Feravante and McVie

[2013] FamCA 758

FAMILY COURT OF AUSTRALIA

FERAVANTE & MCVIE [2013] FamCA 758

FAMILY LAW – Wife’s application for a litigation funding order of $150,000 – where only head of power is s 117 (costs) – relevant considerations – application refused

APPLICANT: Ms Feravante

RESPONDENT: Mr McVie

FILE NUMBER: MLC 7111 of 2012

DATE DELIVERED: 12 September 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 3 June 2013

LAST SUBMISSIONS DUE: 29 August 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr St John SC

SOLICITOR FOR THE APPLICANT: Scanlon Carroll Pty Ltd

COUNSEL FOR THE RESPONDENT: Mr Strum

SOLICITOR FOR THE RESPONDENT: JH Legal

Orders

1. The orders sought in paragraphs 1 to 3 inclusive of the wife’s application in a case filed on 21 March 2013 and any response by the husband thereto be dismissed.

2. The balance of the said application be dismissed.

3. I will deliver my reasons for decision subsequently.

4. The hearing listed to commence 7 October 2013 be vacated.

5. This matter be listed for mention by telephone before me on 10 October 2013 at 10.30 am for the purpose of setting a trial date and making directions for trial.

6. Any party who wishes to make an application for costs arising out of this application notify the other party and my Associate of same by not later than 1 November 2013 and the matter be relisted before me at 9.00 am one morning.

7. Any party seeking costs provide to the other party and my Associate a memorandum of costs claimed drawn in accordance with the scale provided in the Family Law Rules 2004.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Feravante & McVie 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

FILE NUMBER: MLC7111/2012

Ms Feravante

Applicant

And

Mr McVie

Respondent

REASONS FOR JUDGMENT

Introduction

1. The wife seeks a costs order against the husband whereby he pay her $150,000 as interim provision for litigation expenses.

2. The wife relies on her Application in a Case filed 21 March 2013, her Initiating Application filed 13 August 2012, her affidavits sworn 6 August 2012, 2 November 2012, 25 January 2013 and 20 March 2013, her financial statement sworn 6 August 2012 and the affidavits of Ms B sworn 21 March 2013 and 3 June 2013.

3. The husband seeks that the wife’s application be dismissed on the basis that an order for such costs is not justified. The husband relies on his Amended Response to an Initiating Application filed 19 April 2013, his affidavits sworn 12 October 2012, 7 December 2012, 14 December 2012, 22 March 2013 and 6 May 2013, and the affidavit of Dr C sworn 8 March 2013. In oral submissions, counsel for the husband also relied upon the husband’s financial statement sworn on 12 October 2012.

4. The matter was argued before me on 3 June 2013. Neither party sought to adduce oral evidence and neither party sought to cross examine the other party or any of the witnesses of the other party. I was assisted by the written submissions relied upon by the respondent husband on 3 June 2013 which led to the hearing taking less time than it would have by oral submissions alone. I reserved my decision with each party agreeing to facilitate a private mediation with Mr G Dickson, of counsel, prior to my decision in this application being handed down. The parties were to advise my Chambers of the date and arrangements for the private mediation. The husband was to be responsible initially for the costs of the mediator. Subsequently, my Chambers was notified that no mediation would be convened.  

5. On 31 July 2013 the matter came before me on an urgent parenting application by the husband. The solicitors then acting for the wife, Scanlon Carroll Pty Ltd, appeared for the wife on that day but said that they were not instructed to act thereafter. I excused them from further acting and from any requirement to file a notice of ceasing to act. The wife filed a Notice of Address for Service. In relation to this financial proceeding I ordered, by consent, that by not later than 4.00 pm on Thursday 15 August 2013 the husband file and serve any further submissions he sought to make in relation to the wife’s application confined to the consequences of the wife’s former legal practitioners now having ceased to act on her behalf. The wife was required to file and serve any written submissions upon which she relies in the same vein by not later than 4.00 pm on Thursday 29 August 2013.

