Antoun & Antoun (No 3)
[2025] FedCFamC1F 38
•31 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Antoun & Antoun (No 3) [2025] FedCFamC1F 38
File number: PAC 796 of 2017 Judgment of: WILLIAMS J Date of judgment: 31 January 2025 Catchwords: FAMILY LAW – PROPERTY – Major complex financial proceedings list – Interim applications – Where the wife alleges the husband has divested himself of the matrimonial pool – Application for joinder – Application to strike out pleadings – Application for security for costs – Order made for the proposed respondents to be joined as parties to the proceedings – Leave granted to amend the wife’s further amended points of claim. Legislation: Family Law Act 1975 (Cth) ss 78, 79, 102QAB, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 56, 69
High Court Rules 2004 (Cth) r 27.04
Legal Profession Uniform Law Australians Solicitors’ Conduct Rules 2015 r 21.4
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01, 3.03, 12.02, 12.15
Cases cited: Akbar & Gandega (2023) 67 Fam LR 593; [2023] FedCFamC1A 174
Antoun & Antoun [2023] FedCFamC1F 129
Antoun & Antoun (No 2) [2024] FedCFamC1F 354
Frazier & Valdez (2016) FLC 93-729; [2016] FamCAFC 163
Hohol & Hohol (1980) FLC 90-824; [1981] VR 221
Quincey & Quincey [2023] FedCFamC1A 30
Wayne & Dillon & Anor (2008) Fam LR 543; [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 86 Date of hearing: 16 December 2024 Place: Melbourne Counsel for the Applicant: Mr Ford Solicitor for the Applicant: Lewarne & Goldsmith Counsel for the First Respondent: Ms Clark Solicitor for the First Respondent: Brooklyn Bennett Counsel for the Second Respondent: Mr Dura SC Solicitor for the Second Respondent: Dentons Counsel for the Third Respondent: Mr Dura SC Solicitor for the Third Respondent: Dentons The Fourth Respondent: Did not participate The Fifth Respondent: Did not participate The Sixth Respondent: Did not participate Counsel for the Eighth Respondent: Ms Samolej Solicitor for the Eighth Respondent: Thomson Geer Counsel for the Proposed Ninth Respondent: Mr Dura SC Solicitor for the Proposed Ninth Respondent: Kennedys Law Counsel for the Proposed Tenth Respondent: Mr Dura SC Solicitor for the Proposed Tenth Respondent: Dentons Counsel for the Proposed Eleventh Respondent: Mr Dura SC Solicitor for the Proposed Eleventh Respondent: Dentons The Twelfth Respondent: Did not participate Counsel for the Thirteenth Respondent: Mr Dura SC Solicitor for the Thirteenth Respondent: Dentons Counsel for the Proposed Fourteenth Respondent: Mr Dura SC Solicitor for the Proposed Fourteenth Respondent: Dentons Counsel for the Proposed Fifteenth Respondent: Mr Dura SC Solicitor for the Proposed Fifteenth Respondent: Kennedys Law Counsel for the Seventeenth Respondent: Mr Dura SC Solicitor for the Seventeenth Respondent: Dentons ORDERS
PAC 796 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ANTOUN
ApplicantAND: MR ANTOUN
First Respondent
B PTY LTD
Second Respondent
MR C (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
WILLIAMS J
DATE OF ORDER:
31 JANUARY 2025
THE COURT ORDERS THAT:
1.Ms AE be joined as the 9th respondent in these proceedings.
2.PP3 Holdings be joined as the 10th respondent in these proceedings.
3.AF Pty Ltd be joined as the 11th respondent in these proceedings.
4.H Group be joined as the 14th respondent in these proceedings.
5.QQ1 Holdings Pty Ltd be joined as the 15th respondent in these proceedings.
6.On or before 28 days from the date of these orders, if she seeks to do so, the wife
file and serve any further amended points of claim.
