Cloney and Cloney & Ors
[2015] FamCA 78
•18 February 2015
FAMILY COURT OF AUSTRALIA
| CLONEY & CLONEY AND ORS | [2015] FamCA 78 |
| FAMILY LAW – PRACTICE AND PROCEDURE - Summary Dismissal – farming properties – wife claims equitable interest in property held by husband’s parents – husband’s parents seek summary dismissal due to litany of errors in wife’s application – consideration of principles set out in Bigg & Suzi (1998) FLC 92-799 – defects do not amount to “no reasonable chance of success” – no orders for summary dismissal. FAMILY LAW – COSTS - Security for Costs – husband’s parents sought security for costs in the alternative to application for summary dismissal – financial circumstances of the parties – wife’s capacity to raise funds – potential to stifle litigation – no order for security for costs. |
| Family Law Act 1975 (Cth) s 97, 117, 118 Family Law Rules 2004 (Cth) 10.12, 19.05 |
| Bigg & Suzi (1998) FLC 92-799 |
| APPLICANT: | Ms A Cloney |
| RESPONDENT: | Mr B Cloney |
| SECOND & THIRD RESPONDENTS: | Mr C Cloney and Ms D Cloney |
| FILE NUMBER: | ADC | 3743 | of | 2013 |
| DATE DELIVERED: | 18 February 2015 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Dawe J |
| HEARING DATE: | 23 September 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Cox SC |
| SOLICITOR FOR THE APPLICANT: | Voumard Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Pyke QC |
| SOLICITOR FOR THE RESPONDENT: | Mellor Olsson |
| COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: | Ms Kari |
| SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: | Thomas Legal |
Orders
The Application in a Case filed by the second and third respondents on 12 August 2014 is dismissed and removed from the active cases pending list.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cloney & Cloney & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 3743 of 2013
| Ms A Cloney |
Applicant
And
| Mr B Cloney |
First Respondent
And
Mr C Cloney and Ms D Cloney
Second and Third Respondents
REASONS FOR JUDGMENT
Introduction
The wife brought proceedings seeking s 79 property settlement orders by Initiating Application filed on 9 October 2013. That Initiating Application also sought orders that various people, including the second and third respondents Mr C Cloney and Ms D Cloney be joined as third parties to the proceedings. By amended Initiating Application filed on 8 April 2014 the wife, Ms A Cloney (“the wife”) sought orders for final property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”) and a declaration that the second and third respondents “hold on trust for the husband and wife arising out of a resulting and/or constructive trust(s)”. The second and third respondents are the husband’s father and mother.
The claim by the wife is more particularly set out in the document headed “Applicant’s Particular of Claim” filed on 4 June 2014.
On the same date, 4 June 2014, the “Amended Amended Initiating Application” of the wife was filed.
The final orders sought in that document include the following:
A declaration that the Second and Third Respondents hold land on trust for the husband and wife arising out of a resulting and/or constructive trust(s). (My emphasis).
In the documents filed on behalf of the wife there is reference to the further possible joinder of the husband’s brother and sister-in-law, but this has not yet occurred.
The wife claims an equitable interest by way of a constructive trust in property purportedly held by the respondents. The wife claims the respondents made representations that she and the husband would receive an interest in the farming properties and that in reliance on those representations the husband and wife acted to their detriment including taking on debt associated with the farming enterprise.
On 12 August 2014 the husband’s parents, the second and third respondents, filed an Application in a Case in which they sought that paragraphs 2 and 3 of the wife’s Amended Amended Initiating Application be dismissed, that similar orders be made in relation to the interim orders sought by the wife and that if the summary dismissal was not successful, that orders be made pursuant to s 117(2) requiring the wife to provide $50,000 to their solicitor’s trust account as security for costs.
The Court allocated a special listing for the matter on 23 September 2014 when the wife was represented by Mr Cox, SC, the husband by Ms Pyke, QC and the second and third respondents by Ms Kari.
Background
In the detailed particulars of claim filed by the wife and the affidavits filed by the second and third respondent, certain facts are not in dispute. After the parties’ marriage in 1988 both the husband and wife worked on two properties which were called “E property”. These properties were owned by entities controlled by the husband’s parents. Thereafter the husband and wife continued to be involved in certain farming business. They purchased other properties in their own name and carried out farming on those properties. It is alleged by the wife that at various times from 1988 until 2011 representations were made by the husband’s parents to the husband and wife that they would receive an interest in the farming properties in exchange for the work they carried out. It is also alleged that the husband and wife maintained and renovated certain properties and did not receive sufficient benefits for conducting such work.
