KNIGHT & ELLINGTON
[2018] FamCA 892
•5 November 2018
FAMILY COURT OF AUSTRALIA
| KNIGHT & ELLINGTON | [2018] FamCA 892 |
| FAMILY LAW – SUMMARY DISMISSAL – Wife’s application to summarily dismiss husband’s s 79A Application – Where the Full Court has held that the only material to be relied upon in such applications is the material put forward by the respondent – Where the husband’s s 79A Application is not doomed to fail and is not frivolous or vexatious – Application dismissed. FAMILY LAW – SECURITY FOR COSTS – Wife alternatively sought security for costs in the sum of $50,000 from the husband – Matters identified by the Full Court in Luadaka & Luadaka (1998) FLC 92-830 considered – the weight of the considerations favour there being no order for security for costs – Application dismissed. |
| Family Law Act 1975 (Cth) ss 79A, 117 Family Law Rules 2004 r 10.12 |
| Pelerman (2000) FLC 93-037 Bigg v Suzi (1998) FLC 92-799 |
| APPLICANT: | Mr Knight |
| RESPONDENT: | Ms Ellington |
| FILE NUMBER: | CSC | 677 | of | 2007 |
| DATE DELIVERED: | 5 November 2018 |
| PLACE DELIVERED: | Cairns |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Tree J |
| HEARING DATE: | 2 October 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Richardson |
| SOLICITORS FOR THE APPLICANT: | Vernon Da Gama & Associates |
| COUNSEL FOR THE RESPONDENT: | Dr Ingleby |
| SOLICITORS FOR THE RESPONDENT: | Berger Kordos Lawyers |
Orders
The Application in a Case filed by the wife on 2 August 2018 is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Knight & Ellington has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: CSC677/2007
| Mr Knight |
Applicant
And
| Ms Ellington |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
By Initiating Application filed 11 August 2017, Mr Knight (“the husband”) sought orders under s 79A of the Family Law Act, varying earlier consent orders made under s 79 of the Act, which effected a final division of the parties’ matrimonial property. By her Response filed 3 October 2017, Ms Ellington (“the wife”) seeks that the husband’s Initiating Application be dismissed.
On 8 May 2018 the court advised the parties that a Trial Management Hearing, at which the matter would be readied for trial, would be conducted on Tuesday 7 August 2018. However prior to then, on 2 August 2018, the wife filed an Application in a Case seeking summary dismissal of the husband’s Initiating Application, or in the alternative, security for costs in the sum of $50,000.00, pending the payment of which, the husband’s Initiating Application would be stayed.
On 7 August 2018 I made orders listing the matter for trial to commence on 13 March 2019, and directions for the filing of further material in relation to the wife’s Application in a Case, which was listed for determination in Melbourne on 2 October 2018. On that day I heard the parties’ oral submissions in relation to the Application in a Case, and made directions for the filing of further written materials. Otherwise I reserved my decision in relation to the wife’s application. This is that decision and the reasons for it.
THE FACTS
The husband is presently 49 years of age, whereas the wife is 44 years of age. The parties married in 1998, separated on 8 August 2006, and were divorced in January 2015. There is one child to the relationship, who is presently 14 years of age, and resides with the wife.
On 8 August 2006 the wife commenced proceedings seeking a division of the parties’ matrimonial property. They were concluded by consent orders made on 8 November 2007. One of those consent orders dealt with the former matrimonial home at B Town in North Queensland. Specifically, it was ordered to be sold, and the proceeds of sale, after sale costs had been met and the mortgage discharged, were to be divided 70 per cent to the wife and 30 per cent to the husband. Pending its sale, each of the parties was to contribute equally to the monthly mortgage instalments, together with rates and household insurances.
In his affidavit filed 11 August 2017, the husband says that thereafter, real estate property prices in B Town “collapsed,” in consequence of which the parties agreed that the B Town property should be rented out until the property market stabilised, and then sold. Also at about that time, the husband lost his employment, but was able to secure alternative employment in Europe. Paragraph 12 of the husband’s affidavit continues:
Further to the discussion that the [wife] and I had at the relevant time, the [wife] and I agreed that:
(a)We would re-draw a sum of $25,000.00 from the joint account that we hold to be utilised as follows:
(i)Partly towards payment to the Australian Taxation Office towards the tax liability owed by me to the Australian Taxation Office, which debt arose while the [wife] and I lived together as husband and wife;
(ii)The balance to pay off my credit card debt with the National Australian Bank, which was a joint liability that accrued whilst the [wife] and I lived together.