7.On or before 28 days from the date of these orders, the wife file and serve an Amended Initiating Application setting out the relief sought against each of the 9th, 10th, 11th, 14th, and 15th respondents.
8.Within 28 days of service of a Further Amended Points of Claim or Amended Initiating Application, any respondents affected, file and serve an amended defence or Response.
9.The wife’s Application in a Proceeding filed 28 August 2024 and her Amended Application in a Proceeding filed 16 October 2024 are otherwise dismissed.
10.The Response filed 12 December 2024 is 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 Antoun & Antoun has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILLIAMS J
INTRODUCTION
In 2017 the applicant wife commenced proceedings against the husband, the first respondent, pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) seeking a property settlement following the breakdown of their marriage in late 2015.
The wife asserts the husband, his relatives, business associates and advisors, have embarked upon a course of conduct to the defeat the wife’s claim, by entering transactions and creating and executing documents, which divested the husband of control of various companies and trusts.
I made orders on 27 May 2024 inter alia, for the joinder of various individuals and entities.
On 28 August 2024, the applicant filed an Application in a Proceeding seeking leave be granted to join as respondents to the proceedings PP3 Holdings (10th)), AF Pty Ltd (11th), QQ1 Holdings(12th), and H Group (14th). That application was amended on 16 October 2024 (“the Amended Application in a Proceeding) to also seek to join Ms AE (aka two other surnames) (9th) as a respondent to the proceeding.
The proposed respondents (9th, 10th, 11th, 12th and 14th) filed a Response on 12 December 2024 ( the Response), seeking the Amended Application in a Proceeding be dismissed, a costs order or alternatively a costs order against the solicitors for the applicant wife pursuant to Rule 12.15 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), paragraphs [181]-[202] (inclusive) and [203]-[206] (inclusive) of the Further Amended Points of Claim (“FAPC”) filed 28 August 2024 be struck out, and the applicant cause the sum of $1,756,986.30 to be deposited into Dentons Trust Account as security of costs for the 2nd, 3rd, 13th and 17th respondents to the FAPC. During the hearing, the Response was effectively treated as having been filed on behalf of the additional respondents and the proposed respondents.
BACKGROUND
The extensive background of the dispute between the parties is set out in paragraphs [5]-[7] of my reasons in Antoun & Antoun (No 2) [2024] FedCFamC1F 354 (“Antoun & Antoun (No 2), and by Riethmuller J in Antoun & Antoun [2023] FedCFamC1F 129 at [13]-[68], which I incorporate and rely on in these reasons.
THE JOINDER APPLICATION
The wife seeks to join the companies referred to respectively in paragraph 4 hereof as the 10th, 11th, 12th and 14th respondents and Ms AE as the 9th respondent. Although the application refers to QQ1 Holdings as the proposed 12th respondent, Ms G, was joined as the 12th respondent by orders made 16 November 2022. I will therefore now refer to the proposed respondent, QQ1 Holding sas the proposed 15th respondent.
All proposed respondents oppose joinder and indeed, if the wife is unsuccessful in this regard, seek costs against her, and in the alternative, against her solicitors.
The husband also opposed the joinder of the proposed respondents.
Documents relied upon
The wife relied upon the following documents:
(i)Amended Application in a Proceeding filed 16 October 2024;
(ii)Affidavits of the wife filed 28 and 29 August 2024;
(iii)Outline of Case document filed 14 October 2024; and
(iv)Documents from the wife’s tender bundle tendered during the hearing.
The husband did not file any documents, but his counsel sought to make submissions.
The proposed respondents (9th, 10th, 11th, 14th, and 15th) relied upon the following documents:
(i)Response to an Application in a Proceeding filed 12 December 2024;
(ii)Affidavit of solicitor filed 12 December 2024; and
(iii)Outline of Case Document (not filed).
