Prodromos Anastasi Foukkare v Angreb Pty Limited & Ors

In the meantime, we have also received a somewhat threatening facsimile from you dated 25 August 2003.

We take this opportunity to clarify some wrongly founded references in your letters. In the process of the Family Court proceedings, we have a responsibility to our client to ensure that all matrimonial assets are brought into the proceedings. In our initial searches we have noted that Mrs Foukkare holds the subject shares and consequently we are entitled, on behalf of our client, to investigate the nature of the share holding.

You may not be aware, but in initial discussions, an offer was made by Mrs Foukkare's Solicitors to provide us with a stamped Trust Deed to clarify the nature of Mrs Foukkare's share holding. This has never been provided.

In any event, your companies are not a party to the proceedings and there is no obligation on our client's part to carry out a form of discovery of your companies' records. We do suggest though that it is up to Mrs Foukkare to show, in the Family Court proceedings, the nature of her share holding.

In short we advise that until the nature of Mrs Foukkare's shareholding interests in your companies are clarified, we can not advise our client as to whether these shares have any bearing in the Family Court proceedings." 22 Every point made in this letter was correct. The appellant's solicitors exhibited a clear understanding of the obligations and entitlements of the parties in the Family Court proceedings and, in particular, the obligation of the respective parties to those proceedings to provide evidence of their assets and their value. 23 It should be noted that this point was made again by the appellant's solicitors in a letter to the respondents' solicitors, Peter Bouzanis & Associates (Bouzanis) dated 21 May 2004, after Theodore Onisforou discontinued an application he made to intervene in the Family Court proceedings. Chambers wrote to Bouzanis in terms: "With respect, we have made our client's position in this matter clear previously, in that, it is our client's wife that needs to clarify her position with respect of her involvement in the companies in the Family Court. Our client does not have to seek any action in the subject Supreme Court Proceedings." 24 The basis upon which the allegations in paras 7 and 9 of the Angus Statement of Claim and para 6 of the Angreb Statement of Claim were made in the Family Court proceedings is set out at [16] above. 25 In June 2004, Angus, Angreb and Sentra sought leave to intervene in the Family Court proceedings seeking relief in substantially the same terms as that sought by the plaintiffs in the Supreme Court proceedings. Leave was granted for them to do so. On 21 February 2005, the Family Court, by consent, made a declaration that Kary Foukkare had no beneficial interest in any of the respondents' companies or trusts. Shortly thereafter, the Family Court proceedings between the appellant and Kary Foukkare were resolved. 26 Notwithstanding that the Family Court proceedings were concluded the Supreme Court proceedings remained on foot. On 8 April 2005, the appellant filed Defences to each of the two Statements of Claim, together with a Cross-Claim in each matter. In his Defence in the Angus proceedings, the appellant denied the allegations in paras 7 and 9 of the Statement of Claim that he had ever asserted a claim on his behalf and/or on behalf of Kary Foukkare, any entitlement to any interest in the companies or trusts. In his Defence to the Angreb proceedings, the appellant denied that he had asserted a claim by way of an equitable interest in Angreb as claimed in para 6 of the Statement of Claim. 27 On 15 July 2005, notices of motion seeking the summary dismissal of the Cross-Claims were dismissed with costs by Associate Justice McLaughlin. 28 On 14 September 2005, the matters were listed for a two day hearing to commence on 27 February 2006 before Gzell J. By that time, substantial costs had been incurred in relation to pre-trial procedures, including the administering of interrogatories and the filing of numerous affidavits by the respondents. In addition, there had been correspondence between the legal representatives for the parties. It is necessary to refer to that correspondence in detail, as it is relevant to the manner in which his Honour exercised his discretion in ordering that the appellant pay costs.

The correspondence 29 On 30 March 2005, about a month after the Family Court proceedings concluded and the day before the matter was in the Equity Registrar's list in the Supreme Court, the respondent's solicitors, Bouzanis, wrote to the appellant's solicitors, Chambers, in the following terms; "1. Consistent with the consent judgment in our client's favour on the identical issue in the Family Court of Australia, we presume you will now also consent to judgment in our client's favour in these proceedings.