6. On 13 August 2013 the husband filed further submissions in which he stated that the evidentiary basis for the wife’s application had now dissolved due to the fact that she was no longer legally represented. Furthermore, the husband submitted that the wife’s debt to her former solicitors has now become like a debt to any other creditor and it would not be a proper exercise of power under s 117 “to order payment of that debt under the guise of a costs order, when in fact it would be a property order, in respect of which the Court’s jurisdiction is in dispute and has not been established”. The wife did not file any submissions by 29 August 2013.

7. On 12 September 2013 there was a telephone mention before me at which the wife appeared on her own behalf and Ms Hepworth, solicitor, appeared for the husband. I dismissed the wife’s Application in a Case filed on 21 March 2013, in which she seeks the costs order of $150,000, and said that I would deliver my reasons subsequently. These are those reasons.

Background

1. The wife was born in 1973 and is 40 years of age. She is engaged in home duties.

2. The husband was born in 1952 and is 61 years of age.

3. The parties never married. They commenced a de facto relationship in or about March 2002. There are two children of the relationship:-

   a)D (‘D’) born in 2003, and

   b)E (‘E’) born in 2004.

4. The children live with the wife and spend time by agreement with the husband. There are no parenting orders for the children other than an order made by me on 31 July 2013 that requires the parents to mutually do all acts and things necessary to ensure that the children continue to attend Suburb F Primary School and continue to reside within 15 kilometres of the Melbourne’s GPO. Pursuant to orders made on 23 April 2013, the parties and children were to participate in an assessment by Mr G, psychologist with interviews taking place on 22 August 2013.

5. Part VIIIAB was inserted into the Act by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2009 (Cth). Part VIIAB gives this Court jurisdiction to make orders for property settlement between parties to a de facto relationship but does not apply to parties whose de facto relationship ‘broke down’ before 1 March 2009.

6. The husband contends that the parties separated finally on 23 January 2007. The wife contends that the date of final separation is 1 May 2012.

7. The wife filed an initiating application on 13 August 2012 seeking a declaration under s 90RD(2)(d) of the Family Law Act 1975 (Cth) (‘the Act’) that the parties’ de facto relationship ended on 1 May 2012. That matter was listed for hearing on 7 October 2013. It was envisaged that I would determine when the parties’ relationship concluded which would, in turn, be determinative of whether this Court has jurisdiction to entertain the wife’s application for an alteration of property interests. If the parties separated on the date alleged by the wife, her application is appropriately filed in this Court. However, if the Court finds that the parties separated in January 2007, as alleged by the husband, this Court has no jurisdiction to grant relief as sought by the wife.

8. Also during the telephone mention on 12 September 2013 I vacated the trial listing on 7 October 2013 and, instead, listed the matter for mention on 9 October 2013. I did so on the basis that the husband and wife have again agreed to participate in a private mediation prior to having a trial of the jurisdictional issue.

The applicable law

1. As it is not conceded that the parties’ de facto relationship concluded on or after 1 March 2009, the Court does not have jurisdiction to make orders for litigation funding under the heads of power provided by s 79 and s 80(1)(h) (interim property) or s 74 and s 80(1)(h) (lump sum spousal maintenance).

2. It is common ground that the only basis for the wife’s claim is the costs power contained in s 117.

3. Section 117(1)–(2A) provides as follows:

   (1)Subject to subsection (2), subsection 70NFB(1)[1] and sections 117AA[2], 117AC[3] and 118[4], each party to proceedings under this Act shall bear his or her own costs.

   [1] Section 70NFB(1) requires the court to consider making an order for costs against a person found to have contravened a parenting order without reasonable excuse (more serious contravention). It does not apply to this case.

   [2] Section 117AA provides for costs in proceedings relating to overseas enforcement and international conventions. It does not apply to this case.

   [3] Section 117AC prohibits the Court from making an order for security for costs in a proceeding involving a Convention country (which is defined). It does not apply to this case.

   [4] Section 118 relates to frivolous or vexatious proceedings and it does not apply to this case.

   (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.

