Franke and Long and Ors

[2011] FamCA 64

FAMILY COURT OF AUSTRALIA

FRANKE & LONG AND ORS [2011] FamCA 64

FAMILY LAW – COSTS – application for security for costs – wife impecunious, wife has joined third parties claiming a trust – prospects of success – whether an order for costs would stifle the proceedings

Family Law Act 1975 (Cth) ss 117(1), 117(2), 117(AA), 117(2A) and 118
Family Law Rules 2004 (Cth) r 19.05(2)

Luadaka v Luadaka (1998) FLC 92-830
Harvey v Harvey (1970) 120 CLR 529
Brundza v Robbie (1952) 88 CLR 171
Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd; Jeffery & Katauskas Pty Limited v Rickard Constructions Pty Limited [2009] HCA 43 (13 October 2009)
L &Z & Anor [2003] FamCA 9

APPLICANT: Mr Franke

1st RESPONDENT: Ms Long

2nd RESPONDENT: Mr Franke Senior

3rd RESPONDENT: Mrs Franke Senior

FILE NUMBER: CSC 703 of 2008

DATE DELIVERED: 14 February 2011

PLACE DELIVERED: Cairns

PLACE HEARD: Hobart

JUDGMENT OF: Benjamin J

HEARING DATE: 24 January 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Largo

SOLICITOR FOR THE APPLICANT: Williams Graham Carman

COUNSEL FOR THE 1ST RESPONDNET: Mr Tree S.C

SOLICITOR FOR THE 1ST RESPONDENT:: O’Reilly Stevens Bovey Lawyers

COUNSEL FOR THE 2ND RESPONDENT: Mr Kirk S.C

SOLICITOR FOR THE 2ND RESPONDENT: Miller Harris Lawyers

COUNSEL FOR THE 3RD RESPONDENT: Mr Kirk S.C

SOLICITOR FOR THE 3RD RESPONDENT: Miller Harris Lawyers

Orders

1. The interlocutory application by the second and third respondents for security for costs of the proceedings is dismissed.

2. BY CONSENT and in relation to the claim by the applicant wife for a declaration against the husband in respect of an alleged equitable interest or entitlement he may have in the properties owned by the second and third respondents and consequential orders in respect of those respondents, be the subject of a pleadings program.  That pleadings program will be in accordance with the timetable agreed between the parties and if the parties are unable or unwilling to agree then a timetable determined by the Court. The parties are given liberty to apply on 7 days notice in respect of the pleading program arising pursuant to this order.

3. Leave is given to the parties to inspect the material produced on subpoena to the Queensland Rural Adjustment Authority (“QRAA”).

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage senior counsel and counsel to attend.

IT IS NOTED

1. A single expert will need to be appointed to value the entire farm property subject to a determination as to who should meet the costs of that single expert report, the application of which is to be determined subsequent to the issue of these orders.

IT IS NOTED publication of this judgment under the pseudonym Franke & Long and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: CSC 703 of 2008

MR FRANKE

Applicant

And

MS LONG

First Respondent

And

MR FRANKE Senior

Second Respondent

And

MRS FRANKE Senior
Third Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. This is an interlocutory application by third parties seeking security for costs against an impecunious wife in the context of contested property proceedings. The third parties are the wife’s parents-in-law and the property is rural agricultural land and business situated in far north Queensland.

2. Mr Franke (“the husband”) and Ms Long (“the wife”) commenced cohabitation in May 1999 and were married in November 2001.  They separated in July 2007.  There are two children of the marriage, aged seven and five.  There are parenting proceedings in respect of those children which will be determined separately to the property proceedings (pursuant to an order made by me on 24 January 2011).

3. The parenting and property proceedings had been listed for hearing when this matter came before me on 5 November 2010.  I then made directions for the appointment of a single expert to value the father’s interest in the partnership with his parents (a three party partnership) and an order that the second and third respondents be joined to the proceedings, subject to any application they wish to make for their removal from the proceedings.  The proceedings were listed before me for mention on 22 December 2010.

4. On 17 December 2010 the second and third respondents filed an application in a case seeking the sum of $145,000 as security for costs and other orders.  These reasons relate to that application for security for costs.

5. The wife opposed that application.

6. The second and third respondents were represented by senior counsel, as was the wife.  Written submissions were provided on behalf of the second and third respondents and on behalf of the wife, and those submissions were included as part of the submissions made by senior counsel for their respective clients.