Legal Principles
Section 79(10)(b) of the Family Law Act 1975 (Cth) (“the Act”) states that “any other person whose interests would be affected by the making of the order, as sought by the parties, are entitled to become a party to proceeding”.
Rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) addresses the procedure to join a party to proceedings. That Rule provides:
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in the proceeding, must be included as a party to the proceeding.
The term necessary was considered in Wayne & Dillon & Anor (2008) Fam LR 543 by Warnick J who said:
[18]The word necessary… must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
[19]However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute”.
Leave is required per r 3.03(4) of the Rules because the application is made after the first court date.
In exercising my discretion to determine the application, I must consider:
(a)Are the proposed respondents a person (or entity) whose rights may be affected by an issue in the proceeding; and
(b)Is the participation of the respondents as a party, necessary for the court to determine all issues in dispute in the proceedings.
The wife’s submissions – the joinder application
I will deal with the submissions relevant to each of the proposed respondents.
The gravamen of the wife’s application to join further respondents is her assertion that the husband, his relatives, business, and various entities have undertaken steps to dissipate them matrimonial pool, and thereby deprive the wife of her future entitlements.
First, the wife seeks to join Ms AE because she is a director of the proposed 10th, 11th, 14th, and 15th respondents.
The wife submits three of the four appointments occurred post separation, and replaced either the third respondent (Mr C), or the husband’s sister, Ms AB, as directors of the proposed respondents.
In the Further Amended Points of Claim filed by the wife on 28 August 2024 (“FAPC”), she seeks a Declaration per s 78 of the Act and/or an account of profits against Ms AE as articulated at [274]-[275] and [289]-[290] of the FAPC, as well as against the companies of which she is a director at [205] and [206] of the FACP.
Secondly, the wife seeks leave to join PP3 Holdings and AF Pty Ltd, as the 10th and 11th respondents. Her proposed claim is set out at [246]–[275] of her FAPC.
The wife asserts that on 6 May 2021 the structure of PP Pty Ltd was altered so that 4 shares were held by PP2 (an entity not proposed to be joined), 14 shares were held by PP3, and two shares were held by AF Pty Ltd. The 3rd respondent, Mr C, is the director of PP3 and Ms AE, the husband’s sister, is the director of AF Pty Ltd. Between June 2016 and September 2017, H Group made transfers of $126,500 to PP Pty Ltd. The husband was involved in establishing AM bank accounts for PP Pty Ltd, as well as an AG Bank account in Country AH. The husband also signed the heads of agreement for a lease of premises in the AJ Residential Area in favour of PP Pty Ltd. The bank accounts, accountancy fees, emails, and domain names for PP Pty Ltd were set up by Ms AK, who was then the accountant for H Group. At that time, the husband was the director of H Group.
Thirdly, the wife seeks to join QQ1 Holdings as the 15th respondent. Her proposed claim is set out at [276]–[290] of the FAPC.
The wife asserts in September 2021 the structure of QQ Pty Ltd was altered so that 75 shares were then to be held by QQ1 Pty Ltd. Mr C, the 3rd respondent, is the director of QQ1 Pty Ltd. Between August 2016 and November 2021, transfers of $531,337.80 were made from H Group and L Pty Ltd to QQ Pty Ltd. The husband negotiated the lease terms for premises to be rented by QQ Pty Ltd. The bank accounts, accountancy fees, emails, and domain names for QQ Pty Ltd were set up by Ms AK, who was then the accountant for H Group. At that time, the husband was the director of H Group.
Lastly, the wife seeks to join the proposed 14th respondent, H5 Group, because she asserts the proposed 14th respondent is the phoenix entity of H Group. Her proposed claim against the proposed 14th respondent is set out at [181]-[206] of the FAPC.
She asserts that in December 2017 the husband and his sister, Ms AB, reissued numerous contracts which were previously in the name of H Group, to H5 Group, all work previously completed by H Group now operates through H5 Group, and subsequent to the liquidation of H Group (now known as AC Pty Ltd), H5 Group has continued to trade.
