Keene and Scofield - [2012] FMCAfam 28

FEDERAL MAGISTRATES COURT OF AUSTRALIA

KEENE & SCOFIELD

[2012] FMCAfam 28

FAMILY LAW – Costs – application for security for costs pending trial – matters to be considered – what is just – application for injunction prior to trial – balance of convenience – de facto property proceedings – proceeding set for trial in respect of issue as to the existence of such a relationship between the parties – impossible to assess parties’ respective chances of success at interim stage.

Family Law Act 1975, ss.4A(1); 90RD(1); 90SM; 114(3); 117(1); 117(2)
Family Law Rules, r.19.05
Federal Magistrates Court Rules, r.1.05(2)
The Commonwealth Powers (Defacto Relationship) Act 2009 (South Australia)

Luadaka & Luadaka (1998) FLC 92-830
Jones & Jones (2001) FLC 93-080
Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 6 FCR 497
Brown & Brown; Eley & Henty (Intervenors) (1991) FLC 92-265
Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 770

Applicant:

MR KEENE

Respondent:

MS SCOFIELD

File Number:

ADC 983 of 2011

Judgment of:

Brown FM

Hearing date:

19 December 2011

Date of Last Submission:

19 December 2011

Delivered at:

Adelaide

Delivered on:

13 January 2012

REPRESENTATION

Counsel for the Applicant:

Mr Berman SC

Solicitors for the Applicant:

Angela Ferdinandy

Counsel for the Respondent:

Mr McGinn

Solicitors for the Respondent:

Howe Martin & Associates

ORDERS

UNTIL FURTHER OR OTHER ORDER

The applicant be restrained and an injunction issued restraining him from further mortgaging, encumbering, charging, borrowing money on the security of, or in any other way dealing with the following properties:
(a)[1] Property D being the whole of the land comprised and described in Certificate of Title Register Book Volume [omitted]; and
(b)Units [numbers omitted] at Property M being the whole of the land comprised and described in Certificates of Title Register Book Volume [omitted].
The interim application filed 1 November 2011 and the response filed 30 November 2011 other than Mr Keene’s application for the delivery of items of property to him are dismissed.
Order 2 of Mr Keene’s response filed 30 November 2011 is adjourned to 1 March 2012 for further hearing.
The costs of these proceedings are reserved to the conclusion of the trial scheduled for 1 & 2 March 2012.
The final hearing before Federal Magistrate Brown on 1 & 2 March 2012 at 10.00am is confirmed.
The applicant file and serve all affidavit evidence he proposes to rely on at trial on or before close of Registry filing on 2 February 2012.
The respondent file and serve all affidavit evidence she proposes to rely on at trial on or before close of Registry filing on 16 February 2012.
That on or before 2 February 2012 the applicant do pay the setting down fee or file an exemption certificate in respect thereof.
The applicant pay such daily hearing fee as required pursuant to the Federal Magistrates Regulations 2000.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT ADELAIDE

ADC 983 of 2011

MR KEENE

Applicant

And

MS SCOFIELD

Respondent

REASONS FOR JUDGMENT

Introduction

This is an application for security of costs brought by Ms Scofield against Mr Keene. She also seeks an injunction restraining him from dealing with a number of items of real property pending trial of the action between the parties. Mr Keene seeks the dismissal of both applications.
The substantive proceedings in this matter relate to an application brought by Mr Keene. He asserts that he and Ms Scofield were involved in a de-facto relationship, as defined by section 4A(1) of the Family Law Act 1975, between late June 2004 and November 2010.
During this period, Ms Scofield lived at [2] Property D. From September of 2006 onwards, Mr Keene owned the adjoining property situated at [1] Property D. The parties continue to be neighbours.
By way of his amended application filed 20 May 2011, Mr Keene seeks a declaration pursuant to section 90RD(1) of the Act that a de facto relationship existed between him and Ms Scofield.
As a consequence of such a declaration, he seeks further orders from the court, which would result in the alteration of property interests between him and Ms Scofield pursuant to the provisions of section 90SM of the Act. These orders relate primarily to the property located at [1] Property D, particularly a second mortgage registered on the title of that property in Ms Scofield’s favour.
Specifically Mr Keene seeks an order that a debt in the sum of $114,892.77, said to be owed by him to Ms Scofield, be either set aside or that he be adjudged to be entitled to retain the sum in question as his part of an appropriate settlement of the de facto property proceedings arising between the parties.
Ms Scofield denies that any de facto relationship has ever existed between her and Mr Keene. At the most, she asserts that there was a “casual boyfriend-girlfriend type relationship” between the parties from 2004 until 2006. During this period, she says the two operated separate households and maintained distinct finances. It is her case that the relationship ended when she was diagnosed with [medical condition omitted], which required surgery.
Mr Keene purchased [1] Property D in September 2006. Ms Scofield has deposed that she lent Mr Keene the necessary deposit of $114,892.77 to purchase the property. There is a second mortgage, in her favour, in this sum, registered on the property. The mortgage was registered in April 2008.
It is Mr Keene’s position that the purchase of the property in question was a joint venture between the parties, arising from the de facto relationship between them. In these circumstances, he seeks orders which would confirm his ownership of the property free from any liability to Ms Scofield, given that he asserts he has paid mortgage payments due on the property and made other financial contributions, which have benefitted Ms Scofield.
Ms Scofield is the parent of two children. They are [X] born [in] 1993 and [Y] born [in] 1999. The father of the two children is Mr S.