7. Senior counsel for the second and third respondents argued that if their application for security of costs was unsuccessful there should be a direction for pleadings.  That pleadings approach was supported by senior counsel for the wife and no objection was made on behalf of the husband.  Accordingly, having regard to the determination I have made in relation to these reasons, I have put in place an order for pleadings, although I will leave it to the parties to set out a timetable and a scheme but give them leave to approach the Court in the event that they cannot agree on an appropriate timetable.

8. The second and third respondents relied upon the following:-

   (a)Order made 5 November 2010.

   (b)Reply filed 17 December 2010.

   (c)Application in a Case filed 17 December 2010.

   (d)Affidavit of Mr K filed 17 December 2010.

   (e)Affidavit of Mr A filed 17 December 2010.

   (f)Affidavit of third respondent filed 20 December 2010.

   (g)Affidavit of second respondent filed 20 December 2010.

   (h)Further affidavit of Mr A filed 19 January 2011.

   (i)Further affidavit of third respondent filed 19 January 2011.

9. The wife relied upon her second additional further amended response filed 17 December 2010 which sets out the precise orders she was seeking with regard to parenting, and more particularly in respect of this aspect of property.

10. In terms of the orders sought by the wife, I note that they are set out in the outline of the property orders which are contained on pages 6, 7, 8 and 9 of the second additional further amended response to an initiating application filed 17 December 2010.  I do not intend to repeat them in these reasons but I have had regard to them.

11. The wife relied upon:-

    (a)Second additional further amended response to an initiating application filed 17 December 2010.

    (b)      Affidavits of wife filed 14 October 2010 and 17 December 2010.

    (c)Affidavits of expert, Mr J, filed 26 October 2010 and 21 December 2010.

    (d)Affidavit of wife’s solicitor, Beviee Joy Reaston, filed 21 December 2010.

12. There was some initial debate as to whether either party would be seeking to cross-examine the experts (Mr J and Mr A) in the context of these interim proceedings.  After discussion between counsel and the bench, these applications were not pursued and the experts were released to go back to their day-to-day business.

13. It was not in issue that the costs of the trial for the hearing of the proceedings for the second and third respondents could amount to as much as $180,000 and the total cost of the wife for the hearing of the property and parenting matter could cost up to $200,000.

14. Neither the husband nor the wife have significant available assets apart from any equitable interest the husband may or may not have in the partnership and property owned by his parents and his entitlement to superannuation.  The wife has limited assets and it was conceded on her behalf and submitted on behalf of the second and third respondents that she would have few available funds to pay any costs order in the event that the second and third respondents were successful in obtaining a costs order.

15. It was submitted by senior counsel for the wife that if the wife was unsuccessful, it would be unlikely that any costs order in favour of the second and third respondent would be met.  The husband’s financial position, if the wife was unsuccessful, was that his finances would also be in the negative (apart from superannuation which would not be available to the parties).

16. Section 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that, subject to ss (2), s 117(AA) and s 118, each party to a proceeding under the Act shall bear his or her own costs. Section 117(2) provides that if a court is:-

    of the opinion that there are circumstances that justify it in doing so, the court may, subject to ss (2A), (4) and (5) and the applicable Rules of Court make such order as to the costs and security for costs, whether by way of interlocutory order or otherwise, as a court considers just. 

17. Section 117(2A) provides that in considering what order (if any) should be made under ss (2A) the court shall have regard to the matters set out in paragraphs (a) to (g).

18. It is clear from the authorities that the general rule applies, that is, subject to s 117(2) each party shall pay his or her own costs. However, if the Court is satisfied that there are circumstances which would justify an order then the Court may, subject to s 117(2A), make such order for security for costs as the Court considers is just.

19. It is clear from the authorities, including Luadaka v Luadaka (1998) FLC 92-830, that there are at least a number of matters to take into consideration. These are now included in the Rules, but is not an exhaustive list. In that case, the Full Court pointed out that s 117(2A) of the Act is not excluded and the other matters have now been set out in Rule 19.05(2) which provides that 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)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 a 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.

20. Property proceedings under the Act are generally between parties to a marriage or to a de facto relationship. As a consequence of the different type of family dynamics, family structures and financial structures that people enter into, it is from time to time necessary that third parties are joined to those proceedings. Such are the circumstances in this case. The normal costs principles and laws apply to all parties to a proceeding under the Act. However, the fact that a party is a stranger to the underlying domestic relationship (which relationship grounds the proceedings) is a significant factor which needs to be taken into account in terms of costs and in this case I have had significant regard to that fact.