Discussion

1. The wife contends that the financial circumstances of the parties (s 117(2A)(a)) justifies the relief she seeks. Mr St John of Counsel also placed reliance on s 117(2A)(g) in so far as he sought to rely on considerations under Rule 19.05 of the Family Law Rules 2004.

2. The husband contends that the financial circumstances of the parties (s 117(2A)(a)), the conduct of the parties in relation to the proceedings (s 117(2A)(c)) and the prospects of success (s 117(2A)(g)) are the relevant factors in this case.

3. It is common ground that neither party is in receipt of legal aid and that the proceedings have not been necessitated by the failure of a party to comply with previous orders of the Court. Accordingly, s 117(2A)(b), (d), (e) and (f) are not relevant to this proceeding.

The Financial Circumstances of each of the Parties to the Proceedings

1. The wife has not worked outside the home since the birth of the children but she derives an income from various sources of slightly less than $3,000 per week.

2. In her financial statement sworn 6 August 2012 she deposes to income of $1,314.38 per week. She deposed to receiving $390 per week by way of rental income from her property in J Town, $115.38 per week from her parent’s company, Feravante Pty Ltd, $184 per week in government benefits and $625 per week from the husband by way of child support. The wife also estimated that the husband pays $1,615 per week on her behalf by way of rental for the property in which she and the children live at H Street, Suburb F, health insurance, utilities, phone, car, credit card, rates, children’s activities and ‘mortgage gap’, which, I assume, is the difference between the rental income she receives for the J Town property and the mortgage repayments she is required to make.

3. In her affidavit sworn 3 June 2013, Ms B, the mother’s solicitor, deposes that the wife has outstanding legal costs of $109,969.56 as well as an amount of $14,300 for unbilled work in progress. In relation to future legal costs, Ms B deposed that she estimated the cost of this interim application as between $10,000 and $15,000 and estimated the cost of the final hearing as totalling $50,000 to $67,000. Counsel for the wife submitted that the wife is not able to borrow money to pay her legal costs due to her ‘uncertain income position’.

4. Furthermore, counsel for the wife submitted that her solicitors are unable to continue providing legal representation without some of their fees being met. There was affidavit evidence by the wife and the wife’s solicitor to support that conclusion and, as indicated, they withdrew as her legal practitioners on 31 July 2013.

5. The wife is the registered proprietor of a property in J Town, which has been valued at $360,000 and is subject to a mortgage of $162,000. Counsel for the husband submitted that the wife could fund her legal costs by borrowing against that property and contended that there was no evidence to substantiate the wife’s claim that she has no borrowing capacity. I accept that the wife’s statement that she cannot borrow is evidence per se.

6. The husband is employed in the Defence Forces and also receives rental income. In his affidavit filed 12 October 2012 the husband deposed that he had previously worked regularly freelance but “that work has basically dried up”. He deposed that he was receiving approximately one booking every ten weeks and that he expects to retire in the next few years, particularly as many countries have age restrictions for his kind of work of 55 to 60 years (the husband is now 61 years old).

7. In his financial statement filed 12 October 2012 the husband estimated that he received income of $3,360 per week made up of $1,160 per week as ‘Landlord, … and Consultant’ and $2,500 per week from ‘Pension and [Defence Forces]’. The husband deposed to expenses of approximately $5,371 per week, $2,000 of which he estimated was paid as maintenance and child support for the benefit of the wife and their children. The husband deposed to owning property of total value $2,392,164 and superannuation of $716,400. He estimated that he had liabilities of $1,075,000. Counsel for the wife did not seek to cross examine the husband but the wife, in her affidavit evidence, asserted that the husband had understated his income. I cannot make a finding to that effect at this juncture.

8. Counsel for the husband submitted that the husband does not have funds readily available to provide $150,000 by way of litigation funding to the wife. That appears to be the case. In any event, counsel for the wife did not identify any fund or liquid asset from which the $150,000 can be accessed. Counsel for the husband submitted that, if the Court were to make an order for the husband to sell one of his properties and the wife fails to obtain her declaration, there may be no property proceedings between the parties which could give rise to an adjustment in his favour and, in any event, the husband could not be restored to his previous position by the mere payment of funds from the wife.

