GALLOWAY & STEEL (SECURITY FOR COSTS)

[2011] FamCAFC 243

FAMILY COURT OF AUSTRALIA

GALLOWAY & STEEL (SECURITY FOR COSTS) [2011] FamCAFC 243

FAMILY LAW – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – where the respondent mother had filed an appeal against parenting orders made in the Family Court – where the applicant father sought an order that the mother provide security for her costs of the appeal – where the Full Court found that the parenting orders appealed had a significant effect on the child’s living arrangements and that the mother had made progress in preparing her appeal – where the Full Court further found that there was no certainty that an order for security would not stifle the appeal – application dismissed – no order for costs.

Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206
Halsbury & Halsbury [2008] FamCAFC 170
Jones and Jones (2001) 27 Fam LR 632
Palma & Caleffi and Anor (Security for costs) [2011] FamCAFC 174
Sawer & Sawer [2007] FamCA 140

APPLICANT: Mr Galloway

RESPONDENT: Ms Steel

FILE NUMBER: SYC 6615 of 2007

APPEAL NUMBER: EA 90 of 2011

DATE DELIVERED: 20 December 2011

PLACE DELIVERED: Canberra

PLACE HEARD: Sydney

JUDGMENT OF: Finn, Strickland and Young JJ

HEARING DATE: 29 November 2011

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE:	8 July 2011
LOWER COURT MNC:	[2011] FamCA 550

REPRESENTATION

SOLICITOR FOR THE APPELLANT: Mr Holmes
Slade Manwaring Solicitors

COUNSEL FOR THE RESPONDENT: Mr de Robillard

SOLICITOR FOR THE RESPONDENT: Self represented

Orders

1. The father’s application for security filed on 14 October 2011 be dismissed.

2. There be no order for costs in relation to the father’s application for security.

IT IS NOTED that publication of this judgment under the pseudonym Galloway & Steel (Security for Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Number: EA 90 of 2011
File Number: SYC 6615 of 2007

Mr Galloway

Applicant

And

Ms Steel

Respondent

REASONS FOR JUDGMENT

1. This is an application by the father for an order that the mother provide security for his costs in an appeal which she has filed against orders made on 8 July 2011 by Fowler J in parenting proceedings between the father and the mother.

2. The essential effect of his Honour’s orders was that the child of the parties’ relationship (who was born in February 2007 and is thus aged just under five) was moved from the care of his mother, with whom he had always lived, to live with the father, and for at least the first eight months his time with the mother was to be supervised.

Background

1. On 4 August 2011 the mother filed a Notice of Appeal against his Honour’s orders.

2. On 25 August 2011 the mother filed an application seeking a stay of the orders. That application was ultimately heard and refused by his Honour on 2 September 2011, although on 14 September 2011 he did vary the supervision arrangements “pending appeal”.

3. There was a procedural hearing before the Appeal Registrar on 6 October 2011. The orders made by the Registrar on that day foreshadowed the possibility of an application by the father for an order for security in relation to his costs of the appeal being made, and also the possibility of an Amended Notice of Appeal being filed by the mother.

4. On 14 October 2011 the father filed an application for security in the sum of $20,000.00, with the appeal to “stand dismissed” in the event that the security was not paid.

5. On 19 October 2011 the mother filed an Amended Notice of Appeal.

6. The mother then filed her appeal books (consisting of six volumes) on 27 October 2011, followed by her summary of argument on 14 November 2011 (by which time her solicitor had filed a Notice of Ceasing to Act).

7. The mother subsequently filed a further Amended Notice of Appeal on 17 November 2011.

Hearing of the security application on 29 November 2011

1. At the hearing of the security application on 29 November 2011, the father was represented by his solicitor, Mr Holmes, and the mother was represented by Mr de Robillard of Counsel (on what we understood was a direct brief and pro bono arrangement). We note here for the record that on that day the Independent Children’s Lawyer applied to be discharged from the proceedings, and we so ordered.

