BRANTLEY & SWENSON
[2020] FamCAFC 159
•3 July 2020
FAMILY COURT OF AUSTRALIA
| BRANTLEY & SWENSON | [2020] FamCAFC 159 |
| FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – Where the mother’s financial circumstances are not clear on the available evidence – Where the mother deposes to at least two sources of funds to meet any order for costs in the appeal – Where the father concedes that the appeal is not entirely without merit – Where an order for security for costs would not stifle the litigation – Where further submissions are sought from the parties – Where injunctions are put in place pending the finalisation of the appeal restraining the mother from joining with her current husband in obtaining any further loan secured over either of the titles to their jointly owned properties, and from dealing with or disposing of $16,682.18 of her share of any net proceeds of sale of either or both of those properties. |
| Family Law Act 1975 (Cth) s 117 Family Law Rules 2004 (Cth) r 19.05(2) |
| Marsden & Winch (2013) FLC 93-560; [2013] FamCAFC 177 Rice and Asplund (1979) FLC 90-725 |
| APPLICANT: | Mr Brantley |
| RESPONDENT: | Ms Swenson |
| FILE NUMBER: | DGC | 2935 | of | 2018 |
| APPEAL NUMBER: | SOA | 52 | of | 2019 |
| DATE DELIVERED: | 3 July 2020 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide (via telephone) |
| JUDGMENT OF: | Strickland J |
| HEARING DATES: | 16 April 2020 2 July 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 2 September 2019 |
| LOWER COURT MNC: | [2019] FCCA 2438 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Eley |
| SOLICITOR FOR THE APPLICANT: | Emera Smith Family Law |
| COUNSEL FOR THE RESPONDENT: | Dr R Smith |
| SOLICITOR FOR THE RESPONDENT: | Pentana Stanton Lawyers |
Order
Pending the finalisation of appeal no. SOA 52 of 2019 the respondent mother be restrained and an injunction be granted restraining her:
(a)from joining with her current husband Mr A in obtaining any further loan secured over either of the titles to their jointly owned properties situated at Town D, and at Town C, in the State of Victoria; and
(b)from dealing with, or disposing of in any way, the amount of $16,682.18 of her share of any net proceeds of sale of either or both of the said properties.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Brantley & Swenson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT ADELAIDE |
Appeal Number: SOA 52 of 2019
File Number: DGC 2935 of 2018
| Mr Brantley |
Applicant
And
| Ms Swenson |
Respondent
REASONS FOR JUDGMENT
Introduction
On 25 September 2019, Ms Swenson (“the mother”), filed a Notice of Appeal appealing parenting orders made by a judge of the Federal Circuit Court of Australia on 2 September 2019. By his Application in an Appeal filed on 25 March 2020, Mr Swenson (“the father”) seeks that the mother pay security for costs in relation to the appeal.
The orders sought in the application were for the mother to pay the sum of $26,100 to the father’s solicitors within 28 days, to be held as security for any costs awarded to the father in the appeal, and if that did not occur, then the appeal be stayed pending payment by the mother of the said amount. The father also sought his costs of the application. Just prior to the hearing, the father amended the amount of costs sought in his application to $16,682.18, being costs on a party/party basis, and at the hearing he advised that he did not seek his costs of the application separately to the amount sought for security for costs
The application was supported by affidavits filed by the father and his solicitor on 25 March 2020.
The application was opposed by the mother who filed a Response seeking dismissal of the application, and an affidavit in support thereof, on 14 April 2020.
The appeal has been listed for hearing in the next Full Court sittings in the Melbourne registry in the week commencing 17 August 2020.
Background
In September 2010, the father commenced parenting proceedings in the Federal Magistrates Court (as it then was) in relation to the parties’ only child, X, born in 2010 (“the child”).
On 6 June 2011, final parenting orders were made by consent.
The father deposed that during the 2010/2011 proceedings, the mother also obtained an intervention order against him, which he successfully appealed, and obtained a costs order against the Victorian Police.
On 18 January 2013, the mother filed an Initiating Application seeking to discharge the final parenting orders, and that orders be made reducing the father’s time spent with the child. These proceedings were finalised by consent by orders made on 8 July 2015, which provided for a gradual increase in time between the father and the child commensurate with the child’s age and development.
On 27 August 2018, the mother filed another Initiating Application in the Federal Circuit Court of Australia seeking to set aside the parenting orders made on 8 July 2015, and to relocate the child’s residence. At this point in time the mother had remarried, and had given birth to a child of that marriage.
On 8 November 2018, the matter came before Judge Small who dismissed certain paragraphs of the orders sought in the mother’s Initiating Application, including those seeking interim orders to relocate the child’s residence, and to reduce the father’s time with the child. The remaining paragraphs were adjourned for further hearing.
