Beaumont and Cross (Security for Costs)
[2007] FamCA 1129
•11 September 2007
FAMILY COURT OF AUSTRALIA
| BEAUMONT & CROSS (SECURITY FOR COSTS) | [2007] FamCA 1129 |
| FAMILY LAW - SECURITY FOR COSTS – Wife seeks security in relation to Husband’s appeal of a costs order made against him following property proceedings – Considering the modest amount in dispute, the previous difficulties the wife has faced in enforcing judgment, and the limited prospects of an appeal against a costs order succeeding and a high probability some costs would follow a dismissal, some security should be provided – Application allowed – Husband to provide security by making the sum available to be drawn down against his credit card facility |
| Family Law Act 1975 (Cth) |
Adult Guardian and Mother’s Parents v B and Child’s Representative (2002) FLC 93-116; (2002) 29 Fam LR 384
Jones and Jones (2001) FLC 93-080; (2001) 27 Fam LR 632
Luadaka and Luadaka (1998) FLC 92-830; (1998) 24 Fam LR 340
| APPLICANT: | MS BEAUMONT |
| RESPONDENT: | MR CROSS |
| FILE NUMBER: | HBF | 1168 | of | 2004 |
| APPEAL NUMBER: | SA | 57 | of | 2007 |
| DATE DELIVERED: | 11 September 2007 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Faulks DCJ, Kay and Boland JJ |
| HEARING DATE: | 11 September 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 12 June 2007 |
| LOWER COURT MNC: | [2007] FamCA 568 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Trezise |
| SOLICITOR FOR THE APPLICANT: | AT Legals |
| COUNSEL FOR THE RESPONDENT: | In person |
| SOLICITOR FOR THE RESPONDENT: |
ORDERS
The husband provide security for costs of the appeal in the sum of $3,000 as follows:
(a)by providing to the wife’s solicitors within 7 days an authority to enable the solicitors to obtain $3,000 drawn against the husband’s [credit card] facility with the [husband’s Bank] in the event that any costs order is made against the husband by the Full Court at the hearing of the appeal and an authority enabling her solicitors to request that the Bank reserve an adequate sum to meet any such claim for payment; or
(b)by paying of the sum of $3,000 to the wife’s solicitors to be held by them pending further order.
The wife’s solicitors are to hold the authority to draw on the sum pending any further order of the court.
The husband is restrained pending the determination of the appeal or further order from doing any act which would diminish the capacity of the wife’s solicitors to execute against the credit facility up to the sum of $3,000.
In the event that the husband fails to provide the security referred to in order 1 hereof within 7 days, the appeal stand dismissed.
The wife’s solicitors be at liberty to provide a sealed copy of this order to the husband’s bankers.
The costs of this application be costs in the appeal.
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 57 of 2007
File Number: HBF 1168 of 2004
| MS BEAUMONT |
Applicant
And
| MR CROSS |
Respondent
REASONS FOR JUDGMENT
FAULKS DCJ:
In this matter, I will ask his Honour Justice Kay to deliver a short judgment and to pronounce the orders of the Court.
KAY J:
This is an application by the respondent to an appeal, seeking an order for the provision of security for costs. The order sought is in the sum of $5,000, however it will become apparent shortly that we propose to make an order for the provision of $3,000.
The appeal concerns costs orders that were made by Watt J on 12 June 2007 following a property trial.
The order that was made was that subject to agreement the husband pay 65 per cent of the wife’s costs of and incidental to the proceedings from 27 September 2004 to the date of his Honour’s judgment of 12 June 2007, and in default of agreement as to the amount payable under the order being reached within 28 days, such amount fixed by taxation.
The husband was aggrieved by the costs order and filed a Notice of Appeal on 10 July 2007. The wife has now brought an application for security for costs and we propose to make some orders relating to that application.
The relevant law to be applied in relation to security for costs is well settled. It is set out in the Full Court decisions of Luadaka and Luadaka (1998) FLC 92-830; (1998) 24 Fam LR 340 and Jones and Jones (2001) FLC 93-080; (2001) 27 Fam LR 632. Both of those cases were followed by another Full Court in the matter of Adult Guardian and Mother’s Parents v B and Child’s Representative (2002) FLC 93-116; (2002) 29 Fam LR 384. The Full Court in that case set out the following principles governing an application for security for costs (citations omitted):
34.The power in this Court to make an order for security for costs is to be found in s 117(2) of the Act, which is in the following terms:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsection (2A) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
35.The provisions of s 117(2A) are as follows:
In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has, in accordance with section 117C or otherwise, made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
36.The principles which should govern the exercise of the power in s 117(2) to make an order for security for costs have been considered in the two relatively recent decisions of the Full Court of this Court of Luadaka and Luadaka and Jones and Jones.
37.In Luadaka, which was concerned with the making of an order for the provision of security in relation to the costs of proceedings at first instance, the Full Court made the following observations concerning the matters to which regard should be had in determining whether or not to exercise the discretion to order the provision of security (emphasis added):
39.An order that an applicant provide security for costs may be made in appropriate circumstances. However, it must be established that there are circumstances justifying the making of such an order. In considering whether to make such an order regard must be had to the provisions of s 117(2A). The Family Law Act does not separately list factors which should be taken into account when dealing with an application for security for costs of a pending application for relief pursuant to provisions of the Act.
…
61.In our opinion, when dealing with an application for security for costs the general rule provided for in s 117(1) applies, namely that subject to s 117(2) each party to proceedings shall bear his or her own costs. However, if the court is satisfied that there are circumstances that would justify an order then the court may, subject to s 117(2A), make such order for security for costs as the court considers just. It is not necessary to establish that there are special circumstances. However, it is necessary to establish that there are justifying circumstances. The decision to order security for costs is discretionary, both as to whether to order security, and as to the amount to be secured.
