Butler-Andrews and Andrews and Ors
[2007] FamCA 673
•10 July 2007
FAMILY COURT OF AUSTRALIA
| BUTLER-ANDREWS & ANDREWS AND ORS | [2007] FamCA 673 |
| FAMILY LAW - PRACTICE AND PROCEDURE - Application by second and fourth respondents for summary dismissal - Wife's claim not clearly frivolous, vexatious or "doomed to fail" - Application dismissed FAMILY LAW - COSTS - Security for costs application - Wife to pay $20,000 as security for costs - Proceedings stayed pending payment |
| Family Law Act 1975 (Cth) ss 106B & 117 Family Law Rules 2004 rr 19.05 & 19.06 |
Beck and Beck (2004) FLC 93-181
Gitane and Velacruz (2007) FLC 93-309
Webster & Lampard (1993) 177 CLR 598
Luadaka and Luadaka (1998) FLC 92-830
| APPLICANT: | MRS BUTLER-ANDREWS |
| RESPONDENT: | MR ANDREWS |
| SECOND RESPONDENT: FOURTH RESPONDENT: | MR D C PTY LTD |
| FILE NUMBER: | SYF | 3270 | of | 2004 |
| DATE DELIVERED: | 10 JULY 2007 |
| PLACE DELIVERED: | ADELAIDE |
| JUDGMENT OF: | DAWE J |
| HEARING DATE: | 31 MAY 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MR GRAMELIS |
| SOLICITOR FOR THE APPLICANT: | HARRIS FRIEDMAN HYDE PAGE |
| COUNSEL FOR THE RESPONDENT: | MR HARRISON |
| SOLICITOR FOR THE RESPONDENT: | LANG GELLERT & NOONAN |
| COUNSEL FOR THE SECOND AND FOURTH RESPONDENTS | MR FOSTER |
| SOLICITOR FOR THE SECOND AND FOURTH RESPONDENTS: | ELEANOR MURPHY & CO |
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the court delivered this day will for all publication and reporting purposes be referred to as BUTLER-ANDREWS & ANDREWS
Orders
That paragraph 1 of the Form 2 Application filed by the Second and Fourth Respondents on 18 January 2007 be dismissed.
That the applicant wife pay to the solicitors for the Second and Fourth Respondents the sum of $20,000 as security for costs and that such sum be invested by the Second and Fourth Respondents solicitors in an interest bearing controlled moneys account pending further order.
That pending payment of the sum of $20,000 by the applicant wife the proceedings in so far as they relate to the Second and Fourth Respondents be stayed.
Costs in the cause.
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: SYF 3270 of 2004
| MRS BUTLER-ANDREWS |
Applicant
And
| MR ANDREWS |
Respondent
And
| MR D |
Second Respondent
And
| C PTY LTD |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings listed before me on the 31 May 2007 were the applications by the Second and Fourth Respondents filed on the 18 January 2007 in which the Second and Fourth Respondents sought the following orders:
“1.THAT the Application of the Applicant/Wife filed 22 November, 2005 so far as it seeks orders against the Second and Fourth Respondents be summarily dismissed;
2.THAT consequent on Order 1 the Applicant/Wife pay the Second and Fourth Respondent’s costs on an indemnity basis.
IN THE ALTERNATIVE:
3.THAT Applicant/Wife pay to the Second and Fourth Respondent’s solicitors the sum of $45,000.00 as security for costs and that that sum be invested by the Second and Fourth Respondent’s solicitors in an Interest Bearing Controlled Moneys Account pending further order.
4.Pending payment of the sum of $45,000.00 by the Applicant/Wife proceedings in so far as they relate to the Second and Fourth Respondents be stayed.”
The amended application for final orders filed by the wife on the 22 November 2005 sought the following orders:
“1.That pending the sale of the [Service] Businesses referred to herein, Order 1 Paragraphs 2 and 3 of the Orders by Judicial Registrar Johnston dated 16 May 2005 to remain in force.
