Jones & Jones

[2001] FamCA 460

[2001] FamCA 460

JFJONESED

FAMILY LAW ACT 1975

IN THE FULL COURT

OF THE FAMILY COURT OF AUSTRALIA

AT BRISBANE

Appeal No. NA15 of 2001
File No. BR1931 of 2000

IN THE MATTER OF:

JONES

Applicant/Husband

- and -

JONES

Respondent/Wife

EDITED REASONS FOR JUDGMENT

BEFORE:                 Ellis, Kay and Mullane JJ.
HEARD:                   28th day of May 2001
JUDGMENT:           27th day of June 2001

APPEARANCES:    Mr Cooper, Solicitor of Primrose Couper Cronin Rudkin, Solicitors, 35 – 39 Scarborough Street, Southport   QLD   4215, appeared on behalf of the applicant husband.

There was no appearance by or on behalf of the respondent wife.

Catchwords:  FAMILY LAW - application for security for costs of appeal - factors to be taken into account when determining an application for security for costs - impecunious litigant.

This was an application by the husband seeking that the appellant wife provide security in the sum of $5000 relating to her appeal filed 13 March 2001 in which she appealed against the dismissal of her application for spousal maintenance and an order for costs.

The wife sought that the husband’s application for security be dismissed and that her appeal proceed by way of video link.  The husband did not object to the appeal being so heard.

The parties have litigated in the Court over the past 12 years.  At the time of the hearing, the wife was indebted to the husband in the sum of $22,695.87, being taxed costs, which the wife claimed she has no funds to pay.  The husband, at the date of hearing, had debts totalling approximately $185,000 and no assets of any value.

The wife did not appear at the hearing.

Held, in allowing the application and ordering security for costs in the sum of $3000:-

1. 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.  Cowell v Taylor (1885) 31 Ch. D. 34 at 38, J. & M. O'Brien Enterprises Pty Ltd v The Shell Co. of Australia Ltd (No. 2) (1973) 70 FLR 261 at 264, Ciappina v Ciappina (1983) 70 FLR 287 at 290 and Paton v Campbell Capital Limited (unreported, Federal Court of Australia,

   
   

   1 July 1993) cited.

1. The fact that the wife is impecunious is 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.

1. If an appeal appears to have little merit, a court may be more disposed to make an order for security for costs.  In this case, the Court was unable to conclude that the appeal is without real merit or that it has no prospects of success, although it could not be said that the appeal raises matters of public importance.

1. Having regard to all the circumstances, including the matters referred to in s.117(2A), the Court considered it appropriate to exercise the discretion in favour of the husband and order the wife to give security for the costs of the appeal within one month of the date of order.  Further, the wife’s appeal should be dismissed in the event that she does not provide that security within that period.

1. Although the husband sought $5000 by way of security, there was no skeleton bill of costs provided and the Court was of the view that the costs should be fixed in such sum as the Court considered just in all the circumstances.

Per:  Ellis and Mullane JJ.

The circumstances justified the making of an order for costs in favour of the husband.  The wife was ordered to pay his costs of and incidental to the application fixed in the sum of $500.

Per:  Kay J.

The cost issues should be determined after the outcome of the appeal is known.  If the appeal succeeds and no order for costs is made in favour of the husband, the process with respect to the granting of security will have been a wasteful one.  It is appropriate to fix the costs in the sum of $500 but defer the determination of the question of payment until the outcome of the appeal.

Reportable.

INTRODUCTION

1. ELLIS & MULLANE JJ:    By an application filed in this Court on 9 May 2001, consequent upon the decision of the Court in Finlayson and Finlayson and Gillam (2001) FLC 93-068, the husband sought the following orders:-

“1.That the Respondent/Appellant, CDJ, provide by way of security for the Applicant’s costs of her Appeal the sum of $5,000.00 to be deposited by way of cleared funds to the Trust Account of Primrose Couper Cronin Rudkin, Solicitors pending the completion of the Wife’s Appeal.

2.That until such time as the Wife deposits the said amount the Wife be restrained from proceeding further with her Appeal filed on the 13^th day of March, 2001.

