Alberti and Alberti

[2017] FamCAFC 174

FAMILY COURT OF AUSTRALIA

ALBERTI & ALBERTI [2017] FamCAFC 174

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – Where the wife seeks an order for security for costs in default of which the appeal be stayed – Where the appeal is against orders for the settlement of property – Where the wife submits the husband is unlikely to succeed on appeal and has little prospect of meeting a costs order – Where the court is satisfied that the prospects of success of the husband’s appeal are not hopeless – Where an order for security for costs would stifle the appeal – Application dismissed.

Family Law Act 1975 (Cth) ss 75(2), 79(4), 117, 117(2A)(g)

Family Law Rules 2004 (Cth) r 19.05(2)

Atkins & Hunt (Security for Costs) (2015) FLC 93-646
Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206
Halsbury & Halsbury [2008] FamCAFC 170
Luadaka v Luadaka (1998) FLC 92-830

APPLICANT: Ms Alberti

RESPONDENT: Mr Alberti

FILE NUMBER: BRC 1422 of 2016

APPEAL NUMBER: NA 9 of 2017

DATE DELIVERED: 24 August 2017

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Ryan, Aldridge & Forrest JJ

HEARING DATE: 24 August 2017

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 15 February 2017

LOWER COURT MNC: [2017] FCCA 953

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr George

SOLICITOR FOR THE APPLICANT: Geldard Sherrington Lawyers

SOLICITOR FOR THE RESPONDENT: Browns the Family Lawyers

Orders

1. The Application in an Appeal filed on 14 June 2017 be dismissed

2. Costs in the above application will be costs in the appeal.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Alberti & Alberti has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number: NA 9 of 2017
File Number: BRC 1422 of 2016

Ms Alberti

Applicant

And

Mr Alberti

Respondent

EX TEMPORE REASONS FOR JUDGMENT

Forrest J

1. This is an application by Ms Alberti (“the wife”) who is the respondent to an appeal, for an order for the provision of security for costs. The order sought is for the sum of $20,000 to be paid within twenty-eight days, in default of which the appeal be stayed.

2. The appeal is against orders for the settlement of property made by Judge Coates on 15 February 2017. The orders provide for the “matrimonial property pool” to be divided between Mr Alberti (“the husband”) and the wife so that the wife received 80 per cent and the husband 20 per cent. The orders provide for a cash adjustment to be made by the husband to the wife to otherwise give effect to the 80/20 division of property. 

3. The husband filed a Notice of Appeal against the orders on 14 March 2017.  On 14 June 2017, the wife filed this application for security for costs in the appeal. The wife also filed an application for costs of the trial that has been heard by the primary judge, but in which judgment is reserved. In that application, the wife sought payment of her costs of the proceedings on an indemnity basis approximately $130,000.

Some background

1. The wife is 47 years of age and the husband is 51 years of age. They commenced a personal relationship in 1977 and married in August 2000. Four children were born of their relationship. The oldest is now 19 years of age and the others are aged 16, 12 and 9.

2. The parties separated in January 2016. The three youngest children have lived with the wife since the parties separated and the young adult child remains partly dependent upon her.

3. The trial of the wife’s property application took place in February 2017, with the primary judge delivering judgment at the conclusion of the hearing.  The orders generally reflect those sought by the wife.  For his part, the husband proposed a 60/40 per cent distribution in favour of the wife albeit of a differently constituted pool of assets.

4. It is not disputed that the cash payment to be made by the husband to the wife, determined in accordance with the orders appealed against, would be $33,000. The husband would retain a number of old motor cars, items of jewellery and other personal property valued at $167,500 by the primary judge and would be left with liabilities to his mother and brother of $5,000 and $26,300 respectively, along with unpaid legal fees in the order of $74,000. The wife would also retain real property found by the primary judge to be valued at $950,000, a motor car and personal possessions, as well as the joint mortgage liability to a bank of $427,945 secured over the real property.

5. The husband had not worked for eight years prior to the date of separation and only worked sporadically in the twelve months from separation to trial. He continues to live in the home of his brother, accumulating debt to him for unpaid rent.

6. The wife bears the burden, without financial support from the husband, of supporting the children, who, at the time of the trial, had not spent any time with the husband since separation. She is in receipt of Commonwealth Government social security benefits and is financially assisted by her mother and her mother’s partner.

7. Although the orders have not been stayed, the husband has not paid the wife the cash adjustment he was ordered to pay.

Relevant principles

1. The power to make an order for security for costs is found in s 117 of the Family Law Act 1975 (Cth) (“the Act”). Although the Act provides for each party to proceedings under the Act to bear his or her own costs, that is subject to the Court being able to make such orders as to costs and security for costs as are just if it is of the opinion that there are circumstances that justify it in doing so. It is well settled that in addition to the matters referred to in that section, that pursuant to s 117(2A)(g) the following matters should be considered on an application for security for costs:

   ·the prospects of success of the litigation (relevantly, in this case, the husband’s appeal);

   ·whether the claim for security is made bona fide;

   ·whether or not an order for security would stifle the litigation;

   ·whether or not the litigation may involve a matter of public importance;

   ·whether or not there has been a delay in bringing the application for security; and

   ·whether there would be difficulty in enforcing an order for costs.

   (See Atkins & Hunt (Security for Costs) (2015) FLC 93-646; Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206; Luadaka v Luadaka (1998) FLC 92-830)

2. As was observed in Atkins & Hunt at [22], the list of factors set above “largely mirror” the matters referred to in r 19.05(2) of the Family Law Rules 2004 (Cth).

