Atkins & Hunt (Security for Costs)
[2015] FamCAFC 66
•30 April 2015
FAMILY COURT OF AUSTRALIA
| ATKINS & HUNT (SECURITY FOR COSTS) | [2015] FamCAFC 66 |
| FAMILY LAW – APPEAL – SECURITY FOR COSTS – Where the applicant husband seeks security for costs in the sum of $75,000 – Where it is not possible to conclude that the grounds of appeal are unmeritorious – Where the application lacks bona fides – Where there is potential that an order for security will stifle the appeal – Application dismissed. FAMILY LAW – APPEAL – COSTS – Where the application was wholly unsuccessful – Where the application lacked bona fides – Costs ordered in favour of the respondent wife. |
| Family Law Act 1975 (Cth) – s 117 Family Law Rules 2004 (Cth) – rr 19.05(2) and 22.53(3) |
| Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 |
| APPLICANT: | Mr Hunt |
| RESPONDENT: | Ms Atkins |
| FILE NUMBER: | SYC | 425 | of | 2012 |
| APPEAL NUMBER: | EA | 171 | of | 2014 |
| DATE DELIVERED: | 30 April 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Strickland, Ainslie-Wallace & Kent JJ |
| HEARING DATE: | 29 April 2015 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 December 2014 |
| LOWER COURT MNC: | [2014] FamCA 1076 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Lethbridge SC |
| SOLICITORS FOR THE APPLICANT: | Sexton Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Weightman |
| SOLICITORS FOR THE RESPONDENT: | Paltos Milevski Family Lawyers |
Orders made on 29 April 2015
Leave be granted to the applicant husband to file the Affidavit of Jacqueline Dawson sworn on 24 April 2015.
The time for the respondent wife to file her Response to the Application in an Appeal and her Affidavit in support be extended nunc pro tunc to 22 April 2015.
The Application in an Appeal filed on 12 March 2015 be dismissed.
The question of costs be reserved.
Orders
The applicant husband pay the costs of the respondent wife of and incidental to the Application in an Appeal filed on 12 March 2015, such costs to be assessed on a party/party basis in default of agreement.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Atkins & Hunt (Security for Costs) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 171 of 2014
File Number: SYC 425 of 2012
| Mr Hunt |
Applicant
And
| Ms Atkins |
Respondent
REASONS FOR JUDGMENT
Introduction
On 29 April 2015 this Court heard the Application in an Appeal filed on 12 March 2015 by Mr Hunt (“the husband”) and made the following orders:
(1)Leave be granted to the applicant husband to file the Affidavit of Jacqueline Dawson sworn on 24 April 2015.
(2)The time for the respondent wife to file her Response to the Application in an Appeal and her Affidavit in support be extended nunc pro tunc to 22 April 2015.
(3)The Application in an Appeal filed on 12 March 2015 be dismissed.
(4)The question of costs be reserved.
When making these orders we indicated that we would deliver our reasons for judgment at a later date. We now provide those reasons as well as our reasons for judgment in relation to the question of costs.
The Application in an Appeal sought the following orders:
1.That the wife pay to the trust account of the wife’s solicitor the amount of $75,000 by way of security of the husband’s costs and that the funds be held in the trust account of the wife’s solicitor pending further order.
2.That pending the wife’s compliance with order 1 above, the wife’s appeal be stayed.
3.That the husband have liberty to apply if non-compliance by the wife with order 1 extends beyond 6 months of the date of order.
This application was made in relation to a Notice of Appeal filed by Ms Atkins (“the wife”) on 23 December 2014, appealing against final orders for property settlement made by Aldridge J on 4 December 2014.
In a Response filed on 22 April 2015 the wife sought the dismissal of the application.
In support of the application, the husband filed a brief Affidavit also on 12 March 2015. It is instructive to recite in full the contents of this affidavit as follows:
1. I am the respondent in this appeal.
2.I am informed and believe that on 7 January 2015, my solicitor, Jacqueline Dawson of Sexton Family Law was served with a Notice of Appeal in relation to the Judgment of His Honour Judge(sic) Aldridge dated 4 December 2014.
3.The Judgment of His Honour Judge (sic) Aldridge dated 4 December 2014 was made in relation to the property settlement proceedings commenced on my behalf on 30 January 2012.
