Gull and Gull
[2013] FamCAFC 97
FAMILY COURT OF AUSTRALIA
| GULL & GULL | [2013] FamCAFC 97 |
| FAMILY LAW – APPLICATION IN AN APPEAL – Application for security for costs – Where there may be some limited prospect of success in the appeal – Where the respondent previously failed to comply with orders – Where security for costs will not stifle the appeal – Application granted. |
| Family Law Act 1975 (Cth) ss 79A(1)(c), 117, 117(2A) Family Law Rules 2004 r 19.05(2) |
| Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 Gull & Gull [2009] FamCAFC 71 Jones & Jones (2001) FLC 93-080 Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174 |
| APPLICANT: | Mr Gull |
| RESPONDENT: | Ms Gull |
| FILE NUMBER: | MLC | 10581 | of | 2008 |
| APPEAL NUMBER: | SOA | 51 | of | 2012 |
DATE DELIVERED: | 21 June 2013 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Thackray, Strickland & Ryan JJ |
| HEARING DATE: | 20 June 2013 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 8 June 2012 |
| LOWER COURT MNC: | [2012] FamCA 431 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Weil |
| SOLICITOR FOR THE APPLICANT: | Vernon da Gama & Associates |
| FOR THE RESPONDENT: | Ms Gull in Person |
Orders
Pending further order or disposition of the appellant wife’s Amended Notice of Appeal filed 3 August 2012 (including any application for costs of the appeal), whichever first occurs, the appellant wife provide $10,000 as security for the respondent husband’s costs in relation to that appeal, in the manner following:
There be a charge over $10,000 of the appellant wife’s share of the money held by Vernon De Gama and Associates pursuant to Order 2 of the orders made by Justice Cronin on 8 June 2012.
The respondent husband’s costs of his Application in an Appeal filed 25 March 2013 be costs in the appeal, and be reserved.
The appellant wife’s Response to an Application in an Appeal filed 18 June 2013 be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gull & Gull has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 51 of 2012
File Number: MLC 10581 of 2008
| Mr Gull |
Applicant
And
| Ms Gull |
Respondent
REASONS FOR JUDGMENT
Introduction
This is an application by Mr Gull (“the husband”) for an order that Ms Gull (“the wife”) provide security for his costs in an appeal which she has filed against property settlement orders and an order for costs made on 8 June 2012 by Cronin J.
It is the husband’s application that the wife’s appeal be stayed until she provides security for his costs in the amount of $33,000. That amount would be paid to the husband’s solicitor who would deposit it into an interest bearing account in the parties’ names pending further order. The husband also says the costs of this application should be reserved.
In her Response filed on 18 June 2013 the wife says that the husband’s application should be dismissed.
Background facts and the trial judge’s reasons
Final property orders were made on 19 March 2008 which relevantly required that the parties do all things necessary to bring to Australia approximately $502,000 secured in fixed deposits in India. These funds were deposited in accounts variously in the name of the husband, the husband and the parties’ child jointly or the husband, wife and child jointly. On the basis that the wife would receive 65 per cent of the total net assets, it was ordered that from the repatriated funds the wife receive $288,213 and the husband $213,805. In the event that the repatriated amount differed, a formula was provided which would ensure that the parties’ net assets were divided 65 per cent to the wife and 35 per cent to the husband.
In the event, the wife resisted the husband’s attempts to implement the order to repatriate the entire sum to Australia and it was only in July 2010 that the money invested in India began to arrive in Australia.
On 9 May 2012, the husband filed an application pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth) (“the Act”) to vary the operative property orders and an order that the wife pay his costs calculated on an indemnity basis. On the basis that the wife had defaulted in carrying out the obligation imposed upon her to repatriate the money held in India to Australia the husband argued that the financial consequences of her default meant that he should receive reimbursement for interest which would have been received had the funds been invested, mortgage interest he paid unnecessarily, costs and tax. He also sought consequential relief related to his attempts to have the money repatriated.
Before his Honour, the wife opposed the husband’s application. She sought a distribution of the repatriated funds in accordance with the 2008 orders, as well as payment to her of $33,390: being interest incurred on her mortgage as a result of a drawdown made by the husband prior to the 2008 orders and the amount drawn down.
The husband secured a measure of success. Simply put, from the wife’s share of the money repatriated from India, it was ordered that he receive $111,435. This comprised:
·$50,000 pursuant to s 79A(1)(c);
·$60,000 by way of costs;
·$880 in satisfaction of a costs order made against the wife on 28 February 2005; and
·$555 in satisfaction of an order for costs made against the wife on 6 October 2009.
At paragraph 75 of the trial judge’s reasons he explained that pursuant to s 79A(1)(c) an amount of $50,000 should be paid to the husband “to put him in a similar position that he would have been in had the orders been expeditiously executed”. In settling upon that amount as being just and equitable, his Honour took into account (as best he could) that property each party retained pursuant to the 2008 orders had increased in value, and that in excess of $50,000 interest had accrued on the husband’s mortgage as a consequence of his inability to pay his share of the money held in India towards its reduction. The husband’s claim for an adjustment because of the loss of interest on money that could have been invested failed as did his claim for costs of a trip he made to India to hopefully expedite the process of repatriation.