2.That the Second, Third and Fourth Respondents be restrained and an injunction be granted restraining them from transferring, encumbering or in any way dealing with their interest in the business situate at [R], including the shares in any company which is registered in his/her or their name without the written consent of the wife previously obtained.
3.That the Second, Third and Fourth Respondents be restrained from voting or taking any steps or exercising any of their powers arising out of any shareholding in the company [C] Pty Limited enabling that Company to assign, transfer or surrender its interest in the business situate at [R], or the Lease registered number […] relating to the property known as [R], pending the sale of the business.
4.That the Husband and the Second, Third and Fourth Respondents do all acts and things and sign all documents necessary to give effect to Orders 5 & 6 herein.
5.That the [Service] Business (including but not limited to goodwill, plant, equipment and client lists) situated at [W], be placed on the market for sale with a licensed business agent agreed by the parties, or in default of agreement appointed by the Wife.
6.That on the sale of the business, the proceeds of sale be disbursed as follows:
6.1in payment of the legal costs of the sale;
6.2in payment of the agent’s costs and commission;
6.3in payment of any legitimate debt over the business;
6.490% of the proceeds to the Wife;
6.5the remainder to the husband.
7.That the Share Sale Agreement dated 8 September 2004 between [C] Pty Ltd, [Mr D], [Ms D] and [the husband] be set aside pursuant to Section 106B Family Law Act 1975.
8.That the [service] business and all plant, equipment, client lists and goodwill situate at [R] be placed on the market for sale with a licensed business agent agreed by the parties or in default of agreement, appointed by the Wife.
9.That upon the sale of the [service] businesses referred to in 6 and 8 above, the proceeds of sale be disbursed as follows:
9.1in payment of legal costs of the sale;
9.2in payment of the agent’s costs and commission;
9.3in payment of any legitimate debts of the businesses;
9.490% of the proceeds to the Wife;
9.5the remainder to the husband.
10.That the Husband pay to the Wife an amount of $100.00 per week child support for the child [H], born [in] October 1999.
11.That the Husband pay to the Wife the sum of $100.00 per week spousal maintenance from 16 January 2004 and continuing. A lump sum equal to the total amount of spousal maintenance due to be paid within seven (7) days of Judgment. Ongoing spousal maintenance to be paid on the 28th day of each month.
12.That except as provided above, each party shall be entitled to the exclusion of the other party, for the sole and legal beneficial ownership of all property, both real and personal, which is registered in each of their name, or is in their current possession or control, including their superannuation entitlements.
13.The Husband pay the costs of the Wife.”
The Second Respondent is Mr D, a business associate or former business associate of the husband. The Fourth Respondent is C Pty Ltd, a company the shares in which are owned by the Second Respondent, Mr D. At one time the husband held some shares in that company. The proceedings against the Third Respondent have been discontinued.
By Response to an Application in a Case filed on the 5 April 2007 the wife sought orders that the interim application of the Second and Fourth Respondents be dismissed.
The Hearing
At the hearing before me on the 31 May 2007 the husband was represented by Mr Harrison of Counsel, the wife by Mr Gramelis of Counsel and the Second and Fourth Respondent by Mr Foster of Counsel.
I heard submissions from all Counsel on that day and at the conclusion of the submissions indicated that I proposed to dismiss the application of the Second and Fourth Respondents seeking the summary dismissal of the wife’s proceedings against them. I indicated that I would give my reasons later which I now do.
I further heard submissions in relation to the Second and Fourth Respondents’ application for security for costs and reserved my decision in relation to that matter.
In the hearing before me the Second and Fourth Respondents relied upon the amended application of the wife filed on the 22 November 2005, the affidavit of the wife (described as her primary affidavit) of the 23 September 2005 and the affidavit of the single expert filed on the 23 May 2007.
In relation to the application for security for costs the Second and Fourth Respondents relied upon their application filed on the 18 January 2007, the affidavit of Mr D filed on the 9 March 2007, the Financial Statement of the wife filed on the 10 November 2006, the affidavit of the single expert filed on the 23 May 2007, the affidavit of the husband filed on the 10 November 2006 and the affidavit of the wife filed on the 23 September 2005, together with an affidavit of Ms M.
