and severally meet the wife’s costs. The order in relation to the second and fourth respondents will however commence only from the time of their joinder.
The second, third and fourth respondents seek orders that the wife pay their costs. I am not satisfied in view of the conduct of the second and fourth respondents for the reasons given earlier that there is any basis for an order that the wife should have to pay their costs. The wife’s lack of success in the relief she sought, combined with their offers, are matters that might ordinarily feature in the consideration as to whether there are circumstances that justify the departure from the usual order. However, the second and fourth respondents conduct was so deplorable and so flagrant that there is no basis for such an order. It is disentitling conduct of the highest order.
Alternatively, it was sought on behalf of the third respondent that the Court make an order that the wife pay one third of the total of the respondent’s costs. An order of that nature is reductive and can bear no relationship to the actual costs of the third respondent relative to the relief sought solely against her. In fairness to counsel for the other respondents, he did not seek to promote it other than as representative of a broad-brush approach.
The third respondent seeks her costs, particularly in circumstances where she was not the subject of adverse findings, and the wife was unsuccessful in the relief sought against her. The offer of settlement by its terms was incapable of acceptance as against the third respondent alone. In those circumstances, it carries no weight in the consideration of the matters that justify a costs order.
I accept the third respondent was a third party to the marriage and that might be a matter that may justify a costs order, particularly where the joinder resulted in no order being made against that party. That said, the third respondent has elected to place no evidence before the Court as to her financial circumstances and thus as opposed to the wife (whose financial circumstances I am aware of) and I have no way of assessing the impact upon her of the making or of the refusing to make a costs order. In those circumstances and on balance I am not satisfied that there are circumstances that justify the Court departing from the usual order in relation to costs in so far as it relates to the third respondent.
Accordingly, orders will be made that the husband, second and fourth respondents pay the wife’s costs. The application of the second, third and fourth respondents for their costs will be dismissed.
INDEMNITY OR PARTY AND PARTY BASIS
I will now turn to consider whether the order should be made on an indemnity or party and party basis, whether there should be orders for the wife to pay the husband’s costs on certain discrete applications, and whether certain parts of the wife’s costs should not be included.
The authorities make plain that an order for indemnity costs is not one that is lightly made, and there should be circumstances of an exceptional kind that warrant orders for costs on an indemnity basis (Kohan and Kohan (1993) FLC 92-340). Justice Sheppard in Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 identified various guidelines as to the circumstances in which a court might entertain an order for indemnity costs. The category of cases in which a court may make an indemnity costs order are not closed and are not however limited to those identified by Sheppard J (Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) FLC 93-029 at 87,471).
In Johnson v Johnson (No. 2) (Costs) (1999) FLC 93-040, the Full Court observed as follows:
24.In our view, there are good reasons why the husband should bear those costs on an indemnity basis. As was identified by the trial Judge, had there been a full and frank disclosure on behalf of the husband these proceedings would have been of much shorter duration. Whilst the failure to give such full and frank disclosure may not axiomatically incur the wrath of an indemnity costs order, having regard to the financial circumstances of the parties in this case, and the very nature of the case presented by the husband, there are special and unusual features which justify the court in departing from the ordinary practice that each party should bear their own costs.
The observations of their Honours are apposite to the conduct of the husband, second and fourth respondent. They engaged in a concerted and deliberate ruse designed to frustrate the claim of the wife. That increased the wife’s costs and prolonged the litigation. It was grievous conduct that fits comfortably within the descriptor of exceptionality such as to warrant an order for costs on an indemnity basis. There is no reason to differentiate between the liability of the husband, second and fourth respondents save as to when the order should apply to the second and fourth respondents. They should be jointly and severally liable for the wife’s costs on an indemnity basis.
DISCRETE APPLICATIONS
I will now turn to address the matters enumerated in Exhibit 2 for which the husband seeks a specific order and for which he says he should not have to meet.
In relation to the wife’s Application in a Proceeding filed on 12 April 2024 and 23 July 2024, the husband seeks an order for the payment of his costs at scale in a fixed amount or alternatively as agreed or assessed and that he should not be responsible for the wife’s costs in relation to those applications.
