C & C

[2006] FamCA 867

FAMILY COURT OF AUSTRALIA

C & C [2006] FamCA 867

FAMILY LAW – APPEAL – SECURITY FOR COSTS – where the applicant appears unable to recover the costs of litigation if the appeal is dismissed – where there are limited prospects of the appeal succeeding – application for security granted in the sum of $3000.

Family Law Act 1975 (Cth) ss 117(2), (2A)

Luadaka & Luadaka (1998) FLC 92-830

Jones & Jones (2001) FLC 93-080

APPLICANT:  GMC

RESPONDENT:   SRC

FILE NUMBER:   CAF2841 of 1992

APPEAL NUMBER:   EA94 of 2005

DATE DELIVERED:  11 July 2006

PLACE DELIVERED:  Canberra

JUDGMENT OF:  Bryant CJ, Kay & Boland JJ

HEARING DATE:  11 July 2006

LOWER COURT JURISDICTION:                   Family Court of Australia

LOWER COURT JUDGMENT DATE:             18 July 2005

LOWER COURT MNC: [2005] FamCA 1086

COUNSEL FOR THE APPLICANT:                 Mr Nimmo

SOLICITORS FOR THE APPLICANT:            pappas, j. - attorney

COUNSEL FOR THE RESPONDENT:            The respondent appeared in person

Orders

1. That the time for filing the Husband’s application for security for costs be extended to 23 March 2006.

2. That unless the wife, within one month, provides security for costs in sum of $3,000 in a form acceptable to the Registry Manager, Canberra Registry, the Appeal be dismissed.

3. That the Respondent wife pay to the Applicant Husband the costs of and incidental to this application in sum of $750.

BRYANT CJ:

1. On 18 July 2005 Faulks DCJ dismissed an application by the wife for property settlement. He ordered her to pay the husband's costs, found the current proceedings before him to be vexatious and, pursuant to s 118 of the Family Law Act 1975 (Cth), on the application of the husband, ordered that the wife be restrained from initiating any proceedings against the husband, GMC, about the division of property arising from the marriage without leave of a court having jurisdiction under the Family Law Act 1975 (Cth). The wife filed a notice of appeal against that decision on 15 August 2005.

2. The application before us is the husband's application filed 23 March 2006 in which he seeks:

   1)  that the time in which to file an application for security of costs be extended;

   2)  that the appellant lodge with the Court for security of costs the sum of $10,040 within 28 days;

   3)  that the appellant be prohibited from pursuing her appeal against the orders made by Faulks DCJ on 18 July 2005 until such time as the appellant complies with order 1);

   4)  that, should the appellant not comply with order 1) within two months of the date of these orders, the appellant's appeal be dismissed and

   5)  that the appellant pay the applicant’s costs of and incidental to this application.

3. The background to this matter is that the parties in or about March 1993 divorced and entered into a section 86 agreement. The wife commenced proceedings in September 2003 in the Federal Magistrates Court filing a contravention application alleging the husband had breached the section 86 agreement. In the alternative, she sought orders under s 44(3) of the Family Law Act for leave to institute settlement of property proceedings pursuant to s 79 of the Act out of time. That application was heard before Brewster FM on 12 and 13 October 2004.

4. In a comprehensive judgment which considered in detail the wife's application for leave to extend the time in which to apply for property settlement, Brewster FM ultimately dismissed her application and ordered that her application to enforce the section 86 agreement or in the alternative for leave to institute proceedings out of time be dismissed. 

5. He made a declaration that the wife held her interest in a property situated in G in the Australian Capital Territory on trust for the husband.  He ordered that she forthwith execute a Memorandum of Transfer to transfer to the husband her legal interest in the property, and enabled the matter to be re-listed for costs.  He subsequently dealt with the application for costs and required the wife to pay the husband's costs of her applications.

6. It is clear that in the course of that hearing Brewster FM carefully considered the application for leave to institute property settlement proceedings out of time and in the course of determining that issue he was required to determine whether hardship would be suffered if leave were not granted and then to determine, in the exercise of his discretion, whether leave should be granted.  In order to determine if hardship was established, he decided to undertake the exercise under s 79 to consider what orders would be made if he did decide to grant leave to the wife.