The wife relied upon the affidavits of the wife of the 1 June 2004, 9 February 2005, 21 September 2005, 6 November 2006 and the Financial Statement of the wife of the 31 October 2006, the affidavits of the husband of the 23 September 2004 and the 9 November 2006, the affidavit of Mr G of the 12 April 2005 and the affidavits of Mr P of the 23 September 2005 and 18 October 2006, the affidavit of Mr D of the 15 February 2007, the affidavit of Ms L of the 10 May 2007 and the affidavit of Ms W of the 5 April 2007. The latter affidavit was the affidavit of the wife’s solicitor which contained a large number of annexures, including documents which were to be relied upon by the wife.
Chronology
The husband and the wife commenced living together in 1992, migrated to Australia in 1997 and were married on the 5 June 1999.
For many years the husband operated a service business. In particular, in early 2000 the husband set up a business known as S at W. Later that year he opened a shop at R as a collection point for the W business. The parties separated in January 2004.
The wife asserts that in February 2004 the husband purported to close the R business.
The husband and the Second Respondent assert that in about May 2004 through to July 2004 the husband and the Second Respondent entered into an arrangement to set up C Pty Ltd, the Fourth Respondent which has traded thereafter as “[G]”. The husband asserts that he contributed capital contribution by way of equipment to the business to be operated by the Fourth Respondent. In around June 2004 the Fourth Respondent C Pty Ltd was incorporated and rented commercial premises at a shop close to the shop previously operated by the husband at R.
In July 2004 the husband and the Second Respondent entered into a Shareholder Agreement in which the husband and the Second Respondent held shares in the Fourth Respondent.
Shortly thereafter on the 8 September 2004 the husband entered into a Share Sale Agreement with the Second Respondent transferring his shares in the Fourth Respondent to the Second Respondent.
The Second Respondent asserts that thereafter he has operated the business at R on his own behalf with a separate contractual arrangement between himself and the husband, with the husband collecting items for the Fourth Respondent at his W shop.
It is the Share Sale Agreement which is the subject of the application by the wife pursuant to Section 106B of the Family Law Act. The wife seeks to set aside the Share Sale Agreement thus restoring the husband as a shareholder in the Fourth Respondent.
It is this part of the proceedings by the wife which the Second and Fourth Respondents seek to be summarily dismissed.
The Second and Fourth Respondents asserted that there was no evidence at all to support the wife’s claim under Section 106B to set aside the Share Sale Agreement.
The Second and Fourth Respondents maintain that there is no evidence that the Share Sale Agreement in any way diminished the assets available relating to the wife’s property settlement claim.
It is not disputed that the husband provided plant and equipment of a value of $8,000 at the time of the original share agreement and that later, on the completion of the Share Sale Agreement, received $8,000 back.
The wife asserts that at the time of the parties’ separation there were two businesses in operation, one at W and the other at R which was using the name “[G]”. The wife asserts that the business operated by the husband at R known as “[G]” has now been transferred to the Second and Fourth Respondents.
The affidavit of Mr D, the Second Respondent, of the 15 February 2007 asserts that the business name of “[G]” was transferred from the husband to Mr D.
The wife’s Counsel asserts that the series of events set out in the documents give rise to a clear inference that the husband’s existing businesses at W and R have been “rolled over” into Mr D’s business and that the goodwill of the husband’s previous R business was absorbed into the Second and Fourth Respondents’ business.
The evidence of Mr P relied upon by the wife is the evidence of a Private Investigator who asserts that he observed a high degree of involvement of the husband in the business of the Second and Fourth Respondents after the Share Sale Agreement.
The wife asserts that documents obtained by Mr P, including business cards and internet and yellow pages advertisements, all support the inference that the husband remains involved in the business operated by the Fourth Respondent.
The wife also asserts that the evidence available supports the inference that the Share Sale Agreement, which the wife seeks to set aside, is in fact a “sham”.