3.       That the Wife pay the Husband’s costs of and incidental to this Application.

4.       Such further or other Orders as the Court may deem meet.”

1. On 24 May 2001, the wife filed an application in which she sought the following orders:-

“1.      That the Form 42A of the husband filed the 9^th of May, 2001 be dismissed.

2.That the Appeal of the wife CDJ in proceedings 15/01 in this Honourable Court proceed by way of video link.

3.       That the husband pay the wife’s costs of and incidental to this Application.

4.       Such further and other Orders as this Court deems appropriate.”

1. The wife did not appear on the hearing of this matter as she did not have funds available to pay for representation or to enable her to travel from Camberwell to Brisbane to appear before the Court herself.  However, the solicitors acting on her behalf on a pro bono basis prepared necessary material and advised that at the hearing, she wished to rely upon the following material:-

1.        Form 42A Application filed 24 May 2001.

2.        Affidavit of the wife filed 24 May 2001.

3.        Affidavit of Paul Damian Cahill filed 24 May 2001.

4.        Supplementary Affidavit of Paul Damian Cahill filed 25 May 2001.

5.        Affidavit of Nicholas Prassinos filed 25 May 2001.

1. Mr Cooper, Solicitor, who appeared for the husband before us, raised no objection to us reading the material on which the wife the wife relied.  In addition, he informed us that the husband did not object to the wife’s appeal being heard by the Court by way of video link.

1. He further informed us that, in support of his application for security for costs, the husband relied upon the following material:-

1.        Form 42A Application filed 9 May 2001.

2.        Affidavit of Charles Allan Cooper filed 9 May 2001.

3.        Affidavit of David Wallace Mitchell filed 9 May 2001.

BACKGROUND

1. The parties have been involved in ongoing litigation in the Court since 1989.  We do not propose reviewing the numerous applications and orders made since then but note that on 24 May 2000, an application of the wife to vary an order for maintenance relating to the daughter of the parties made by Fogarty J. on 5 February 1996 came before Registrar Dittman. 

1. On 18 August 2000, Registrar Dittman made the following orders:-

“(1)That paragraphs 1 and 3 of the maintenance orders made in the Family Court of Australia at Melbourne on 5^th February 1996 be discharged.

(2)That the Applicant FATHER, APJ pay pursuant to S66L of the Family Law Act for the maintenance of the child V born 18^th August 1977 the sum of $217-00 per calendar month, the order to date from today with the first payment to be made within 7 days.

(3)That the maintenance payments pursuant to this Order be made to a bank account owned, controlled and nominated by the said V.

(4)      That paragraphs 2 and 3 of this Order

(a)       be discharged as at 18^th December 2001

(b)be suspended should the said V cease undertaking her Bachelor of Commerce studies for any reason.”

1. On 9 November 2000, he ordered that the wife pay the husband’s costs of and incidental to the proceedings.

1. Subsequently, the wife filed Applications for Review of the orders made by the Registrar on both 18 August and 9 November 2000. 

1. That Review, together with an application of the wife relating to spousal maintenance, came before Barry J. who, on 12 February 2001, made the following orders:-

“1.That the Order of Justice Fogarty made 5 February 1996 be discharged as of 18 August 2000.

2.That the Order of Registrar Dittman made 18 August 2000 be discharged as of today’s date.

3.That Order 1 of the Orders of Registrar Harold made on 6 October 2000 is discharged.

4.That the application to review the Order for Costs made by Registrar Dittman be dismissed.

5.That the First Respondent’s [the wife’s] application for spousal maintenance be dismissed.

6.That the Applicant file written submissions in relation to costs withint (sic) seven days of the date hereof, the First and Second Respondents to respond in writing to such submissions within seven days thereafter.”

1. On 13 March 2001, the wife filed a Notice of Appeal against Orders 4 and 5 made by Barry J.  In that Notice, she set out the orders sought in place of those appealed from as:-

“1.That the Order of Registrar Dittman made 9 November 2000 in relation to the question of costs be discharged.