7. His judgment set out the usual stages involved in making a property settlement order under s 79.  He considered the various assets owned by the parties and their value.  He considered the contributions made by the parties and made findings about them.  He concluded that the husband had made greater contributions than the wife, and made a notional contribution base division of 62.5 per cent to the husband and 37.5 per cent to the wife.  He then went on to consider the matters under s 75(2) of the Act, and decided that it would not be appropriate, if he were determining the question of property settlement, to make any further adjustment.

8. He translated the percentages so arrived at into an amount of money, having regard to the assets of the parties, and calculated that, given the assets that the wife then had, if there were to be a property settlement in the manner that he had suggested, after deducting the property in which was in her possession and her car, there would be a payment required to her of $34,668 by the husband.

9. Brewster FM then considered the matters that he was required to consider in determining whether to grant leave to institute property settlement, in addition to the hardship to the wife to what he determined was the loss of her entitlement of $34,668.  The matters for consideration were the reasons or explanation for her delay in bringing the proceedings and any prejudice to the husband.

10. Having considered her explanation for the delay, he concluded that it was not a satisfactory explanation and that in relation to prejudice to the husband, if the wife were granted leave, there would be substantial prejudice to the husband in that he had spent all but $24,500 of his superannuation in discharging mortgages on the two properties, the one in G which was to go to him and the other which was to go to the wife and giving some funds to the parties' son.  He considered that, whilst the loss of $35,000 to the wife may constitute hardship, it was not substantial hardship and he dismissed her application to enforce the agreement. 

11. That judgment was the subject of an appeal which was heard by Finn J, sitting as a single judge but as an appeal court, on 8 July 2005.  On 9 March 2006, judgment was handed down by Finn J.  She granted an extension of time in which to file the notice of appeal, however she dismissed the appeal by the wife against the orders of Brewster FM and gave substantial reasons for doing so.

12. Given the submissions by the wife to us this morning, it is relevant in my view to note that both Brewster FM and Finn J in the appeal considered carefully how the properties of the parties were acquired, the arrangement made between the parties themselves pursuant to the section 86 agreement in which the wife left the original property on the basis that the husband provided another property for her, and the question of the husband's superannuation entitlements.

13. Having considered all of the assets and all of the matters raised by the wife before Brewster FM and again on appeal, those matters, it seems to me, in both of those judgments were comprehensively considered.

14. Before the appeal had been heard before Finn J, the wife filed an application for final orders in the Family Court on 30 May 2005.  That is the application which was heard by Faulks DCJ and which is now the subject of the appeal.  The orders sought by her in that application were as follows:

    `1.That GMC and BC, who I understand is his present wife or partner, as co‑respondents complete the financial [sic] kits and return to the Court without any further delay;

    2.Final order for a fair and equitable division of the parties' propery [sic] pool;

    3.Order that spousal maintenance be paid to SRC, the wife, for the period 1986 to 1993;

    4.That the respondents pay all costs to the applicant, SRC.

    5.That the applicant's court costs, if any, be waived due to her invalid pension status;

    6.That AJH JP be permitted to act as the applicant's litigant carer.’

15. The respondent was served with the material and filed a response on 1 July 2005. In that response he sought that the application be dismissed; the applicant to pay the respondent's costs on an indemnity basis; that pursuant to s 118 of the Family Law Act and r 13.11 of the Federal Magistrates Court Rules the applicant, SRC, be restrained from commencing proceedings in either the Federal Magistrates Court or the Family Court against GMC without first obtaining leave of the Court.

16. Perhaps unsurprisingly, given the nature of the litigation, the application before Faulks DCJ filed by the wife bears a stamp which appears that it was filed in the Federal Magistrates Court.  Nevertheless, it bears a Family Court number and there is no doubt that it was before Faulks DCJ when he dealt with the matter.

17. Similarly, the response also bears a Federal Magistrates Court seal, although it too bears a number of the Family Court proceedings.  By that stage the notice of appeal in relation to Brewster FM's decision had been filed.  It is clear that Faulks DCJ had before him the response. 

18. From the submissions made to us this morning by the wife, it is my understanding that she is suggesting that she might not have had forewarning of the orders sought in the response. She says that the documents may have been filed on the appeal file rather than before Faulks DCJ and that therefore there was a procedural irregularity in the making of the orders under s 118 of the Act, which I take to be relevant to the issue of whether she is likely to succeed in relation to the appeal.