The wife submits all the proposed respondents should be joined because it is necessary to define the matrimonial pool of assets, and her rights may be affected by an order of the Court.
The additional and proposed respondent’s submissions – the joinder application
The additional and proposed respondents collectively resist the wife’s application for joinder.
In their Outline of Contentions emailed to my Chambers on 16 December 2024, they submit that the FAPC fails to properly particularise and/or substantiate a proper cause of action against the proposed respondents. The issue has been an ongoing argument between the wife and the additional respondents, and the wife continues to seek to join parties who are in no way directly affected by the proceedings on foot.
Furthermore, the wife has failed to file a Further Amended Initiating Application seeking relief against any of the proposed respondents and has failed to articulate how and/or why, absent an order or declaration against any of the proposed respondents, the rights of the proposed respondents may be directly affected by an issue in the proceedings or why their participation is necessary.
The wife fails to identify how the rights of third parties are affected, how she has standing to bring a claim for an account of profits on behalf of the husband (Akbar & Gandega [2023] FedCFamC1F 308), and why she does not intend to join the liquidator of H Group (via AC Pty Ltd.)
The husband’s submissions – the joinder application
Counsel for the husband agreed with the submissions of senior counsel for the additional and proposed respondents, and submitted it was a very high bar to say that a joinder of parties was necessary.
The wife had failed to identify why it was now necessary to join the proposed respondents, given the litigation commenced in 2017 and the share transfers, appointment of directors and restructuring had been known to the wife between 2016 and 2013. The wife must have known of the corporate transactions in some form since then, and it was unacceptable to make such an application so late in the proceedings in circumstances where there needed to be a line drawn to identify the asset pool.
Secondly, the trial date has been set for May and if the trial is unable to proceed on the scheduled date because of the latest round of applications, the Court must balance the cost-effective resolution of the dispute and the prejudice to the other litigants, when considering whether to join the proposed respondents.
Conclusion
Whilst I acknowledge the wife’s case against each of the proposed respondents could have been more precisely and clearly articulated, it is evident that the basis of her claims is that the husband has manoeuvred and orchestrated his relatives and, in some instances, their corporate entities, to divert the claimed matrimonial assets of the husband and wife, from the asset pool. The wife relies on the involvement of the husband’s relatives as shareholders and directors in corporate entities and the involvement of the husband himself in the financial and business transactions of the various entities, in her attempt to claw back into the asset pool, what she asserts are matrimonial assets. It is regrettable that the wife’s claims and assertions did not come to light much earlier in the tortured interlocutory history of this proceeding. However, notwithstanding the unsatisfactory delay in bringing the applications, I do not propose to deny the wife the opportunity to prosecute her perceived claims.
Whether or not her suspicions and assertions come to fruition will be a matter for the trial, evidence, and robust cross-examination. The wife is well aware of the cost consequences she may face if she is ultimately unsuccessful.
If on the other hand, she is able to successfully assert her claim, the respondents may well themselves face significant cost consequences. The veracity of the claims cannot, in this Court, be determined on an interim basis, and because of less-than-optimal technical pleadings. This Court will determine the claims and counterclaims of all parties on the evidence presented at trial.
I will make orders joining the proposed respondents as parties to the proceedings, and for the wife to file and serve an Amended Points of Claim should she seek to further particularise her claim. I will also order the wife to file and serve an Amended Initiating Application particularising the relief sought against the proposed Respondents to address the submissions of their counsel referred to at [32]. 28 days should be sufficient time to enable the wife to do so.
STRIKE OUT APPLICATION
The additional and proposed respondents seek to strike out paragraphs [181]–[202] (inclusive) and paragraphs [203]–[206] (inclusive) of the wife’s FAPC. The relevant paragraphs are found at pages 75-77 of the wife’s affidavit filed 29 August 2024. They pertain to the wife’s claim against H5 Group [181]-[202], the proposed 14th respondent, and her assertion of a common intention constructive trust with respect to H5 Group [203]–[206].