(b)That as I was to travel to [Europe] for my employment, and for the sake of convenience, the former matrimonial home was to be transferred to the respondent to enable her to have the former matrimonial home sold in compliance with the 8 November 2007 orders without the need for me to sign transfer documentation, as I would not be in the Australian jurisdiction at the relevant time.
The husband’s affidavit further details that documentation was then prepared by the wife’s lawyers, which the husband signed “in good faith and without independent legal advice, at all times believing that the said documents reflected the agreement reached between the [wife] and myself as set out above.”
In 2014 the husband returned to Australia, and had his solicitor press for the sale of the former matrimonial home, which still remained unsold. However on 11 February 2015, the wife, through her solicitors, wrote to advise the husband that:
As [the husband] has received funds as noted above and agreed to transfer the title to [the wife] for $25,000.00 and as [the wife] is now the sole proprietor of the property, it is the case that the parties have jointly agreed to waive the obligations of the consent order and the property settlement between the parties is at an end. We do not see that there is any equity left in the property to [the husband] nor is he entitled to any payment from our client.
At paragraph 16(d) of the husband’s 11 August 2017 affidavit, he says:
I vehemently deny the allegations as asserted by [the wife] and maintain what is set out by me herein above in paragraphs 11 to 13 in relation to the agreement and an understanding arrived at between [the wife] and myself, which resulted in the transfer of the former matrimonial home to the sole name of [the wife].
It appears as though in early June 2017 or thereabouts, the wife subdivided the B Town property into two separate lots, and by then, with the assistance of a gift from her mother, had discharged the entirety of the mortgage over the property. The husband then lodged a caveat over the properties, which appears to have brought the matter to something of a head. At all events, as I have indicated, these proceedings were commenced by the husband on 10 August 2017.
THE SUMMARY DISMISSAL APPLICATION
Relevant statutory provisions and legal principles
Family Law Rule 10.12 provides as follows;
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that;
a)The Court has no jurisdiction;
b)The other party has no legal capacity to apply for the orders sought;
c)It is frivolous, vexatious or an abuse of process; or
d)There is no reasonable likelihood of success.
In Pelerman [2000] FamCA 881, (2000) FLC 93-037 at [46], the Full Court said in relation to the test for summary dismissal as follows:
The gravamen of the Appeal is that the trial Judge erred in the exercise of the discretionary power to summarily dismiss the Application. It is well established that the following principles apply as were recently reviewed and stated in Bigg v Suzi[1]:
(a)The power for summary dismissal is a discretionary one.
(b)Relief “is rarely and sparingly provided”.
(c)The parties seeking summary dismissal must show that the application is “doomed to fail” or as has been otherwise described “that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”.
(d)A weak case or one that is unlikely to succeed is not “sufficient to warrant termination”.
(e)“If there is a serious legal question to be determined, it should ordinarily be determined at a trial.”
(f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings.”
[1] (1998) FLC 92-799 at 84,974-84,975.
A matter of controversy before me was what material a court may have regard to in determining an application for summary dismissal. Particularly, the wife sought to rely upon material she had filed which, in substance, sought to demonstrate that, as at 2008, the husband’s entitlement under any sale of the property for its then value, would have been about only $25,000.00, and therefore his acceptance of that sum was consistent with the wife’s assertion that the parties had varied the consent orders.
In Beck & Beck (2004) FLC 93-181 at [20]-[21] the Full Court (Ellis, Finn and Chisholm JJ) said as follows:
20. Further support for the proposition that an application for summary dismissal must be determined on the basis only of the material put forward by the respondent (to that application) is to be found in the passage from the judgment of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 at 544-545 (which was quoted by the Full Court in its judgment in Bigg v Suzi) where his Honour said:
…2. To secure such relief, the party seeking must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action (Munnings v Australian Government Solicitor (1994) 68 ALJR 169 at 171f, per Dawson J) or in advancing a claim that is clearly frivolous or vexatious; (Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.)