19. We do not have a transcript of the proceedings, and therefore it is not possible to determine what precisely took place between the appellant before us, who is the wife, and Faulks DCJ on that day.  Absent that transcript, we must assume for these purposes that procedural regularity occurred and that the wife was given an opportunity to consider that application and to make submissions in relation to it.

20. The matter came on before Faulks DCJ on 18 July 2005.  The wife appeared for herself and Ms Godtschalk, a barrister, appeared on behalf of the husband.  The orders made by his Honour were that the application filed on 30 May is dismissed and that the wife pay the husband’s costs of and incidental to the proceedings, in a sum to be agreed upon and for them to be taxed in default of agreement.  He made a further order that he found the current proceedings before the Court filed on 30 May 2005 vexatious and:

    `[The wife] is hereby restrained from instituting any proceedings against [the husband] about the division of property arising from her marriage to [the husband] without leave of the Court having jurisdiction under this Act.’

    The matter was otherwise removed from the Pending Cases List.

21. His Honour delivered extempore reasons for judgment which are fairly short, unsurprisingly, having regard to the matter before him and its determination.  He noted that the application sought a number of different orders, some of which were not properly the subject of proceedings before this Court or any other court exercising jurisdiction under the Family Law Act but which he says all of which are related one way or the other to proceedings that had already been brought in the Federal Magistrates Court and which are presently the subject of appeal from that Court to the appeal division of the Family Court.

22. His Honour noted that the appeal had by that stage been argued and that judgment was awaited.  He noted that those proceedings were about the division of property between the parties and that the present proceedings:

    `... essentially deal with the same matter and are a duplication.  It is not appropriate that proceedings that have already been litigated should be relitigated, particularly when an appeal is pending.’

23. He went on to say:

    `In my opinion, it is inappropriate that proceedings should be allowed to continue and they are dismissed.’

24. He then dealt with the application made by the husband's counsel for an order for indemnity costs.  He did not agree that there should be an order for indemnity costs but made an order for costs under the family law scale.

25. He then turned to the application under s 118 of the Family Law Act and, as I have indicated, made an order that the wife be restrained from commencing proceedings against the husband in relation to property by a court exercising jurisdiction under the Family Law Act without first obtaining leave of the Court.  He set out the basis for coming to the decision to make such an order, including that the present proceedings which, as he says, clearly had no value whatsoever for the reasons he indicated in his judgment and pointed out that they had mirrored other proceedings that had previously been attempted in this Court but withdrawn on advice, and noted that the wife suggested that she withdrew them as a result of blackmail. 

26. He says:

    `I have no grounds for believing either that she will institute further proceedings or will not.’

1. The point his Honour was making was that the proceedings before him were the second set of proceedings brought by the applicant, the first set having been withdrawn, which were of the same nature as the ones before Brewster FM and at that stage the subject of an appeal which judgment had not yet been handed down.  His Honour opined that the present proceedings were vexatious in that they were clearly effectively a repetition of an earlier application and, I would add, in a legal sense an abuse of process and made the order.

2. The wife has now filed an appeal against the orders of Faulks DCJ.  The notice of appeal was filed on 15 August 2005.  The grounds of appeal are as follows:

   1.     No appearance by the respondents or their representatives;

   2.     No service of documents;

   3.     Procedural irregularities;

   4.     The result was plainly unjust

   5.     Arrived at a decision which was clearly wrong.

3. The wife seeks that the orders made by Faulks DCJ be dismissed.  That appeal has yet to be heard, and it is as a consequence of that appeal that the applicant has filed an application seeking an order for security for costs.

4. Costs are governed by s 117 of the Family Law Act. Section 117(2) 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 subsection (2A) ... 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.’

