Gadzen & Simkin
[2018] FamCAFC 21
•13 February 2018
FAMILY COURT OF AUSTRALIA
| CHIOU & VIEN | [2018] FamCAFC 21 |
| FAMILY LAW – APPLICATION IN AN APPEAL – Security for costs – Where the respondent asserts that he is impecunious but appears to have an undisclosed source of funds – Where an order for security for costs would not stifle the appeal – Where the respondent has failed to meet a costs order made in another court – Where it cannot be said that the proposed appeal is devoid of merit – Application allowed. |
| Family Law Act 1975 (Cth) ss 90SF, 90SM, 117 Family Law Rules 2004 (Cth) r 19.05(2) |
| Atkins & Hunt (Security for Costs) (2015) FLC 93-646 Luadaka & Luadaka (1998) FLC 92-830 Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174 |
| APPLICANT: | Ms Chiou |
| RESPONDENT: | Mr Vien |
| FILE NUMBER: | SYC | 699 | of | 2014 |
| APPEAL NUMBER: | EA | 87 | of | 2017 |
| DATE DELIVERED: | 13 February 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 23 January 2018 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 July 2017 |
| LOWER COURT MNC: | [2017] FCCA 1529 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Longworth |
| SOLICITOR FOR THE APPELLANT: | Swaab Attorneys |
| THE RESPONDENT: | In person |
Orders
Within 28 days of this order Mr Vien shall pay to the solicitors for Ms Chiou the sum of $20,000, to be held by them in a controlled monies account as security for any costs that may be awarded to Ms Chiou in relation to Appeal EA87 of 2017.
In the event that Mr Vien fails to comply with Order 1 hereof, Appeal EA87 of 2017 is stayed until that amount is paid.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Chiou & Vien has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 87 of 2017
File Number: SYC 699 of 2014
| Ms Chiou |
Applicant
And
| Mr Vien |
Respondent
REASONS FOR JUDGMENT
Introduction
By an Application in an Appeal filed on 9 November 2017, Ms Chiou (“the applicant”) seeks an order that Mr Vien (“the respondent”) pay to her solicitors the sum of $20,000 to be held as security for any costs awarded to her in relation to Appeal EA87 of 2017 and that the appeal be stayed until that payment is made.
The respondent has appealed against orders made by Judge Kemp on 4 July 2017. In the proceedings before the primary judge, the respondent had sought a declaration that a de facto relationship within the meaning of the relevant provisions of the Family Law Act 1975 (Cth) (“the Act”) existed between him and the applicant in the period February 2014 to September 2014. The respondent was unsuccessful and the primary judge declared that there was no de facto relationship existing between the parties during that period.
The respondent filed a Notice of Appeal on 31 July 2017. Although attempts have been made to list the appeal for directions, he has taken no steps to advance the appeal. On 1 September 2017, the Registry advised the parties that a procedural hearing had been listed for 9 November 2017. On 1 November 2017 the respondent emailed the Registry asking for the hearing to be adjourned to a date after 25 November 2017. The adjournment was refused. When the procedural hearing came before the Court on 9 November 2017, however, the respondent again sought an adjournment, this time on the basis that he was overseas and unable to deal with this application for security for costs, which had been made in court by the respondent at the outset of the hearing.
In order to understand the applicant’s submissions it is necessary to set out aspects of the history of the proceedings in which the parties have been engaged.
There is no doubt that the parties were in a de facto relationship between 2003 and December 2013.
On 6 February 2014 the applicant’s solicitor completed an application for consent orders under s 90SF and 90SM of the Act and forwarded those to the respondent. On 8 February 2014 the respondent signed the orders and returned them to the applicant’s solicitor who then filed an application for the making of consent orders in the Family Court. On 19 February 2014 the orders were made by the Court.
The orders required the respondent to pay the sum of $50,000 to the applicant. He did so on 17 March 2014. On 18 March 2014 the respondent paid the applicant a further sum of $40,000, which was not the subject of any obligation to pay.
On 14 November 2014 the respondent commenced proceedings against the applicant in the Local Court of New South Wales seeking repayment of the sum of $40,000 which he had paid her in March, asserting that it was a loan which she had failed to repay.
On 5 March 2015 the Local Court of New South Wales dismissed the respondent’s proceedings with costs.
