Berfield & Berfield (No 3)

Case [2024] FedCFamC1F 714

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Berfield & Berfield (No 3) [2024] FedCFamC1F 714

File number: SYC 482 of 2021
Judgment of: CAMPTON J
Date of judgment: 24 October 2024
Catchwords: FAMILY LAW – SECURITY FOR COSTS – Where the second and third respondents seek an order for costs and for security for costs as against the applicant wife subsequent to the final determination of the substantive proceedings – Where the wife opposes the application for security for costs – Where the second and third respondents are third parties to the marriage, were joined to the litigation by the wife, and where the wife was unsuccessful in her equitable claim affecting their interests – Where the second and third respondents enjoy a likelihood of success in obtaining a costs order in their favour – Where there is a risk that such costs order, if achieved, may not be able to be enforced – Where an order is made for security for costs in favour of the second and third respondents in a reduced quantum from that sought.
Legislation:

Family Law Act 1975 (Cth) s 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.02 and r 12.03
Division: Division 1 First Instance
Number of paragraphs: 19
Date of hearing: 24 October 2024
Solicitor for the Applicant: Mr Reeve, Marsden Law Group
Solicitor for the First Respondent: Mr Agostino, Agostino & Co
Counsel for the Second and Third Respondents: Mr Katsinas
Solicitor for the Second and Third Respondents: Simone Legal

ORDERS

SYC 482 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS B BERFIELD

Applicant
AND:

MR C BERFIELD

First Respondent

MR D BERFIELD

Second Respondent

MS E BERFIELD

Third Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

24 OCTOBER 2024

THE COURT ORDERS THAT:

1.$100,000 of the adjusting sum payable by the husband to the wife pursuant to the orders made by Justice Harper on 28 August 2024 initially in the sum of $396,352 be secured pursuant to s 117(2) of the Family Law Act 1975 (Cth) pending determination of the application for costs of the second and third respondents filed on 24 September 2024 upon condition that such sum of $100,000 be paid to the trust account of the solicitors for the wife and to be held in that account pending further order of the Court or agreement in writing between the wife and the second and third respondents.

2.The costs of the Application in a Proceeding of the second and third respondents filed 22 October 2024 be reserved and determined at the same time as the Application in a Proceeding of the second and third respondents for costs filed 24 September 2024.

3.Save and except as provided for by these orders, the application in a proceeding of the second and third respondents filed on 22 October 2024 is dismissed.

THE COURT NOTES THAT:

A.The husband’s application for costs of the substantive proceedings have been concluded…

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AGLC
Berfield & Berfield (No 3) [2024] FedCFamC1F 714
Case
[2024] FedCFamC1F 714
Decision Date

CaseChat Overview and Summary

In the matter of Berfield & Berfield (No 3), the second and third respondents, Mr D Berfield and Ms E Berfield, have filed an application for security for costs against the applicant wife, Ms B Berfield. The application arises following the final determination of the substantive proceedings concerning property adjustment between Ms B Berfield and her husband, Mr C Berfield. The second and third respondents were joined to the litigation by the wife, and were not successful in their claim for equitable relief affecting their interests. The wife opposes the application for security for costs, arguing that it may prejudice her ability to receive her due payments.

The primary legal issue before the court was whether to grant the second and third respondents' application for security for costs. The court considered various factors, including the prospects of success of the costs application, the financial means of the wife, and the potential prejudice to her if an order for security for costs were made. The court also noted that the second and third respondents had a likelihood of success in obtaining a costs order, and there was a risk that such an order might not be enforceable if the wife's funds were depleted before the costs application was determined.

The court found that while impecuniosity alone was insufficient to justify an order for security for costs, the prospects of success of the costs application were relevant. The court decided to grant the application for security for costs, but in a reduced quantum from that sought by the second and third respondents. The court ordered that $100,000 of the adjusting sum payable by the husband to the wife be secured pending determination of the costs application. The court also noted that the costs of the application for security for costs would be reserved and determined at the same time as the costs application. The husband's application for costs of the substantive proceedings has been concluded, and he does not propose to further participate in any costs applications.

The final orders of the court were that $100,000 of the adjusting sum payable by the husband to the wife be secured pending determination of the costs application. The costs of the application for security for costs were to be reserved and determined at the same time as the costs application. The application for security for costs filed on 22 October 2024 was dismissed, save and except as provided for by the orders. The form of the order is subject to the entry in the Court’s records, and this copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors, or to record a variation to the order.

Orders

Orders of the court

SYC 482 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS B BERFIELD

Applicant

AND:

MR C BERFIELD

First Respondent

MR D BERFIELD

Second Respondent

MS E BERFIELD

Third Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

24 OCTOBER 2024

THE COURT ORDERS THAT:

1. $100,000 of the adjusting sum payable by the husband to the wife pursuant to the orders made by Justice Harper on 28 August 2024 initially in the sum of $396,352 be secured pursuant to s 117(2) of the Family Law Act 1975 (Cth) pending determination of the application for costs of the second and third respondents filed on 24 September 2024 upon condition that such sum of $100,000 be paid to the trust account of the solicitors for the wife and to be held in that account pending further order of the Court or agreement in writing between the wife and the second and third respondents.