Discussion

1. The gravamen of the submissions made for the wife in support of this application is that the husband is unlikely to succeed on the appeal and would, in that event, have little prospect of meeting a costs order in favour of the wife, given his financial circumstances, particularly in the light of the primary judge’s orders. 

2. It is correct that the husband’s financial circumstances are strained. He remains unemployed with the value of the property he retains under the orders only slightly in excess of his existing liabilities and with a costs application already heard against him remaining undecided. If that is determined against him, he could be left with no property at all.

3. It is also correct that the wife’s financial circumstances are modest. She is in receipt of Government benefits and has managed to support herself and the children and to retain legal representation in these proceedings only with the financial assistance of her mother and her mother’s partner. She does though, have the benefit of orders providing for her to retain a valuable real property with at least $520,000 of equity.

4. The apparent impecuniosity of the husband and the consequent difficulty he might have in meeting a costs order made in favour of the wife at the conclusion of this appeal, are matters for serious consideration. However, they are not necessarily decisive factors in an application for security in respect of the costs to an appeal and should be balanced against others, particularly the prospects of success of, or the merits of the appeal. (See Halsbury & Halsbury [2008] FamCAFC 170 at [22].) I turn to that matter now.

The prospects of success of the appeal

1. In his Notice of Appeal the husband has listed eight grounds of appeal. For the wife, it is submitted that the husband’s prospects of success are “remote”. Counsel for the wife contends that grounds 4-7 assert that insufficient or too much weight was afforded to various portions of the evidence, and he points to the well-known difficulties faced in appeals grounded on assertions in respect of “weight”. He further submits that the remaining grounds “do not, on their face, raise a reasonable suspicion that the Appeal has any grounds of succeeding”, such that this court “could effortlessly conclude that the husband’s prospects of succeeding on appeal are, at best, tenuous.”

2. Those other grounds (1-3 and 8) include that the primary judge erred by taking into account matters from affidavits that were not in evidence, by taking into account matters which were irrelevant to the proper consideration of s 79(4) and s 75(2) of the Act, by making incorrect findings of fact in respect to the value of the real property ordered to be retained by the wife, and by making orders that fell outside a reasonable exercise of discretion such that they were plainly wrong.

3. Whilst, in my view, it is impossible at this stage of the proceedings for this Court to conduct a thorough examination of the merits of the appeal, given the breadth of the grounds and the fact that no summaries of argument have yet been filed in the appeal, some consideration must be given to whether or not there appears to be an arguable case on appeal, or whether counsel for the wife is correct in his submissions about this.

4. In contrast, for the husband, it is submitted that there is a high probability of success in the appeal. In support of that, for example, it is pointed out that the primary judge’s finding as to the value of the real property ordered to be retained by the wife is subject to challenge in ground 3, and reference is made to the transcript of the evidence given by the wife under cross-examination at the trial in support of the challenge (AB 394-396).

5. Consideration of the primary judge’s findings at [19]-[26] in the light of that evidence causes me, at least, to consider the ground of appeal asserting error in this respect is sufficiently arguable, such that I do not accept that the husband’s prospects of success are as “tenuous” as the wife submits. 

6. Further, the husband’s submission (referenced to ground 4 of the Notice of Appeal) that the primary judge failed to give any consideration whatsoever to an inheritance of $96,000 contributed by the husband in 2010, may have some merit (AB 402).

7. Standing in the way of a submission that the appeal has a high probability of failure is also the ground of appeal that the primary judge referred to parts of affidavits in his judgment that were not in evidence before him.

8. Accordingly, I am satisfied that the prospects of success of the husband’s appeal are not as hopeless as counsel for the wife, in his written submissions at least, would have this court accept. 

The bona fides of the application and the delay in bringing it

1. There is nothing about the wife’s application for security for costs, the evidence she relies on in support of it, or the submissions made by her counsel that causes me to consider that there is a lack of bona fides to her application. She has the benefit of a judgment in her favour and the capacity of the husband to meet a potential costs order is a matter of concern to her. She cannot be criticised for that, in my view.

2. Although four months passed after the Notice of Appeal was filed before the wife filed her application for security, I am not concerned that demonstrates any lack of bona fides on her part or that it should determine the application against her.

Is there a matter of public importance involved in the litigation?

1. I do not consider the appeal involves a matter of public importance.

Would an order for security stifle the litigation?

1. For the husband, it is submitted the wife concedes in her submissions that an order for security for her costs of the appeal will likely stifle the appeal. I accept that submission. The wife acknowledges that the husband will submit that an order for security will “nullify his ability to prosecute the Appeal” and does not go on at all, at least in counsel’s written submissions, to make any contrary submission. Indeed, in oral submissions today, counsel for the wife effectively conceded, as I understood his position, that an order for security for costs would probably stifle the litigation.

2. There is clearly a serious prospect that the husband will not be able to prosecute the appeal if he is ordered to pay $20,000 in security for the wife’s costs of the appeal. That factor weighs heavily against the relief sought.

Conclusion

1. Considering all of these matters, particularly the fact that an order for the husband to pay $20,000 security for the wife’s costs or have his appeal stayed would probably put an end to an appeal which is at least arguable, I am not persuaded that the husband, despite his relatively poor financial circumstances, should be ordered to provide the security. I would dismiss the application.

Aldridge J

1. I agree with the reasons given and the orders proposed by Forrest J.

Ryan J

1. I also agree.  The orders will therefore be:

   (1)      The Application in an Appeal filed on 14 June 2017 be dismissed

   (2)      Costs in the above application will be costs in the appeal.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Forrest JJ) delivered on 24 August 2017.

Associate: 

Date:  25 August 2017