Halsbury & Halsbury
[2008] FamCAFC 170
•18 November 2008
FAMILY COURT OF AUSTRALIA
| HALSBURY & HALSBURY | [2008] FamCAFC 170 |
| FAMILY LAW – APPEAL – SECURITY FOR COSTS – where the wife is appealing against property settlement orders – where the respondent husband is seeking that the wife pay the sum of $15,000.00 “to the husband” as security for his costs in the appeal – where the husband submitted that the wife had limited financial means and that there was a lack of merit in the wife’s appeal – found that the circumstances did not justify an order for security for costs – stated that in similar cases time and resources spent in arguing and opposing applications for security for costs may be better spent in determining the appeal itself – emphasised that the fundamental rule in Family Law Act 1975 (Cth) s 117(1) is that each party pays their own costs – application dismissed. |
| Family Law Act 1975 (Cth) s 117(2), s 117(2A) Family Law Rules 2004, Rule 22.49 Federal Proceedings (Costs) Act 1981 (Cth) |
| Adult Guardian and Mother's Parents and B and Child's Representative (2002) FLC 93-116 Rodgers & Pisani [2007] FamCA 1510 Sawer & Sawer [2007] FamCA 140 |
| APPLICANT: | Mr Halsbury |
| RESPONDENT: | Ms Halsbury |
| FILE NUMBER: | LEC | 33 | of | 2007 |
| APPEAL NUMBER: | NA | 50 | of | 2007 |
| DATE DELIVERED: | 18 November 2008 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Finn, Boland and Murphy JJ |
| HEARING DATE: | 5 March 2008 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 29 June 2007 |
| LOWER COURT MNC: | [2007] FamCA 1101 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr Tester |
| SOLICITOR FOR THE RESPONDENT: | In person |
Orders
That the husband be granted an extension of time until 4 September 2007 to file an application for security for his costs in relation to Appeal NA 50 of 2007 (“the application for security”).
That the application for security be dismissed.
That the costs of both parties of and incidental to the application for security be reserved as costs in Appeal NA 50 of 2007 but with liberty to both parties to apply in the event that the appeal does not proceed.
IT IS NOTED that publication of this judgment under the pseudonym Halsbury & Halsbury 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 BRISBANE |
Appeal Number: NA 50 of 2007
File Number: LEC 33 of 2007
| Mr Halsbury |
Applicant
And
| Ms Halsbury |
Respondent
REASONS FOR JUDGMENT
This is an application by the husband, Mr Halsbury, made on his behalf by his solicitor for an order requiring the wife, Ms Halsbury, to pay the sum of $15,000.00 “to the husband” as security for his costs in an appeal which the wife has lodged against orders for property settlement made by Barry J on 29 June 2007 in proceedings between the husband and the wife. The application was resisted by the wife.
There is an issue regarding the timing of the filing of this application for security which we will return to at the conclusion of these reasons.
Relevant principles
It is useful in considering an application for security for the costs of an appeal to begin by setting out the principles which govern the determination of such an application. Those principles were summarised by the Full Court in Sawer & Sawer [2007] FamCA 140 in the following way:
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.)
The judgment the subject of the appeal
It will also be useful in this case to make some reference at the outset to the property settlement judgment which is the subject of the wife’s appeal and in relation to which the husband seeks security for costs.
In his reasons for the property settlement orders which he made on 29 June 2007, Barry J began by explaining the orders which each party sought and also by explaining briefly the factual background. That background was complicated by the fact that there had been earlier property settlement orders made by Bell J on 7 March 2006 which had been the subject of a successful appeal by the husband. Bell J had refused a stay of his orders pending that appeal, and thus there had already been some transfer of property between the parties by the time of the hearing before Barry J.
For purposes of the proceedings before him Barry J valued the parties’ property at $397,124.00.
His Honour determined that the parties’ contributions should be assessed in the proportions of 75 per cent to the husband and 25 per cent to the wife. He went on to make a 7.5 per cent adjustment in favour of the husband on account of the matters mentioned in s 75(2) of the Act. Thus the assets were to be divided 82.5 per cent to the husband and 17.5 per cent to the wife.