In relation to the order for cost, his Honour applied s 117 of the Act. In summary, the circumstances which justified an order for costs were that as a consequence of the wife’s failure to comply with an order, the husband initiated enforcement proceedings in which he secured a measure of success.
As to s 117(2A), his Honour found that neither party was impecunious and that each had a house and cash assets, the effect of which was that there were no financial circumstances which would preclude an order for costs being made against the wife. A series of findings were made by his Honour all of which weighed in favour of an order for costs being made against the wife and none of which weighed in her favour. Particular weight was given to her “defiance” of orders, failure to comply with directions and the presentation of a large volume of irrelevant material, such that the husband incurred costs unnecessarily.
Because of the trial judge’s extensive involvement in the proceedings, he was satisfied that the $60,000 in costs the husband sought was reasonable. That is to say, a reasonable amount which the wife should pay.
Principles governing an Application for Security for Costs
The power to make an order for security for costs is found in s 117 of the Act. As was explained in Gerber & Bradley (formerly Gerber) and Ors (Security for Costs) [2011] FamCAFC 206 in addition to the matters referred to in the section, it is well settled that pursuant to s 117(2A)(g) the following matters should be considered:
·the prospect of success of the litigation (relevantly the wife’s appeal);
·whether the claim for security is made bona fide;
·whether or not an order for security would stifle the litigation;
·whether or not the litigation may involve a matter of public importance;
·whether or not there has been a delay in bringing the application for security; and
·whether there would be difficulty in enforcing an order for costs.
(see also Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174)
These factors largely mirror considerations referred to in r 19.05(2) of the Family Law Rules 2004 (“the rules”).
The prospects of success of the appeal
By her Amended Notice of Appeal filed 3 August 2012 the wife presents 19 grounds of appeal.
The wife is not a novice to appellate litigation. For example, she appealed against the original property settlement orders made in 2008 and she appeared unrepresented in the Full Court (Gull & Gull [2009] FamCAFC 71). Although the original property settlement orders were varied so as to take account of a miscalculation caused by information provided by counsel who then appeared for the husband, she failed in her main grounds of appeal. Her subsequent application for a grant of special leave to appeal to the High Court was also unsuccessful. The significance of this is twofold.
First, the wife is aware of the principles by which appeals against a discretionary judgment are decided. Secondly, she is alive to the probability that by lodging an appeal the husband would almost certainly incur additional legal expenses.
With respect to the effort which the wife has put into her Amended Notice of Appeal, a number of the grounds would appear to misapprehend the basis upon which the trial judge made the orders that he did, seek to challenge the weight which his Honour gave to various factors, lack particularity and otherwise misstate his Honour’s findings.
Before us, the wife focused her analysis of the merits of her appeal on three matters. Namely, the order for costs made by the trial judge (including in relation to GST), his Honour’s finding at paragraph 96 that she was wholly unsuccessful and the extent to which his Honour attributed to her responsibility for the delay in repatriation of the money held in India.
Concerning the orders that relate to enforcement of the two earlier orders for costs, the wife argues that those orders did not require her to pay an amount of money and had done no more than reserve costs against her. She did not establish that this is so.
In relation to her argument contra her being wholly unsuccessful, the wife pointed to earlier components of this lengthy litigation in which she says she secured a measure of success. Even if this is correct, his Honour’s finding is directed to the application heard by him. It follows that this argument would seem unlikely to attract appellate intervention.
However, the argument the wife advanced in relation to the order for costs suggests that there may be merit in at least grounds 6 and 7 of her appeal. The significance of this is that an order for the costs of the appeal may not be made against the wife, which finding weighs against the husband’s application for security for costs.
Is the claim for security bona fide?
In his affidavit filed in support of his application for security for costs, the husband said:
4.The circumstances and history of proceedings between the [wife] and myself has been summarised in the Reasons for Judgement of His Honour Mr Justice Cronin dated 8 June 2012 (Reasons paragraphs 4 to 24 (inclusive) Transcript 11 – 17). I refer to and rely upon His Honour’s summary
5.To this time these proceedings have cost me approximately $200,000 since they began (Reasons page 2, T32). The attitude of the [wife] towards the conduct of these proceedings has been that of defiance to court orders and directions. The wife has frustrated and delayed the expeditious resolution of these proceedings (Reasons paragraph 94 T33, paragraph 95 T33 and paragraph 97 T34).
There is no reason to doubt that the husband is bona fide in pursuing his application for security for costs. He has incurred significant legal costs and established before the trial judge that this round of litigation was necessitated by the wife’s failure over a prolonged period to comply with orders. In effect, it is submitted that history is against the Court being able to proceed on the basis that that ready compliance by the wife with any future order for costs can be inferred. With respect to the submissions made in response by the wife, nothing she said dispelled the force of this argument made by the husband.
In short, the husband has good reason to be concerned that he could face a difficult and expensive road in order to secure compliance with any order for costs that might be made in his favour as a result of the appeal.