4.The effect of the Judgment of His Honour Judge (sic) Aldridge is that the appellant wife, […] has no realisable property or unencumbered assets with which to satisfy any orders for costs in the event her appeal is unsuccessful.
5.The present application is therefore made to secure the costs of responding to the appeal.
We note that the Application and this Affidavit were filed almost three months after the filing of the Notice of Appeal, yet there was no detail provided of the amount of security sought or the basis on which it was calculated.
The Response of the wife was supported by an affidavit also filed on
22 April 2015. According to the direction of the Appeal Registrar made on
14 April 2015, both the Response and the Affidavit were to be filed by
20 April 2015. In the circumstances though we made an order extending the time for filing those documents nunc pro tunc to 22 April 2015.
At the hearing of the Application, the husband’s senior counsel tendered without objection an affidavit of Jacqueline Dawson, the husband’s solicitor, sworn on 24 April 2015. Mr Lethbridge SC also tendered a copy of the reasons for judgment of Aldridge J delivered on 16 April 2015 when his Honour dismissed the wife’s application to stay the operation of one of the orders made by Aldridge J on 4 December 2014, namely an order providing for the sale of the former matrimonial home (marked Exhibit 1), and an estimate of the husband’s costs relating to the appeal which totalled $67,713.80 (marked Exhibit 2).
At the hearing the wife’s counsel also tendered a trust account ledger which indicated that as at 28 April 2015 the wife’s solicitors held the amount of $41,961.31 in trust for the wife (marked Exhibit 3).
Background facts
The husband was born in 1935, and the wife was born
in 1955. At the time of the hearing before the trial judge the husband was 79 years of age and the wife was 59 years of age.
The parties met in 1998, they commenced a personal relationship in February 2000, and they married in 2003.
The parties separated in 2010, and the husband commenced proceedings seeking orders for property settlement on 30 January 2012.
The reasons of the trial judge and the orders for property settlement
The hearing before the trial judge proceeded over 10 days between
15 July 2013 and 24 June 2014. Several companies and two of the husband’s adult children intervened in the proceedings, and on 4 December 2014 his Honour delivered extensive reasons for judgment comprising 335 paragraphs extending over 61 pages.
His Honour found that the net pool of assets of the parties was valued at $2,662,905.
His Honour determined that it was just and equitable to make orders altering the property interests of the parties.
His Honour assessed the respective contributions of the parties at 85 per cent to the husband and 15 per cent to the wife.
As a result of a consideration of the relevant s 75(2) factors his Honour increased the wife’s entitlement by 5 per cent to 20 per cent, and thereby reduced the husband’s entitlement to 80 per cent.
Taking into account the assets retained by the wife, his Honour ordered that the husband pay to the wife the sum of $174,747. His Honour further ordered the sale of the former matrimonial home at Town M with any net proceeds of sale being distributed to the parties in the proportions of 80 per cent to the husband and 20 per cent to the wife.
The husband complied with the order for the payment of $174,747, and the evidence of the wife is that that amount was used by her to part pay her legal costs. As for the sale of the former matrimonial home, it is common ground that that has taken place, but settlement has not yet occurred. There is a dispute as to what if anything the wife will receive from the proceeds of sale, the husband’s solicitor suggesting it could be $22,298.10 but the wife suggesting that that calculation fails to take account of all of the liabilities, and accordingly it is impossible to determine what amount if any she will receive. We are not in a position to resolve this dispute, and thus we proceed on the basis that it is unknown what if any amount the wife will receive from the proceeds of sale of that home.
Relevant principles
The power to make an order for security for costs is found in s 117 of the Family Law Act 1975 (Cth) (“the Act”). As was explained in Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206, in addition to the matters referred to in the section, it is well settled that pursuant to s 117(2A)(g) the following matters should be considered:
·the prospects of success of the litigation (relevantly the wife’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 also Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174; Luadaka & Luadaka (1998) FLC 92-830)
These factors largely mirror the considerations referred to in r 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”).
Discussion
Impecuniosity
The husband’s primary argument in support of his application for security is that on the wife’s own evidence she is impecunious, and thus if her appeal is unsuccessful, “it is unlikely that any costs order in favour of the husband will be capable of enforcement”.