His Honour’s calculations as to how this division should be implemented was then as follows (our emphasis):
125.Net assets as previously assessed $397,124
Husband’s entitlement at 82.5% of $397,124 $327,627
Husband has received former matrimonial home $370,000
Less liabilities – mortgage $ 40,303
Loan from mother $ 45,050
Legal fees $ 11,982
Total $ 97,335
Husband has received net assets $272,665
Amount to be paid by Wife to Husband by way of
adjustment – Husband’s entitlement $327,627
Less Husband has received $272,665
Balance owing [to be paid to the husband by the wife] $ 54,962
It is unnecessary to set out the terms of his Honour’s orders which gave effect to this division. For present purposes it need only be said that the wife was required to pay the husband the sum of $54,962.00 within two months and that in the event of a default, a property owned by her and valued at $340,000.00 (but subject to a mortgage of $233,000.00) was to be sold.
On 27 July 2007 the wife acting on her own behalf (as she had at the hearing before Barry J) filed a Notice of Appeal against his Honour’s orders. In her Notice of Appeal the wife sought (amongst other orders) that “the property of the parties be adjusted on the basis of 60% to the husband and 40% to the wife”. We will refer later to the wife’s grounds of appeal as contained in her Notice of Appeal.
By the time of the hearing before us of the husband’s application for security in relation to his costs of the wife’s appeal, it was common ground that the wife had paid the husband the sum of $50,000.00 on account of the amount of $54,962.00 owed to him under Barry J’s orders.
The matters relied on by the husband in support of his application for security
In support of the husband’s application for security (and no doubt against the background of the principles earlier set out which govern an award of security in relation to the costs of an appeal), his solicitor relied on “two key factors”, being first, the wife’s limited financial means and secondly, the lack of merit in the wife’s appeal and thus its likely failure.
Accordingly, it was submitted that given the lack of merit in the wife’s appeal and its likely failure, she would have to pay the balance of the monies owed by her to the husband under Barry J’s orders, together with interest. There was also the possibility that she would be liable to pay the husband’s trial costs, with the result that there was thus “a very real fear” that her indebtedness may exceed the value of her property. She would thus be unable, it was submitted, to meet any costs order made against her in favour of the husband on account of his costs incurred in defending the appeal, and therefore the husband sought security for such costs.
It was central to the submissions made on behalf of the husband that if the wife’s appeal failed, a costs order in the husband’s favour would be likely to follow.
We turn now to consider the two key factors relied upon by the husband in support of his application for security, being the wife’s financial circumstances and the merits of her appeal.
The Wife’s financial circumstances
The husband’s solicitor endeavoured to establish that the wife was in a near impecunious position by comparing the value of her property, at $340,000.00, against the level of her indebtedness which was alleged to be (at its highest) as follows:
Potential Costs Order flowing from the current appeal $ 15,000.00
Potential Costs Order flowing from the Trial before Barry J
$ 10,000.00
Unpaid portion of the Judgment of Barry J $ 4,962.00
Interest due on unpaid Judgment of Barry J $ 1,776.06
Order for Costs arising from unsuccessful Local Court application
$ 750.00
Wife’s loan from her parents $ 50,000.00
Wife’s Mortgage $ 233,000.00
TOTAL $ 315,488.06
In addition, the solicitor for the husband sought to add to the above total, further costs in the order of $14,000.00, being the costs of sale which would have to be met out of the proceeds of sale of the wife’s property, should the wife default in the payment due to the husband under Barry J’s orders.
Further, in seeking to establish the wife’s near impecunious position, the husband’s solicitor relied on figures contained in an affidavit of the wife filed on 21 February 2008 in other proceedings, which showed weekly expenses of $856.32 and income of $226.29 per week, with “Irregular Income” of Newstart Allowance of $187.09 per week and “Occasional Income” from casual teaching of $288.24 per day and homestay students of $26.42 per day.
In responding to these submissions which sought to establish that she was in a near-impecunious position, the wife relied on her financial statement (sworn 19 April 2007) which had been before Barry J and which showed that her weekly expenditure did not exceed her average weekly income. She maintained before us that her position remained much the same as shown in her financial statement.
The wife also relied on material in an affidavit sworn by her on 11 January 2008, being to the effect that the sum of $4,336.00 was owed to her by the husband on account of other court proceedings; that her parents had lent her the sum of $50,000.00 which she had paid to the husband – she maintained before us that her parents did not currently require re-payment; and that she had made enquiries of a bank which had indicated that her mortgage debt could be increased.
On the basis of these various matters relied upon by the wife, we are not persuaded that she can be said to be impecunious.