On 28 February 2019, the mother filed an Amended Initiating Application seeking, inter alia, the same orders that were dismissed by the Court on 8 November 2019.
The application was listed before the primary judge on 29 April 2019, as a preliminary hearing, to determine whether the application should be dismissed pursuant to the principle established in Rice and Asplund (1979) FLC 90-725.
Following the hearing, on 2 September 2019, the primary judge dismissed the mother’s application, having found that there was not a sufficient change in circumstances to warrant re-litigation of the parenting orders. This is the decision the mother appeals from, and the appeal is the one in respect of which the father now seeks security for costs.
The Relevant Law
The law governing security for costs is well settled. The power for the court to make such an order is found in s 117(2) of the Family Law Act 1975 (Cth) (“the Act”), which provides:
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 subsections (2A), (4), (4A), (5) and (6) 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.
Section 117(2A) of the Act sets out the matters to which the court must have regard in considering what order (if any) should be made, and r 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”) lists the matters to which the court may have regard. Relevantly those matters are:
a)the applicant’s financial means;
b)the prospects of success or merits of the appeal;
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 a 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)the likely costs of the case.
At the hearing of the application, it became apparent that four of those matters were relevant in determining the application, namely:
a)the financial circumstances of the parties;
b)the conduct of the parties;
c)the merits of the appeal; and
d)the question of the stifling of the appeal.
The financial circumstances of the parties
The father is a [public servant] and earns $110,000 per annum. His only major asset is a fully encumbered property which he owns with his partner. The father deposes that his financial circumstances are strained, and that he has incurred legal costs and disbursements totalling approximately $347,000 as a result of the ongoing litigation with the mother since 2010 (affidavit of the father filed 25 March 2020, paragraph 27). The father says that approximately $230,000 of those legal costs have been paid through personal bank loans, loans from family, and credit card debt, and that his borrowing capacity is now exhausted.
The mother deposes in her affidavit filed on 14 April 2020 that she is engaged in sessional [work], and she has a business which she operates through a family trust, both of which produce minimal taxable income. The mother’s current husband’s base salary is $142,257. The mother jointly owns with her husband two properties, one of which was purchased in … 2019 with a $250,000 deposit which came from the sale of another property owned by the mother, and the other property is on the market for sale. The mother deposes that each of the properties are mortgaged, however the value of each property, and thus the equity in each, is not disclosed.
The mother says she is not impecunious, and that she will be able to meet any costs order made following the conclusion of the appeal, either through additional help from her parents or by selling one of her properties. However, as her financial means are tied up in property, she submits that an order for security for costs now would have the effect of being oppressive.
The mother deposes to her legal fees being in excess of $45,000, which amount has been partly paid by her parents. However, the exact amount of assistance from her parents is unknown.
The lack of detailed evidence as to the mother’s ability to meet a costs order was put to her counsel at the hearing, and he submitted that the Court could be satisfied that the mother could meet such an order from the evidence of the $250,000 deposit in the home purchased in 2019, and her evidence that she could borrow from her parents or sell one of her properties. Counsel submitted that if the Court could not be satisfied of the ability of the mother to pay a costs order, then the Court could also not be satisfied that the mother could meet an order for security for costs now, and that would have the effect of stifling the appeal.
The conduct of the parties
The father points to the history of the litigation and the conduct of the mother in bringing a number of applications to vary the parenting orders, which have been outlined above. In effect, the father submits that in the mother bringing an Amended Initiating Application in February 2019 after Judge Small had dismissed her prior application for relocation, the mother has had two bites of the cherry, resulting in further legal costs incurred by him.
The father deposes that following the orders made by Judge Small on 8 November 2018, he wrote to the mother on 24 November 2018 and 25 February 2019 respectively, proposing that the mother’s application be dismissed, to which he received no reply.
The father also points to the primary judge’s findings in relation to the mother’s conduct in her latest application to revisit the parenting orders. Her Honour noted that the mother’s argument for a change in circumstances, namely the mother’s husband accepting employment in another location, was manufactured (at [90]-[92]). As earlier mentioned, the mother’s application was wholly unsuccessful before the primary judge.
The father lastly points to the intervention order proceedings which were also unsuccessful and resulted in a $50,000 costs order made in his favour.
The merits of the appeal
The father submits that while the mother’s grounds of appeal are not incompetent or entirely without merit, they are considered weak and have little prospect of success.