Ms Scofield has been divorced from Mr S for a considerable period of time. [X] and [Y] live with her.
Initially, Mr Keene began proceedings in this court on 16 March 2011 seeking to spend time with [X] and [Y]. It was his position that he was the stepfather of the two children concerned and had a significant level of relationship with them.
This was not Ms Scofield’s view. To the contrary, it was her position that neither child has any affection for Mr Keene. In those circumstances, she opposed any formal order being made, which would require [X] or [Y] to spend time with Mr Keene.
On 30 August 2011, Mr Keene, Mr S, Ms Scofield and [Y] attended a child dispute conference with Mr P, a family consultant. In interview with Mr P, [Y] indicated that he did not wish to spend time with

Mr Keene. At the time of this conference, [X] was almost eighteen years of age. In such circumstances, there was no utility in any attempt being made to canvas her views.
Against this background, on 6 September 2011, Mr Keene elected to abandon his application in respect of spending time with [X] and [Y]. However, the de facto property proceedings remained on foot. Needless to say, it is Ms Scofield’s position that this application should be dismissed and Mr Keene pay her costs.
In addition, she seeks an injunction which would restrain Mr Keene from approaching her or either of her children. She asserts that

Mr Keene is mentally unstable and is stalking her.
On 31 May 2011, Ms Scofield applied to the South Australian Police for a summary protection order against Mr Keene. Such an order was made by the Adelaide Magistrates Court on 2 June 2011 in the absence of Mr Keene.
On 9 May 2011, solicitors instructed by Ms Scofield wrote to

Mr Keene demanding payment in the sum of $149,368.39. It was alleged that this was the sum due to Ms Scofield pursuant to the mortgage secured against [1] Property D. It being her position that