The strike out application was opposed by the wife. She asserts the proposed 14th respondent is a “phoenix” company of the former core electrical business previously operated by the husband and wife, H Group. The wife alleges H Group was allegedly sold by the husband to the 3rd respondent, his brother-in-law, Mr C, and the proposed 14th respondent has been transferred the website, social media account and projects of H Group, absent market consideration.
Documents relied upon
All parties relied on the documents referred to above at [10] and [12].
Legal principles
In relation to the power of this Court to strike out pleadings, s 69 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) provides:
69 Power of the Federal Circuit and Family Court of Australia (Division 1) to give directions about practice and procedure in a civil proceeding
(1)The Federal Circuit and Family Court of Australia (Division 1) or a Judge may give directions about the practice and procedure to be followed in relation to a civil proceeding, or any part of a civil proceeding, before the Court.
…
(4)In particular, the Federal Circuit and Family Court of Australia (Division 1) or Judge may do any of the following:
(a) dismiss the proceeding in whole or in part;
(b)strike out, amend or limit any part of a party’s claim or defence;
(c) disallow or reject any evidence;
(d) award costs against a party;
(e)order that costs awarded against a party are to be assessed on an indemnity basis or otherwise.
Because the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (the “FCFCOA Rules”) are silent in relation to proceedings and strike out applications, the High Court Rules are incorporated by operation of s 56(2) of the FCFCOA Act.
Section 56 of the FCFCOA Act states
56 Practice and procedure
(1) Subject to this Chapter and the Family Law Act 1975, the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1) is to be in accordance with:
(a)regulations made under this Act and the Family Law Act 1975; and
(b)the Rules of Court.
(2)To the extent that the provisions mentioned in subsection (1) are insufficient, the Rules of the High Court apply, mutatis mutandis, so far as they are capable of applying and subject to any directions of the Federal Circuit and Family Court of Australia (Division 1) or a Judge, to the practice and procedure of the Federal Circuit and Family Court of Australia (Division 1).
(3)This section does not apply in relation to proceedings that are transferred to the Federal Circuit and Family Court of Australia (Division 1) from the Federal Court.
(4)In this section, practice and procedure includes all matters with respect to which regulations under this Act, the Family Law Act 1975 or Rules of Court may be made
Rule 27.04 of the High Court Rules 2004 (Cth) (the “High Court Rules”) refers to the “Contents of Statements of Claim” and is the provision to be applied in determining whether pleadings are deficient in this jurisdiction. Rule 27.04 relevantly provides:
27.04 A Statement of Claim:
(a)shall state the basis on which it is claimed that the matter is within the original jurisdiction of the Court;
(b)shall contain in a summary form a statement of all the material facts on which the plaintiff relies, but not the evidence by which those facts are to be proved;
(c)where any claim arises by or under any Act, shall identify the specific provisions relied on; and
(d)shall contain the necessary particulars of any fact or matter pleaded, including:
(i)all particulars necessary to enable the opposite party to plead or to define the questions for trial or to avoid surprise at trial; and
(ii)particulars of any misrepresentation, fraud, breach of trust, wilful default, or like matter; and
(e)shall state specifically the relief or remedy claimed.
The additional and proposed respondent’s submissions
Senior counsel for both the additional and proposed respondents relied upon two factors supporting strike out of relevant paragraphs of the wife’s FAPC.
First, the wife has failed to file a Further Amended Initiating Application setting out the relief sought against the proposed respondents.
Secondly, despite request to do so, the wife has failed to particularise with certainty the factual matters underpinning the allegations of fraud and/or illegal behaviours pleaded by her in the FACP, notwithstanding the provisions of rule 21.4 of the Legal Profession Uniform Law Australians Solicitors’ Conduct Rules 2015.