The Law on Summary Dismissal
The principles governing the summary dismissal of an application are set out in the decision by the Full Court in Beck and Beck (2004) FLC 93-181 at paragraphs 17, 18 and 19:
“17.In his reasons for judgment (after setting out the factual background to this matter largely in the terms which we have used above), Holden J identified the principles to be applied to the application before him in the following way:
‘12.This application seeks to summarily dismiss the relief sought in order 1(i) of annexure A to the application of the wife filed 15 August 2001. That is, that there be a finding that there has been a miscarriage of justice by reason of fraud and suppression of evidence or any other circumstance. It is well established that the following principles apply: (see Bigg v Suzi (1998) FLC 92-799 at 84,973-84,974) and also Pelerman v Pelerman (2000) FLC 93-037 at 87,582):
(a)The power for summary dismissal is a discretionary one.
(b)Relief ‘is rarely and sparingly provided’.
(c)The parties seeking summary dismissal must show that the application is ‘doomed to fail’ or as has been otherwise described ‘that the opponent lacked a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious’.
(d)A weak case or one that is unlikely to succeed is not ‘sufficient to warrant termination’.
(e)‘If there is a serious legal question to be determined, it should ordinarily be determined at a trial’.
(f)‘If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings’.’
13.In determining an application of this nature I accept that the rule to be extracted from the authority is that if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the court to proceed on the basis that the respondent's version will ultimately be accepted at the trial of the action (see Webster v Lampard (1993) 177 CLR 598 at 608).’
18.Given that there is no challenge to his Honour’s formulation of the test for the summary dismissal of an application, it is unnecessary that we discuss the principles stated in the Full Court decisions of Bigg v Suzi and Pelerman v Pelerman (as set out by Holden J in paragraph 12 of his reasons for judgment).
19.However, given the nature of the wife’s complaints concerning his Honour’s application of the test, we consider it useful at this stage to set out the following passages from the joint judgment of Mason CJ, Dean and Dawson JJ in Webster v Lampard (to which Holden J referred in paragraph 13 of his reasons):
‘It is important to note at the outset that the issue before the learned Master on the application for summary judgment was not whether Mr and Mrs Webster would probably succeed in their action against Sergeant Lampard. It was whether the material before the Master demonstrated that that action should not be permitted to go to trial in the ordinary way because it was apparent that it must fail. The power to order summary judgment must be exercised with ‘exceptional caution’ (General Steel Industries Inc. v. Commissioner for Railways (NSW) (1964) 112 CLR 125, at p.129.) and ‘should never be exercised unless it is clear that there is no real question to be tried’ (Fancourt v. Mercantile Credits Ltd. (1983) 154 CLR 87, at p 99). As Dixon J commented in Dey v. Victorian Railways Commissioners ((1949) 78 CLR 62, at p 91.):
‘A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his (or her) case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.’
Nowhere is that need for exceptional caution more important than in a case where the ultimate outcome turns upon the resolution of some disputed issue or issues of fact. In such a case, it is essential that ‘great care ... be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his (or her) opportunity for the trial of his (or her) case by the appointed tribunal’" (General Steel Industries Inc. v. Commissioner for Railways (NSW) (1964) 112 CLR, at p 130; see, also, Church of Scientology v. Woodward (1982) 154 CLR 25, at p 31). [602-603]
As has been said, it was incumbent on the Master, in the absence of any opportunity of cross-examination, to dispose of the case on the basis that the Websters' version of the facts, which was not inherently incredible, would ultimately be accepted on the trial of the action. [608]’
In the recent decision of Gitane and Velacruz (2007) FLC 93-309 delivered by the Full Court in March 2007, Justice Kay of the Full Court provided the following succinct summary:
“24.The principles to be applied in an application to strike out or summarily dismiss have been discussed in a number of cases by this Court and in particular the words of Kirby J in Lyndon (sic) v Commonwealth No 2, (1996) 70 ALJR 541 at 544 and 5 have been applied. I refer, amongst other decisions, to the decision of Bigg v Suzi (1998) FLC 92 799 at paragraph 510.