Mr Keene had never made any repayments of either principal or interest arising as a result of the mortgage since its execution in April of 2008. The solicitors concerned indicated that they had instructions to issue immediate proceedings to recover this sum in the event repayment was not made.
It has subsequently been agreed between the parties that Ms Scofield will forebear from bringing such proceedings until such time as the issues arising between the parties, pursuant to the provisions of the Family Law Act 1975, have been resolved in this court. To this end, the parties competing applications have been fixed for trial before me on 1 & 2 March 2012.
In order to reduce costs it has been determined that this trial should be concerned only with the issue as to whether or not there was a de facto relationship between the parties, within the terms envisioned by the relevant provisions of the Family Law Act 1975. If it is ultimately found that there was such a relationship, it will be necessary for there to be a subsequent trial regarding what, if any, should be the orders altering the parties’ property interests, particularly in respect of the mortgage secured against [1] Property D.
As this brief summary indicates, the respective positions of the parties are polarised in the extreme. There are few, if any, matter agreed between them. Underlying Ms Scofield’s application for security of costs is her conviction that Mr Keene’s case is either misconceived or is improperly motivated. She portrays herself as a vulnerable person by reason of her serious illness in 2006, from which she continues to recover and her limited financial means.
Prior to trial, in the absence of any extended examination of the available evidence, through the process of cross examination, it is not possible for the court to make any findings of fact. In addition, it may be the case that the parties will call other witnesses, who have not as yet provided affidavits, to corroborate their respective accounts of events. Finally, there may be many documents, which I have not as yet examined, which are relevant to the nature of the parties’ relationship together.
The parties’ positions can be summarised as follows. Ms Scofield asserts:
·The parties never lived together;
·Mr Keene never had a key to her house or stayed over in it for extended periods of time;
·She did not pay any expenses arising from [1] Property D;
·Mr Keene did not pay any expenses relating to [2] Property D, particularly the mortgage or rates;
·Mr Keene did not improve or maintain [2] Property D;
·The parties never held any joint bank accounts or credit cards and kept their finances separate;
·The parties were never engaged to be married;
·Whatever relationship existed between the parties ended on 1 June 2010, when Mr Keene attempted to run over her and the children with his motor vehicle;[1]
·Mr Keene is obsessively stalking her, which has had serious implications for her health and wellbeing;
·The current proceedings are a part of this process of stalking and intimidation and indicative that Mr Keene has a tenuous grip on reality;
·She lent Mr Keene the sum of $114,892.77, in order to allow him to purchase [1] Property D, in September of 2006, “against her better judgment” and with the expectation that he would repay her, when he was able to do so;
·When Mr Keene failed to make any repayments to her and as she became increasingly concerned that the loan was unsecured, she prevailed upon Mr Keene to execute a second mortgage, in her favour, in respect of the property concerned;
·Pursuant to this mortgage, Mr Keene was to pay her interest on the principle at the rate of 6.5% per annum;
·She has not received any such interest payments, which were due monthly. Accordingly, she is currently owed the sum of $149,368.39 by Mr Keene.
[1] The Commonwealth Powers (Defacto Relationship) Act 2009 (South Australia), pursuant to which South Australia referred authority to make laws relating to the breakdown of de facto relationships within that State to the Commonwealth, was assented to in December 2009 and was gazetted to commence on 1 July 2010. Accordingly, if the court determines there was a de facto relationship between the parties but that it broke down prior to the commencement of the applicable South Australian legislation, this court will not have jurisdiction to deal with Mr Keene’s application for the alteration of property interests between him and Ms Scofield.
Mr Keene asserts as follows:
·He paid significant sums of money towards the living expenses of Ms Scofield and her children;
·He proposed to Ms Scofield and was accepted in October of 2007. As a result, the parties exchanged rings;
·The parties lived together at [2] Property D from October 2006 onwards;
·[1] Property D was purchased as a joint enterprise with the intention of it and number [2] being demolished so that a large family home could be constructed;
·An architect was engaged by the parties to prepare plans to this effect;
·The parties had a close personal and sexual relationship together;
·He has extensive financial records, including receipts, which evidence his financial contributions towards Ms Scofield and her children;
·He has maintained Ms Scofield’s house and garden, which has increased the value of [2] Property D;
·The purchase of [1] Property D was a joint project. As such, it was the parties intention that the property would be jointly owned with Ms Scofield contributing the initial deposit and Mr Keene paying the necessary recurrent mortgage repayments;
·The second mortgage, in Ms Scofield’s favour, was registered in April of 2008, only as a device to protect the property from potential creditors of Mr Keene, who is a self employed [occupation omitted];
·The parties did separate on 1 June 2010. The reason for the separation was that Mr Keene accidentally backed his motor vehicle onto the wife and children. However, the parties soon mended their relationship;
·When purchased, [1] Property D was in an extremely rundown state and was not suitable for occupation. As a result, he lived at number [2] and the fence between the two properties was demolished.

The current application

On 1 November 2011, Ms Scofield filed an application for security for her costs from Mr Keene. The sum she seeks is $25,000.00 plus GST. In addition she seeks orders in the nature of an injunction that

Mr Keene be restrained from dealing with the property situated at [1] Property D and four other units owned by him, which are located at Property M.
Mr Keene responded to this application on 30 November 2011. He seeks the dismissal of Ms Scofield’s application. In addition, he seeks the return to him of a number of items, which he asserts belong to him. These items include the keys to [1] Property D and an engagement ring.
In support of her application, Ms Scofield relies on the following documents:
i)An Affidavit of her solicitor Gregory Howe filed 1 November 2011;
ii)A statement of her financial circumstances filed 25 November 2011.
Mr Keene relies on the following documents:
i)An Affidavit of himself filed 30 November 2011;
ii)A statement of financial circumstances filed 25 November 2011.