2. As to costs we will be seeking an order for costs. Presuming you do not agree with our costs application, we suggest, the following orders by consent be made on Thursday 31 March, 2005:

a. Judgment by consent in favour of the Plaintiff. b. Plaintiff file its evidence in support of an application for costs within 28 days c. Defendant file its evidence in reply 28 days thereafter. d. Set the costs matter for hearing before the Registrar 60 days hence (or a date suitable to the Court)." 30 There does not appear to have been any response to that letter and on 31 March 2005, orders were made by the Registrar for the plaintiff to answer particulars; for a defence to be filed by the end of April 2005; for the plaintiff to file and serve affidavits by 22 April 2005; and for the defendants to file and serve affidavits in reply by 6 May 2005. A further directions hearing was listed for 20 May 2005. 31 On 21 April 2005, Bouzanis wrote to Chambers as follows: "From a purely practical point of view, we make the following observations:

The Family Court proceedings have been resolved in our clients favour in that Orders were made (with your consent) in accordance with the Claim sought by our client in those proceedings, which is almost identical to the Claim made in the within Supreme Court proceedings;

In that circumstances, we agree with the suggestion that, strictly speaking, our client does not additionally need the Orders of the Supreme Court;

In that circumstance, we had previously sought your consent to the Orders sought in the two Supreme Court Proceedings in accordance with the Consent Orders in the Family Court;

Curiously you have now refused to give us such Consent Orders and are now seeking to strike out the Statements of Claim as an abuse of process;

The ultimate outcome in the Family Court justifies retrospectively the commencement of the within proceedings;

If Costs is the matter that is predominantly of concern to your client, we suggest: a. You agree to an Order in accordance with the Orders sought together with an Order for costs: or b. You agree to an Order in accordance with the Orders sought, with costs to be argued: or c. Not agree to such Orders but agree to litigate the issue of Costs in the Supreme Court proceedings only without other order being additionally made.

We ask you to carefully consider this offer. We are trying to minimise the costs either party will have to incur and or pay.

We simply do not understand what you are getting at other than your desire to avoid an Order for Costs. We are happy to argue costs if you wish.

Subject to your reply herein, we may need to seek particulars of your Cross-Claim and reserve our rights to do so." 32 By letter dated 22 April 2005, Chambers advised Bouzanis that the offers were rejected. 33 On 27 April 2005, Bouzanis sought particulars of the Cross-Claim in the following terms: "a. Do you agree that our client is prepared to not continue the within proceedings, other than as to the issue of costs;

b. We refer you to our letter dated 21 April 2005 and in particular point 6(c) on pages 3 and 4 of that letter. Do you agree that the letter contains an offer to not continue the within Supreme Court proceedings other than as to the issue of costs." 34 Chambers responded to this letter on 28 April 2005, requesting particulars to the effect that the letter was "not a proper request for particulars". At the conclusion of the letter, Chambers pointed out that the Defence and Cross-Claim had been served on 8 April 2005 and that the respondents had not filed affidavits in support of their claims. A request was made that that be attended to within seven days. 35 Subsequently, numerous procedural steps were taken in the proceedings, as I have earlier noted, instigated on each occasion by the respondents. 36 On 8 August 2005, Bouzanis wrote to Chambers in the following terms: "Irrespective of whether we are correct or otherwise, in any of the above, we ask that you simply consider either of the following proposals:

a. We by agreement dismiss the whole proceedings subject to an argument as to costs or

b. You consent to the orders sought by us in the Statement of Claim, without prejudice to your application for costs or

c. Any other proposal you can suggest that will have the effect of minimizing legal costs wastage." 37 On 9 November 2005, Bouzanis wrote to Chambers enclosing two Notices of Motion, one in each set of proceedings, in which an order was sought for leave to be granted under Rule 12.2 of the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR) to discontinue the proceedings. Other orders were sought relating to the Cross-Claim. Further, and relevantly for present purposes, an order was sought in each Notice of Motion that the appellant pay the respondents' costs of the proceedings. The letter indicated that it was proposed to file the Notice of Motion in court on Monday 14 November 2005, returnable instanter. 38 On 14 November 2005, the matter came before Gzell J. His Honour granted leave to the plaintiffs to discontinue the proceedings and ordered that the Cross-Claims be dismissed. The question of costs was set down for hearing on 27 February 2006. The costs hearing was heard by his Honour on that date. His Honour gave judgment on 1 March 2006, in which he ordered that the appellant pay the respondents' costs of the Cross-Claims. His Honour also ordered the appellant to pay the respondents' costs of each of the proceedings from 21 April 2005, being the date of the second letter from the respondents' solicitors to the appellant's solicitors which contained offers to settle the proceedings. 39 The appeal is brought against his Honour's orders in respect of costs.