2. At the commencement of the hearing, Mr de Robillard sought to file in Court a document entitled “Response to an Application in an Appeal”, but because the orders sought in that document were not directed to the application for security for costs, we were not prepared to receive it.

3. In addition Mr de Robillard sought to file in Court a document entitled “Affidavit in reply to Security for Costs Application”. We were prepared to permit the mother to rely on the first 48 paragraphs of that affidavit, and there was no objection to that course on behalf of the father.

4. We were advised at the hearing by Mr Holmes that the appeal has been listed for hearing on an expedited basis in the week commencing on 30 January 2012.

Relevant principles governing applications for security for costs

1. It will assist an understanding of the submissions made to us on behalf of both parties if we set out the principles which govern applications for security. Those principles were explained by the Full Court in Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 in the following way:

   2.In the recent decision of the Full Court (Coleman, Thackray and Strickland JJ) in Palma & Caleffi and Anor (Security for costs) [2011] FamCAFC 174 the following principles, which govern an application for security for the costs of an appeal, were set out (adopting what was said by an earlier Full Court (Finn, May and Thackray JJ) in Sawer & Sawer [2007] FamCA 140):

   19. The power in this Court to make an order for security for costs is to be found in s 117(2) of the [Family Law Act 1975 (Cth) (“the Act”)], which is in the following terms:

   If, in proceedings under this Act, the court is of [the] opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   20. The provisions of s 117(2A) are as follows (- s 117(4) and (5) are not presently relevant):

   In considering what order (if any) should be made under subsection (2), the court shall have regard to:

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

   (b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)  the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

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

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

   (f)   whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

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

   21. The authorities establish that in exercising the discretion to order security for costs, it may also be relevant for the Court to consider in addition to the financial circumstances of the parties and the other five specific matters mentioned in
   s 117(2A), the following matters:

   a)    the prospect of success of the litigation;

   b)    whether the claim for security is made bona fide;

   c)whether or not an order for security would stifle the litigation;

   d)whether or not the litigation may involve a matter of public importance;

   e) whether or not there has been a delay in bringing the application for security;

   f) whether there would be difficulty in enforcing an order for costs

   (Luadaka v Luadaka (1998) FLC 92-830; Jones and Jones (2001) FLC 93-080; Adult Guardian and Mother's Parents and B and Child's Representative (2002) FLC 93-116.)

   3.Also in Palma & Caleffi (supra) the Full Court set out the following observations made by the Full Court (Finn, Boland and Murphy JJ) in Halsbury & Halsbury [2008] FamCAFC 170; these observations have relevance in the present case:

   …

   34. Before concluding we take the opportunity to make the following observations regarding applications for security in relation to the costs of an appeal.  Such applications appear increasingly to be taking up the time and resources of the litigants and of the Court.  The proper place of such applications and the competing rights that lie at the heart of such applications need to be borne in mind by those seeking them.

   35. Appeals are a part of our system of law.  They operate as part of the proper checks and balances on the actions and decisions of trial judges.  Litigants have a right to appeal in circumstances where they, properly and bona fide, allege error on the part of the trial judge (subject of course to the requirements in certain circumstances of leave to appeal being granted).  That right to appeal is an important part of our system of law.  It should not be fettered except for good reason. 

   36. The remedy for those who have a basic right to enjoy the fruits of their judgment and who have that right disturbed by an appeal which is ultimately held to be unmeritorious, is to receive confirmation of the right by the dismissal of the appeal, and, frequently, to have their costs met by the unsuccessful appellant. Although it needs to be recognised in this jurisdiction that s 117 of the Act has the potential to impact on the latter part of that remedy.

   37. As we earlier indicated, in the present case both parties put before us relatively detailed arguments in support of, and in opposition to, each ground of appeal.  Furthermore, in the present case the wife had already demonstrated her bona fides, by having prepared and filed the appeal books on
   7 November 2007.  Thus the appeal could well have been heard in the Full Court sittings in which the application for security was heard.

   38. Indeed, in our view, and with great respect to the husband and those advising him, the hearing before us of the security application at which it should be noted the husband was able to be legally represented, would have been better devoted to the hearing of the appeal itself.

