Limousin and Limousin (Security for Costs)
[2007] FamCA 1179
•28 September 2007
FAMILY COURT OF AUSTRALIA
| LIMOUSIN & LIMOUSIN (SECURITY FOR COSTS) | [2007] FamCA 1179 |
| FAMILY LAW - SECURITY FOR COSTS – Husband renewed his application for security for costs in relation to the wife’s appeal, part of which had previously been heard without the necessity to provide security – Whilst the remaining grounds appeared unlikely to succeed, the wife’s impecuniosity would mean a substantial security would stifle the appeal it is appropriate that a modest security for costs order be made |
| Family Law Act 1975 (Cth) |
| Beaumont& Cross (Security for Costs) [2007] FamCA 1129 Jones and Jones (2001) FLC 93-080; (2001) 27 Fam LR 632 Limousin & Limousin [2007] FamCA 505 Luadaka and Luadaka (1998) FLC 92-830; (1998) 24 Fam LR 340 MIL v EL (2005) FLC 93-244; (2005) 35 Fam LR 5 |
| APPLICANT: | MR LIMOUSIN |
| RESPONDENT: | MS LIMOUSIN |
| FILE NUMBER: | MLF | 10522 | of | 1996 |
| APPEAL NUMBER: | SA | 36 | of | 2004 |
| DATE DELIVERED: | 28 September 2007 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Kay, Warnick and Boland JJ |
| HEARING DATE: | 11 September 2007 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 May 2003; 24 July 2003; 25 May 2004 |
| LOWER COURT MNC: | [2003] FamCA 769; [2003] FamCA 1449; [2004] FamCA 493; [2004] FamCA 504 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr St John SC and Mr Strum |
| SOLICITOR FOR THE APPLICANT: | Meerkin & Apel |
| ADVOCATE FOR THE RESPONDENT: | Mrs Limousin in person |
ORDERS
That unless the wife within one month of the date of this order provide security for the husband’s costs of the appeal in the sum of $5,000 in a form acceptable to the Appeal Registrar at the Melbourne Registry, the appeal stand dismissed.
The costs of this application be costs in the appeal.
And the Court notes that in the event that the appeal stands dismissed the cross-appeal will be abandoned.
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SA 36 of 2004
File Number: MLF 10522 of 1996
| MR LIMOUSIN |
Applicant
And
| MS LIMOUSIN |
Respondent
REASONS FOR JUDGMENT
This is the husband’s application for security for costs.
On 25 May 2004 the Honourable Justice Guest made an order that the husband pay spousal maintenance for a period of two years but otherwise dismissed the wife’s claims for alteration of property interests and spousal maintenance. His Honour also made other orders relating to child support.
On 22 June 2004 the wife filed a Notice of Appeal seeking to set aside Guest J’s orders and to have other orders made in their stead. The husband then filed a Notice of Cross-Appeal in relation to the spousal maintenance orders.
The wife sought to rely upon fourteen grounds of appeal. She subsequently abandoned ground three which asserted that the trial judge had erred in failing to disqualify himself from hearing the trial of the action on the basis of actual or perceived bias.
On 2 September 2004 the husband filed an application seeking that the wife pay to the husband’s solicitors within 14 days security for costs of the appeal in the sum of $82,500 and that in the event that the wife failed to make that payment the appeal be stayed.
The application came on for hearing before the Full Court (Rowlands, Holden and May JJ) on 21 October 2004. In a judgment published 30 December 2005 as MIL v EL (2005) FLC 93-244; (2005) 35 Fam LR 5 their Honours determined that the wife be at liberty to argue two of the grounds relied upon as a preliminary issue without having to make provision for security for costs. Those grounds (9 and 14) complained of lack of procedural fairness. Their Honours otherwise adjourned the application for security for costs with liberty for the husband to relist the application in the event the wife elected to proceed with the balance of the appeal if she lost on the issues of procedural fairness.
The Full Court (Kay, Coleman and Boland JJ) heard argument in relation to the procedural fairness grounds in January and February 2007 and delivered a judgment on 1 June 2007 dismissing those grounds (see Limousin & Limousin [2007] FamCA 505).
The wife subsequently gave notice that she intended to proceed with the balance of the grounds remaining in the Notice of Appeal. The husband then indicated that he wished to renew his application for security for costs. That application came on for hearing before us on 11 September 2007.
The remaining grounds of appeal sought to be relied upon by the wife are as follows:
1.His Honour erred in failing to give any or any proper weight to the evidence.
2.The findings of His Honour were against the evidence and the weight of the evidence.
…
4.His Honour erred in finding that:
(a)the companies referred to in Annexure JEM-10 and exhibits [sic] 12;
(b)the [S] group of companies and [G];
(c)the New South Wales litigation;
had no value.