2.That the husband pay for the maintenance of the wife CDJ the sum of $400.00 per week.”

1. The grounds of appeal appearing in the Notice are:-

“1.The Learned Trial Judge erred, and his finding was against the evidence and the weight of the evidence, in finding that the income of the husband had diminished.

2.The Learned Trial Judge erred in the circumstances where he had considerable doubt as to the husband’s income in:-

(a)failing to find that the husband had not properly disclosed his income and financial affairs;

(b)       failing to apply the principles of authorities of this Court in

“1993 Flc 92-338”
Weir  and

“1992 Flc 92-287”
Black and Kellner

3.The Learned Trial Judge erred in failing to accept the contention of the wife’s counsel that the husband’s income actually earnt in fact included the amount paid to the husband’s present wife.

4.       The Learned Trial Judge erred:-

(a)       in failing to take into account the earning capacity of the husband;

(b)Accepting the reasons of Registrar Dittman when the hearing was a hearing De Novo.

5.The Learned Trial Judge erred, and his finding was against the evidence and the weight of the evidence, in failing to find that the wife had failed to make proper efforts to either complete the eduction or to obtain paid employment.

6.       The Learned Trial Judge erred in finding:-

(a)that the wife could obtain a menial position sufficient to support herself;

(b)That the wife, in all the circumstances, should take a menial position to support herself.

7.       The Learned Trial Judge erred in failing to take into account:-

(a)       the length of the marriage;

(b)       the primary occupation of the wife as homemaker and parent.

(c)the impact of the marriage and the wife’s responsibilities of homemaker and parent of the wife’s earning capacities and ability to support herself;

(d)The standard of living enjoyed during the marriage and of the husband since separation.  Regarding the Costs Orders of Registrar Dittman.

8.The Learned Trial Judge erred when he dismissed the appeal as to Costs Orders of the hearing before Registrar Dittman.”

1. The husband’s costs ordered by Registrar Dittman were taxed and allowed in the sum of $20,653.70.  In addition, the wife is indebted to the husband in the sum of $2,042.17 being costs taxed consequent upon an order made on 17 August 1998 in the Federal Court of Australia.  Those taxed costs total $22,695.87, none of which has been paid by the wife who deposes that she has no funds to do so.  On 10 February 1995, the husband’s costs of that day in proceedings before Brown J. were reserved. 

1. As a consequence of the ongoing litigation between the parties, the husband is indebted to his solicitors in the sum of $82,244.45 for legal fees.  He is indebted to his son in the sum of $8,664.53 under a costs order and to the Australian Taxation Office in the sum of $94,653.00.  His solicitor has deposed that the husband has no assets of any value. 

1. In relation to her financial position, the wife deposed in her affidavit as follows:-

“4.That I say that my financial position is extremely poor.  I presently receive a widows allowance of approximately $300.00 per fortnight.  In addition I am able to obtain some casual tellemarketing work which provides me an average income of approximately $100.00 per week.  Because this is casual work there are some periods of time when I receive no work at all.  If I were to receive a full widows allowance I would be receiving the maximum allowance of approximately $440.00 per week.

5.       That I have no assets of significance.  I reside in rental accommodation.

6.That I have no funds from which to make payment of any Order for security for costs.  An Order in the terms sought by my husband will effectively mean that I cannot proceed with my Appeal.

7.That I have no funds from which to make payment of Solicitors or Counsel’s costs.  I am not eligible for Legal Aid having reached the statutory funding cap.”

1. In a letter dated 29 March 2001 from the husband’s solicitors to the solicitors for the wife, they sought that the wife pay into their trust account the sum of $5000 as security to cover the husband’s anticipated costs of the appeal.  On 23 April 2001, the wife’s solicitors advised that the wife would not be able to make any payment by way of security for costs.

RELEVANT STATUTORY PROVISIONS

1. Section 117(2) of the Act provides:-

“If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsection (2A) 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.”

whilst sub-section (2A) provides:-

“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, in accordance with section 117C or otherwise, 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.”