The proposed respondents submitted that the wife’s claim in its current form, does not assist the Court to determine the issues or enable the relevant proposed respondents to properly identify the nature of the case to be met.
Senior counsel for the proposed respondents referred to various paragraphs of the FAPC, in particular paragraphs [187], [188], [189], [190], [191], [200], and [202]. The paragraphs are “bulk assertions, absent particular allegations as to fraud or alleged common intention”, as pleaded by the wife. Furthermore, the Court has no jurisdiction to grant the relief sought at paragraph [206], namely an account of profits.
The wife has had multiple occasions on which to particularise her case to enable the respondents joined by her and proposed to be joined by her, to properly understand and address the allegations of the wife and the issues raised by her. Opportunities to particularise her allegations were afforded to the wife by the orders made on 27 May 2024, but she has failed to do so. The wife has continued to repeat the same complaints and the particulars of the FACP fail to address the necessary obligations of solicitors when making allegations of fraud and illegal activities.
The wife should not be afforded a further opportunity to amend her particulars, nor should she be permitted to delay the particulars of her claim until she files her trial affidavit. Her purported response to the request for further and better particulars is deficient because it primarily refers to affidavits of the wife and otherwise claims request are a matter for evidence and ought not be the subject of a request for particulars.
The wife’s submissions
Counsel for the wife, as in the previous application made by respondents in Antoun & Antoun (No 2), submitted the application was either, or analogous to, a summary dismissal application pursuant to s 102QAB of the Act, and taking the wife’s material at its highest, the Court could not be satisfied that there was no reasonable prospect of success, because the wife had an arguable case. The wife’s reference to Hohol & Hohol (1980) FLC 90-824, in her Further Amended Points of Claim (“FAPOC”) at paragraph [204], was in the sense of depravation of her rights, as opposed to criminal activity.
Counsel for the wife relied on annexures to the wife’s affidavit of 29 August 2024 which specified the conduct complained of. In particular, annexure WA37 demonstrates the connection between H Group and H5 Group and annexure WA38 comprises specific emails. The wife’s solicitors have provided a response to the Request for Further and Better Particulars, as demonstrated by Exhibit W-1, which is a letter from the wife’s solicitors.
As to the basis of the strike out application, I agree with senior counsel for the respondents that the claim is brought pursuant to the FCFCOA Act and is not an application for summary dismissal pursuant to s 102QAB of the Act.
It is trite to remark the current application is similar to the previous strike out application brought by respondents. I make the same observations as at [138] of Antoun & Antoun(No 2) although in the context of s 45 of the Act. I do not accept the relevant pleadings should be struck out, and accept the wife has used her best endeavours, although this may be far from optimal. As previously remarked, the events will no doubt be the subject of rigorous cross‑examination, and the wife’s claim will either succeed or fail on the evidence.
As also observed in Antoun & Antoun (No 2) at [101], the purpose of pleadings is to enable parties and the Court to discern the precise nature and extent of dispute between the parties. However, it must be borne in mind, this Court is not a court of pleadings and cases are determined on the evidence, not the pleadings: see Tree J in Quincey & Quincey [2023] FedCFamC1A 30.
In the event the wife seeks to further amend the FAPOC, I will make orders enabling her to do so within 28 days of these orders. I again adopt my observations as to amendment made at [143] of Antoun & Antoun (No 2).
SECURITY FOR COSTS
At paragraph [5] of the Response to an Application in a Proceeding filed 12 December 2024, the existing respondents, and the proposed respondents (as referred to in the affidavit of Mr AL, filed 12 December 2024), seek an order for the wife to pay into trust the sum of $1,756,986.30 (inclusive of GST), as security for costs.
The wife opposes payment of any amount for security for costs.
Documents relied upon
All parties relied on the documents referred to above at [10] and [12].
Legal principles
Section 117(2) of the Act empowers the Court to make an order securing the payment of the costs of the other party.
