Botsman and Amundson (No 2)

[2010] FamCA 412

FAMILY COURT OF AUSTRALIA

BOTSMAN & AMUNDSON (NO. 2) [2010] FamCA 412

FAMILY LAW – COSTS – SECURITY FOR COSTS – application by the respondent mother for $10,000 by way of security for costs – where the matter has a long history – where the father is an impecunious litigant – orders made for $10,000 for security for costs – proceedings stayed pending payment

Family Law Act 1975 (Cth) s 117
Family Law Rules 2004 r 19.05

Luadaka & Luadaka (1998) FLC 92-830
JRS & KM [2005] FamCA 338
Croser & Attrill (1989) 13 FamLR 489
IB & LB [2006] FamCA 225

APPLICANT: Ms Botsman

RESPONDENT: Mr Amundson

FILE NUMBER: ADC 75 of 2007

DATE DELIVERED: 17 May 2010

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 5 May 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mrs Tinning

SOLICITOR FOR THE APPLICANT: Adey Lawyers

COUNSEL FOR THE RESPONDENT: N/A

SOLICITOR FOR THE RESPONDENT: In person

Orders

1. That on or before the 30 June 2010 the father pay to the Registry Manager, Adelaide Registry of the Family Court of Australia the sum of TEN THOUSAND DOLLARS [$10,000.00] by way of security for costs.

2. That pending payment of the sum of TEN THOUSAND DOLLARS [$10,000.00] the contravention proceedings filed on the 12 February 2010 be stayed.

IT IS NOTED that publication of this judgment under the pseudonym Botsman & Amundson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 75 of 2007

MS BOTSMAN 

Applicant

And

MR AMUNDSON

Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application filed by the mother on 19 March 2010 seeking security for costs in relation to the lengthy contravention application filed by the father on 12 February 2010.  She also seeks that the father pays her costs of and incidental to this application.

2. At the hearing Mrs Tinning of counsel appeared for the mother. The father appeared unrepresented. I have heard submissions from both parties in relation to the question of whether an order for security of costs should be made. I reserved my judgment.

Background

1. The parties were married in 1999 and separated in late 2002. There was one child of the marriage, a son who was born in December 2001.

2. This matter has quite a considerable history. The parties have been embroiled in litigation over issues in relation to their son for nearly 7 years. At one stage, the parties were able to come to agreement in relation to parenting issues. Consent Orders (“the Orders”) were subsequently made by Federal Magistrate Mead on 10 July 2008. These orders provided that the child live with the mother and spend time with the father. The parties were to have equal shared parental responsibility.  A supplementary Order of 16 August 2008 addressed further issues. They are not relevant to these proceedings.

3. The matter returned to the Court when the father filed an application on 23 January 2009 seeking dismissal of the consent Orders and for new parenting orders to be made. This application was characterised as the Rice and Asplund argument. The mother then filed a contravention application on 27 February 2009.

4. In early 2009, the matter was transferred from the Federal Magistrates Court for the consideration of these applications. I ultimately dismissed the father’s application. I also found that the father had contravened the previous Orders. Upon application for costs by the mother, I made a costs order for the amount of $10,000 which amounted to approximately half of her total legal expenses.

5. The relevant application requiring my determination today is the mother’s application seeking the amount of $10,000 for security for costs. Mrs Tinning argued that this amount was a reasonable estimate of the fees which would be incurred by the mother if the matter were to proceed to trial, which she estimated would take two days. This figure took into account solicitor, counsel and witness fees.  It was proposed by Mrs Tinning that in the event of non-compliance with the order for payment, the father’s application would be stayed.

6. Mrs Tinning asked the Court to consider the financial background of the father. It was the mother’s greatest concern that if she was successful in defending the contravention proceedings, it would be unlikely that she would be able to recover any costs. She stated that the mother had been left significantly out of pocket although being successful in the two prior proceedings and being successful in her previous application for costs.   

7. The father’s position was that he simply did not have the funding to comply with an order for security of costs. He submitted that if such an order was made, it would prevent him proceeding with his contravention application.

8. The father’s contravention application consists of eight separate counts. They relate to paragraphs 2(i), 6 and 12 of the Orders. Those paragraphs read as follows:-

   2.(i)    On each alternate Thursday from the conclusion of school until the commencement of school on the Friday or if no school then until 5pm on that day.