On 1 April 2015 the respondent commenced the proceedings in the Federal Circuit Court of Australia that are subject to the appeal. In those proceedings he asserted that notwithstanding the termination of the de facto relationship in 2013 and the consent orders, the parties reconciled in February 2014 and remained in a de facto relationship until September of that year.
Principles to be applied
The Court is empowered by s 117(2) of the Act to make an order for security for costs. The Full Court in Atkins & Hunt (Security for Costs) (2015) FLC 93-646 (“Atkins”) at [21] regarded it as well-settled that in addition to matters referred to in s 117(2A) the following matters should also be considered under s 117(2A)(g):
·the prospects of success of the appeal;
·whether the claim for security for costs was made bona fide;
·whether or not an order for security for costs would stifle the litigation;
·whether or not the litigation may involve a matter of public importance;
·whether or not there had been a delay in bringing the application for security; and
·whether or not there would be difficulty in enforcing an order for costs.
See also Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174; Luadaka & Luadaka (1998) FLC 92-830 (“Luadaka”).
As the Court pointed out in Atkins at [22], these factors largely mirror the considerations referred to in r 19.05(2) of the Family Law Rules 2004 (Cth).
The applicant bases her application upon essentially three propositions. The first is that the grounds of appeal are so vaguely drawn that it is impossible to make any assessment of the merits of the appeal, so that the prospects of its success must be regarded as very low. The second is that there is an outstanding costs order against the respondent in favour of the applicant which has remained unpaid for over two and half years. The third is that it is unlikely that the respondent would meet any costs order and although the respondent asserts that he is impecunious, that, of itself, is not a bar to an order. The applicant submits that in any event the evidence establishes that it is likely that the respondent in fact has the ability to meet an order for security for costs and that such an order would therefore not stifle the appeal.
The financial circumstances of the parties (s 117(2A)(a))
The applicant is in a reasonable financial position. She is employed and owns an investment unit. She is obliged to use part of her income to meet the shortfall between rent and expenses and mortgage repayments. She lives in rented accommodation. She has a motor vehicle and some cash savings. However, she has an obligation to meet a taxation debt and the legal expenses in these proceedings.
Importantly, she asserted, without challenge, that she has spent approximately $80,000 in legal costs meeting the respondent’s applications, including the proceedings in the Local Court.
The fact the applicant is in a comfortable financial position does not, of itself, prevent an order for security for costs being made in her favour: Luadaka at [62].
The respondent asserts that he is impecunious, being unable to work because he is depressed. He says that he is supported by his father.
It is clear enough that on 8 February 2014, in support of the application for consent orders, he stated that he had a net equity of approximately $388,000 in a property, approximately $98,000 in cash and $40,000 in superannuation.
On 1 April 2015 he filed a Financial Statement in the Federal Circuit Court of Australia. He described himself as being unemployed but nonetheless as receiving a salary of $200 per week and receiving rent of $200 per week.
Another Financial Statement was filed by him on 15 March 2016. He again described himself as being unemployed but as receiving rent of $250 per week.
The primary judge recorded that on 26 April 2014 the respondent sold a property at Suburb B. Therefore the rent referred to in his 2015 and 2016 Financial Statements, if they be accurate, must come from another undisclosed property.
In the course of his submissions before me, the respondent accepted that he had sold the Suburb B property, in respect of which he had received at least $300,000. Of this he paid $90,000 to the applicant, as described above, and said that he has spent the rest.
The applicant tendered some pages from the respondent’s account at without objection. These photographs establish that six months ago the applicant was at a beach and riding a scooter in Country E. A photograph depicts him enjoying drinks at the Gold Coast four months ago. More recently, photographs taken as late as one month ago together with their captions indicate that the respondent spent nearly two months in Country T and Country H.
When asked about the Country T trip the respondent reiterated that he was unemployed and on Centrelink benefits. He said that he had stayed at a friend’s place in Country T and his only expense was an airfare. He also said that the “majority” of funds for his overseas trip came from his father. That of course indicates that there was some other source of funds.
The respondent has no apparent means to meet an order for costs but it is obvious that he has access to funds from some source.
The only explanation for the respondent’s disposal of over $200,000 since 2014 was that he “spent it”. He has received rent in 2015 and 2016 from some source. Within the last six months he has been overseas twice, once for an extended period and has also visited the Gold Coast.