The application filed 12 April 2024 was one that sought the payment of monies by way of interim costs. The husband seeks his costs whether in a fixed amount or as agreed or assessed only from the date on which he made an offer. In respect of this application, the husband says that he made an offer to resolve the application that was more favourable to the wife than the one ultimately made by the Court. The terms of the husband’s offer in relation to a discrete application before the final hearing need to be seen within the context of the husband’s conduct throughout the proceedings. For the reasons given earlier in relation to the conduct of the husband, I am not satisfied that there are circumstances that justify the Court making an order in favour of the husband in relation to this application, notwithstanding he had made an offer some days earlier. His offer to settle needs to be viewed in the context of his conduct in the litigation throughout. This was an application brought on the eve of the hearing where the wife was urgently seeking a payment of monies to enable her to retain counsel to run the hearing. In the event that she was unable to retain counsel, she would have been unable to properly prosecute the proceedings. The fact that the husband made an offer late in the day to try and resolve the proceedings is but one factor in the consideration as to whether or not a costs order should be made. I am not satisfied, given his conduct overall, that there is any basis for an order in his favour. I am also satisfied that it provides a basis for him meeting the payment of the wife’s costs of that application.
The wife’s application filed 23 July 2024 falls into an entirely separate category. This was an application brought at the end of the hearing that sought to restrain the husband from leaving the jurisdiction. In respect of that application, in my reasons for judgment reported as Zha & Wun (No 6) [2024] FedCFamC1F 519 it is recorded:
36That said, as the authorities referred to earlier identify, it is a serious step to curtail a person’s freedom of movement. The wife bears the onus of establishing that she will be denied a remedy if the husband’s freedom to travel and leave the jurisdiction is limited or suspended.
…
38While the wife’s claim for final relief is pitched at in excess of $130 million, she seeks on the application a surety of only $25 million. The authorities make clear that the wife must demonstrate that her remedy will be defeated if the injunction is not granted. I am not satisfied that is so.
39Firstly, the remedy she seeks is an order pursuant to s 79 of the Act. No such order has yet been made. Secondly, it cannot be that an injunction can be justified simply upon the basis that a party in a Court which exercises a wide discretion asks for a property settlement of a certain magnitude. Thirdly, the primary relief she seeks on the application does not seek to permanently injunct the husband from leaving the jurisdiction but rather only until that he pays $25 million into Court whereupon he can leave. The husband asserts he does not have $25 million he can deposit. The wife does not point to the husband having $25 million he can deposit. Her application invites the Court to conclude contrary to his evidence that he does in circumstances where it is has not reached its final determination.
40There is merit to the submissions of the husband that the wife’s position is otherwise protected by the present injunctions. In the event that the wife is successful in her claim in relation to the assertion that the assets of the husband include property held on trust for the husband by the respondents or alternatively that the fourth respondent is his alter ego, then at least $25 million of assets would be available to meet the wife’s claim. It would be a nonsense to contend otherwise.
41In the event that the wife is unsuccessful in her contentions that the assets of the husband include property held on trust for the husband by the respondents or alternatively that the fourth respondent is his alter ego then a fortiori the wife may not be able to justify a surety of $25 million.
42I also accept that there is merit to the submissions on behalf of the husband that he could have left the jurisdiction at any time prior to the final hearing or for that matter not taken part in the litigation or the final hearing. In that respect I note that he undertook to remain pending the hearing of the application and gave a further undertaking that he would remain in Australia pending determination of the application in circumstances where he could not know what the result would be. I am not satisfied that the husband is a “flight risk” where China is his home.
43I am also satisfied that it would be punitive to restrain the husband from returning to his home. He lives in China, conducts a business there (on the wife’s case an extremely large and successful business of which he is a key man) and is engaged in litigation there instituted by the wife. Further on either limb of the wife’s application the injunction is of indefinite length in circumstances where the husband says he does not have $25 million and final orders have not yet been made.
44The granting of an injunction involves the balancing of convenience, competing prejudices and should be no more than is necessary to do justice. Weighing the matters referred to above in the balance I am not satisfied that the wife has discharged the heavy onus she carries. I am not satisfied that if the husband leaves the jurisdiction her remedy will be defeated. I am satisfied that any prejudice to the wife is outweighed by the prejudice to the husband when I take account of the existing injunctions.
I am not satisfied that there is a basis for the husband to have to pay the wife’s costs in relation to an application heard after the completion of the evidence and submissions and in which she was ultimately unsuccessful. It was quite an extraordinary application seeking an order which required her to meet a high bar which she did not meet.