DISCUSSION

1. In Luadaka v Luadaka (1998) FLC 92-830, the Court, whilst noting the unfettered nature of the discretion to order security for costs, considered matters which may be relevant in such an application by a respondent to an application at first instance.

1. At 85,507, the Court said:-

“61.In our opinion, when dealing with an application for security for costs the general rule provided for in s 117(1) applies, namely that subject to s 117(2) each party to proceedings shall bear his or her own costs.  However, if the court is satisfied that there are circumstances that would justify an order then the court may, subject to s 117(2A), make such order for security for costs as the court considers just. It is not necessary to establish that there are special circumstances.  However, it is necessary to establish that there are justifying circumstances.  The decision to order security for costs is discretionary, both as to whether to order security, and as to the amount to be secured.

62.The purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.  In considering whether or not to make an order, apart from those referred to in s.117(2A), matters which may be relevant include the following:

62.1It may be relevant to take into account the means of an applicant to satisfy an order for costs if he or she is unsuccessful.  Ordinarily the means of the applicant is not alone sufficient to justify an order for costs because of the rule that poverty should be no bar to justice.  This is reinforced by s.117 (1).  However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order.  Financial weakness may be relevant, for example, if the applicant is a company. In relation to the means of the respondent, who is the applicant for security, it was held by Goldstein J in Alexander and Alexander (supra) and Gee J in B and B (supra) that the question is whether or not the respondent is able to pay his or her costs.  Section 117(2A)(a) requires consideration of the financial circumstances of both parties.  However, we do not accept that it will only be in cases where the applicant for security does not have the means to meet his or her costs that an order would be made.  In appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.

62.2The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd (supra).  However, ordinarily the court will not undertake a detailed assessment of the likelihood of the applicant’s success unless it can be demonstrated that there is a high probability of success or failure:  Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420 ; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR ¶40-972.  This is because of the lack of material at the time the application is dealt with.  However, such an assessment may be possible in circumstances where, as in this case, affidavits have been filed in which the case sought to be made out is set out.

62.3It is a relevant consideration whether the applicant’s claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham: Parkinson & Co Ltd v Triplan Pty Ltd (supra); Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133; J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790.

62.4It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation.  In Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Byrne J said at 306:

“A factor in deciding whether security should be required is that the order may well mean that the action cannot proceed.  That prospect does not require refusal of the application but it is often a significant matter.”

See also Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 and Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480.

62.5It may be relevant to consider whether or not the litigation may involve a matter of public importance:  Equity Access Ltd v Westpac Banking Corporation (supra); Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248.  In Quick on Costs at [4.9440] it is said that this will militate against the making of an order.

62.6It may be relevant to consider whether or not there has been delay in bringing the application.  An application may be refused if there is delay in making the application and prejudice is caused to the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164 .

62.7Other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.

63.We do not suggest that the above matters are exhaustive of what may be taken into account.  However, such matters may be relevant to the exercise of discretion.”

1. 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.

1. 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 Enterpreises Pty Ltd v The 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 Limited (unreported, Federal Court of Australia, 1 July 1993).

1. 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.

1. If an appeal appears to have little merit, a court may be more disposed to make an order for security for costs.  Whilst we have not had the benefit of submissions on behalf of the wife, the appeal does not appear to raise matters of principle.

1. The solicitor for the husband in the written submissions, dealing with the “Prospects of success of the Application” said:-

“The wife seeks to appeal an order of Justice Barry in which he dismissed her spousal maintenance application on his findings of fact that:

(a)She had not attempted to obtain employment or complete her education in the four years given to her under the previous order, which had a clear “sunset” clause in it as referred to by the initial Trial Judge, Justice Graham, and by Justice Kay in the Court of Appeal; and

(b)That the husband’s financial circumstances had significantly deteriorated.

These were both findings of fact made by His Honour after hearing cross-examination of both parties.