The legal principles applicable

The general rule is that parties in family law proceedings are to bear their own costs [section 117(1)]. However, pursuant to section 117(2) of the Family Law Act 1975, if the court is of the opinion that there are sufficient circumstances to justify it, it may make an order for security of costs, if it considers such an order just.
An order for security of costs is a discretionary order. However, the exercise of the discretion is subject to the matters set out in section 117(2A) and any applicable rules of court. Pursuant to section 117(2A) the court is directed to have regard to the following matters:
·The financial circumstances of each of the parties to the proceedings;
·Whether any party to the proceedings is in receipt of legal aid;
·The conduct of the parties to the proceedings;
·Whether the proceedings were necessitated by the failure of a party to comply with previous court orders;
·Whether a party to the proceedings has been wholly unsuccessful in the proceedings;
·The terms of any written offer to settle;
·Any other relevant matters.
Rule 19.05 of the Family Law Rules is also applicable to applications for security for costs.[2] Pursuant to sub-rule (2) in deciding whether to make an order for security of costs, the court may consider any of the following matters:
[2] Pursuant to Rule 1.05(2) of the Federal Magistrates Court Rules the Federal Magistrates Court is authorised to apply the Family Law Rules if the Court’s own rules are insufficient. Given the provisions of section 117(2) of the Family Law Act it is clearly appropriate for the court to have regard to the Family Law Rules in dealing with any application for security of costs.
·The applicant’s financial means;
·The prospects of success or merits of the application;
·The genuineness of the application;
·Whether the applicant’s lack of financial means was caused by the respondent’s conduct;
·Whether an order for security of costs would be oppressive or would stifle the case;
·Whether the case involves a matter of public importance;
·Whether a party has an order for costs against the other party, which remains unpaid;
·Whether the applicant ordinarily resides outside of Australia;
·The likely costs of the case;
·Whether the applicant is a corporation;
·Whether a party is receiving legal aid.
In Luadaka & Luadaka [3] the Full Court said as follows:
“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.”
[3] See Luadaka & Luadaka (1998) FLC 92-830 at 85,507
In Luadaka the Full Court directed that in determining whether or not to make an order for security of costs, the court might consider the prospects of success of the party for whom security was sought in the substantive proceedings. However, in this context, it was noted:
“…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 … 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.”
It is a well settled principle that the poverty alone of a party to proceedings is not a sufficient reason to justify an order for security for costs.[4] Security for costs can work unfairly on a plaintiff who has a good cause of action but scant finances.
[4] See Jones & Jones (2001) FLC 93-080 at 83,377
In this particular case, Ms Scofield seeks security for costs in an amount of $25,000.00. This sum is calculated to include costs already incurred by her in the proceedings to date. In Bryan E Fencott Pty Ltd v Eretta Pty Ltd [5] French J (as he then was) indicated that security may extend not only to future costs but also to costs already incurred. However, in fixing the amount of the security, the court must look to the whole of the case. In so doing the court should order what it thinks is a fair amount for security.
[5] See Bryan E Fencott Pty Ltd v Eretta Pty Ltd (1987) 6 FCR 497 at 515

Pursuant to section 114(3) of the Family Law Act 1975 the court may grant an injunction, in any case, “in which it appears to the court to be just or convenient to do so …” In this particular case, Ms Scofield seeks injunctions to preserve the parties asset pool determination of the substantive proceedings.

Ms Scofield’s case

Ms Scofield is a [occupation omitted], who is employed on a part-time basis by [omitted]. Her weekly income is $380.00. Her major asset is [2] Property D, which she values at $550,000.00. It is subject to an unregistered mortgage, in favour of her mother, in the sum of $460,000.00.
It is Ms Scofield’s case that her health precludes her from full-time employment. It is also uncontroversial that she has a significant level of financial responsibility in respect of [X] and [Y]. I accept that