But in any event it must be remembered that as has been explained in a number of decisions of the Full Court, the impecuniosity of an appellant is not the only or deciding factor in an application for security in respect of the costs of an appeal (See Jones and Jones (supra) paragraphs 21-23; Sawer & Sawer (supra) paragraphs 25-26; Rodgers & Pisani [2007] FamCA 1510, paragraphs 22-23). Rather it is one factor which must be balanced against other factors, particularly the prospects of the success of, or the merits of, the appeal, which is the matter to which we now turn.
Merits of the appeal
The wife’s notice of appeal contains eight grounds of appeal, five of which allege mistakes of fact on the part of the trial Judge, two of which are directed to the weight which his Honour had placed on certain matters, and one (Ground 7) alleges a failure to consider one of the orders made in the earlier property settlement proceedings before Bell J.
The alleged errors of fact relate to the wife’s earnings during the marriage (Ground 1), the husband’s earnings during the marriage (Ground 2), the initial contributions made by the wife (Ground 3), the wife’s earning capacity (Ground 4), and the parties’ housing expenses post separation (Ground 6).
The matters of weight which are the subject of Grounds 5 and 8 are, respectively, the arrangements for the children and the husband’s future medical expenses.
Before us the solicitor for the husband relied on written submissions which he had prepared directed to each ground of appeal and which endeavoured to establish that none of the grounds could result in the appeal being allowed.
The wife had also for the purposes of the hearing before us, prepared detailed written submissions in relation to each ground of appeal. She also relied on the pre-argument statement which she had filed on 20 August 2007 in compliance with the Family Law Rules 2004 (“the Rules”) and in which she explained each ground.
It would clearly not be appropriate in the present context of an application for security for costs of the appeal, for us to embark on a detailed consideration of the material which each party has put before us in support of, or in opposition to, each ground of appeal, with a view to determining the likely outcome of the appeal.
The relevance of this factor of the merits of the appeal in the exercise of the discretion to require security is primarily, to strengthen the case for security when the grounds are, on their face, plainly unmeritorious or where, on their face, there are no realistic prospects of success, or where it can be said that the appeal is vexatious or otherwise an abuse of process.
We could not conclude that the grounds as drafted are unmeritorious. That, it needs to be understood, is not the same as saying that the appeal enjoys good, or even reasonable, prospects of success. Rather, it is a conclusion that, on their face, the grounds are in conventional form and have been drafted with a view to establishing those matters necessary to succeed in an appeal against a discretionary judgment. They are certainly not vexatious. They are certainly not, on their face, certain to fail.
Conclusion
Before this Court can make an order for security for costs, it is required under s 117(2) of the Act to be of the “opinion that there are circumstances that justify it in doing so” (our emphasis).
The circumstances that have been relied upon on behalf of the applicant husband in this case as justifying an order for security, are the likelihood that the wife’s appeal would not succeed for lack of merit in the grounds of appeal, and the likelihood that the wife would then be unable, because of her poor financial circumstances, to meet the costs order which would be likely to be made in the husband’s favour.
For the reasons which we have earlier given, we are not persuaded that the circumstances relied upon by the husband would justify an order for security in his favour in respect of the costs of the appeal. Nor do we see any other matter which would justify the making of such an order against the wife. Accordingly, the husband’s application for security must be dismissed.
Some general observations
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.
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.
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.
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.
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.
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.
In relation to the present case, we note that the application for security was drafted on the basis that any security ordered to be paid would be paid to the respondent husband himself. Had security been ordered, the appropriate order would have been for it to be held in some form of trust or similar account or to have been paid into Court.
The need for an extension of time for the filing of the present application
In his application for security, which was filed on 4 September 2007, the husband sought that his application should be heard “despite the fact that it was not filed within 21 days of the date of service of the Notice of Appeal” (as required by Rule 22.49 of the Rules).
In an affidavit filed in support of that application the husband’s solicitor, Mr Tester, explained the reasons why that application had been filed on 4 September 2007 rather than on 31 August 2007, being the final date for filing under the Rules. In our view, the explanation provided for the delay was entirely reasonable.
Furthermore, as we did not understand the wife to raise any issue concerning the slight delay in the filing of the application, we propose to grant the husband the necessary extension of time for the filing of his application for security.
Costs of the application for security
As we foreshadowed in the context of the submissions concerning the costs of the husband’s application for security made at the conclusion of the hearing before us, we consider that the appropriate order would be that the costs of the application be reserved as costs in the appeal, but with liberty to both parties to apply should the appeal not proceed.
I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 18 November 2008
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