9. If this court does not have jurisdiction to entertain the wife’s application, the wife may seek a property adjustment and/or maintenance in the state courts of Victoria pursuant to s 41 of the Relationships Act 2008 (Vic). However, s 43(1) provides that any such application “must be made within 2 years after the day on which the relationship ended”. Section 43(2) provides that a court may grant leave for an application to be filed outside the 2 year period “if the court is satisfied that greater hardship would be caused to the partner applying [the wife] if that leave were not granted than would be caused to the other partner [the husband] if that leave were granted.” It follows that the wife may not be eligible to apply as of right and might have to seek and obtain leave pursuant to s 43(2). It also follows that, if this court does not have jurisdiction to deal with an alteration of property interests between the parties, there is no certainty that there will be proceedings in a court of the State of Victoria for an adjustment of interest or maintenance which would render an entitlement against which any interim costs order now paid to the wife could be clawed back or adjusted against for the husband.

10. Counsel for the wife submitted that, if I am inclined to make the orders sought in the wife’s application, the wife would be willing to consent to an order restraining her from encumbering, selling or otherwise disposing of the J Town property. However, it was conceded by senior counsel for the wife that this falls well short of according the husband any priority over her other unsecured creditors.

11. There was discussion around the wife executing a second mortgage in favour of the husband over her property in J Town as security for any ‘costs’ which she may subsequently be required to repay to the husband in the event that she fails to secure the declaration she seeks under s 90RD(2)(d). However, there was no indication that the wife was prepared to execute a second mortgage by way of security. Notably, it appears from the affidavit of the wife’s solicitor that as recently as 8 January 2013 that firm took an equitable charge over the wife’s interest in the J Town property to secure “any fees not paid in accordance with out trading terms” and that the wife agreed “to sign all further documents necessary to complete and to perfect the security interest”. It would appear, therefore, that the wife has already accorded her instructors some priority over unsecured creditors.

The Conduct of the Parties to the Proceedings in Relation to the Proceedings

1. Counsel for the husband submitted that, as the giving of false or misleading evidence is a circumstance which may justify an order for costs (see Penfold v Penfold (1980) FLC 90-800), conversely, it is a circumstance which may justify an order for costs or security for costs not being made. Mr Strum submitted that it is open to the Court to find that the wife has “committed perjury” in these proceedings by alleging that in August 2011 she was pregnant with the husband’s child and not withdrawing that allegation even after DNA testing of the foetal tissue excluded the husband as the biological father. I do not agree that such a finding is open to me in the context of the wife’s current application for costs. Perjury is a criminal offence. The wife has not been charged with any such offence.

2. I am satisfied that the wife’s conduct can be relevant within the context of s 117(2A)(c) or (g) so I will record what I understand has transpired.

3. In her first affidavit in these proceedings sworn 6 August 2013, the wife deposed to details of the relationship she had with the husband which she thought were indicative of the fact that they were in a de facto relationship beyond January 2007. She swore that:

   ·The parties attended upon a clinical psychologist for relationship counselling with a view to reconciling. The wife deposed, “by late 2007, the [husband] and I seemed to be making some positive progress and had reconciled”.

   ·The husband spent time with and shared meals with the children, the wife and his father at his father’s home when the husband was in Melbourne.

   ·The husband occasionally spent the night at the home of the wife and the children.

   ·The husband, wife and the children spent time together at their holiday home in I Town, and on holidays to Sydney, Country K and J Town on several occasions. The wife deposes that the parties always shared a bed.

   ·Between 22 April 2007 and 29 March 2008 the parties attended social events such as birthdays, weddings, work functions and funerals together and the husband sometimes introduced the wife as his fiancée.

1. In his responding affidavit sworn 12 October 2012 the husband deposed that the parties had not had a sexual relationship since final separation on 22 January 2007.