Ms Scofield cannot be described as being in a strong financial position.
Mr Howe deposes that, to date, Ms Scofield has incurred legal fees in an amount of $13,168.39. She has paid $17,000.00 into Mr Howe’s trust account on account of these fees. All of this sum has been borrowed from relatives.
Mr Howe estimates that he has performed work, as yet unbilled, in this matter, to a value of $4,000.00 and estimates the costs of preparing for the March hearing to be $6,000.00. Counsel’s fees are estimated to be $7,500.00 for the trial. It is Mr Howe’s evidence that his client will borrow further moneys to fund her representation at the hearing.
Mr Howe estimates that approximately half of Ms Scofield’s costs incurred to date have related to Mr Keene’s application to spend time with [X] and [Y], which aspect of the case has been totally unsuccessful from his (Mr Keene’s) perspective, given the dismissal of his application in this respect.
Ms Scofield’s position is that she will be successful in her application to have the remainder of Mr Keene’s application dismissed. In these circumstances, she will seek reimbursement of her costs in the sum of $25,000.00. She and Mr Howe have examined Mr Keene’s disclosed financial circumstances and, as a result, have grave concerns that

Mr Keene will be able to satisfy such an order.
This is the rationale for Ms Scofield’s application for security for costs. In addition, she is concerned at the possibility Mr Keene may further encumber the various pieces of real property owned by him, which will further hamper her prospects of successfully recovering any award of costs made in her favour.
Mr Howe has described the nature of his client’s financial circumstances as “precarious”. In these circumstances, he has written to the solicitors for Mr Keene seeking an undertaking from him that he will not further encumber either [1] Property D or any of the four units located at Property M. Mr Howe has deposed that no such undertaking has been provided.
Mr Howe has also written to Mr Keene’s solicitors seeking details of their client’s costs to date and in future and requesting information as to whether those costs have been paid and, if not, how it is anticipated they will be paid. Information has also been sought as to whether monies have been provided on account of costs.
There has been no substantive response to this letter, which has added to Ms Scofield’s sense of disquiet about the proceedings. She fears that she will potentially be put to an expense which she can ill afford and will be unable to recoup this expense from Mr Keene.

Mr Keene’s case

Mr Keene is a self-employed [occupation omitted]. He operates a company known as [T] Pty Ltd. He estimates his personal weekly income received from [T] to be $238.00.
Mr Keene estimates his weekly personal expenditure as being slightly in excess of $3,000.00. The major component of this expenditure relates to the payment of the mortgage instalments on both [1] Property D and the Property M units. As such there is what can only be described as a major disconnect between his income and his expenses.
Mr Keene estimates the value of [1] Property D as being $550,000.00. It is subject to a first mortgage of $480,000.00, leaving an equity of $70,000.00, putting aside the issue of the contested second mortgage liability to Ms Scofield.
The four units at Property M are estimated to be valued at $1,200,000.00 by Mr Keene. Mortgages to a value of $950,000.00 are secured against these properties, leaving equity of $250,000.00.
Mr Keene, through the agency of [T], owns a number of motor vehicles. These include a transit van worth $10,000.00 and a truck also worth $10,000.00. In addition, he owns a Toyota Landcruiser worth $75,000.00, which is subject to a significant finance liability.
Given his equity in the Property M units and [1] Property D, it is

Mr Keene’s position that he has sufficient assets to meet any costs order made against him, in the event he is unsuccessful in the substantive application, particularly as the maximum amount of costs foreshadowed is in the vicinity of $25,000.00.
However, Mr Keene argues that Ms Scofield’s application for security is oppressive in the sense that it is calculated to stifle his legitimately brought application for de facto property settlement. The rationale for this assertion is that he seeks the payment of moneys from Ms Scofield rather than vice versa.
As such, in order to satisfy any order for security of costs, it is likely to be necessary for him to liquidate some item of property, given his current lack of liquidity. It is the submission of counsel for Mr Keene, that such an outcome would be both unfair to Mr Keene and grossly prejudicial.
In all these circumstances, it is submitted that it would not be just to make an order for security for costs against Mr Keene, when the amount sought is comparatively modest when compared to the net property owned by him and given that the issues in dispute between the parties – whether there was or was not a de facto relationship between the parties – cannot be described as being unusual and in circumstances where it is not specifically asserted that Mr Keene’s application is lacking in bona fides.
In this context, Mr Berman, counsel for Mr Keene relies on the case of Brown & Brown; Eley & Henty (Intervenors)[6] where Butler J said as follows:
Costs security orders prevent abuse of Court process by inter alia preventing impecunious persons from litigating without responsibility.”
[6] See Brown & Brown; Eley & Henty (Intervenors) (1991) FLC 92-265 at 78,778
Essentially, it is Mr Keene’s position that he is not such an impoverished litigant, who has brought his application irresponsibly. In addition, it is his position that it cannot be said that either parties current lack of liquid funds to finance the current litigation is in any way attributable to his personal conduct.