21. That parties are strangers to the relationship is a factor which the Court must have significant regard to when considering questions of costs under the provisions of the Act. The Court must analyse the nature of the claim and the impact of the claim in relation to both the claimant and the third party. A party’s right to litigate legitimate claims needs to be preserved. Similarly, third parties ought to be protected from vexatious or unmeritorious claims.

22. In this case, the husband has been engaged in work on his parents’ property over many years.  Without making a final finding, it is likely that he would have some form of claim to an interest in his parents’ agricultural property and business.  The precise nature of that claim has not yet been pleaded, although in due course it will be set out, but there is evidence of his interest in the available affidavit material.

23. I have had regard to all of those factors in these proceedings in coming to the determination that I have.

24. Senior counsel for the second and third respondents argued this interlocutory issue on:-

    ·The wife’s financial means;

    ·The prospects of success/merits of the application;

    ·The genuineness of the wife’s application;

    ·Would the order be oppressive/stifle the case;

    ·The likely costs.

The Likely costs

1. As to the likely costs, I note the concessions that I have alluded to earlier in these reasons. Those costs are considerable.

Whether the order would be oppressive/stifle the case

1. Senior counsel for the second and third respondent conceded that if security was ordered that it may stifle the wife’s case against the respondents.  Having regard to the agreed status of the wife’s financial circumstances, I am satisfied that an order for payment of substantial security for costs would likely stifle or stop the wife’s ability to pursue her claim.

2. Senior counsel for the second and third respondents then observed:-[1]

   The reverse of that, of course, is the Husband’s parents should not be forced to expend substantial legal costs [sic] are recoverable if (we submit “when”) the wife’s case against him fails, as that would be seriously oppressive to them.  Having regard to the merits of her claim as particularised, it would be unjust to allow the Wife to litigate without responsibility for the costs she is forcing the Respondents to incur.

   [1] Paragraph 9 of the second and third respondent’s written submissions dated 21 January 2011.

3. That is the situation in which the second and third respondent find themselves.

Prospects of success/merits of application

1. In respect of the prospects of success/merits of the application senior counsel for the second and third respondents referred me to the decision Harvey v Harvey (1970) 120 CLR 529 where Walsh J held at 536:-

   … I cannot agree that it follows from the fact that land is the asset which produces the partnership profits and is physically involved in the business that it is an asset of the partnership. It is common for agreements to be made, particularly amongst members of a family, for the use by a partnership of land which belongs to one of the partners. By such an agreement, unless a different intention is expressed or is to be inferred from the circumstances, the partnership acquires a right to have the use of the land so long as the partnership continues but no greater right or interest in it either at law or in equity than a right to use the land, a right which may be regarded as arising either from a tenancy or from a licence. Subject to that right the ownership of the property remains with its former owner.

2. Counsel for the second and third respondents submitted that the farming activities in matter before me were conducted on 60ha (lot 3) of land owned by the three way partnership and that the balance of the land (lot 4), some 204ha were owned by the husband’s father.  He submitted that until 2005 when the husband received the government subsidy to exit the sugar industry, the partnership had, by agreement, “the right to use the father’s land but that was the limit of the right”.[2]

   [2] Ibid at paragraph 7.1.

3. Counsel for the second and third respondents submitted that the wife’s assertions that a constructive trust existed in relation to the assets was unfounded.  He said the husband does not assert that he has any equitable interest in the properties owned by his parents.  He submitted that as a consequence  … the wife (a third party) was left asserting that the husband had an equitable interest in property owned by his father upon which farming activities were conducted by a partnership.  Counsel argued that even if the wife’s assertions were all accepted she would still be unable to establish any constructive trust.  Counsel for the second and third respondent submitted this was:-[3]

   A simple case of the Husband and his parents conducting a partnership on farm land, part owned by all of them (the 60ha in Lot 3) and part owned by the Second Respondent (the 204ha in the other lots).  Farming arrangements such as this are common.

   …

   [3] Ibid at paragraph 7.3.

4. He went on to say:-[4]

   It is inconceivable that any of these so called detriments to the Husband or advantages to his parents could render it unconscionable for the father to retain sole ownership of his farming land but that appears to be the Wife’s case.  We know of no equitable principle or authority which would support the case we perceive the Wife is seeking to run.