31.That is the relevant power to make an order for security of costs as sought by the applicant.  Sub-section (2A) provides the matters that the Court must consider in an application for costs, including:

(a) the financial circumstances of each of the parties to the proceedings;

(b) whether either of the parties are in receipt of assistance by way of legal aid;

(c) the conduct of the parties in relation to the proceedings;

(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders;

(e) whether any party to the proceedings has been wholly unsuccessful in proceedings;

(f) whether any party has in accordance with s 117(c) or otherwise made an offer in writing to settle the proceedings; and

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

1. Considerations as to the exercise of the power under s 117 have been set out by the Full Court in Luadaka & Luadaka (1998) FLC 92-830 and Jones & Jones (2001) FLC 93-080. In Luadaka the Court, whilst noting the unfettered nature of the discretion to order security for costs, considered the matters which may be relevant in such an application by a respondent to an application for first instance.  At page 85,507 the Court said:

   `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 that 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.’

2. I do not intend to quote in detail from the matters set out in Luadaka (supra) and Jones (supra), but to identify those matters in brief. 

3. First, the Court considered that 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 the rule of poverty should be no bar to justice.  However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order.

4. Secondly, the prospect of success is a relevant matter to take into consideration.  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.

5. Thirdly, it is a relevant consideration whether the applicant's claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham. 

6. Fourthly, it may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation.

7. Fifthly, it may be relevant to consider whether or not the litigation may involve a matter of public importance.

8. Sixthly, it may be relevant to consider whether or not there has been a delay in bringing the application.

9. Seventhly, other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.  The Court said that the matters were not exhaustive of what may be taken into account, but such matters may be relevant to the exercise of the discretion.

10. In Jones & Jones (supra) the Court said (at para 21):

    `It has long been recognised that, as a general rule and in the exercise of an unfettered discretion, mere impecuniosity of a litigant who is a natural person, will not of itself be a basis for ordering that person to provide security.  There is, however, an exception to that general rule, namely in the case of appeals.’

11. In Jones & Jones (supra) again at paragraphs 22 and 23 the Court said:

    `The fact that the wife would be unable to pay the costs awarded against her, if her appeal was dismissed, is, in our view, a significant factor to take into account in considering whether to exercise the discretion to order security in favour of the husband, but it is not the only or deciding factor.

    If an appeal appears to have little merit, a court may be more disposed to make an order for security for costs.’

12. Turning to the facts in this case, the applicant to this application, namely the husband, submits that there is no real prospect of success on the appeal, having regard to the nature of the application, and points to the fact that the wife asserts her impecuniosity and that this is demonstrated effectively by a number of costs orders having been made against her which have not been met.

1. In submissions to us, the wife acknowledged that she had the property in which she was living, but beyond that told us that she had no money to pay costs and conceded that she had not paid those orders for costs against her at least which had to date been quantified.

2. Considering the matters that we are required to take into account, first, the means of the appellant to satisfy an order for costs if he or she is unsuccessful, it seems to me from what has been put by the wife that at least without recourse to the property in which she is living she has no funds from which she could meet an order for costs.  It appears that a number of orders for costs have been made, whether or not they have all been yet assessed, and that no money has been paid to the husband in respect of those orders.  It seems demonstrably clear from the concessions made by the wife that, unless she were to sell her property, she does not have the funds to meet any order for costs which might ultimately be made if the appeal is unsuccessful.  Considering the prospects of success of the appeal, it is in my view a significant matter in determining this application.

3. The wife’s application before Faulks DCJ was, putting it at its highest, inelegantly expressed.  On its face, it seems to me that there are two matters of substance and the other matters are, on their face, procedural.  The matters of substance are order two, a fair and equitable division of the property pool, and order three, spousal maintenance to be paid for the period 1986 to 1993.  The orders seeking financial statements from the husband's present wife, on its face, appears to me to be a procedural order, as do the balance of the orders.

4. In argument, it seemed to me that the wife did not in fact mean the first order, seeking the following financial statements by the husband and his wife, to be merely a procedural order.  It seems that she considered that the assets which had been accumulated during their marriage, particularly the property in which the husband is now living and his superannuation, have been shared with his present partner and that that fact should entitle her now to bring an application of substance against the husband and his present wife as a respondent.  Some weight is given to that understanding at least by the fact that she has nominated his present wife as the second respondent.

5. Be that as it may, that concept is entirely misconceived.  There is no doubt that the previous application dealt with the assets of the parties, dealt with contributions and dealt with their value.  The fact that the husband's present wife is enjoying with him some of those assets does not now create a separate cause of action against her which has not already been determined by the Court.  That claim, if it is more than procedural, is in my view an entirely misconceived one. 