Accordingly, it is far from clear that an order for security for costs would stifle the appeal. It is apparent that the respondent has access to a source of funds.
Any other relevant matters (s 117(2A)(g))
I have already referred to the proceedings in the Local Court. In addition to the dismissal of the proceedings, an order was made that the respondent pay the applicant’s costs in the sum of $6,600.
On 23 April 2015 the applicant sought the issue of a writ for levy of property in the Local Court. That writ was served on the respondent on 11 May 2015. This led to the respondent filing a notice of motion to pay by instalments. That application was filed on 21 May 2015 and proposed the payment of $2,050 each month commencing on 1 July 2015. That application was refused.
The respondent then filed a further application to pay by instalments on 22 May 2015 seeking to pay $250 per month commencing immediately. That order was made by the Court. The respondent made three payments, each of $250, to the applicant pursuant to the order, the last being made on 6 August 2015. He has made no further instalments.
It appears that the respondent can obtain funds for the purpose of holidays but not pay funds for the purpose of complying with costs orders. This circumstance strongly supports the making of an order for security for costs.
The prospects of success of the appeal
The grounds of appeal are (errors in the original):
1.Judgement and discretion by judge was wrong.
2.The judge failed to afford the appellant procedural fairness.
3.Judge failed to take into account material considerations.
4.Made findings of fact of important issue not supported by evidence.
5.Applied wrong interpretation of the law.
6.Judge made ruling on evidence & subpoena documents and then contradicted his own ruling. This affected my case preparation.
7.Ignored pejury and misleding court by respondent.
As was correctly pointed out by counsel for the applicant, in the absence of any indication of what is said to constitute the error in the exercise of discretion or the failure to afford procedural fairness and the like, the grounds are essentially meaningless and it is impossible to gauge the prospects of success of the appeal.
When this was raised with the respondent he said that one of his two main complaints was that the primary judge rejected a Google timeline of the location of his telephone over two years which, he asserts, establishes that he stayed at the applicant’s home very much more often than she said he did during the relevant period. Without the benefit of the transcript, it is impossible to know the basis on which it was rejected, but I was informed by counsel for the applicant, who also appeared at the trial, that the document was rejected because it could not be authenticated.
The respondent said that the other main ground of his appeal was the primary judge’s failure to take into account significant evidence that adversely affected the credit of the applicant. Some of this evidence was taken into account by the primary judge so that aspect would devolve into a weight argument with the attendant difficulties of such submissions.
The balance of the material upon which the respondent relies was said to be evidence that was the subject of an unsuccessful application to re-open the evidence after judgment had been reserved.
As stated none of these main planks of the appeal appears to be strong but the bar is a particularly low one and I am not prepared to find that the appeal is doomed to fail.
Whether the claim for security for costs was bona fide
There is no suggestion that the application was made anything other than bona fide.
Whether or not an order for costs for security would stifle the litigation
As I have already indicated I am not satisfied that this is the case.
Whether or not the litigation may involve a matter of public importance
No matter of public importance is involved.
Whether or not there has been a delay in bringing the application for security
The Notice of Appeal was filed on 31 July 2017. As I have said, the application for security for costs was filed on 9 November 2017 which would, at first blush, appear to be a significant delay.
However the respondent has not yet taken any steps to prosecute the appeal and a directions hearing to provide for the management of the appeal has yet to take place. He has not yet obtained the transcript.
In other words, the respondent has not spent any money in prosecution of the appeal and no prejudice therefore arises from any delay in bringing this application.
Whether or not there would be difficulty enforcing an order of costs
I have already found that there would be such a difficulty.
Conclusion
Taking all these matters into account but particularly taking into account the failure of the respondent to meet the costs order in the Local Court of New South Wales, his apparent ability to obtain funds for overseas travel and the fact that absent an order for security for costs, it is likely that the applicant would not be able to enforce any order for costs, I consider it is appropriate to make an order for security for costs.
The applicant sought an order in the sum of $20,000. She did not adduce any evidence as to how that sum has been arrived at, but, in all of the circumstances, it is not an inappropriate sum.
Therefore there will be an order for that amount.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 13 February 2018.
Legal associate:
Date: 13 February 2018
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