   …

   6.     That the parties do have equal shared parental responsibility for making decisions about the long term care, welfare and development of the child.

   …

   12.    That the parents be restrained and injunctions are hereby granted restraining each of them from referring to [the child] by any other name than [X Amundson] in any capacity whatsoever.”

9. The parties’ submissions were lengthy and detailed. From the eight contraventions, six related to paragraph 12 of the Orders as mentioned above. They are identified as counts 1, 2, 3, 4, 7 and 8. The essence of these contraventions is that the mother referred to, or allowed others to refer to the child by a name other than that as provided for in the Orders. Mrs Tinning submitted that the mother had changed the child’s name on the official documents when the Orders were made and she was unaware that the child was being referred to by the incorrect name.

10. Count 5 and 6 relate to paragraphs 2(i) and 6 respectively. In the first, the father alleges that the mother held on to the child for a short time at the beginning of the father’s time before releasing him. In the latter, it is alleged that the mother failed to consult the father in relation to the enrolment of the child in a religious program.

11. The mother sets out her defence to each of these contraventions in her affidavit filed on 19 March 2010. Mrs Tinning also went to significant detail in responding to each contravention in the course of her oral submissions.

The Law

1. The relevant provisions of the Family Law Act 1975 (Cth) (“the Act”) dealing an application for security for costs are found in s 117. The sections which are significant to these proceedings are set out in s 117(1) to (2A) of the Act. They read as follows:-

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117A, 117AB and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)If, in proceedings under this Act, the court of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) 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.

   (2A)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 limitating the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of fact, 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 made an offer in writing to the other party in the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

2. The Family Law Rules 2004 also provide guidance as to the application of these provisions. They are contained within rule 19.05 and provide that:-

   19.05(1)A respondent may apply for an order that the applicant in the case give security for the respondent’s costs.

   19.05(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 case;

   (f)   whether the case involves a matter of public importance;

   (g)whether the party has an order, in the same or another case (including a case in another court), against the other party for costs that remains unpaid;

   (h)   whether the applicant ordinarily resides outside Australia;

   (i)    the likely costs of the case;

   (j)    whether the applicant is a corporation;

   (k)   whether a part is receiving legal aid.

3. The relevant principles which apply to an application for security for costs are set out by the Full Court in the case of Luadaka & Luadaka (1998) FLC 92-830:

   “38.Section 117(1) provides that, subject to sub-section (2), each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides that if in proceedings under the Act the court is of the opinion that there are circumstances that justify it in doing so the court may, subject to sub-section (2A), make such order for security for costs as the court considers just. Section 117(2A) provides that in considering what order should be made the court shall have regard to the matters set out in paragraphs (a) to (g) inclusive. Section 117(2A)(g) provides that the court shall have regard to such other matters as the court considers relevant.

   …

   61.In our opinion, when dealing with an application for security for costs the general rule provided 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 to 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 (supra) and Gee J in B and B (supra) 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 own costs.

   62.2The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd (supra). 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 [1987] 1 WLR 420; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR 40-972. 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 cause 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 (supra); Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133; J & M O’Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790.

   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 (1990) 8 ACLC 304 Byrne 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 if often a significant matter.’

   See also Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 and Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480.

   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 (supra); Jodcast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248. 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 by the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164.

   62.7Other relevant matters may include any difficulties of enforcing an order for costs the amount of costs to be incurred.”

Discussion

1. In the decision of  JRS and KM [2005] FamCA 338 the Full Court at paragraph 20 said that that, “before proceeding to consider the quantum of any security for costs which the Court orders the Court must first be satisfied that circumstances justify making an order”.

The financial circumstances of the parties

1. The Court is required to consider the financial circumstances of both parties. In this case, it draws particular attention to the ability of the father to satisfy a costs order in the event that he is unsuccessful. Mrs Tinning argued that the mother had already incurred substantial legal costs in the ongoing litigation between the parties and should not be liable to bear further costs in the event of the father’s application failing.

2. In his submissions, the father said that he had a debt to his family members of about $20,000. He had borrowed significant funds in order to comply with the previous cost Order of $10,000. The father maintained that health problems rendered him incapable of employment and therefore dependant solely on government benefits. He disputed Mrs Tinning’s position that the father was able to secure further funding because he was able to do it in the past.  Instead, he argued that the mother had plentiful funds to draw from in order to fund proceedings.