The outline of argument filed on behalf of the second and third respondent refers to the detailed affidavit filed by the husband’s father on 12 August 2014 which sets out the basis of the respondents’ opposition to the wife’s claim.
The Cloney family (including the husband, his parents and brother and sister) have employed a system of companies and trusts to run the various farming enterprises. The E property is a farming property held in the name of F Pty Ltd. The properties, G, H and I are owned by Cloney Nominees Pty Ltd, which is the trustee of the Cloney Family Trust.
The wife is claiming an equitable interest in those properties as a result of what she claims are representations made by the second and third respondents.
The Law
The law in relation to summary dismissal is uncontroversial.
The application for summary dismissal is to be assessed on the basis that the wife’s evidence is accepted.
Rule 10.12 of the Family Law Rules 2004 (Cth) (“the Rules”) is as follows:
Application for summary orders
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a)the court has no jurisdiction;
(b)the other party has no legal capacity to apply for the orders sought;
(c)it is frivolous, vexatious or an abuse of process; or
(d)there is no reasonable likelihood of success.
The Full Court acknowledged in the decision of Friar & Friar [2011] FamCAFC 71 at [50] that “the rules are properly read as supplementing the power of the court to dismiss pursuant to s 118” of the Act.
Section 118 of the Act provides the Court may “at any stage of proceedings” dismiss the proceedings if it is satisfied the proceedings are frivolous or vexatious. The section further provides that the Court may make such orders as to costs as it considers just.
The principles to be applied when considering an application for summary dismissal are set out in Bigg & Suzi (1998) FLC 92-799 and were affirmed in Pelerman & Pelerman (2000) FLC 93-037 and summarised at [46]:
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 lacks 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.”
In Bretton & Bondai [2013] FamCAFC 168 at [59] Finn and Strickland JJ noted that “no reasonable chance of success” is a conceptually different test to the “doomed to fail” test.
Section 117 of the Act and Rule 19 relate to the application for security for costs:
FAMILY LAW ACT 1975 - SECT 117
Costs
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC 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 is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) 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 limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, 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 to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
(3) …..
(4) ……
(4A) …..
FAMILY LAW RULES 2004 (Cth) - RULE 19.05
Application for security for costs
(1)A respondent may apply for an order that the applicant in the case give security for the respondent's costs.
Note: Chapter 5 sets out the procedure for making an application for interim, procedural, ancillary or other incidental orders.
(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.
The interplay between s 117(1) and s 117(2) was considered by the High Court in Penfold v Penfold (1980) 144 CLR 311 at 315:
It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the subsection is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in "a “clear case".
The authorities clearly establish the Court has power to make an order for security for costs if the circumstances justify such an order.
The principles applicable to an application for security for costs are helpfully summarised by the Full Court in Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 at [2]:
In the recent decision of the Full Court (Coleman, Thackray and Strickland JJ) in Palma & Caleffi and Anor (Security for costs) [2011] FamCAFC 174 the following principles, which govern an application for security for the costs of an appeal, were set out (adopting what was said by an earlier Full Court (Finn, May and Thackray JJ) in Sawer & Sawer [2007] FamCA 140):
19.The power in this Court to make an order for security for costs is to be found in s 117(2) of the [Family Law Act 1975 (Cth) (“the Act”)], which is in the following terms:
If, in proceedings under this Act, the court is of [the] 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 provisions of s 117(2A) are as follows (- s 117(4) and (5) are not presently relevant):
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 limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, 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 to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
21.The authorities establish that in exercising the discretion to order security for costs, it may also be relevant for the Court to consider in addition to the financial circumstances of the parties and the other five specific matters mentioned in s 117(2A), the following matters:
a)the prospect of success of the litigation;
b)whether the claim for security is made bona fide;
c)whether or not an order for security would stifle the litigation;
d)whether or not the litigation may involve a matter of public importance;
e)whether or not there has been a delay in bringing the application for security;
f)whether there would be difficulty in enforcing an order for costs
(Luadaka v Luadaka[1998] FamCA 1520; (1998) FLC 92-830; Jones and Jones [2001] FamCA 460; (2001) FLC 93-080; Adult Guardian and Mother's Parents and B and Child's Representative [2002] FamCA 874; (2002) FLC 93-116.).”