His Honour's reasons 40 Gzell J recorded the history of the proceedings, the relevant parts of which are referred to above. The respondents had based their application for costs on the letter of 30 March 2005, containing the original offer of settlement. His Honour rejected that claim on the basis that the offer was more onerous than the Orders finally made by consent. However, his Honour considered (at [15]) that the "offer" made in the letter of 21 April 2005: "… would have created the same result as the final orders of November 2005. Those orders simply terminated the proceedings including the cross-claims and left open the question of costs." 41 His Honour observed that, having rejected that offer, the appellant demanded that a defence to the Cross-Claim be served. His Honour referred to the other procedural steps that had been taken by the respondents, including the service on the appellant of: Notices to Admit Facts, Interrogatories, Motions to strike out the Cross-Claims and some 14 affidavits. His Honour noted that in the Notice Disputing Facts in response to the Notices to Admit Facts served in May 2005, the appellant did not dispute that Kary Foukkare had no beneficial interest in the shares or assets of the trusts. 42 His Honour, at [20], referred to the offer contained in the letter of 8 August 2005 (see [36] above) and then observed that, although that proposal was rejected, the orders of November 2005 were made by consent. His Honour then ordered the appellant to pay the respondents' costs of the Cross-Claims and of the proceedings after the date of the offer. He said at [28]: "In the circumstances, I am of the view that the cross-claim initiated by Mr Foukkare was futile. What were sought in the proceedings in this court were essentially the declarations made by consent in the Family Court. That being so, there was no point in Mr Foukkare continuing his opposition to the Supreme Court proceedings. But if he did, there was no point in his putting on a cross-claim alleging an abuse of process. His proper course was to seek to strike out the statements of claim. In my view, it is appropriate that Mr Foukkare pay the cross-defendants' costs of the cross-claims." 43 His Honour further concluded at [29] that it was unreasonable for the appellant to reject the offer contained in para 6(c) of the letter of 21 April 2005 and its repetitions in later correspondence.

Issues on the appeal 44 The appellant contends that his Honour erred in the exercise of his discretion in ordering him to pay costs. It was submitted that his Honour's error was twofold. First, there was a fundamental misapprehension on the part of his Honour, in assuming that the appellant's refusal of the offer made in para 6(c) of the letter of 21 April 2005 thereafter caused the expense in the matter. It was submitted that that misapprehension led his Honour into legal error, in that he failed to have regard to the fact that it was at all times within the power of the respondents to discontinue proceedings: see UCPR 12.1. The appellant further submitted that under UCPR 42.19, a party who discontinues must pay the costs of the proceedings unless the court makes some other order. It was submitted that his Honour failed to have adequate regard to the ordinary rule, but rather focussed attention on the appellant's supposed unreasonableness in not accepting the respondents' offer. 45 The appellant further submitted that his Honour erred in the exercise of his discretion in relation to the costs order made in respect of the Cross-Claim. It was submitted that his Honour applied Reynolds v Reynolds [1977] 2 NSWLR 295 adversely to the appellant in the absence of any hearing on the merits. During the course of argument on the appeal, two other issues emerged. The first related to the meaning of the offer contained in para 6(c) of the letter of 21 April 2005. The second related to whether the respondents would have been entitled to the relief pleaded in the Statement of Claim.