2. The wife then filed a further affidavit sworn 2 November 2012 in which she deposed that she had continued a sexual relationship with the husband until approximately January 2012. As evidence of that fact, she deposed that she had fallen pregnant with the husband’s child in August 2011. The wife also deposed that the husband had driven her to the rooms of Dr K, obstetrician, on 17 August 2011 and that the husband’s brother-in-law, Mr L, had collected her after the appointment. The wife deposed that the pregnancy did not continue to full term. The wife filed an affidavit of Dr K sworn 2 November 2012 in which he deposed that the wife presented to his rooms pregnant and bleeding heavily on 17 August 2011 and that on 18 August 2011 he performed a curette on her terminating the pregnancy.

3. The husband filed a second affidavit sworn 7 December 2012 in which he denied that he had been the father of the wife’s child, denied that he had driven the wife to Dr K’s rooms on 17 August 2011 and deposed that he had not previously been aware that the wife had been pregnant in August 2011. The husband deposed that he was not in Australia in August 2011 and annexed several documents to his affidavit confirming that he was not in the country on 17 August 2011. This was the day the wife alleged that the husband had driven her to Dr K’s rooms.

4. The husband filed a third affidavit sworn 14 December 2012 in which he deposed that the documents produced upon subpoena by Dr K disclosed that he had performed an ultrasound on 17 August 2011 which revealed a foetus of seven weeks, making the date of conception approximately 29 June 2011. The husband deposed that he was overseas from 24 May 2011 to 11 July 2011 and annexed photocopies of the stamped pages of his passport and receipts for expenses whilst he was travelling during that period which corroborated his absence from Australia.

5. The husband also deposed that Dr K’s notes revealed he had received correspondence from the wife’s general practitioner, Dr M, which was dated 17 October 2011 and indicated that the wife was pregnant. The husband deposed that Dr K’s file also contained a Histopathology of Biopsy dated 1 November 2011 which referred to a seven week TOP suction curette. If the wife was seven weeks pregnant on 17 October 2011 the date of conception would have been approximately 29 August 2011. The husband deposed that he was similarly overseas from 11 August 2011 to 3 September 2011 and again photocopies of the stamped pages of his passport and receipts for expenses whilst he was travelling during that period were annexed to his affidavit.

6. The wife filed a further affidavit of Dr K sworn 19 December 2012 in which Dr K attempted to correct errors in his first affidavit and deposed that the wife had first presented to his rooms on 17 October 2011 rather than 17 August 2011 and that he performed a curette on the wife on 18 October 2011. Dr K deposed that he calculated that the wife was approximately seven weeks pregnant at the time, on the basis of her last menstrual period occurring on 1 September 2011.

7. The wife also filed an affidavit of her general practitioner. Dr M, sworn 11 January 2013 in which he deposed that on the basis of the date of the wife’s last menstrual period and the results of an ultrasound he performed, his opinion was that the wife was 6 weeks and 2 days gestation on 12 October 2011.

8. The wife filed a third affidavit sworn 25 January 2013 in which she attempted to correct errors in her second affidavit relating to the date of her pregnancy. She deposed that she had become pregnant with the husband’s child in September 2011.

9. The husband filed an affidavit sworn 8 March 2013 of Dr C, chief molecular biologist at the Victorian Institute of Forensic Medicine, as a single expert witness, annexing a report of scientific testing prepared by her with the parties’ consent. The test was performed on foetal material from the curette performed on the wife by Dr K.  Dr C reported that the husband was “excluded as being the biological father of the Foetus”. This is where the evidence rests.

10. Since the affidavit of Dr C was filed, the wife has not retracted her assertion that she became pregnant with the husband’s child in 2011 nor sought to reconcile the evidence adduced by the husband as to his presence outside Australia at the time of conception and/or the evidence of the single expert witness, Dr C, as to the DNA of the foetus.

11. Counsel for the husband submitted that the wife’s conduct in relation to this issue should be taken into consideration as a relevant factor by the Court when determining whether to make an order for litigation funding. That is, not only is the wife’s allegation of her pregnancy with the husband’s child a plank of her case in relation to an existing relationship but that in her handling of the consequential evidence, ignoring the apparently exculpatory evidence of the molecular biologist, the wife has conducted herself unreasonably as a litigant.