25. I paraphrase the salient points as follows:
(1)that relief for summary dismissal is rarely and sparingly provided;
(2)that it is only available if it is clear on the face of the documents of the person asserting a cause of action that there is no reasonable cause of action or that it is a frivolous or vexatious one;
(3)that it is not enough to attain summary dismissal to show that it is a weak case;
(4)that there is a defect in the pleading and it appears that the party still has a reasonable cause of action, the Court will allow the party to reframe its pleading; and
(5)that one only summarily dismisses if it is clear that the case is doomed to fail.”
Conclusion on Summary Dismissal
When considering the wife’s case it is necessary to look at the facts as alleged by the wife and the documents which support her case. Considering the allegations made by the wife and the alleged evidence of the various witnesses and documents, the “version of the facts put forward” by the wife is “not inherently incredible” (see Webster & Lampard (1993) 177 CLR 598 as referred to in Beck and Beck (supra).
Taking into account the material put forward by the wife I am not satisfied that the wife’s claim is clearly frivolous or vexatious nor that it is “doomed to fail”.
In exercising my discretion I consider it inappropriate to summarily dismiss the wife’s proceedings against the Second and Fourth Respondents.
I therefore dismiss the application of the Second and Fourth Respondents for summary dismissal.
Security for Costs
The second part of the application by the Second and Fourth Respondents seeks an order that the wife provide security for the Second and Fourth Respondents’ costs and that pending payment of the sum for security for costs, the proceedings be stayed so far as they relate to the Second and Fourth Respondents. The Application in a Case filed by the Second and Fourth Respondents on the 18 January 2007 sought that the sum of $45,000 be placed in an interest bearing account in the name of the Second and Fourth Respondents’ solicitors.
In final argument before me, Counsel for the Second and Fourth Respondents sought that the wife provide security for costs in the sum of $20,000.
The wife opposed any order for security for costs. Counsel for the wife asserted that the wife had already incurred significant costs.
It was also asserted on behalf of the wife that the Second and Fourth Respondents should have made any application for security for costs much earlier than at this stage of the proceedings.
It was agreed by the parties before me that if the disputed business of the Fourth Respondent operated by the Second Respondent was not brought into account, then the current liabilities of the husband and wife exceed their assets by approximately $68,000.
The wife has provided a Financial Statement filed on the 10 November 2006 in which she discloses assets of a net value of $3,915 and liabilities of $106,634.
The Second and Fourth Respondents concede through their Counsel that they have the means to fund the proceedings. It was submitted on their behalf that the wife’s prospects of success are minimal. It was also submitted that if the Second and Fourth Respondents are successful in their opposition to the wife’s claim, any order for costs would be illusory, taking into account the assets of the wife and indeed the assets of the husband and wife.
The wife submits that the order for security for costs has the risk of stifling the litigation.
The wife does not reside in Australia but resides in P the capital of the A Islands in the Pacific.
The Law on Security for Costs
Section 117(1) provides that subject to the relevant sections referred to “each party to proceedings under the Family Law Act shall bear his or her own costs.”
Section 117(2) provides:
(2)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) 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.”
The relevant provisions of Section 117(2A) are (a) and (g).
Rules 19.05 and 19.06 provide:-
19.05:-
“(1) A respondent may apply for an order that the applicant in the case 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 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) whether the applicant ordinarily resides outside Australia;
(i) the likely costs of the case;
(j) whether the applicant is a corporation;
(k) whether a party is receiving legal aid.
(3) In subrule (1):
"respondent "includes an applicant who has filed a reply because orders in a new cause of action have been sought in the response.”
19.06:
“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 case of the party be stayed.
Note The court may, on application or on its own initiative, dismiss a case for want of prosecution. “
The Full Court considered the power to order security for costs and the principles to be applied when making decisions about security for costs in the matter Luadaka (1998) FLC 92-830. The Full Court (Ellis, Finn and O’Ryan JJ) considered the relevant cases in detail and in paragraphs 61, 62 and 63 stated:
“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:
62.1 It 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 (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 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 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 (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 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 (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); Jodast 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 to 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 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.”