The respondents and proposed respondents bear the onus of demonstrating entitlement to such an order. In Frazier & Valdez (2016) FLC 93-729 at [12] the Full Court of the Family Court referred to the relevant influential factors, including the factors referred to in s 117(2A) of the Act. Rule 12.02 of the FCFCOA Rules 2021 sets out the matters the Court may consider in deciding whether to make an order for security of costs. Rule 12.02 relevantly provides:
Application for security of costs
(1)A respondent may apply for an order that the applicant in the proceeding give security for the respondent's costs.
(2)In deciding whether to make an order, the court may consider any of the following matters:
a.The applicant's financial means;
b.The prospects of success or merits of the application;
c.The genuineness of the application;
d.Whether the applicant's lack of financial means was caused by the respondent's conduct;
e.Whether an order for security for costs would be oppressive or would stifle the proceeding;
f.Whether the proceeding involves a matter of public importance;
g.Whether a party has an order, in the same or another proceeding (including a proceeding in another court), against the other party for costs that remain unpaid;
h.Whether the applicant ordinarily resides outside Australia;
i.The likely costs of the proceeding;
j.Whether the applicant is a corporation;
k.Whether a party is receiving legal aid;
l.Any other relevant matter
The additional and proposed respondent’s submissions
In the Outline of Case document, at paragraphs 25(e)(i)–(v) the respondents refer to relevant matters to be taken into account, in addition to those particularised in s 117(2A) as follows:
(i)The claim for security for costs is made bone fide;
(ii)An order for security for costs with staff or litigation;
(iii)The litigation of the matter of public importance;
(iv)There has been delay in bringing the application for order for security for costs; and
(v)Whether there would be difficulty in enforcing an order for costs (if one was made at the conclusion of the substantive proceedings).
First, it was submitted that the application for security for costs is made on a bona fide basis, partially reliant upon my comments at [225] of Antoun & Antoun (No 2). Paragraph [29] of the Outline of Case document states as follows:
On the basis of the comments above, the additional respondents have brought this application in good faith and with proper notice.
In the absence of any explanation, I fail to understand how it is that the comments in [225] could possibly be construed as supporting an application for security for costs or establishing bone fides of the respondents. Reasons for Judgement was delivered in May 2024, and it was not until 12 December 2024 that the respondent’s filed a response seeking an order for security of costs. There was no explanation as to why the respondents did not apply for security for costs many months earlier, rather than waiting for a further interim application to be filed by the wife, and then responding with such a punitive order. That conduct does not lead me to conclude the actions of the additional respondents or proposed respondents are bona fide, but rather to the contrary.
Secondly, it was submitted that the application for security of costs of around $1.7 million could not in any way stifle the wife’s opportunity to pursue her claim. Reliance was had on the $250,000 which was ordered to be paid to the wife, upon settlement of the sale of a property, without the Court being advised whether in fact the property had been sold and the wife had received any such sum. Even if the wife has received all her entitlement, the sum of $250,000 is around $1.5 million less than the costs contemplated by the respondent’s and is completely disproportionate to the amount sought to be paid by way of security.
It was also asserted that the wife has substantial assets in her name and at her disposal, without any particularisation of what those assets are, and contrary to the husband’s position of the limited nature of the asset pool.
Whilst the submissions acknowledge the wife has significant outstanding legal costs, it was submitted that if she continued the “same trajectory” she would incur greater costs which she may be unable to meet.
Thirdly, it was conceded that the proceedings do not involve a matter of public importance.
Fourthly, as to delay, it was submitted that the wife’s conduct to date has been “entirely unreliable, inconsistent and cause significant costs and delays for all parties involved”. The gathering of evidence, material, and swearing of affidavits on behalf of the additional and proposed respondents is a timely process and the application has been brought as soon as practicable in the circumstances of the litigation.