2. The costs of the Application in a Proceeding of the second and third respondents filed 22 October 2024 be reserved and determined at the same time as the Application in a Proceeding of the second and third respondents for costs filed 24 September 2024.

3. Save and except as provided for by these orders, the application in a proceeding of the second and third respondents filed on 22 October 2024 is dismissed.

THE COURT NOTES THAT:

A. The husband’s application for costs of the substantive proceedings have been concluded by way of the orders made 30 September 2024 and in that circumstance the husband does not propose to further participate in any costs applications.

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.

Background

Background to the litigation

The application has been listed with short notice before me today in circumstances where:(a)The second and third respondents filed an Application in a Proceeding on 25 September 2024, seeking that the wife pay their costs of the substantive proceedings on an indemnity basis, either in a fixed sum of $152,128 or, in the alternative, on an agreed or assessed basis. Implicitly, they sought further alternatives being available to the judge determining the cost application on other foundations such as solicitor-client costs and/or party-party costs. They additionally sought the costs of the cost application;(b)An order was made requiring the husband to pay the wife an adjusting payment of $396,352 on or before 27 October 2024;(c)Orders have been made by Justice Harper in chambers on 10 October 2024 for prescribing a schedule as to the filing of material, by way of written submissions and affidavit evidence, as to costs, with the last document being filed by the second and third respondents in reply on 5 December 2024. Judgment in relation to the second and third respondents' application as to costs otherwise is reserved to chambers;(d)Mr C Berfield (“the husband”) made an application that the wife pay his costs of the substantive proceedings. That application was compromised by way of a consent order made as between the husband and the wife on 30 September 2024 for the wife to pay the husband's costs of $60,000. This, in turn, reduced the value of the adjusting sum to be paid by the husband to the wife, pursuant to the substantive verdict, to $336,352; and(e)The trial judge is on a period of leave and will not return from leave prior to 27 October 2024.BACKGROUND On 27 January 2021 the wife commenced proceedings for the adjustment of property were between she and the husband. The second and third respondents were joined to the property adjustment proceedings by the wife on 9 July 2022. The wife prosecuted a series of alternate equitable claims as to an interest in real property at Suburb G in Sydney. The orders made by Justice Harper on 28 August 2024 dismissed the wife's claims as against the interests of the second and third respondents, such that no orders were made affecting their interests.THE HEARING TODAY Notwithstanding the shortlisting of the matter on an urgent basis today, the wife agreed to a hearing of the Application in a Proceeding as to security for costs filed on 22 October 2024 without filing any affidavit material in response. The wife was content to conduct the hearing today by reference to the reasons for judgment of Justice Harper and by way of submissions.THE LAW Rules 12.02 and 12.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) prescribe relevant matters applicable to an application for security for costs:12.02 Application for security for 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.(3) In subrule (1):respondent includes an applicant who has filed a reply because orders in a new cause of action were sought in the response.12.03 Order for security for costs If the court orders a party to give security for costs, the court may also order that, if the security is not given in accordance with the order, the application or response of the party be stayed.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Impecuniosity alone of a respondent is insufficient to justify, in and of itself, an order for costs or for security for costs, or to oppose one. The prospects of success of the costs application is relevant, however a detailed assessment as to the likelihood of success as to costs need not be the subject of close examination but more broad consideration. It is important to consider whether there has been a delay in bringing the application for security, and perhaps pivotally, the prejudice to the wife in this case by way of a security order.CONSIDERATION The second and third respondents, in support of their application for security for costs, submit that they enjoy a very good prospect of success in obtaining the benefit of a costs order arising out of the substantive proceedings. They identify that they are strangers to the marriage and were joined to the proceeding by the wife. They highlight that their joinder was not a product of their election, and in the circumstances, implicitly, they identify the absence of necessity for their engagement in the proceedings. This coupled with the absence of success of the wife in the equitable relief she prosecuted affecting their interests are significant factors weighing in their favour to securing and obtaining a costs order. Whether the second and third respondents establish a justification to order for costs on an indemnity basis may be a different matter. The second and third respondents identify that the wife will receive a modest quantum by way of the adjusting property order payable by the husband. She will have modest liquid assets more than the adjusting sum she will receive after payment of the husband’s agreed costs. If the fund is expended before any costs application is determined, the value of a verdict as to costs may evaporate if it cannot be enforced. A comparison as to the financial circumstances as between the second and third respondents and the wife may weigh in favour of the wife as to the failure to establishment of a justifying circumstance as to costs. The wife identifies what she described as an inconvenience whereby an order for security for costs will entail that she will not be able to receive the entirety of the remainder of her verdict moneys currently due and payable on 27 October 2024 for many months, having regard to the timetable for filing evidence and submissions as identified earlier in these reasons, such that the costs application will not be determined until early 2025. The wife had the opportunity to put on evidence to identify her proposed use and application of the balance of her verdict moneys and as to any prejudice she would suffer in the event the application for security for costs was successful. She did not do so. It is important to keep in mind that an order for security for costs is not, in and of itself, an order as to costs. It does not affect the creation of liability for costs. Its object is merely to ensure that an injustice is not occasioned to one party or the other until the exercise of the cost discretion has been discharged.