In her grounds of appeal filed on the 13^th March, 2001, the last possible day for filing, the wife attacked the Trial Judge’s findings in respect of the credibility of the husband, the wife and the husband’s employer’s representative, Jill Trounce, a witness whom His Honour observed and said he was impressed with and had no hesitation in accepting her testimony (paragraph 45 of the Reasons for Judgment), notwithstanding the fact that His Honour had the opportunity of observing the witnesses giving their evidence and be cross examined. 

In respect of the wife’s appeal against His Honour’s dismissal of the appeal as to the Costs Order paid before Registrar Ditman (sic), the wife offers no ground except that he erred when he dismissed the appeal.”

1. However, we are unable to conclude that the appeal is without real merit or that it has no prospects of success, although it could not be said that the appeal raises matters of public importance.

1. The husband filed his application before the date fixed for settling the appeal book index, within two months of the wife filing the appeal and following a letter to her solicitors seeking agreement to her providing security for costs, three days after the service of her Notice of Appeal.

1. In addition to the matters to which we have earlier referred, we have taken into account that neither party is in receipt of a grant of legal aid and that no submissions have been made as to the relevance of paragraphs (d) and (f) of s.117(2A).

1. Having regard to all the matters to which we have referred, we have concluded that it is appropriate to exercise the discretion in favour of the husband and order the wife to give security for the costs of the appeal.  We are further of the view that, in the circumstances of this case, we should order that the wife’s appeal be dismissed in the event that she does not provide that security. 

1. We now turn to consider the question of the amount in which security should be given.  In determining that question, we have regard to the amount of the costs likely to be incurred by the husband, although as Fullagar J. said in Brundza v Robbie & Co (No. 2) (1952) 88 CLR 171 at 175:-

“… in ordering security for costs, the Court does not set out to give a complete and certain indemnity to a respondent:  see Aberdare & Plymouth Co. v. Hankey [(1888) 32 S. J. 644].  It is not, of course, to be assumed that the appellant will fail.”

1. The husband has sought $5000 by way of security.  However, no skeleton bill of costs was provided and we are left to form our own view of what the husband’s costs are likely to be based on such knowledge as we have of the issues disclosed in the material before us.  We are of the view that we should fix such sum as we think just in all the circumstances.  On that basis, we would fix the security in the sum of $3000.  That security should, however, be in a form acceptable to the Registry Manager, Brisbane Registry of Court.

COSTS OF APPLICATION

1. At the completion of the hearing, Mr Cooper, on behalf of the husband, sought, if the application was successful, an order that the wife pay the husband’s costs of and incidental to the application in the sum of $500 and that those costs be paid prior to the wife’s appeal being heard.

1. The wife was on notice that the husband sought an order that she pay the costs of and incidental to the application.

1. Having regard to the matters set out in s.117(2A), we are of the view that the circumstances justify the making of an order for costs which we assess in the sum of $500.  Those costs should be paid within three months of the date hereof.

1. KAY J:          I have read the joint judgment of Ellis and Mullane JJ.  Save for the order as to the costs of this application, I agree with the reasons given and the orders proposed.

1. In my view, the issue as to whether or not an order should be made in respect of this application ought properly be determined after the outcome of the appeal is known.  If the appeal succeeds and no order for costs is made in favour of the applicant, then the process with respect to the granting of security of costs will have been a wasteful one.

1. I would propose that we fix the sum of costs incurred by the applicant in the sum sought, namely $500, and that we defer the determination of the question of payment of such costs until the outcome of the appeal.  In the event that the appeal is dismissed or deemed to be abandoned by the failure of the wife to meet the obligations to provide security, then as part of that dismissal or abandonment the costs abandonment the costs should then become payable.

ORDERS

1. The orders of the Court are:-

1.That unless the wife, within one month of the date of this order, provides security for the husband’s costs of the appeal in the sum of $3000 in a form acceptable to the Registry Manager of the Brisbane Registry of the Court, the appeal stand dismissed.

2.        That the appeal of the wife proceed by way of video link.

3.That the wife pay the husband’s costs of and incidental to the application assessed in the sum of $500;  such costs to be paid by the wife to the solicitors for the husband within three months of the date of this order.

I certify that the preceding 37 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.



Associate