Discussion and Conclusions
(a)Summary Dismissal
The Amended Amended Initiating Application seeks a declaration that the second and third respondents hold “the land” on trust for the husband and wife.
Senior Counsel for the wife acknowledged that, if read alone, the application as drafted is deficient and that the Court would be assisted by more detailed specification and identification. However, when the application is read in conjunction with the Particulars of Claim it is clear that the wife is claiming “equitable interests in the five farming properties”.
The Particulars of Claim set out a detailed history that purports to be the basis for her claim.
The wife submitted that a lack of specificity should not be a barrier to advancing a claim in equity. Furthermore, that the Family Court, as a Court of Equity, is entitled to decide an appropriate interest without requiring parties to assign a specific percentage to their claim and that to do so would be an error of law.
Counsel for the wife acknowledged that the registered owners of the land in question were not the second and third respondents but various other entities. It was conceded that those other entities would be required to be joined to the proceedings. Counsel indicated however that they hope the matter would resolve without a need for final trial and therefore had not yet carried out what they submitted was a “mere formality” to join the other entities.
The Amended Amended Initiating Application filed in June 2014 did indeed foreshadow the joinder of the husband’s brother and his wife, Mr J and Ms K Cloney, F Pty Ltd and Cloney Nominees Pty Ltd.
The actual orders as sought currently drafted in the Amended Amended Initiating Application paragraph 3 are not orders of the sort that any court would make. Regrettably in this Court, although it is a Superior Court of Record, the orders sought by parties are frequently not properly specified at the commencement of the proceedings. For instance, in the husband’s Response to the Initiating Application filed on 20 November 2013 the final orders he seeks are:
1.That the net matrimonial assets of the parties be divided as ordered by this Honourable Court.
2.That the wife pay the husband’s costs.
3.Such further or other order as this Honourable Court deems fit.
Section 97(3) of the Act provides:
(3)In proceedings under this Act, the court shall proceed without undue formality and shall endeavour to ensure that the proceedings are not protracted.
Whilst the Court considers that there are problems with the documents filed by the wife and that there may be a need for further amendments and the joinder of other parties, these difficulties should not be the basis upon which to summarily dismiss the wife’s applications in relation to the second and third respondents at this stage.
The interest of the second and third respondents are likely to be affected by the claims the wife is now making and the declaration which she seeks that she has an equitable interest in the five pieces of real estate.
The wife’s proceedings claiming an equitable interest in certain pieces of real estate may well affect the interests of the second and third respondents. It is also not possible to find at this stage that the wife’s claim has “no reasonable chance of success”. The apparent defects in the drafting of final orders sought and the possibility of joinder of other entities is not a basis to exercise the discretion to summarily dismiss the wife’s case at this time.
(b) Security for Costs
The respondents sought an order for security for costs in the sum of $50,000 if their application for summary dismissal was unsuccessful.
It was submitted that the circumstances of the case justify the making of an order for security for costs.
Counsel for the respondents outlined the history of the proceedings drawing particular attention to the wife’s repeated failure to join the appropriate parties and delay in identifying the property in issue. Ms Kari emphasised what she described as “a litany of errors, difficulties, oversights, [and] problems” in the wife’s documents.
The financial circumstances of the parties are relevant. The second and third respondents are self-funded retirees. The wife is also on a limited income.
The second and third respondents are unwilling participants in these proceedings.
The most recent Financial Statement of the wife was filed on 18 September 2014. In that statement the wife indicates her share in real estate at L Street, M Town, N Street, M Town and 50 per cent share in other real estate in M Town and O Town.
I accept that the current arrangements and financial circumstances of the wife are such that without cooperation from the husband, the wife’s capacity to raise the funds sought for security for costs is limited. Such an order may therefore stifle the litigation. This may alter if the husband and wife agree to sell jointly owned property and invest the proceeds pending the outcome of the litigation.
The second and third respondents would not be prevented from presenting their case as they have access to various assets and funds in the entities controlled by them or their family.
If the second and third respondents are ultimately successful in defending the wife’s claim, the wife is likely to have an entitlement to sufficient assets to meet any order for costs made against her in favour of the second and third respondents.
I am therefore not satisfied that the Court should exercise its discretion at this stage to order any security for costs.
For the above reasons I make the orders set out at the commencement of these reasons.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 18 February 2015.
Associate:
Date: 18 February 2015
0
8
2