12. I am aware that our rules of court restrict the circumstances in which parties can file or rely upon affidavits and considered whether this might explain why the wife has not addressed the issue of her impugned conduct in the proceedings. However, it was open to the wife to explain these matters in evidence filed in support of her current application for costs. It is conceivable that the wife could assert privilege in respect of self-incrimination under s 128 of the Evidence Act 1995 (Cth) but she has not done so. It is not as if the wife and those who advise her could not have reasonably anticipated that the husband would focus some attention on the wife’s conduct in these proceedings, to wit, making, retracting and recasting allegations against the husband but ultimately failing to return to, and explain, the issue and the considerable expense to which each party has been put as a result of the wife’s allegation that she became pregnant to the husband well after he alleges they ceased to have an intimate relationship.

Such Other Matters as the Court Considers Relevant

1. Counsel for the husband, Mr Strum, also submitted that, by virtue of the wife seeking $150,000 to apply to her costs which are calculated by reference to a costs agreement entered between the wife and her solicitors, she is in effect, seeking not just a costs order but an indemnity costs order. Notably the costs agreements annexed to the affidavit of Ms B (the wife’s solicitor) sworn 3 June 2013 provide for her work to be charged at an hourly rate of $495, for the work of a senior associate to be charged at $462 per hour and for the work of a solicitor to be charged at $275 per hour whereas the current rules of court provide for time spent by a lawyer on work requiring the skill of a lawyer to be charged at something less than $220 per hour.

2. Counsel for the husband submitted that it has been held that the prospects of success are also a relevant matter to take into consideration under s 117(2)(g) (see Luadaka v Luadaka (1998) FLC 92-830). The husband relies on correspondence between the parties’ solicitors going back to 2006, correspondence between the husband and the Child Support Agency and evidence of Centrelink payments the wife received between 2006 and 2012 which, it is submitted, support his client’s contention that the parties’ de facto relationship ceased finally on 23 January 2007. I agree that it is appropriate to have regard to the prospects of success of the case mounted by the applicant for a costs order. By paragraphs 16 to 19 (inclusive) of the wife’s affidavit sworn 2 November 2012, the wife seeks to deflect the husband’s evidence in general terms and justifies some of her actions “due to me needing financial independence and the relationship with [Mr McVie] was simply not working”. It is clear that these matters will occupy a significant amount of evidence and cross examination at the final hearing. At this stage I do not regard the evidence as a whole as being supportive of the wife’s application.

Security for Costs Factors

1. Senior Counsel for the wife submitted that I should also give consideration to the matters the court may consider when deciding whether to make an order for security for costs, as is provided for in Rule 19.05 of the Family Law Rules 2004 (Cth). Rule 19.05 provides as follows:

   (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.

1. Mr St John sought to rely on factors provided for in subsection (2)(a)-(e) and (2)(i). He contended that the wife has demonstrated a need for an interim costs order and the husband has the capacity to meet that order. Further, that the wife’s lack of financial means was caused by the husband’s conduct throughout the relationship and that the wife’s claim for property settlement is genuinely brought and has real prospects of success. Mr St John submitted that if an interim costs order was made, as ought, it would not be oppressive to the husband because he has multiple assets. However, if I declined to make the order it could stifle the wife’s pursuit of her case. Finally, senior counsel submitted that the wife’s application is complex and, if she were required to proceed unrepresented, it would lead to an inequality of representation and the potential for a miscarriage of justice.

2. Subrule (2) provides an inclusive list of matters which may be considered by the court in deciding whether to make an order for security for costs under subrule (1). Subrule (1) – which is extracted above – provides that a “respondent may apply for an applicant in the case to give security for the respondent’s costs.” The wife is the applicant, not the respondent, in the substantive proceeding. Rule 19.05(3) makes clear that a respondent, as referred to in subrule (1), includes an applicant who has filed a reply where orders in a new cause of action have been sought in response but the wife has not done so. Accordingly, I am not satisfied that the provisions of Rule 19.05(2) have any application to the current proceedings or they will not, per se, inform the exercise of my discretion as to whether to make an order for costs.