As to the wife meeting the husband’s costs, much of the evidence relied upon by the wife was based upon assertions that were the subject of ultimate findings of non-disclosure by the husband. Having regard to the matters under s 117(2A) of the Act and in particular the significant financial disparity between the husband and wife and his enormously superior financial position, I am not satisfied that the circumstances justify departure from the usual position that each party pay their own costs. Accordingly, I am of the view that the parties should meet their own costs of that application.
The husband says the wife’s costs of the application filed 18 July 2023 related solely to applications brought by the second to fourth respondents and that he took no part in those proceedings and accordingly should not have to bear responsibility for the wife’s costs. In circumstances where I am satisfied that each of the first, second and fourth respondents were engaged in a process of obfuscation and deception and where there will be an order that the costs wife’s should be borne jointly and/or severally by the husband, the second and the fourth respondents, then it is a matter as between them as to the liability for a discrete application. I see no basis whatsoever to differentiate between them in the making of a costs order. I do not propose to make the order the husband seeks in relation to the wife’s cost of the application filed 18 July 2023.
The Application in a Proceeding filed 16 May 2024 related to subpoenas issued by the wife. The husband in his affidavit identifies that the wife issued 31 subpoenas to which he filed notices of objections in relation to 14. The objections were listed initially before a Judicial Registrar, that date was vacated, and the matter was listed before me. At the hearing of the matter there were various compromises reached on the terms of the subpoena which were reflected in orders made on 4 July 2024. I am not satisfied that just because compromises were reached in relation to the issue of the subpoena, that the wife should not receive her costs. The issuing of subpoenas was one of the few armouries available to the wife to establish her case, particularly in circumstances where the bulk of the assets of the husband were located overseas and beyond the reach of a subpoena. I do not propose to make the order the husband seeks in relation to the wife’s cost of the Application in a Proceeding filed 16 May 2024.
The husband seeks that he does not have to pay the wife’s costs of and incidental to the s 50 Notices served on 3 July 2024. These were part of the information-gathering process and evidence relied upon by the wife at the hearing. Many of the s 50 Notices became exhibits in the proceedings. I am not satisfied for reasons given earlier in relation to conduct that there is a basis articulated by the husband for the exclusion of the wife’s costs in that respect.
The husband seeks that he should not have to contribute to the tax invoice issued by EO Valuers. Counsel for the wife conceded that the husband should not have to meet the costs of this invoice.
The tax invoice issued by EP Law Firm dated 6 June 2024 was said to relate to expert evidence obtained by the wife in relation to the transfer of funds out of China. In circumstances where the matter had initially been placed in issue, I am satisfied that this is an incident of the wife’s costs incurred in the proceedings and I am not satisfied that there is a basis for him not to have to meet these costs.
The husband otherwise seeks to exclude the costs of the single expert engaged by the parties to value a single property in China. The cost is said to relate to one property that the wife contended was held on trust for the husband. The wife met the costs of this valuation solely. She was not successful in her claim in that respect. I do not see a basis upon which the husband should have to meet the wife’s costs in relation to this particular item.
The husband otherwise asserts that he should not have to meet the wife’s costs of the setting down and hearing fee. Given an order will be made for the wife’s costs of the proceedings there is no principled reason why that should not include her costs of the setting down and hearing fee.
Finally, the husband sought that he does not have to meet the wife’s costs of and incidental to the Application in a Proceeding filed 25 August 2023. The submissions of the wife made it clear that she was not seeking recovery of her costs in relation to that application.
Accordingly, I propose to include in the order as to costs that it exclude the costs of the wife in relation to the applications filed 23 July 2024 and 25 August 2023, the tax invoice issued by EO Valuers dated 14 July 2024 and the costs of the single expert engaged by the wife to value a property in China.
I will certify for senior and junior counsel in relation to the final hearing. Each of the parties retained senior counsel and junior counsel and I am satisfied that the complexity of the matter warranted their retention. The question of the reasonableness of retaining senior and or junior counsel in relation to the various interlocutory applications will be a matter for assessment.
Accordingly, I propose to make orders in relation to the above matters.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 22 November 2024
SCHEDULE OF PARTIES
SYC 4269 of 2020 Respondents
Fourth Respondent:
AB LTD
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