Unreasonableness of the appellant in refusing the offer 46 I have already set out the terms of the offer made on 21 April 2005. His Honour considered that the appellant was unreasonable in failing to accept the offer contained in para 6(c). Before turning to the terms of that paragraph, brief reference should be made to the offers made in 6(a) and 6(b), which involved the appellant agreeing to the orders sought in the Statements of Claim. Had the appellant agreed to the making of Orders and Declarations as sought, he would have been agreeing to orders which he at all times maintained were unfounded. Had he agreed to the offer in para 6(a) he would have conceded costs in respect of proceedings. Had he agreed to the offer in 6(b), it is highly likely that, having conceded the orders sought, he would have been at serious risk of a costs order being made against him. Costs, of course, at this stage, was the only matter in issue between the parties. 47 That then leaves the offer contained in para 6(c). His Honour considered it was unreasonable for the appellant not to agree to that offer, which his Honour interpreted as an offer to discontinue proceedings after costs had been determined. Notwithstanding that this was his Honour's understanding of para 6(c), it must be said that its terms are not clear. His Honour's understanding was gained in the context where there was in fact a discontinuance. It is hardly the use of accurate legal language to say "without other order being additionally made", when what is meant is a discontinuance, if that is in fact what was meant. These parties and Bouzanis were not unfamiliar with the concept of discontinuance. Theodore Onisforou had made an application to intervene in the Family Court proceedings in addition to the one that is relevant here. That application was discontinued. I have referred to that above. In those circumstances, it is quite unlikely that the respondents were seeking a consent to a discontinuance. 48 Further, the process involved in discontinuance is precisely provided for in the UCPR. First, a party files a Notice of Discontinuance, either by consent or leave of the court: UCPR 12.2. If a party discontinues it must pay the costs unless some other order is made by the court. A court, as a practical matter on an application for Leave to Discontinue, upon being told that the real issue is costs, might not formally make the order for leave until it has heard and determined the costs question. However, not even that practical process accommodates his Honour's understanding of para 6(c). In my opinion, the offer in para 6(c) was postulated on there being no order made in the proceedings. As I say below, I consider that the offer was carefully drafted to avoid the normal consequences of discontinuance. It follows on this approach, that had the appellant agreed to para 6(c), he would have agreed to the Court being asked to determine the issue of costs in proceedings which had no conclusion. 49 Costs orders are not made in gross and in my opinion, the "offer" contained in para 6(c), is not one that could have been, or at least ought to have been, entertained by the Court. Accordingly, the very matter upon which his Honour based his finding of unreasonableness was an offer that required an agreement in respect of a process which could not, or at least, should not, have been undertaken by the Court. For that reason alone, the appellant's failure to agree to para 6(c) could not, in my opinion, be characterised as unreasonable and his Honour's discretion miscarried. 50 However, there are other matters for consideration which follow from what I have just said. 51 The appellant having refused the offers contained in the letter of 21 April 2005, the respondents, who were the prosecuting parties, had two options available to them. They could proceed with their claims or they could discontinue. The respondents commenced proceedings in the Supreme Court in circumstances where there were already property proceedings on foot between the appellant and the second respondent. Having commenced proceedings in the Supreme Court, three of the respondents intervened in the Family Court proceedings: see [25] above. (There is no explanation of why three only of the respondents sought leave to intervene in the Family Court proceedings, although it can be observed that the "interests" involved in both the Angus and the Angreb proceedings were represented.) 52 The orders and declarations sought by the relevant respondents in the Family Court proceedings were essentially the same as those sought in the Supreme Court proceedings. The respondents themselves conceded as much in the letter of 21 April 2005 (see para 2 thereof, at [31] above) and Theodore Onisforou in his affidavit evidence said expressly that: "[t]he relief sought in the Intervention Application included relief that was to the same effect as the relief sought in [the Supreme Court] Proceedings." 