Furthermore, the wife’s solicitors were put on notice of the proposed application, prior to the filing of a Response on 12 December 2024. The correspondence to the wife’s solicitors dated 10 December 2024, foreshadows such an application.
I do not consider attempting to blame the wife to be an acceptable reason for delay in bringing the application for security for costs. As referred to above, the application was made seven months after reasons were delivered in May 2024, absent any cogent reason why the application was not made in the intervening period. I do not consider an additional two days’ notice prior to the filing of a Response to be of any relevance.
Lastly, as to whether there would be difficulty in enforcing an order for costs, senior counsel for the respondent’s submitted that the wife’s own actions have caused her to incur significant legal fees, and for the respondents to also incur significant legal fees. It was submitted that the wife, in her affidavit of 29 August 2024 at [159] estimated her unpaid legal costs at $850,000.
According to the respondents, the manner in which the wife has incurred legal fees of such magnitude make it highly improbable that any additional respondents will actually receive costs from her if they were ordered at the final realisation of the proceedings. That statement is directly contradictory to the submissions that the wife has substantial assets in her name and disposal.
The wife’s submissions – security for costs
Counsel for the wife submitted that the wife had no financial capacity to pay the amount claimed by the proposed respondents and relied upon the wife’s financial statement filed on 19 February 2024.
If the Court were to adopt an overall view as to the merits of the wife’s application, the Court would be bound to conclude that the wife had a reasonable prospect of success, which is a factor relevant (r 12.02(2)(b)).
As to the bone fides of the application, the respondents did not provide any explanation why an application had not been made at an earlier date, particularly in circumstances where the current solicitors had been on the record for the additional respondents since 28 June 2022.
In the event the application was granted, it would be oppressive to the wife and would stifle the proceedings.
Additionally, the conduct of the husband has required the wife to join the other respondents to the proceedings and to be put to the expense of pleadings is to her proposed cause of action against the respondents. It may well be that the husband, or other respondents, may be held responsible for some of the ultimate costs incurred, which is a matter to be determined at the conclusion of the trial.
I prefer the submissions of counsel for the wife, and do not propose to make any order for payment of security for costs. I do not accept the application has been made on a bone fide basis because of the delay and the discrepancy between the partial property settlement order to be paid to the wife and the amount claimed by way of security for costs, a difference of approximately $1.5 million.
According to both the wife and the husband, the wife does not currently have the financial capacity to meet a payment into a trust account of some $1.7 million and it is axiomatic that if such an order were made, the litigation would be stifled, and the wife would be deprived of any claim she may have to whatever assets the Court determines comprises the matrimonial asset pool. I will therefore dismiss the application.
Because I have permitted the wife to join the proposed respondents to the proceeding, there is no need to consider Orders 2 and 3 as sought by the proposed respondents, that the wife or in the alternative, her solicitors, pay the costs of the proposed respondents arising from the Application in a Proceeding filed on 28 August 2024 and Amended Application in a Proceeding filed 16 October 2024. I intend to make orders dismissing the Response filed 12 December 2024.
I will make orders accordingly.
I certify that the preceding eighty-six (86) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 31 January 2025
SCHEDULE OF PARTIES
PAC 796 of 2017 Respondents
Fourth Respondent
D PTY LTD
Fifth Respondent
D PTY LTD
Sixth Respondent
D PTY LTD
Seventh Respondent
Intentionally left blank
Eight Respondent
MS BB
Proposed Ninth Respondent
MS AE
Proposed Tenth Respondent
PP3 HOLDINGS
Proposed Eleventh Respondent
AF Pty Ltd
Twelfth Respondent
MS G
Thirteenth Respondent
H PTY LTD
Proposed Fourteenth Respondent
H5 GROUP
Proposed Fifteenth Respondent
QQ1 PTY LTD HOLDINGS
Sixteenth Respondent
Intentionally left blank
Seventeenth Respondent
Q PTY LTD
0
4
5