3. With regards to the father’s argument, I note that an order for security may be made “even if the applicant for security has the means to pay his or her costs” (Luadaka & Luadaka (1998) FLC 92-830).

4. I also note that at paragraph 62.1 of Luadaka & Luadaka (1998) FLC 92-830 the Full Court said that “the financial circumstances of the applicant (the father) do not prevent an order being made if there are other grounds which justify an order.  I will now consider those other grounds.

Will an order for security stifle the litigation?

1. At the heart of the father’s argument against an order for security for costs was that such an order would have the effect of stifling proceedings. In his submissions, he argued that an order for security would essentially have the effect of “opening the floodgates” in allowing the mother to contravene the Orders without punishment. The father was of the view that any future contravention application would be met with an application for security for costs as the mother was aware of the father’s financial limitations.

2. In response, Mrs Tinning noted that the purpose of an order for security was to prevent impecunious persons from proceeding with litigation without responsibility. I am once again guided by the Full Court in Luadaka & Luadaka (1998) FLC 92-830. The success of the mother in obtaining an order for security for costs in relation to these alleged contraventions does not in any way reduce the obligation to obey the Orders in the future.

The bona fides of the father

1. Mrs Tinning put forward the proposition that the father was pursuing his application as a vexatious litigant. She directed the court to paragraph 11 of the father’s affidavit filed on the 12 February 2010 where it read “I further ask that the mother receive some form of financial punishment for her blantant [sic] and serious breach of the court order”, which she suggested was indicative of the father’s motives. Mrs Tinning cited the case of Croser & Attrill (1986) 13 FamLR 489 where it was noted by the Full Court that an application was not to be brought for the purposes of punishment.

2. The father vehemently disputes the claims put forward by Mrs Tinning.

The merits of the father’s application

1. The Court is also required to consider the merits of the father’s contravention application. The relevant provisions of the Act will be Subdivision C or Subdivision D of Pt VII Div 13A. The first deals with contraventions which are alleged but not established and the latter deals with cases where there exists a reasonable excuse for the contravention. In both situations, the Court has the discretion to impose an order for costs if the applicant is unsuccessful. The Court has not heard the application however.

2. Mrs Tinning argued that the mother had done all in her power to obey the Orders. In the alternative, if in the event that the Court was to find the mother had contravened, then she argued that the mother had reasonable excuses. Moreover, Mrs Tinning noted that the subject of the contraventions was petty and vexatious and that the father had not complained of these matters any time before filing the application.  She submits that this supports the mother’s claim that the father is seeking to punish her financially.

3. The father’s submissions in relation to this matter once again focussed on the fact that an order for security would be allowing the mother the opportunity to contravene the orders as she pleases as he could not afford to bring proceedings if required to provide security.

1. I accept Mrs Tinning’s submissions that the contraventions are of a relatively minor nature. If the Court found that the mother contravened the Orders the Court’s powers under section 70NEB are limited.  

2. I am assisted by the decision of IB & LB [2006] FamCA 225 where the Full Court made an order for security after taking into consideration the likely inability to satisfy a costs order and the lack of merit of the appeal case.

Conclusion

1. There is evidence to suggest that if the contravention application is dismissed the father may not have the ability to pay or will not readily pay any costs order made against him. The mother has already incurred substantial legal costs in the litigation in this Court. Although her financial circumstances are better than those of the father this should not be determinative. The complaints raised by the father as the basis for the allegations about alleged contraventions when seen in context are not significant contraventions and call into question the merits of the father’s application.

2. Whilst an order for security for costs may restrict the father’s access to the Court in the limited sense of this contravention application, this is but one factor to be considered and weighed with other factors relevant to the Court’s discretion.

3. Having regard to all the relevant factors I have discussed above I am satisfied that there exist justifiable circumstances in which a security order should be made.

4. The amount sought by the mother is reasonable in the circumstances. In particular, having taken into consideration the merits of the father’s application together with the financial background of the parties, I am of the view that the father should pay the sum of $10,000 by way of security for costs in relation to this contravention application.

I certify that the preceding thirty four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe

Associate: 

Date:  17 May 2010