   [4] Ibid at paragraph 7.3 on page 8.

5. The substance of the wife’s case against the second and third respondent is:-[5]

   [5] The wife’s written submissions dated 21 January 2011.

   6. …that they [the second and third respondents] have financially benefited from the husband’s work on the farm (meaning all three properties, not just the property which the husband is a co-registered proprietor), the particular evidence is detailed at para 7 of the wife’s affidavit filed 14 October 2010 and perhaps more significantly, at paras 114-120 of her affidavit filed 17 December 2010.  In the later evidence she particularly refers to:-

   ·       The absence of income derived from the husband’s efforts.

   ·       The improvements effected to the second and third respondents’ land.

   ·       The increased area of the farm which is able to specialise use of growing sugar cane.

   7.The second and third respondents seek to argue:-

   ·       By reference to Harvey v Harvey, that the provisions of the land is a common form of capital contribution in rural partnerships; and

   ·       That the husband stood to be renumerated for his work in part by a share of any profits of the farming partnership.

   8.This however wholly ignores the fact that the wife’s case is that the second and third respondents have enjoyed a capital windfall by virtue of the husband’s devotion of his efforts towards the improvement of the farming properties.  Whilst in part that might have been expected to result in greater profits, and hence potentially benefit the husband directly, they were never actually derived, but rather property of the second and third respondents became more valuable, became more suited to a specialised purpose.

   9.This is a situation that is commonly given rise to recognition of equitable rights in the part of the improver (see for example Giumelli v Giumelli (supra) and Flynn v Flynn (supra)).  The unusual aspect here is that the husband apparently does not wish to assert any equitable interest in the property of his parents.  That however does not mean that the claim raised, in effect, on his behalf, by the wife against those parents, cannot succeed.  That may not in fact give rise to an equitable right in the husband (given that he appears to abandon any such claims) but is nonetheless means for the purposes of the litigation, such a right recognised by this Court forms part of the matrimonial property.

   10.That case is by no means forlorn, and indeed enjoys reasonable prospects of success, depending on the evidence as it emerges during the course of the hearing. …

6. Whilst I make no findings, I was taken with some evidence in relation to the equitable claims and other aspects, these included:-

   ·Paragraph 7(l) of the wife’s affidavit filed 14 October 2010 where she asserted that she had been told by the husband and the third respondent that upon the death of his parents, the husband would have the farm and that the husband’s sister always asserted she had no interest in the farm as she had never worked on it.  That assertion is denied by the husband and the second respondent but is not specifically denied by the third respondent (although there is some argument that she has indirectly denied it in her affidavit).

   ·Paragraph 13 of the wife’s affidavit of 14 October 2010 where she asserts significant work undertaken by the husband to the real estate, and I was referred to an article in an industry publication[6] annexed to the affidavit of the wife sworn 17 December 2010 and a transcript of an interview with the husband.[7]

   [6] Exhibit KEL7 of affidavit of wife sworn 17 December 2010.

   [7] Exhibit KEL8 of affidavit of wife sworn 17 December 2010.

1. In coming to the conclusion that I have in these reasons, I have been conscious that the second and third respondents are not parties to the marriage or to the relationship.  However, they are not strangers.  The husband and his parents have been engaged in agricultural activities for many years.  Common as it is with many families on the land, they worked together and the nature of that work and its consequences are issues to be determined.  The husband worked on the land, although there has been no determination as to the extent of that work and the precise nature of the promises that were made or may have been made or may not have been made between the husband and his parents.  Senior counsel on behalf of the second and third respondents asserts that there has been no ‘promise’.  There is some evidence of a promise, whether that is established on hearing will be a matter for the trial judge but there is some evidence, at least implicitly from the wife, to that end. Whether that evidence survives a trial will need to be seen.

2. Secondly, as submitted by senior counsel for the wife, there may be some implied or implicit trust arrangement created by virtue of the husband’s years of work on the farm and possible application of significant funds towards the improvement of those assets.

3. There are live issues to be determined as to the husband’s involvement with the farm, the occupation of a farm house by the husband and wife and whether the husband received a salary.  It is asserted on behalf of the wife that any such monies paid to him may well have been paid back by a capital infusion. There are issues to be determined in relation to the borrowings of the partnership and otherwise. 

4. It is asserted, on behalf of the second and third respondents, that this is a simple case of the husband and his parents conducting a partnership on the farm land part of which is owned by all of them and part of which is owned by the second respondent. On the material before me, I do not accept that it is so simple, at this time. 