53 I do not agree, therefore, with his Honour's statement at [23] of his judgment, where his Honour said: "It was argued that Mr Foukkare had never asserted that Mrs Foukkare held a beneficial interest in the companies or trusts, yet that allegation was pleaded. But that element was not a necessary aspect of the relief sought by the interveners in the Family Court. Nor did it constitute part of the declaration ultimately made by consent that Mrs Foukkare had no beneficial interest in the shares or the trusts." 54 Having already obtained the relief they were seeking in the Family Court, there was no need to also obtain relief in the Supreme Court. For that reason, the continuation of the Supreme Court proceedings was not an effectively available option, as to maintain the proceedings was, in my opinion, an abuse of process. In Reynolds v Reynolds, Waddell J said (at 306): "… it might be said of the proceedings in this Court that, even though commenced before the institution of proceedings for principal relief in the Family Court, their continuance would be an abuse of the process of this Court. It is well established that the maintenance of proceedings in two courts, in each of which the relief sought may be granted, may be an abuse of process. The general principle in relation to proceedings in two courts in the one country is stated by the Court of Appeal in McHenry v Lewis (1882) 22 Ch D 397 and in relation to proceedings in each of two divisions of the one court in Williams v Hunt [1905] 1 KB 512 again a decision of the Court of Appeal. In such cases the existence of two proceedings is considered prima facie vexatious, and the court will generally, as of course, put the plaintiff to his election, and stay one of the proceedings; or it may, as in the latter case, stay the proceedings which it considers to be inappropriate." 55 Gzell J distinguished Reynolds, stating at [26]: "His Honour was referring to proceedings in two courts between the same parties. Here the proceedings in this court were by different plaintiffs, the parties to the Family Court proceedings being defendants in both. In my view, Reynolds is not authority for the proposition raised in the cross-claim. Furthermore, no attempt was made by Mr Foukkare to strike out the proceedings in this court as an abuse of process." 56 I do not agree that Reynolds can be distinguished on those bases. Once Angus, Angreb and Sentra were granted leave to intervene in the Family Court proceedings they became parties to those proceedings. The fact that there were additional parties in these proceedings does not affect the position, at least in circumstances where those other parties did not seek any separate or different relief from that sought by those respondents who had intervened in the Family Court proceedings. In my opinion, the basis upon which proceedings may be an abuse of process is not confined to the limited basis as appears to have been considered to be the case by Gzell J. 57 In Reichel v Magrath (1889) 14 App Cas 665 the House of Lords held that a defence which was not barred by res judicata estoppel may nevertheless be struck out as an abuse of process. Lord Halsbury LC said at 668: "… it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again … there must be an inherent jurisdiction in every Court of Justice to prevent such an abuse of its procedure …" 58 In Sinclair v British Telecommunications plc [2001] 1 WLR 38, Judge LJ at 50, with whom Peter Gibson LJ agreed, observed that in that case, the commencement of new proceedings by a party who had taken an assignment of a cause of action, being a cause of action that had been brought in previous proceedings but had been dismissed, had the effect of circumventing: "… the ordinary principles in relation to costs which govern the conduct of second or further proceedings arising out of the same issues …" (Emphasis added) 59 In Idoport v National Australia Bank Limited & Anor [2006] NSWCA 202 I pointed out at [108] (Mason P and Ipp JA agreeing) that Reichel v Magrath has been accepted as good law in Australia: see Walton v Gardiner (1993) 177 CLR 378 at 393; Rogers v The Queen (1994) 181 CLR 251 at 287-288. See also Rippon v Chilcotin Pty Limited (2001) 53 NSWLR 198. 60 In Rogers v The Queen McHugh J observed at 286: "Inherent in every court of justice is the power to prevent its procedures being abused. Although the categories of abuse of procedure remain open, abuses of procedure usually fall into one of three categories: (1) the court's procedures are invoked for an illegitimate purpose; (2) the use of the court's procedures is unjustifiably oppressive to one of the parties; or (3) the use of the court's procedures would bring the administration of justice into disrepute." (Footnote omitted) 61 In State Bank of New South Wales Ltd v Stenhouse Ltd (1997) Aust Torts Reports 81-423 (64,077) Giles CJ Comm D (as he then was) set out the circumstances in which the court would find that there was an abuse of the court's process when a party sought to re-litigate an issue in a second set of proceedings. His Honour said at 64,089: "The guiding considerations are oppression and unfairness to the other party to the litigation and concern for the integrity of the system of administration of justice, and amongst the matters to which regard may be had are:-