Conclusions

I must start any deliberation, in respect of an application for security for costs, on the basis that it is a rule of general application that parties in Family Law proceedings should bear their own cost. This rule should only be departed from if the justice of the individual case concerned dictates that it should be.
It is a not uncommon phenomenon, in Family Law cases, for the parties concerned to have diametrically opposing views as to what has previously happened between them and, as such, to have very different views as to the appropriate outcome of those proceedings. In addition, such cases have the potential to evince a strong emotional response from the parties concerned, given what is invariably the highly personal and private nature of the proceedings concerned.
This would appear to be the rationale for the rule that costs, in Family Law matters, should not ordinarily be granted to the party successful in such proceedings, as routinely occurs in other civil matters. Rather something idiosyncratic to the parties’ circumstances must be demonstrated, which is germane to overall considerations of justice and fairness, before an order for costs is made, including an order for security of costs.
In my view, Mr Keene’s application cannot be described as extraordinary merely because of the extreme level of polarisation in the positions of the parties regarding the nature of their previous relationship. Such dichotomies of view are commonplace in proceedings brought pursuant to the Family Law Act.
It is potential unjust for an irresponsible or impoverished litigant to bring unmeritorious proceedings against a vulnerable person without any heed for the consequences of his or her actions. In such circumstances, an order for security of costs is open to the court to prevent a potential abuse of the court’s processes.
Whether an applicant, in family law proceedings, is irresponsible and so it is appropriate that some form of security be provided to protect the other party concerned from potential abuse, is very often a difficult issue to determine at the interim stage, prior to the court being in a position to ascertain the bona fides of the parties concerned in the absence of any assessment of credit. As I say, it is a common phenomenon, in matrimonial causes, for the parties concerned to have, as in this case, highly divergent views as to what has been the nature of their relationship together.
At this stage, it is not possible for me to characterise Mr Keene in any way as an irresponsible or maliciously motivated litigant. It is clear that there was some form of relationship between him and Ms Scofield – they live in adjoining properties and it is incontrovertible that