5. There are issues as to pool of assets including any chose in action the husband may have but which he does not pursue at this time. If the property is then to be valued to determine the value of any interest the husband may have in it, there are questions as to the approach adopted by experts and the soundness of their methodology and underlying facts. 

6. Senior counsel for the second and third respondents asserted that the wife had no standing to take proceedings against his clients. I accept the submission by senior counsel for the wife that the wife has standing to bring proceedings against the husband.  There may be a right but the action should be against the husband and his interest in the property to be valued.  I also accept that there seems to be available, on the present state of the evidence, a possible direction against the second and third respondents as referred to in the wife’s claim.

7. It was argued that the problem with that submission was that if the husband chooses not to pursue his equitable rights (if any) against the second and third respondents, there would be no assets against which the wife could recover.  The structure proposed by the wife, that there be a declaration against the husband and then, if he does not meet his obligations in respect of that declaration, there be an order that the second and third respondents account to the wife (via the husband) for the return of capital, is what was submitted and is the appropriate way to resolve that issue.  I accept and adopt that submission made by senior counsel for the wife.

8. The second aspect is that there is no evidence of a constructive trust.  I accept on the albeit untested evidence of the wife, that there is some evidence of a trust. If the wife’s evidence in respect of the work undertaken on the property by the husband is accepted, it is possible that there could be found some sort of equitable interest, whether that is a constructive trust charge or equitable lien. 

The genuineness of the wife’s application

1. In relation to the genuineness of the wife’s application, counsel for the second and third respondents submitted that the wife had only sought to rely on this issue shortly before the commencement of the trial, despite the husband and wife having separated in 2007.

2. Counsel for the second and third respondents argued that as an alternative to the claim of a constructive trust, the wife would still be able to make a claim against the husband in respect of his expectation to inherit a “financial resource” without the need to join the respondents as parties to the proceedings.

3. The wife’s solicitor, Mrs Reaston, said in paragraphs 34 and 35 of her affidavit:

34:The Wife’s Application is not vexatious and frivolous.  The husband and wife met in July 1998 and commenced living together in May 1999.  The husband and wife married [in] 2001 and separated on 24 July 2007.  ….

35:The wife is entitled to bring an Application pursuant to section 70 of the Family Law Act and seek for her and the husband’s contributions towards the conservation and improvement of [the second] and [third respondents’] properties to be recognised. 

1. I am satisfied that the wife has established the basis for a claim, albeit that I make no findings at this time.  I accept the submission by senior counsel for the wife that the structure set out by him in his written submissions establishes a possible way to make an order against the second and third respondents.  These claims are rarely easy and the nature of the claim is not one usually associated in proceedings about property by parties to a relationship.  Thus the consideration and development of thought and actions in regard to such a claim can sometimes take time.

2. There was a submission by the third parties that the wife was guilty of delay.  The history of the matter is that the husband commenced parenting proceedings in November 2008.  In December 2009 the wife filed a response.  In February 2010 the husband filed a further amended initiating application seeking property orders together with some changes to the parenting orders he was seeking.  In March 2010 the wife filed a further amended response to an initiating application seeking property orders together with some changes to the parenting orders she was seeking.  When the matter was before me in the second half of 2010 the wife’s counsel indicated that they may seek to join the second and third respondents which they later did.

3. It was submitted on behalf of the second and third respondents that the wife, in joining the respondents at this stage, is recognising that her only prospect of receiving any property is from their assets.  At paragraph 42 of the submission of the respondents under the heading genuineness of application it is said:-

   In relation to the genuineness of the wife’s application counsel for the second and third respondents submitted the wife had only sought to rely on this issue a shortly before the commencement of the trial, despite the husband and wife having separated in 2007.

4. Having regard to the history of these proceedings and the late commencement of the property aspect, I am prima facie satisfied that the wife’s application is genuine.

5. As to delay, in Brundza v Robbie[8], a decision of his Honour Fullagar J, it is said:-

   There has been substantial delay in applying for further security.  The application could have been made at any time after 21 July.  It is a well settled rule that application for security of full costs must be made promptly.  I would agree that delay as such may often be of less importance where the ground of the application is that the applicant is out of the jurisdiction or where an application is based on some other ground.

   [8] (1952) 88 CLR 171 at 175.