That the wife is impecunious is not in dispute. On her evidence she does not have the financial capacity to comply with any order for security for costs if one is made.
The wife’s income is limited to spousal maintenance which will cease on the sale of the former matrimonial home. She has savings totalling $457; she has a property valued at $350,000 on which there are mortgage loans outstanding of $335,388; she has credit card liabilities totalling $88,785; she has outstanding legal costs of $63,559.90, and a liability to an accounting firm of $185,855.50.
The evidence of the wife is that she has borrowed money from her brother to meet her legal fees associated with the appeal to date, and although at one stage it seems that she had $70,000 of borrowed funds in her solicitor’s trust account, she now has $41,961.31 in that trust account. However, that money is earmarked to meet her senior counsel’s estimated fees to advise on the appeal.
Finally, and to repeat, it is unknown what amount if anything the wife will receive from the proceeds of sale of the former matrimonial home.
The authorities suggest that mere impecuniosity of a party will not of itself be a basis for ordering that person to provide security for costs, but there is an exception to that in the case of appeals. However, as was explained in Halsbury & Halsbury [2008] FamCAFC 170 at [22]:
… [i]t must be remembered that as has been explained in a number of decisions of the Full Court, impecuniosity of an appellant is not the only or deciding factor in an application for security in respect of the costs to an appeal … rather it is one factor which must be balanced against other factors, particularly the prospects of success of, or the merits of, the appeal …
(Authorities omitted)
In relation to this issue, we note the concession by the wife’s counsel that although the wife’s financial circumstances are such that she has no capacity to meet an order for security, she has been able to borrow funds from her brother. It must be remembered though that to be able to borrow funds is only one side of the equation; there must still be the capacity to repay that borrowing, and here that capacity is simply not apparent on the wife’s evidence.
The prospects of success of the appeal
In her Notice of Appeal the wife promotes nine grounds of appeal as follows:
1.The trial judge erred in principle by failing to adequately expose the process of reasoning which led his Honour to conclude, at paragraph 291 of his judgment, that the appellant had not established that her contributions were “rendered more onerous” by the conduct of the first respondent.
2.The trial judge erred in principle by proceeding on the erroneous basis that an adjustment of the parties’ entitlements in reliance upon the violent conduct of one party to the other could “occur only in exceptional cases”, when his Honour was required to consider the nature and quality of the contributions of the parties in reliance upon the evidence before the Court, and determine the case on its own merits in the absence of presumptions.
3.If, contrary to ground 2, adjustments on the basis referred to therein could only be made in “exceptional cases”, the trial judge’s refusal to consider “whether or not the assaults and intimidation alleged by the wife occurred in the manner in which she said they did” precluded his Honour from determining whether the appellant’s was an “exceptional case”.
4.The trial judge’s consideration of the Wife’s case with respect to domestic violence was erroneous in principle, in that his Honour impermissibly discounted the significance of and impact on the appellant in reliance upon her apparent resilience, and ability to “continue her employment” with little apparent interruption.
5.The trial judge erred in principle by failing to adequately expose the process of reasoning which led his Honour to conclude, at paragraph 300 of his judgment, that there should be an adjustment in favour of the appellant of 5% pursuant to s75(2) of the Act.
6.The trial judge erred in the exercise of his discretion pursuant to s75(2) of the Family Law Act 1975 Cth. (“the Act”) in that the adjustment made in favour of the appellant was manifestly inadequate in the light of his Honour’s findings of fact with respect to the earning capacity and financial resources of the appellant and the first respondent.
7.The trial judge made a material error of fact by failing to include the entirety of the legal fees paid by the Husband in the sum of $403,104 and/or notionally increasing the Husband’s superannuation entitlement, or otherwise failing to have regard to such payment in the context of assessing the parties’ post separation contributions.
8.The trial judge’s findings with respect to the value of the Husband’s various business interests was contrary to the evidence and the weight of evidence.
9.The trial judge’s finding in paragraph 191 of his judgment, that the husband did not have any undisclosed assets in [Country A] was not reasonably open on the evidence.