21. Regard should also be had to paragraph 6.31 of the judgment in Bigg v Suzi where the Full Court referred to the fact that the wife, who was the applicant for the summary dismissal of a s 79A application by the husband, “had no right to adduce any evidence at that summary hearing to contradict the evidence of the husband or to seek to contradict any inference which it might be submitted should be drawn from that evidence.
That authority has never been subsequently departed from by another Full Court, and as such, plainly binds me.
In his written submissions, counsel for the wife relied upon observations of Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd [2006] FCA 1352 at [43] which, he said, were authority for the proposition that the wife’s evidence “can be relied upon if the evidence is not contradicted by the husband.” He supported that argument by reference to a decision of McClelland J in Gadde & Gadde [2015] FamCA 617 at [30], where his Honour said (footnotes omitted):
Caution is required before making findings on the basis of uncontested evidence. I note, however, that the respondent has had the opportunity to file evidence refuting the evidence of underpayment which has been given by the wife. While the husband disputed that figure in submissions from the bar table, there has been no material placed before the court that challenges the veracity of the wife’s particulars of the amount outstanding and, for the purposes of this interim application, I accept the wife’s evidence in that respect.
Gadde & Gadde was not an application for summary dismissal, but rather his Honour was determining whether or not, as a condition for the grant of an adjournment, various orders for payment of arrears under earlier orders should be made. Although his Honour referred to Boston Commercial Services in this context, plainly his Honour was not intending to countenance its application in summary dismissal applications.
Counsel for the wife further relied upon the Full Court decision of Ricci & Jones [2011] FamCAFC 222 at [52], where the court did indeed refer to Boston Commercial Services. However, even accepting the court was then dealing with an appeal relating to summary dismissal, what their Honours said at [52] bears repeating as follows:
True it is that the authorities urge caution in making such a finding in circumstances where “contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed” as per Rares J in Boston Commercial Services Pty Ltd v GE Capital Finance Australasia Pty Ltd (2006) 236 ALR 72 at paragraph 45.
That statement is not support for the proposition that the court may have regard to material relied upon by the applicant, and plainly it does not purport to vary the long established principle articulated in Beck & Beck.
Counsel for the wife further referred to two decision of Hogan J, being Finch & Finch [2013] FamCA 567 at [13], and Dunnett & Dunnett [2013] FamCA 529 at [24]. True it is that there her Honour was dealing with applications for summary dismissal, and did refer to both Boston Commercial Services and Ricci & Jones, however significantly, in Dunnett at [25] her Honour continued:
It is also clearly established that, in determining the application for summary dismissal of the current application:
(a)I must have regard only to the wife’s material and material relied upon by her; and
(b)I must proceed on the basis that the wife’s version of the facts is that which it would ultimately be accepted at a trial.
Her Honour justified those statements of principle by reference to, inter alia¸ Beck & Beck.
I therefore reject the suggestion that either of the decisions of Hogan J are authority for the proposition that regard may be had to the applicant’s material when determining the application for summary dismissal. In my view, Beck & Beck remains binding authority for precisely the contrary proposition.
Evaluation
There is a significant dispute of fact between the parties as to what was agreed in 2008. I am obliged to determine the application for summary dismissal only on the material relied upon by the husband. He asserts that the parties did not agree to vary the consent orders, but rather, for payments to be made as he deposes in his affidavit. Otherwise he asserts that he remains entitled to 70 per cent of the net proceeds of sale, as agreed by the parties and embodied in the 2006 consent orders. To the extent that his application under s 79A seeks to effect that outcome, albeit on a just basis taking into account subsequent events, it cannot be said that it is doomed to fail. Likewise it is also not clearly frivolous or vexatious.
It therefore follows that the application for summary dismissal must be dismissed.
THE SECURITY FOR COSTS APPLICATION
Relevant statutory provisions and legal principles
Section 117(2) of the Act provides:
If, in proceedings under this Act, the court is of the opinion that there are circumstances that justified in doing so, the court may, subject to sub-sections (2A), (4), (4A) 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.
Section 117(2A) requires the court to have regard to, amongst other things, the financial circumstances of each of the parties to the proceedings. Sub-sections (4), (4A) and (5) have no bearing upon an application for security for costs in the circumstances before me.