   39. It is also important to stress (but without in any way reflecting on the conduct or intentions of those involved in the present case) that applications for security for costs should not be regarded as a method of funding a respondent’s costs of legal representation in an appeal. This consideration should particularly be borne in mind in this jurisdiction where the fundamental rule regarding costs is that contained in s 117(1) of the Act, being that each party pays his or her own costs.

   …

Matters relied on in the submissions made on behalf of the parties

1. The principal matters relied on in the oral and written submissions made on behalf of the father in support of his application for security were as follows:

   ·This case was submitted to be unusual because although the mother is “plainly impecunious” (paragraph 6 of the father’s written submissions), she has had available to her significant financial resources (including an ability to borrow significant sums) which have permitted her to pursue the litigation to date. These resources could not be accessed by the father to satisfy any costs order that might be made in his favour (should the appeal be unsuccessful), yet these resources could, it was asserted by the father, be used by the mother to satisfy an order that she lodge security for such costs, and thus, an order for security would not “stifle” the appeal.

   ·The mother’s conduct of the appeal to date including the filing of three Notices of Appeal has increased the father’s legal costs.

   ·The mother’s latest grounds of appeal (each of which Mr Holmes succinctly examined) were submitted to be of “dubious merit”, and this, it was further submitted, should be the “tipping” factor in favour of an order for security.

2. In response, Counsel for the mother conceded that his client was in financial difficulties and dependant on others for support. However, it was his submission that to order security would deny her a right of appeal against orders which affected the interests of a child. Counsel also endeavoured to demonstrate that there was merit, and indeed even a public interest, in certain of the grounds of appeal directed to the trial Judge’s acceptance of the expert evidence.

Discussion and Conclusion

1. In deciding whether or not to exercise our discretion to order that the mother provide security for any costs which the father might be awarded in the event that the mother’s appeal is unsuccessful, we have considered it important to bear in mind that this was a case in which a young child’s living arrangements were changed from having always lived with his mother as his primary carer to a situation where he would live with his father and only see his mother at least initially on a supervised basis.

2. It is also important to bear in mind that the mother has managed to progress her appeal to date by the filing of an appeal book (in six volumes) and the filing of a summary of argument for her appeal.

3. It appears to be common ground that the mother is impecunious, and we accept that the decision in Jones and Jones (2001) 27 Fam LR 632 (which was relied on by Mr Holmes for the father) establishes that more weight can be placed on the impecuniosity of an appellant in applications for security which are made in the appeal context.

4. However, we cannot be certain that an order for security, even for a limited amount, would not prevent the mother pursuing her appeal; in other words, that such an order would stifle the appeal. Given the significant effect of the orders appealed on the child and the progress that the mother has to date been able to make in prosecuting her appeal, we are not prepared in the overall interests of justice to risk that the appeal could be stifled by an order for security.

5. Although as Mr Holmes was able to demonstrate, the mother’s grounds of appeal, as currently drafted, may have limited merit, it cannot be said that they might not be shown to have some merit when argued. Their present apparently limited merit would not therefore dissuade us from our decision not to order security.

6. Finally, we mention that there were claims from both sides about delay in prosecuting the appeal and/or the application for security. As we made clear at the hearing, we consider there was no merit in such claims. Similarly, we consider that there was no merit in the claims made on behalf of the mother concerning the bona fides of the father in bringing the application for security, and we have certainly placed no weight on those claims.

Costs of the application for security

1. At the conclusion of the hearing of the security application we received oral submissions in relation to the costs of the application.

2. The only submissions made on behalf of the father was that if he was successful in his application for security, then the costs of that application should be costs in the appeal.

3. So far as the mother was concerned, we understood from her Counsel that she would make no application for costs should she be successful.

4. Having regard to those submissions, we consider that in all of the circumstances the general rule should apply, and there should be no order for costs in relation to the application for security.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Strickland and Young JJ) delivered on 20 December 2011.

Associate:

Date:  20.12.11