3. I am mindful that, without a payment of $150,000 from the husband, the wife is now likely to have to represent herself in these proceedings. However, very many litigants do so in this court. In any event, the payment of $150,000 would have not have covered much more than the current indebtedness of the wife to her solicitors. I accept the submission of the husband made 9 August 2013 as correct that the relief sought by the wife may do little more than relieve her of a liability for costs and expenses already incurred rather than secure legal representation for the wife into the future. 

4. Finally, counsel for the wife sought to rely on the decision of Murphy J in Esdale & Schenk [2012] FamCA 111. There, the applicant sought an order requiring the respondent to pay her the sum of $65,000 by way of litigation funding. The respondent denied that there had ever been a de facto relationship between them. As in the present case, the only source of power for the relief sought by Ms Esdale was the costs power under s 117. Murphy J referred to the comments of Judge Reithmuller in Wenz & Archer (2008) 40 Fam LR 212 at [52], which were cited by the Full Court with approval by the majority in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466. Murphy J discussed at [58] that the matters considered by Judge Reithmuller as relevant to whether the interests of justice require an interim property order to be made. Murphy J went on to observe:-

   59.     Whilst appreciating that those factors are directly relevant to a discussion by the majority of the Full Court in relation to an interim property settlement and not an exercise of the costs power, nevertheless, some of those matters seem to me to be directly relevant to the exercise of the discretion inherent in s 117(2) in the circumstances under consideration (s 117(2A)(g)).

   […]

   62.     …the reference to “an irresistible claim” in circumstances where neither jurisdiction nor a party’s entitlement to receiving at least something is in issue, can be seen to be very different from where each is in issue. Framed by reference to the relevant head of power, the Application here seeks from a person who denies any entitlement to the other and has a prima facie foundation for denying such entitlement, that the person fund the litigation that seeks to establish that very entitlement.

   […]

   66.     While the cases in respect of matrimonial causes reveal multiple heads of power for the making of any order, those same cases also emphasise that each is much more than a convenient vehicle for achieving the same end.  If the property power is relied upon, the relevant requisites of justice and equity must be complied with; if the maintenance power is to be relied upon, the relevant requisites of need, capacity and propriety must be met.  So, too, where the costs power is relied upon. The majority in Strahan emphasise this very point by pointing out clearly that the relevant head of power under which the order is sought must be clearly identified.

   67.     The exercise of the costs power does not merely involve a consideration of the s 117(2A) matters.  It also involves paying proper regard to s 117(1).  That is, the Application must be judged by reference to the primary position that “each party shall bear his or her own costs”.

   68.     Even where proceedings involve a matrimonial cause and jurisdiction is not in issue and even where, within those proceedings, an applicant for litigation expenses can establish an entitlement to ultimate relief, it by no means follows that litigation expenses will be awarded by reference to s 117 as the head of power.  Section 117(1) remains, as it were, an obstacle that must be overcome.  Indeed, it might be thought that this consideration explains why it is almost invariable that applications of this type are brought in reliance upon the power to make interim property orders and not the costs power.

   69.     Those same considerations seem to me to apply with greater force in circumstances where jurisdiction is not yet established.

   And his Honour ultimately declined to make the costs order sought by the applicant.

5. I agree with the observations of Murphy J but I do not see how those observations support the wife’s case in the present application. In fact, the reasons of Murphy J underscore another point upon which counsel for the husband placed heavy reliance. That is, s 117(2A) is not be to read in isolation. It is an inclusive description of the matters which the Court must take into account in the exercise of its discretion under s 117(2) to depart from the provision in s 117(1) that “each party to proceedings under this Act shall bear his or her own costs”. In other words, a consideration of whether relevant matters under s 117(2A) “justify” making an order that one party pay some or all of the costs of another party, involves a consideration of the general rule that “each party to proceedings under this Act shall bear his or her own costs”.