In summary, these grounds raise errors of principle, lack of adequate reasons, errors of fact, and matters of weight. However, it is impossible at this stage of the proceedings for us to conduct a detailed examination of the merits of the appeal. Although the appeal books have been filed, the summaries of argument have not. Thus, all we can do is, on the documents that we do have, make an assessment of whether prima facie there appears to be an arguable case on appeal, or to put it another way, whether it is apparent that the grounds of appeal are certain or doomed to fail.
We are not assisted in this exercise by the submissions of the husband, but doing the best we can we are not able to conclude that the grounds of appeal are unmeritorious. That is not to say that we consider that the appeal has good prospects of success, but rather that it is impossible for us to say with any certainty that all of the grounds will necessarily fail.
The bona fides of the application
We consider that the application for security for costs lacks bona fides. The Application as drawn sought security in the sum of $75,000, but the Affidavit in support provided no detail of that sum, and in particular how it was calculated.
At the commencement of the hearing, as referred to above, we were provided with a detailed estimate of the costs of the husband in relation to the appeal. That estimate totalled $67,713.80. However, there was no application made on behalf of the husband to amend his Application in an Appeal to reflect this estimate.
Further, as the husband’s senior counsel conceded, that estimate was calculated on an indemnity basis rather than the usual basis of party/party. The husband’s senior counsel advanced no submissions before us in support of the proposition that in the event the wife’s appeal is dismissed and an order for costs made in favour of the husband there existed circumstances making it probable, or even arguable, that costs might be ordered on an indemnity basis. The husband’s senior counsel acknowledged that he was unable to point to any authority in support of the proposition that it is legitimate for the amount ordered by way of security for costs of an appeal to be calculated on an indemnity basis. We also note that r 22.53(3) of the Rules was not complied with.
When challenged about this, the husband’s senior counsel indicated that the amount that the husband then sought by way of security for costs was the amount of $22,298.10, being the amount that the husband’s solicitor suggested the wife would receive from the proceeds of sale of the former matrimonial home. There was no attempt though to relate that amount to any estimate of the costs of the husband on a party/party basis in relation to the appeal.
Plainly, in these circumstances, the initial application could have no basis in reality, and that, coupled with the subsequent history of the application and the claims ultimately made at the hearing, demonstrates a lack of bona fides on the part of the husband.
If the husband had been genuine about the application, there would have been a proper estimate of his party/party costs in relation to the appeal provided in support of the application, with the application itself being framed on the basis of that estimate. If that had occurred we may have been minded to consider making an order for security for costs.
Whether an order for security would stifle the litigation
The wife’s case is that if an order for security is made then it would stifle the appeal, subject though to the wife being able to borrow the necessary funds, and, we add, to repay those funds.
For our part, taking account of the wife’s financial circumstances, there is at least the potential for an order for security for costs to stifle the appeal, and that must be weighed with all of the other factors in exercising our discretion.
Whether the litigation may involve a matter of public importance
The appeal does not involve a matter of public importance.
Delay in bringing the application for security
The Rules previously provided for an application for security for costs to be made within 21 days of the date of service of the Notice of Appeal. The Rules have since been amended and no time limit is now provided. Nevertheless, in our view, it is desirable for an application for security for costs to be filed as soon as practicable after the appeal has been instituted.
In the present matter, approximately four months elapsed before the application for security was made, but no point has been taken to the effect that as a result the wife has been prejudiced in responding to the application.
Whether there would be difficulty in enforcing an order for costs
We consider that this issue has been canvassed by us in addressing the impecuniosity of the wife, and nothing more need be said.
Conclusion
Taking into account the factors that we have addressed above, we are not persuaded that the wife should be ordered to provide security for costs, and the application must be dismissed. Although the wife is impecunious, the merits of the appeal, the lack of bona fides of the husband, and the prospect of the appeal being stifled plainly outweigh that factor.
Costs
At the conclusion of the hearing the wife made an application for costs. This was opposed by the husband who sought that costs be costs in the cause.
We consider that there are circumstances here that justify an order for costs being made now, namely the husband has been wholly unsuccessful in the application (s 117(2A)(e)) and he has demonstrated a lack of bona fides in bringing the application (s 117(2A)(c)). Accordingly, we propose to make an order for costs in favour of the wife.
I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Ainslie-Wallace and Kent JJ) delivered on 30 April 2015.
Associate:
Date: 30 April 2015
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