6. There is no question of delay on the part of the second and third respondents. There may be a question of delay on the part of the wife in pursuing the claim against her parents-in-law. Having regard to the circumstances of this case, I have considered that issue of delay and find that delay is not such as would base the security for costs order sought.

Conclusion

1. I have considered the financial circumstances of each of the parties to these proceedings, such as are presently available to me.

2. There is no suggestion that any party is legally aided.

3. The only issue regarding conduct is the question of delay and genuineness, which I have considered elsewhere in these reasons. There is no issue or question of the failure of a party to comply with Court orders and the question of success or otherwise is for the future. The issue of offers was not raised, so that the other matters raised by the second and third respondents (as provided in s 117(2A) of the Act) are the issues for me to consider and evaluate.

4. This application for security of costs is made at first instance, and it is subtly different from such applications on appeal.

5. That the wife is impecunious should not prevent her from being able to litigate an arguable issue.  She is entitled to pursue a claim in a court.  The High Court in Jeffery & Katauskas Pty Limited v SST Consulting Pty Ltd; Jeffery & Katauskas Pty Limited v Rickard Constructions Pty Limited [2009] HCA 43 (13 October 2009) said:-

   37.Two points may be made at once. Neither was controverted. First, the bare fact that a plaintiff may be unable (even will be unable) to meet an adverse costs order does not mean that further prosecution of proceedings by that plaintiff is an abuse of process. Secondly, the fact that, absent a finding of abuse of process or contempt of court, the funder of the litigation would not be liable to meet an adverse costs order is a product of the applicable rules of court (UCPR r 42.3) cutting down the otherwise general power given to the courts in New South Wales by s 98(1) of the CP Act.

   38.The difficulties presented for a defendant by a plaintiff's impecuniosity have led to the identification of an inherent jurisdiction, and the development of rules of court and statutory powers, under which a plaintiff may be ordered to provide security for costs. In general, the bare fact of impecuniosity is not of itself reason to order a plaintiff who is a natural person to provide security for costs. But a corporate plaintiff may be ordered to provide security where it is shown that it will not be able to meet the defendant's costs. It is neither necessary nor appropriate to consider the extent to which those two general propositions should be elaborated or qualified. Neither is intended as a comprehensive or definitive statement of the applicable principles. What is presently important is that by providing for security for costs the UCPR (and in this case the applicable provisions of the Corporations Act 2001 (Cth)) deal directly with at least some part of the first element of what was said to be the relevant unfairness. The reference to "some part" of the first element should be explained.

   39.Because security for costs will not always be ordered against an impecunious plaintiff, it cannot be said that a defendant, faced with proceedings by such a plaintiff, can always obtain the protection of security for costs. There are cases where successful defence of an action will come at a considerable cost to the defendant. But the extent to which that possibility exists and the extent to which there is a resultant "unfairness" to a defendant is a product of the provisions and principles that govern security for costs. Neither the existence of the possibility nor its scope suggest that there is some more general rule that to prosecute proceedings without reasonable prospects of being able to meet an adverse costs order is an abuse of process. Whether or to what extent the possibility that a defendant will succeed in defending proceedings only at a cost not recoverable from the plaintiff suggests some need to revisit the provisions or the principles governing security for costs is a large question. It was not the subject of argument and is a question about which no view is expressed.

6. In L and Z and Anor, Young J said:-[9]

   This Court must not, in any way whatsoever, pre-judge the property and financial proceedings that remain to be heard at the trial.  The wife may succeed with one or other of her applications.  She may be awarded a property settlement, substantial or otherwise.  She should, on balance, be able to present her case and not, be financially disqualified from doing so.

   [9] L &Z & Anor [2003] FamCA 9 at page 7.

7. I adopt those remarks in this instance. In doing so I have had regard to the difficult circumstances in which the second and third respondents find themselves in and that they are not parties to the marriage. However, as I said earlier, there is some evidence of a trust.  I am satisfied that it is, at least arguable, that the wife is able to take the course outlined by senior counsel on her behalf.

8. The costs involved in these proceedings are very high and understandably so bearing in mind the complex nature of the proceedings and the claim.  It may well be that once pleadings have been completed and evidence is filed that an application for either summary dismissal or a further application for security for costs against the wife can be mounted.  This determination does not rule out that possibility.  I neither encourage nor discourage such an application.

9. However in exercising the broad discretion I have, I intend to dismiss the present application for security for costs and I will order a pleading program.

I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 14 February 2011.

Associate:     

Date:              14 February 2011