Would an order for security for costs stifle the appeal?
It is the husband’s contention that an order for security for costs would not stifle the wife’s appeal or be oppressive to her. As has already been mentioned, relevantly his Honour found that the wife owns a home. From her share of the money repatriated from India, after compliance with Orders 1 and 2 made by his Honour, she will have received somewhere in the vicinity of $185,000. No challenge is made by the wife to his Honour’s finding that she is not impecunious.
However, the wife points out that she has health difficulties and from a Disability Support Benefit she supports the parties’ son (who is at university). Other than a bare assertion that she is unable to lodge security for costs, in her affidavit filed on 18 June 2013, the wife failed to disclose whether she has savings and whether she has retained or disposed of her share of the money sent from India. When we attempted to explore this issue with the wife, she prevaricated saying only that she did not have money in the bank.
However, in the event that the wife was able to establish that she is impecunious, that fact alone would not determine the outcome of this application. As the Full Court explained in Jones & Jones (2001) FLC 93-080 at [20] - [22]:
There is no doubt that the wife is impecunious, that she may well be unable to proceed with the appeal if she is ordered to provide security and will be unable to meet an adverse order for costs in the appeal. The prospect, however, of the husband being left without a remedy in respect of a costs order if the appeal is dismissed is significant.
It has long been recognised that, as a general rule and in the exercise of an unfettered discretion, mere impecuniosity of a litigant who is a natural person, will not of itself be a basis for ordering that person to provide security. There is, however, an exception to that general rule, namely in the case of appeals. See Cowell v Taylor (1885) 31 Ch D 34 at 38, J & M O'Brien Enterprises Pty Ltd v Shell Co of Australia Ltd (No 2) (1983) 70 FLR 261 at 264, Ciappina v Ciappina (1983) 70 FLR 287 at 290 and Paton v Campbell Capital Ltd (unreported, Federal Court of Australia, 1 July 1993).
The fact that the wife would be unable to pay the costs awarded against her, if her appeal was dismissed, is, in our view, a significant factor to take into account in considering whether to exercise the discretion to order security in favour of the husband, but it is not the only or deciding factor.
It follows that had the wife been able to establish that she is impecunious, on the application of the principles referred to in Jones, the prospect of the husband being left without a remedy in respect of a costs order should her appeal be dismissed, would warrant significant weight.
We are satisfied that the husband has established that an order for security for costs in the amount sought would not stifle the appeal. In coming to this view we also take into account that the wife has filed the appeal books, which includes the transcript of the hearing before his Honour. It follows that an order for security for costs would not compromise her capacity to present the material upon which she relies in support of her appeal.
Does the appeal raise a matter of public importance?
The appeal does not involve a matter of public importance.
Delay?
Approximately eight and a half months lapsed from when the wife filed her Notice of Appeal and the husband presented this application. Although this involves a measure of delay, the time taken has not interfered with the wife’s capacity to prosecute her appeal. It is more relevant that the date upon which the appeal will be heard has not yet been allocated.
Conclusion
In coming to the view that an order for security for costs should be made, we are satisfied that the matters of particular significance are the manner in which to date the wife has conducted the proceedings (which alone amounts to justifying circumstances), that the proceedings were necessitated by her failure over a very long time to comply with orders, and the prospect of the husband being left without a ready remedy in respect of a costs order should her appeal be dismissed.
In the unusual circumstances of this case, an order for security for costs against the wife is appropriate. However, the $33,000 sought by the husband would appear to presuppose that he would secure an order for indemnity costs. Although we were informed that the amount of $33,000 comprised costs at scale, it is apparent to us that we ought not to proceed on the basis that the amount sought was other than a claim for indemnity costs.
By reference to the schedule of costs contained in the rules and the nature of the work required of those who represent the respondent, we are not satisfied that an order for security greater than $10,000 would be appropriate.
By Order 2 of the orders made by the trial judge $22,000 was paid from the money repatriated from India to the husband’s solicitor. The purpose of this order was to establish a fund “to satisfy any taxation liability arising out of the firm or its principal, acting as trustee for the said repatriated funds” (Order 2). We were informed by counsel for the husband that it is now clear that neither the firm of solicitors nor its principal will incur a taxation liability of the type referred to in the order.
As was correctly pointed out by the wife, it follows that she is entitled to forthwith receive 65 per cent, which is $14,300, of the money secured pursuant to that order. We understood counsel for the husband to concede the point. There is thus a fund, which can be secured immediately, against which an order for security for costs can be made, and there is no need to stay the wife’s appeal. It follows that all that needs to be done to secure the amount, is to charge the fund in possession of the husband’s solicitor.
Other matters
As well as orders that the husband’s application for security for costs be dismissed, in her Response, the wife applied for orders that, in the event her appeal is allowed, replicate the orders sought in the appeal. None of these matters are properly matters for this hearing and her Response will be dismissed.
I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Thackray, Strickland & Ryan JJ) delivered on 21 June 2013.
Associate:
Date: 21 June 2013
0
6
0