(a) the importance of the issue in and to the earlier proceedings, including whether it is an evidentiary issue or an ultimate issue …

(d) the identity between the relevant issues in the two proceedings …" 62 In my opinion, there was such identity of parties and issues in the intervention application in the Family Court and these proceedings that it was an abuse of process to maintain both. The respondents should only ever have had one set of proceedings on foot at any one time. Further, the abuse continued by maintaining the Supreme Court proceedings after the finalisation of the Family Court proceedings. That being so, the respondents should have taken the appropriate steps to discontinue the Supreme Court proceedings. In my opinion, that should have been done upon the filing of the Intervention Application, or at least after leave to intervene was granted. 63 But, in any event, the respondents should have discontinued the proceedings upon the conclusion of the Family Court proceedings, as from that point they had no utility. The respondents themselves recognised that, as is clear from the statement in Bouzanis' letter of 21 April 2005: "1. The Family Court proceedings have been resolved in our clients favour in that Orders were made (with your consent) in accordance with the Claim sought by our client in those proceedings, which is almost identical to the Claim made in the within Supreme Court proceedings;

2. In that circumstance, we agree with the suggestion that, strictly speaking, our client does not additionally need the Orders of the Supreme Court …" 64 His Honour does not appear to have given this factor any consideration. Rather, he found at [22] that: "It was not unreasonable for [the appellant] to be asked to consent to a formula that allowed costs to be argued before a notice of discontinuance was filed". 65 In my opinion, for the reasons I have given, that finding was also erroneous. As already indicated, UCPR 42.19 provides, relevantly, that a plaintiff who discontinues proceedings must pay the defendant's costs unless the Court orders otherwise. Whilst UCPR 42.19 does not give rise to a presumption that costs will be ordered against the discontinuing party: see Fordyce v Fordham [2006] NSWCA 274, the rule does place an onus on the discontinuing party to make an application in respect of costs if that party does not propose to otherwise pay the costs of the other party or parties to the discontinued proceedings in accordance with the rule. 66 In Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 Hill J summarised the principles that have emerged from the case law as to how the Court should approach the exercise of discretion in respect of costs when there has been no hearing on the merits. He said (at 201): "(1) Where neither party desires to proceed with litigation the Court should be ready to facilitate the conclusion of the proceedings by making a cost order …

(2) It will rarely, if ever, be appropriate, where there has been no trial on the merits, for a Court determining how the costs of the proceeding should be borne to endeavour to determine for itself the case on the merits or, as it might be put, to determine the outcome of a hypothetical trial … This will particularly be the case where a trial on the merits would involve complex factual matters where credit could be an issue.

(3) In determining the question of costs it would be appropriate, however, for the Court to determine whether the applicant acted reasonably in commencing the proceedings and whether the respondent acted reasonably in defending them …

(4) In a particular case it might be appropriate for the Court in its discretion to consider the conduct of a respondent prior to the commencement of the proceedings where such conduct may have precipitated the litigation …

(5) Where the proceedings terminate after interlocutory relief has been granted, the Court may take into account the fact that interlocutory relief has been granted …" 67 The same question was considered in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; ex parte Lai Qin (1997) 186 CLR 622. McHugh J said at 624 -625: "In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd [1971] QWN 13, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent Council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans." (Footnotes omitted) 68 The principles discussed in these cases apply where a court is asked to make an order under UCPR 42.19. This was recognised in Fordyce v Fordham, where McColl JA (Beazley and Santow JJA agreeing) said, after pointing out the default orders provided for under the rules governing discontinuance (see UCPR 42.19): "84 [ UCPR 42.19 is] a relevant, but not determinative, consideration. Other relevant considerations were, as the primary judge concluded, usefully gathered in Lai Qin and Australian Security Commission v Aust-Home Investments Ltd & Ors (1993) 44 FCR 194, notwithstanding, as the discussion below reveals, that they were decided in a different statutory context.