Ms Scofield has a significant legal interest in the premises owned by Mr Keene.
Given there is some relationship between the parties, Mr Keene’s application cannot be said to be doomed to failure at this juncture. However it is impossible for me to assess, at this preliminary stage, whether it is a relationship which will fall within the definition of de facto relationship provided by the applicable legislation. Nor is it possible for me to determine, in the event it is found that there is such a relationship, the date on which that relationship terminated.
Accordingly, it is impossible for me to say that there is either a high probability that Mr Keene’s application will either fail or succeed. It does however seem apparent that the proceedings will be vigorously contested, as Ms Scofield asserts that Mr Keene is either deluded about what was the nature of the relationship between the two or is motivated by some issue unknown to her.
I have undertaken some assessment of the respective cases of the parties, given each has filed affidavit material. However it may well be the case that more affidavit and documentary evidence will be filed prior to trial. In those circumstances, I do not think that this is the type of case where at this stage there can “be a detailed assessment of the likelihood of the applicant’s success…”[7]
[7] See Luadaka & Luadaka (supra) at [62.2]
In this regard, I bear in mind what was said by Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd [8] that it behoves courts to “be very cautious” in assessing the prospects of success of a party where the evidence available prior to final determination is “ambivalent”. In my view, this is a case where the factual situation concerned is highly contested and therefore it is objectively reasonable for me to conjecture that either party may be believed at the final hearing with the result that either one of them may ultimately be successful at that stage.
[8] Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 770 at [45]
Boston Commercial Services was a case concerned with an application for summary dismissal of an application, which is not the case in the current matter. The rationale for dismissing the application in Boston Commercial Services was the danger of wreaking injustice on the applicant by a premature assessment of the prospect of success.
I believe the same concerns apply in this matter but note that an order for security for costs, of itself, will not necessarily prevent Mr Keene continuing with his application, which is a situation in marked contrast to a summary dismissal application. However considerations of overall justice must still predominate and, in this regard, I must be careful not to prejudge the issues in the case prematurely bearing in mind the pre-eminence of the rule that parties, in family law proceedings, should ordinarily bear their own costs.
The evidence indicates that currently Mr Keene is not in a strong financial position. However his difficulties are chiefly concerned with issues to do with liquidity. He does not appear to have ready access to a source of cash. He does however have capital assets, albeit that those assets are subject to security. Accordingly it is not possible for me to characterise Mr Keene as impoverished or without any means to satisfy an order for costs which may be made against him in future.
In addition, poverty is not of itself a sufficient ground to justify an order for security for costs because of the danger that such orders will act as a mechanism to deprive a meritorious but impoverished litigant from being able to pursue a bona fide course of action. At this stage, it is impossible for me to characterise Mr Keene’s application as being trivial, vexatious or a sham.
I also accept that Ms Scofield is not in a strong financial position currently. However there is no direct evidence to indicate that her current difficult financial circumstances are as a result of any conduct or behaviour emanating from Mr Keene. Necessarily she is likely to be in a stronger financial position if she had not advanced the monies which are secured against [1] Property D. But once again, what are the exact circumstances of that transaction remain an issue for trial.
Mr Keene does not make the submission that an order for security made against him will inevitably stifle his application. It is his position however that such an order will be oppressive given his current level of financial liquidity. If an order for security is made, it seems inevitable that he would have to sell an item of property to satisfy it.
It is Mr Keene’s position that such a sale has the potential to be unfair to him, given that it is not beyond the bounds of reasonable possibility that he may be successful in his ultimate application and so it will not be necessary for him to dispose of any property to satisfy the final orders of the court. I agree that given Mr Keene’s current quantum of proprietary interests, it would be oppressive to require him to sell a piece of property to satisfy a security order.
In conclusion, I am satisfied that the evidence currently available to me indicates that Mr Keene has control of assets to a value of approximately $250,000.00. This is a sum sufficient to satisfy both the amount of Ms Scofield’s claim against him and her costs amounting to around $25,000.00.
In all these circumstances, I am not satisfied that there exist “justifying circumstances” in this case sufficient to merit a security of costs order against Mr Keene, after having considered the various matters detailed in section 117(2A) of the Act and Rule 19.05(2) of the Family Law Rules. As was said in Luadaka “[t]he 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.” [9]
[9] Luadaka & Luadaka (supra) at 85,507
Given Mr Keene’s current level of asset backing, which is not disputed by Ms Scofield, I do not think that it is likely that such injustice will be occasioned to her in the event Mr Keene is wholly unsuccessful in his application and it is found that no de facto relationship existed between him and her. In this eventuality there exist sufficient assets to ensure that Ms Scofield is recompensed and her own claim is satisfied.
Accordingly, I do not propose to make an order for security for costs in this matter. There remains the question of Ms Scofield’s application for an injunction restraining Mr Keene from dealing with the various pieces of real property which he owns pending the outcome of these proceedings.
As I have already observed, although not without assets, Mr Keene is not in a strong financial position. His income is far exceeded by his recurrent expenditure. For how long this situation remains sustainable is unclear to me. In addition, neither I nor Ms Scofield have been appraised as to the means by which Mr Keene has funded and proposes to fund these proceedings in future.
In these circumstances, it does not seem unreasonable that Ms Scofield would be anxious as to whether Mr Keene is able to maintain his current level of asset backing prior to trial. I share these concerns. As such, I have formed the view that it would be just and appropriate for the court to make the injunction which Ms Scofield seeks.
Mr Keene has not deposed that he proposes to encumber any of the real property which he currently owns further. He has not provided any evidence as to the solvency or otherwise of [T] or given details of its work at hand. Given Ms Scofield straitened financial circumstances, I have determined that the balance of convenience favours her in respect of the granting of the injunction.
There was no argument regarding Mr Keene’s application for return of the items of property listed in his response document. Similarly the issue of the inadequacy or otherwise of discovery was not agitated before me. In those circumstances I do not propose to make any orders in respect of these issues.
In addition, I do not propose to make an order in respect of this interim application for costs at this stage. The costs of these proceedings will be reserved to the conclusion of the trial on the preliminary issue as to whether there was or was not a de facto relationship between the parties.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.

I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of Brown FM

Date: 13 January 2012