62.The purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other. In considering whether or not to make an order, apart from those referred to in s 117(2A), matters which may be relevant include the following:
62.1It may be relevant to take into account the means of an applicant to satisfy an order for costs if he or she is unsuccessful. Ordinarily the means of the applicant is not alone sufficient to justify an order for costs because of the rule that poverty should be no bar to justice. This is reinforced by s 117(1). However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order. Financial weakness may be relevant, for example, if the applicant is a company. In relation to the means of the respondent, who is the applicant for security, it was held by Goldstein J in Alexander and Alexander and Gee J in B and B that the question is whether or not the respondent is able to pay his or her costs. Section 117(2A)(a) requires consideration of the financial circumstances of both parties. However, we do not accept that it will only be in cases where the applicant for security does not have the means to meet his or her costs that an order would be made. In appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.
62.2The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd. However, ordinarily the court will not undertake a detailed assessment of the likelihood of the applicant’s success unless it can be demonstrated that there is a high probability of success or failure: Porzelack KG v Porzelack (UK) Ltd; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd; Equity Access Ltd v Westpac Banking Corporation. This is because of the lack of material at the time the application is dealt with. However, such an assessment may be possible in circumstances where, as in this case, affidavits have been filed in which the case sought to be made out is set out.
62.3It is a relevant consideration whether the applicant’s claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham: Parkinson & Co Ltd v Triplan Pty Ltd; Lynnebry Pty Ltd v Farguhar Enterprises Pty Ltd; J & M O’Brien Enterprises Pty Ltd v Shell Company of Australia Ltd.
62.4It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation. In Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd Byrne J said at 306:
A factor in deciding whether security should be required is that the order may well mean that the action cannot proceed. That prospect does not require refusal of the application but it is often a significant matter.
See also Rosenfield Nominees Pty Ltd v Bain & Co and Sydmar Pty Ltd v Statewise Developments Pty Ltd.
62.5It may be relevant to consider whether or not the litigation may involve a matter of public importance: Equity Access Ltd v Westpac Banking Corporation; Jodast Pty Ltd v A & J Blattner Pty Ltd. In Quick on Costs at [4.9440] it is said that this will militate against the making of an order.
62.6It may be relevant to consider whether or not there has been delay in bringing the application. An application may be refused if there is delay in making the application and prejudice is caused to the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd.
62.7Other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.
63.We do not suggest that the above matters are exhaustive of what may be taken into account. However, such matters may be relevant to the exercise of discretion.
38.Subsequently in Jones, where the Full Court was concerned with the making of an order for security for the costs of an appeal, the Full Court, after setting out paragraphs 61 to 63 of the judgment in Luadaka, went on to say (emphasis added):
20.There is no doubt that the wife is impecunious, that she may well be unable to proceed with the appeal if she is ordered to provide security and will be unable to meet an adverse order for costs in the appeal. The prospect, however, of the husband being left without a remedy in respect of a costs order if the appeal is dismissed is significant.
21.It has long been recognised that, as a general rule and in the exercise of an unfettered discretion, mere impecuniosity of a litigant who is a natural person, will not of itself be a basis for ordering that person to provide security. There is, however, an exception to that general rule, namely in the case of appeals.See Cowell v Taylor; J & M O’Brien Enterprises Pty Ltd v The Shell Company of Australia Ltd (No. 2); Ciappina v Ciappina and Paton v Campbell Capital Limited.
22.The fact that the wife would be unable to pay the costs awarded against her, if her appeal was dismissed, is, in our view, a significant factor to take into account in considering whether to exercise the discretion to order security in favour of the husband, but it is not the only or deciding factor.
23.If an appeal appears to have little merit, a court may be more disposed to make an order for security for costs. Whilst we have not had the benefit of submissions on behalf of the wife, the appeal does not appear to raise matters of principle.
…
27.In addition to the matters to which we have earlier referred, we have taken into account that neither party is in receipt of a grant of legal aid and that no submissions have been made as to the relevance of paragraphs (d) and (f) of s 117(2A).
In particular, there is a general rule stated in Jones and Jones (above) that there is an exception to the general rule in security for costs for appeals, namely, that the impecuniosity of a litigant may of itself be a basis for requiring a provision for security.
In this case, the issues that weigh upon my mind in relation to security are:
·the somewhat modest amount in dispute in the proceedings;
·the difficulties that the wife has faced in previous aspects of the proceedings in an endeavour to enforce judgment which ultimately have been met but only after either time delays or enforcement proceedings; and perhaps more particularly
·the limited prospects of an appeal against a costs order.
The order the subject of the appeal is a very discretionary order and the authorities would indicate that it is only in unusual circumstances, to say the least, that the court is likely to interfere with a costs order.
Given that background to the matters and the matters that I think ultimately are relevant, it is my view that some security should be provided to assist in the event that an order for costs, in the event the appeal is unsuccessful, follows the appeal. There is a high probability with a discretionary appeal that if it is unsuccessful some costs order will be made.
The requirement is to provide security. That can be done in a number of ways and as a result of some discussions we had with the parties prior to taking a short adjournment, I believe we have concluded that the appropriate order would give the husband an opportunity to simply make available a capacity for the wife to draw down against the husband’s credit facility in the event that a costs order is made in her favour.
FAULKS DCJ:
I agree with the orders that his Honour Justice Kay proposes and his reasons therefore. I have nothing further to add.
BOLAND J:
I too agree with the reasons of Kay J and the orders he proposes and I have nothing further to add.
I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 20 September 2007
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