The mother submits that she has an arguable case. Her Notice of Appeal outlines four grounds of appeal as follows:
1.The learned judge at first instance erred and her Honour's discretion miscarried in confining the scope of her enquiry to whether there had been a 'significant change in circumstances';
2.The learned judge at first instance failed to consider, or failed to adequately consider, whether the appellant had established a 'prima facie case of changed circumstances' such as to warrant 'a consideration as to whether that case is a sufficient change of circumstances to justify embarking on a hearing';
3.The learned judge at first instance erred in failing to consider, or failing to adequately consider, whether the appellant's prima facie case of changed circumstances was a sufficient change of circumstances to justify embarking on a hearing;
4. The learned judge at first instance failed to provide adequate reasons.
The gravamen of the mother’s appeal is that the primary judge did not apply the appropriate test as set out in Marsden & Winch (2013) FLC 93-560. It is submitted that her Honour limited her enquiry to looking for a “sufficient change in circumstances”, rather than considering whether the changes asserted by the mother warranted embarking on a hearing of the matter. It is also argued that her Honour failed to take into account the total factual matrix of the parties now, in contrast to when the previous final orders were made.
Whether an order for security would be oppressive or would stifle the case
The father submits that an order for security for costs would not stifle the litigation given the mother’s financial circumstances.
The mother argues that she would be able to meet an order for costs in the future, because she would “be able to obtain the funds by either getting additional help from her [parents] or selling one of [the] properties” (affidavit of the mother filed on 14 April 2020, paragraph 16). She confirmed that one of the properties owned by her and her current husband is currently on the market for sale. She contends though that an order for security for costs now would be oppressive to her, “given [her] current situation and the fact that she [is] relying on [her] parent’s finances to continue [the] proceedings” (affidavit of the mother filed on 14 April 2020, paragraph 19). In effect, the mother submits that an order for security for costs now would stifle the case, but that she will have the ability to obtain funds to pay any costs order made as a result of the appeal, in the fullness of time.
The father submits in reply that if the Court made an order for security for costs, the appeal would not be stifled as on the mother’s own evidence, she could obtain assistance from her parents or sell one of her properties, and the appeal could proceed thereafter.
Conclusion
Given the history of the proceedings between these parties, and the outcomes of the various applications, it is understandable that the father would bring this application.
However, importantly, the father concedes that the appeal is not entirely without merit, and thus it is possible that no order for costs will be made in his favour. The importance of that is that the prime reason for an order for security for costs being made, is that in the event of the appeal being dismissed, and an order for costs being made against the appellant, that order for costs can be met. Plainly, that situation will not arise if the appeal is allowed, or if there is an order pursuant to s 117(1) of the Act that each party bear their own costs.
As can also be seen, the financial circumstances of the mother are highly relevant for two reasons. First, in assessing whether an order for costs, if made against her, can be met, and secondly, in assessing whether an order for security for costs would stifle the litigation. It would of course stifle the litigation if the financial circumstances of the mother were such that an order for security could not be met, and the appeal was stayed or dismissed as a result.
Here, the financial circumstances of the mother are such that she would be reliant on obtaining the funds from her parents, or from the sale of one of the properties owned by her and her current husband. In that regard, one of those properties is on the market for sale, but the mother has provided no information as to the likely net proceeds of sale, or as to when a sale would take place.
As to the funds being obtained from her parents, the mother does not put any limitation on that, either in terms of an amount, or when those funds would be available. Thus, I proceed on the basis that the amount sought by the father would be readily available from that source.
In the circumstances, I find that not only would the mother be able to meet any order for costs, but her financial circumstances are such that an order for security for costs would not stifle the litigation. However, that is subject to one important rider, namely, that if the money to meet any order is to come from the proceeds of sale of a property, there must be such proceeds available to the mother. I will return to this issue shortly.
Given that the appeal is not entirely without merit, and given that the mother will have funds from at least two sources to meet any order for costs made against her in the appeal, but not because an order for security for costs will stifle the litigation, I do not consider it appropriate to make an order for security for costs per se. However, given the lack of detailed evidence as to the two sources of the funds available to the mother, what I propose to do is to make what orders I can, to ensure that what the mother says about the funds being available turns out to be the case, if necessary. I cannot of course make any order against the mother’s parents, or against her current husband, but, pending the finalisation of the appeal, I can restrain the mother from joining in the obtaining of any further loan secured over the titles to either of the properties owned by her and her current husband, and restrain her from dealing with or disposing of in any way, the amount of $16,682.18 of her share of the net proceeds of any sale of either or both properties. However, given that those orders were not sought by either party, I listed this matter on 2 July 2020, for a further hearing to raise the same, and receive any submissions that either party sought to make, before making those orders.
Costs
Neither party sought an order for costs arising out of this application, and thus, no such order will be made.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 3 July 2020.
Associate:
Date: 3 July 2020
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