The Headnote for the reported judgment summarises the main features of paragraph 62 as follows:
“1.The provisions of s.117 Family Law Act apply to an application where a party is seeking security for costs which may be ordered in his or her favour in the event that the other party is unsuccessful.
2.Apart from the provisions of s.117(2A), other matters which may be relevant to take into account, when determining whether to exercise the discretion to order security for costs, include:
·the means of the applicant to satisfy an order for costs if unsuccessful;
·the prospect of success of the application;
·whether the applicant's claim is made bona fide or is genuine;
·whether an order for costs would be oppressive or stifle the litigation;
·whether the litigation involves a matter of public importance;
·whether there has been delay in bringing the application for security;
·any difficulties in enforcing an order for costs; and
·the amount of costs to be incurred.”
The cases emphasise that the overall guiding principle is to do what is just in the particular circumstances of the case.
Discussion
The means of the applicant to satisfy an order for costs if unsuccessful
It is conceded that if the wife is unsuccessful she has no means to satisfy an order for costs in favour of the Second and Fourth Respondents. However, as was indicated in Luadaka (supra) it is the general rule that poverty should not be a bar to justice.
Section 117(2A) (a) requires consideration of the financial circumstances of the Second and Fourth Respondents. As indicated in 62.1 of Luadaka (supra) “in appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.”
The prospects of success of the application
The application for security for costs sought by the Second and Fourth Respondents in the proceedings against them does not currently permit a detailed assessment of the probability of success of the wife’s claim. Much of the material will need to be tested by cross-examination and carefully considered in the context of all of the material. It therefore cannot be said that there is a high probability of success or failure. Whilst the application to summarily dismiss the wife’s proceedings against the Second and Fourth Respondents has been unsuccessful nonetheless the wife’s proceedings pursuant to section 106B are substantially based on inferences to be drawn from the various pieces of evidence. As such it is not correct to say that the wife has a high probability of success against the Second and Fourth Respondents.
Whether the applicant’s claim is made bone fide or is genuine
I accept that the applicants’ claim is made bone fide and is not vexatious or frivolous.
Whether an order for costs would be oppressive or stifle the litigation
The wife submits that an order for security of costs may prevent her from proceeding against the Second and Fourth Respondents. As indicated in Luadaka (supra) at paragraph 62.4
“62.4 It 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 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.’”
The wife has already expended a considerable amount of money on legal fees. This is a matter which needs to be weighed with the other factors in these proceedings.
Whether the litigation involves a matter of public importance
This is not relevant in these proceedings.
Whether there has been delay in bringing the application for security.
The wife argues that the Second and Fourth Respondents did not bring the proceedings promptly. However the delay in bringing the application has not caused significant prejudice to the wife in these proceedings.
Any difficulties in enforcing an order for costs; and
The amount of costs to be incurred
The Second and Fourth Respondents are likely to incur significant costs in the proceedings particularly in preparing the matter for trial and responding to the claims by the wife. The significant factor under this criteria is the fact that the wife does not reside in Australia, but in a foreign jurisdiction. There may be greater than usual difficulty in enforcing any order for costs.
ConclusionsI have considered carefully the various criteria referred to in Luadaka (supra) and the Rules. The significant factors are:-
(i)the financial circumstances of the wife;
(ii)the nature of the proceedings being based upon a claim significantly dependent upon the Court drawing certain inferences; and
(iii)the likely difficulties in enforcing any order for costs should the Second and Fourth Respondents be successful in their defence of the wife’s claim.
I have carefully considered the risk that the order for security for costs may stifle the proceedings, but weigh this against the other significant factors. The order for $20,000 security is not oppressive in these circumstances and appropriately protects the Second and Fourth Respondents.
I therefore conclude that in the exercise of the discretion, after carefully considering the various factors in Section 117, the Rules and the authority of Luadaka (supra) that an order for security for costs should be made.
It is also appropriate to grant the stay sought by the Second and Fourth Respondents.
I certify that the preceding sixty two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe.
Associate:
Date: 10 July 2007
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