Berfield & Berfield (No 3)
[2024] FedCFamC1F 714
•24 October 2024
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 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.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Berfield & Berfield has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
CAMPTON J:
These reasons determine an Application in a Proceeding filed by Mr D Berfield and Ms E Berfield (“the second and third respondents”) on 22 October 2024 seeking security for costs sought to be payable by the Ms B Berfield (“the wife”) of an incidental to their response in the proceedings determined by way of judgment delivered and orders made by Justice Harper on 28 August 2024.
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.
The relevant principles as to the considerations for security for costs are well settled. Whilst the exercise of discretion depends upon the relevant circumstances in each case, the Full Court has identified that in additional to, or in the context of those identified in s 117(2A) of the Family Law Act 1975 (Cth) (“the Act”), the purpose of an order for security for costs is to secure justice between the parties to that costs application by ensuring that an unsuccessful party does not occasion injustice to the other.
As to costs generally, the default position established by s 117(1) of the Act is that each party should bear their own costs. Section 117(2) of the Act allows a court to make such orders as it considers just if there are circumstances which justify doing so. It is unnecessary to establish extraordinary or exceptional circumstances in order to ground the discretion to justify a costs order. The Act requires a finding of a justifying circumstance before any substantive costs order can be made. In addition to the factors identified in s 117(2A), of the Act, consideration ought to be given to:
(a)The means of the respondent to the application to satisfy an order for costs if the application is successful; and
(b)The financial circumstances of both parties.
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.
I am persuaded that substantive merit exists as to the likelihood a costs order being achieved by the second and third respondents payable by the wife. While that merit may be militated by other factors pursuant to s 117(2A) of the Act, I accept that the second and third respondents have established justifying circumstances so as to make an order securing costs pending determination of their costs application grounded from the absence of success achieved by the wife in joining them to the proceedings in circumstances where they were strangers to the marriage. In circumstances where the security order does not equate to an order for costs in and of itself, there appears, on the balance of convenience, insufficient prejudice established by the wife, in all the circumstances identified earlier in these reasons, to dismiss the application for security for costs. I am further satisfied that having regard to the wife's limited financial circumstances, it may be difficult to enforce a cost order if made.
As to the indemnity value quantum sought by way of security for costs, the foundations for that value has not the subject of detailed evaluation or inquiry for the purposes of these urgent reasons. A broad comparison between the value incurred on an indemnity basis of costs, and that which would be payable pursuant to the scale, is not in evidence before me. That said, doing the best I can in the urgent circumstances and on the evidence, I am satisfied that an amount that ought to be secured by way of costs can be struck at the sum of $100,000. This is less than the value of costs as claimed on an indemnity basis and greater than that which may be recoverable on a party-party scale basis. The value of $100,000 is somewhat arbitrary. Notwithstanding, in the exercise of a broad discretion, an order at that value by way of security would be just in the circumstances of this case.
For all of these reasons, I make the orders as set out herein.
I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 29 October 2024
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