6. I return to the gravamen of the application, which is that the wife wants a fair and equitable division of property.  His Honour dealt with that matter succinctly because it seems to me patently obvious that a fair and equitable division of property is exactly the matter that was agitated before Brewster FM and the subject of an appeal before Finn J. 

7. Whilst we are not dealing with the appeal itself today but rather an application for security for costs, it is hard to imagine, despite whatever submissions might ultimately be put, how the wife could be successful in such an appeal, which is clearly the same issue that was determined by Brewster FM, whatever she may believe about the position of the husband's present wife.  As far as the application for a just and equitable property settlement is concerned, in my view there is no likelihood of success on that issue.

8. The second matter of substance relates to the wife’s application for spousal maintenance from 1986 to 1993.  The Deputy Chief Justice does not deal with the order sought specifically in his reasons for judgement.  However, there are two things that in my view are relevant to the prospects of success in relation to it.  The first is significant and is that, as presently sought, the wife would require leave to commence proceedings and those proceedings are now about 12 years out of time.  There was no application for leave before his Honour, and he was, in my view, entirely justified in dismissing the application.

9. I would add in any event as to the prospect of success, the fact that the application not only is brought 12 years out of time, but is an entirely retrospective application and the chances of obtaining an extension of time, even if such an application were made, would seem to me highly unlikely.

10. Whether the wife’s claim is made bona fide, genuine, vexatious or a sham is, in my view, a relevant matter.  I have no doubt that the wife’s claim is made bona fide but it is misconceived.  I accept that she genuinely misunderstands the process and the nature of the applications that have been dealt with by the Court and the kind of relief the Court has already considered and could grant.

11. However, I for my part agree with Faulks DCJ that the application is vexatious and it is relevant, in my view, that a previous application, although withdrawn, seeking similar relief had been made.  The fact that the wife does not understand the nature of the proceedings dealt with makes it all the more likely that she may bring further proceedings of that kind.

12. As to whether an order for costs would be oppressive or stifle litigation, it is not entirely clear.  Certainly on the face of it, it appears that the wife has no money to pay the costs or at least has not done so.  Whether she could raise funds to meet an order for security for costs, if one were made, is not clear.  But that should, in my view, not be the determining factor in this case as a result of the other matters.  In any event, these proceedings relate to an appeal. 

13. I do not consider the litigation involves any matter of public importance.  From the wife’s point of view, she has prosecuted the appeal in a timely way.

14. There has been a delay in bringing the application on the part of the husband, and he seeks leave to extend the time.  Given the nature of these proceedings, the way in which they have developed, the fact that the appeal by Finn J was handed down after the application was dealt with by Faulks DCJ and indeed Finn J's order not having been handed down until March 2006, in my view there is reason for any delay and I would be prepared to extend the time for making this application.

15. Having regard to those matters and in particular the two matters that I consider of the most importance ‑ namely, the apparent inability of the husband to recover the costs of litigation if he is successful and the limited, if any, prospects of success of the wife on appeal ‑ lead me to conclude that in this case it is an appropriate case in which an order for security for costs in favour of the husband should be made.

16. The husband seeks an order that he be awarded security in the sum of $10,040.  In my view, that is a figure which is much higher than would be warranted in the preparation of a matter which, on its face from the respondent's point of view, could have very limited prospects of success.  In my view an order for $3000 is a far more appropriate order.  That is not to say that that is the order that a court would ultimately make but, in my view, it is an order which would be in these circumstances an appropriate one. 

17. Accordingly, I would make the following orders:

    1.      That the time for filing the Husband’s application for security for costs be extended to 23 March 2006.

    2.      That unless the wife, within one month, provides security for costs in sum of $3,000 in a form acceptable to the Registry Manager, Canberra Registry, the Appeal be dismissed.

    3.      That the Respondent wife pay to the Applicant Husband the costs of and incidental to this application in sum of $750.

KAY J:

1. I agree with the orders proposed by the Chief Justice. 

BOLAND J:

1. I also agree with the reasons and orders proposed by the Chief Justice.

I certify that the preceding
62 paragraphs
are a true copy of the reasons
for judgment delivered by this
Honourable Full Court.

Associate