In Luadaka & Luadaka (1998) FLC 92-830 at [62] the Full Court (Ellis, Finn and O’Ryan JJ) said:
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…
Their Honours then set out a number of matters, which were later helpfully summarised by Mullane J in Richards and Duff [2001] FamCA 177 at [19] as follows:
(a)The means of the respondent to the application to satisfy an order for costs if he or she is unsuccessful.
(b)The prospects of the respondent to the application succeeding in the proceedings.
(c)Whether the claim in the proceedings of the respondent to the application “is made Bona fide, whether is genuine or not trivial, vexatious or a sham.”
(d) Whether an order for costs would be “oppressive or stifle the litigation.”
(e) Whether or not the litigation may involve a matter of public importance.
(f)Whether or not there has been delay in bringing the application, causing prejudice to the respondent to the application.
(g) The amount of costs likely to be incurred.
(h) Any difficulties likely enforcing an order for costs.
Mullane J noted that the Full Court in Luadaka & Luadaka did not suggest the list was exhaustive, and there may be other matters able to be taken into account pursuant to s 117(2A)(g).
Evaluation
It is convenient to evaluate the application for security by reference to the matters identified by the Full Court in Luadaka.
Means of husband to satisfy order for costs if he is unsuccessful
According to the husband’s Financial Statement also filed on 11 August 2017, he has net assets of $13,500.00, and an excess of income over expenditure per week of only $285.00. He has negligible superannuation. I am satisfied that he would be unable to satisfy any order for costs if one were to be made if he was unsuccessful at the trial of these proceedings, unless it were by progressive payment from his income over a lengthy period.
Prospects of husband succeeding
I have already determined that the husband’s claim is not hopeless. Any success would depend upon him being believed as to his version of the events that transpired in 2008, leading to the payment of certain sums and the transfer of the former matrimonial home to the wife. If he is believed, then he has some prospects of success. It is not possible on the face of the affidavit material to make any determination as to the prospects of him being believed. Moreover, given that the matter is listed for trial, and I am the trial judge, it would be positively unhelpful for me to make such an observation at this point. What I am prepared to conclude is that his case is not hopeless.
Is husband’s claim bona fide, not trivial, vexatious or a sham
I have already determined that the husband’s claim is not vexatious, and has some prospects of success. There is no reason to doubt his bona fides, at least in the material before me, on a summary basis.
Would an order for costs stifle the litigation
Plainly the husband could not presently meet an order for $50,000.00 by way of security for costs. The matter is listed for trial early next year. I am satisfied that an order for security for costs would stifle the litigation.
Does the litigation involve a matter of public importance
Plainly there is no matter of public importance involved in this litigation.
Has wife delayed in bringing the application
The wife filed her Response on 3 October 2017, but did not bring her application for security until 2 August 2018, five days before the Trial Management Hearing intended to list the matter for trial was to be held.
In Lan & Hao [2015] FamCA 1149, Stevenson J was critical of a party waiting “almost” twelve months before he filed an application for security for costs. Her Honour noted that there was little explanation for the delay; here there is no explanation for the delay. Whilst each case will depend upon its own facts, a delay of ten months, in the context of litigation shortly to be listed for trial, is significant.
The amount of costs likely to be incurred
It is said that the costs of the wife will be between $50,000.00 and $75,000.00, assuming the matter runs for the full two days. There is no reason to doubt that estimate.
Difficulties in enforcing order for costs
The husband has little in the way of assets, and therefore enforcement of any order for costs would be problematic.
Other matters
One additional matter relied upon by the husband, was that any impecuniosity he presently suffers from, is the result of the wife’s failure to effect the sale of the former matrimonial home, and distribute the husband’s share of the net proceeds to him. That is not a matter upon which I can make any conclusion in a summary determination such as this.
Consideration
There are factors which favour the grant of the orders sought by the wife, but on balance, the considerations favour there being no order for security for costs. Particularly I give weight to the fact that such an order would stifle the litigation, which is listed for trial, and the wife delayed for nearly some then months from the commencement of these proceedings until bringing her the application for security, which was only made well after the Trial Management Hearing was advised to the parties.
I am not persuaded that there should be an order for security for costs in this case, whether in the sum of $50,000.00 or at all.
CONCLUSION
For these reasons there will be orders as set out at the commencement of this judgment.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 5 November 2018.
Associate:
Date: 5 November 2018
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