6. The object of the general rule is to ensure that parties are not deterred from bringing or maintaining legitimate applications for fear of incurring an intolerable financial burden if they lose.[5] In considering whether there are circumstances that justify a costs order being made the weight to be attached to any of the considerations in s.117(2A) is wholly discretionary.  While no single factor out-ranks any other, there is nothing to prevent one or other of them from being the sole foundation for a costs order.[6] As Kay J observed in Brown & Brown[7]:

   In many cases there will be an outstanding feature...that makes an order for costs appropriate, a feature which so dominates the scene that it can outweigh any of the other s 117(2A) considerations.

   [5]          In the Marriage of Kohn (1977) 30 FLR 175 at 177.

   [6]          LAC and TRF and LKL [2005] FamCA 158 at [41].

   [7] (1998) FLC 92-822 at 85,347.

7. In the present case, I cannot identify matters which in isolation or cumulatively go so far as to justify the order sought by the wife or any costs order at all.

Security for costs

1. I understood Mr St John to have submitted that the matters in Rule 19.05(2) were relevant to the exercise of my discretion to make an order for costs in contradistinction to him making an alternative application that the husband pay the wife $150,000 by way of security for costs. However, in case I have misconstrued Mr St John’s submission and he does, in fact, pursue the payment of $150,000 by way of security for costs, I decline that application for reasons which appear below.

2. Part 19.3 of the rules of Court is not the sole source of power for the Court to make an order for security for costs. The power appears in s 117(2) and the exercise of that discretion is informed by the Court’s consideration of the matters referred to in s 117(2A), which are extracted above. I have already dealt with the parties’ submissions pursuant to s 117(2A).

3. Furthermore, the authorities in relation to security of costs (not pursuant to Part 19.3 of the Family Law Rules 2004) make clear that orders for security for costs “are imposed as a condition for the continuation of proceedings by a party against whom the order is made” (see Re JJT & Ors; ex parte Victoria Legal Aid [1998] HCA 44 per Callinan J at p 228). In Brown and Brown; Eley and Henty (Interveners) 105 FLR 329, Butler J made the following observations, with which I agree, about the nature of orders for security for costs:-

   Costs security orders prevent abuse of court process by inter alia preventing impecunious persons from litigating without responsibility. An appropriate example is the issuing of Mareva injunctions: see Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264.

   Generally orders are made where the defendant is an unwilling participant in the litigation and should not be prejudiced by the plaintiff's lack of funds: see Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 . But the court must carefully balance this consideration against the possibility that the plaintiff might be shut out or unfairly dealt with if security is ordered: see Cameron's Unit Services Pty Ltd v Kevin R Whelpton & Associates (Aust) Pty Ltd (1986) 13 FCR 46.

   It is of essential importance to consider as far as possible whether the plaintiff's shortage of funds has been brought about as a consequence of the defendant's conduct of which the plaintiff complains. If so it would be unfair to require the plaintiff to provide security for the defendant's costs: Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133.

   While there is a strong social trend that litigants short of funds should have their day in court without suffering any disadvantage caused by lack of means, the fact that an appellant will be unable to pay the costs of the appeal if the appeal fails is a special circumstance where the appellant should provide security for costs: see Scerri v Northam Holdings Pty Ltd [1967] VR 674.

1. If there is an application by the wife for an order for security for costs, I am not satisfied that an order for security for costs is justified in the circumstances of this case.

Conclusion

1. For the above reasons, I dismiss the wife’s application. Whilst I made orders to that effect on 12 September 2013, in my view, it is only fair that the time in which the wife has to file a notice of appeal run from the date of these reasons. This is because a party should be able to see the reasons for decision before deciding, or taking advice, to appeal and even more so when a litigant has recently come to be self-represented.

Costs

1. Any party wishing to make an application for costs may do so by notice to the other and to my Associate and the matter will then be listed before me if necessary.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 8 October 2013.

Associate: 

Date:  8 October 2013