87 Once it is recognised, however, that the costs discretion conferred by UCPR 42.19 … is unconfined, the matters referred to in the Lai Qin line of authority are plainly pertinent, although, again, not necessarily determinative." 69 Gzell J did not refer to (and appears was not referred to) these authorities. Rather he took the view that the result effected on 14 November 2005, when his Honour gave leave to discontinue the proceedings, "would have created the same result" as the offers in the letter of 21 April 2005, although he ultimately only determined that it was unreasonable to have not accepted the offer in para 6(c). With respect to his Honour's reasoning, this is not correct. I have already referred to the effect of the offers made in the letter. None had the same effect as the Orders claimed. Indeed, it is likely that the offers, including that contained in para 6(c), were specifically framed so as to avoid the respondent having to pay costs on discontinuance unless the court ordered otherwise. 70 As I have already indicated, I do not consider that the offer in para 6(c) had the effect of asking for a discontinuance. But even if para 6(c) is properly understood in that way, there was no obligation on the appellant to agree to that formula - it is not one for which provision is made by the Rules of Court - and it would not have been unreasonable for the appellant to have refused such a proposal when it was at all times available for the respondents to take a simple procedural step of filing an application for leave to discontinue and an order for costs under UCPR 42.19. The respondents' continuance of the proceedings and in taking the many steps they did in the Supreme Court proceedings was, in my opinion, the overwhelmingly unreasonable conduct in this litigation. Indeed, to do so constituted an abuse of process for the reasons I have already indicated. For that reason also, I am of the opinion that his Honour's discretion miscarried. 71 There is a final matter. Angus and Angreb were each proprietary limited companies. The legal and beneficial shareholding in each company is set out above. In the Family Court proceedings the appellant had sought an order that any share or beneficial interest in a trust held in his and/or his wife's name jointly or severally be either sold or quantified and that there be an equal division or apportionment of the sale proceeds or value between them. It was important to Kary Foukkare's position in those proceedings to establish that she did not hold any beneficial entitlement to the shares in respect of which she was the registered legal holder. 72 That could have been established by evidence from a proper officer of the companies or a person authorised by the trusts to which I have referred. She did not pursue that approach. Rather, Angus, Angreb and Sentra sought leave to intervene to establish those matters and the Family Court granted them leave to do so. The Family Court was clearly an appropriate forum, and in my view, the appropriate forum, for that issue to be determined. The appellant had not made any assertion to any entitlement to the specific shares in the companies or to any specific interest in the trusts and to the extent it did so, it was only in relation to the Family Court proceedings. That claim was cast in general terms as I have already discussed. In those circumstances, there may have been a real question whether the Supreme Court would have made the Declarations and Orders sought. That may have been important because Lai Qin establishes that the reasonableness of a party commencing proceedings is one of the matters relevant to the exercise of the discretion to order costs where there has been no curial determination of the proceedings. However, no point in that regard was taken and it is therefore not necessary to determine it, although my own view is that it was not reasonable for the respondents to commence Supreme Court proceedings. The point that was taken by the appellant and with which I have agreed is that it was not reasonable for the respondents to continue the Supreme Court proceedings. 73 That leaves the question of the Cross-Claims. His Honour determined that the appellant should pay the costs of the Cross-Claims because he had utilised the wrong procedure. That may be so, but it is of small moment. As I have indicated, the respondents themselves failed to engage the correct procedure in failing to seek leave to discontinue when they should have done so and in failing to make an application in respect of costs. More importantly however, it is difficult to see that there would have been any appreciable difference in the costs in filing the Cross-Claims and in bringing a Notice of Motion to strike out the Statements of Claim. I would also add that if a court insists that correct procedures be followed by a party at the risk of costs, it should do so in respect of all parties in the matter. For those reasons, the discretion as to the costs on the Cross-Claims also miscarried. 74 As his Honour's discretion miscarried, this Court may itself exercise the discretion in respect of costs. It will be apparent from what I have said that I consider that the respondents should not have commenced proceedings in the Supreme Court at all, although that needs to be put to one side for the purposes of the present determination. Having commenced the proceedings, they should have discontinued them once three of the respondents sought leave to intervene in the Family Court proceedings. Finally, they ought to have discontinued the proceedings as soon as the Family Court proceedings were resolved. In those circumstances, I am of the opinion that this is not a matter where a costs order in favour of the respondents should be made under UCPR 42.19. It follows that the respondents should pay the costs of the appellant in each proceeding. I would also order the respondents to pay the costs of the Cross-Claims. The intention of the Cross-Claims was to have the proceedings struck out as an abuse of process. Apart from the matter of form, it was reasonable for the appellant to bring some such application to strike out the statements of claim as an abuse of process, for the reasons that I have given. 75 I would make one further comment in the matter. The correspondence from the legal representatives for the respondents was often unnecessary, usually prolix, at times provocative and rude, and at other times threatening. When legal practitioners engage in such conduct it has the inevitable effect of increasing costs and it is not professional. Legal practitioners ought not to engage in such conduct, either on their own initiative or at the behest of their clients. 76 The formal orders I propose are as follows:

3. The respondents are to pay the appellant's costs of each of the proceedings No. 5341 of 2003 and No. 5342 of 2003;

4. The respondents are to pay the costs of the summons for leave to appeal and of the appeal but are to have a certificate under the Suitors' Fund Act 1951 (NSW) if entitled. 77 GILES JA: I agree with Beazley JA. 78 IPP JA: I agree with Beazley JA. **********

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