5.His Honour erred in failing to accept the evidence of the wife.
6.His Honour erred in accepting the evidence of the husband and the witnesses called on behalf of the husband.
7.His Honour erred in failing to accept the evidence of Mr J M, Forensic Accountant, called on behalf of the wife.
8.His Honour erred in failing to find that the husband had not made full and frank disclosure of all financial matters.
...
10.His Honour erred in failing to allow the wife to re-open her case to file a Form 17 – Financial Statement and admit evidence concerning the husband’s entitlement under the Will of the husband’s father.
11.His Honour erred in discharging all arrears of spousal maintenance and failing to award arrears of spousal maintenance.
12.His Honour erred in awarding ongoing spousal maintenance limited only to two years.
13.His Honour erred in failing to make a Departure Order under s 117(2) of the Child Support Assessment Act.
At the hearing of the application for security Mr St John, Senior Counsel on behalf of the husband indicated that in the event that the appeal was not prosecuted, the cross-appeal would be abandoned but otherwise it was intended to continue with the cross-appeal.
THE PRINCIPLES GOVERNING AN APPLICATION FOR SECURITY FOR COSTS
The power of the court to make an order for security for costs is found in s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) which says in the following terms:
(2)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 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.
Subsections (4) and (5) of s 117 appear to have no application to the present case. The relevant portions of subsection (2A) appear to be as follows:
(2A)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;
…
(g)such other matters as the court considers relevant.
The balance of subsection (2A) appears to have relevance to the circumstances in which a court may make an order for costs after a proceeding rather than to an application for security.
The principles which govern the exercise of the power in s 117(2) to make an order for security for costs have been considered in several Full Court decisions, the most relevant appearing to be Luadaka and Luadaka (1998) FLC 92-830; (1998) 24 Fam LR 340 and Jones and Jones (2001) FLC 93-080; (2001) 27 Fam LR 632.
Luadaka and Luadaka (above) was a case that concerned the provision of security for costs in proceedings at first instance and in that case the Court made the following observations concerning matters to which regard should be had in determining whether or not to exercise the discretion to order the provision of security (citations omitted):
39.An order that an applicant provide security for costs may be made in appropriate circumstances. However, it must be established that there are circumstances justifying the making of such an order. In considering whether to make such an order regard must be had to the provisions of s 117(2A). The Family Law Act does not separately list factors which should be taken into account when dealing with an application for security for costs of a pending application for relief pursuant to provisions of the Act.
...
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…
62.2The prospects of success is a relevant matter to take into consideration:… 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…
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…
62.4It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation…
62.5It may be relevant to consider whether or not the litigation may involve a matter of public importance…
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…
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.
Subsequently in Jones and Jones (above), where the Full Court was concerned with the making of an order for security for the costs of an appeal, the Full Court, after setting out paragraphs 61 to 63 of the judgment in Luadaka and Luadaka (above), went on to say (citations omitted):
20.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.
21.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…
22.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.
23.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.
DISCUSSION
The previous Full Court (Rowlands, Holden and May JJ) in MIL v EL (above), when allowing the wife to proceed on her procedural fairness grounds without the provision of security, commented that in their view the wife’s prospects of succeeding on the remaining grounds would be remote given the strength and comprehensiveness of Guest J’s findings. Whilst we do not feel bound in any way by those observations, given that many of the remaining grounds attack the weight given to evidence led on behalf of the wife as compared to the weight that was given to evidence led on behalf of the husband, we could not confidentially predict that the wife’s prospects of succeeding on the remaining grounds would be other than unlikely. However we would endorse the observations of the earlier Full Court that it could not be said that the grounds are entirely devoid of merit. This may be particularly so in relation to the grounds relating to the failure to award ongoing spousal maintenance. It may be that the wife will be able to persuade the Full Court to admit further evidence of the husband’s ongoing financial circumstances to demonstrate an error on behalf of the trial judge in reaching conclusions that he did as to the husband’s financial circumstances at the time of the trial.
Clearly any substantial order made for the provision of security for costs is likely to stifle this appeal. The wife has indicated to us that she is bereft of any assets and is earning only a very modest salary. There was no evidence before us of the husband’s present financial circumstances.
Provision of an order for security for costs does not carry with it any inference that in the event that the appeal is lost an order for costs will necessarily follow the event. Section 117(1) of the Act has the effect of removing the general rule in civil proceedings that costs automatically follow the event. The purpose of the provision of an order for security for costs is simply to ensure that in the event that a costs order is made difficulties in enforcing such an order will be alleviated.
It is abundantly clear that the husband will have significant difficulties in enforcing any order for costs made in his favour as against the wife. It is also clear that if we place upon the wife a heavy obligation to provide security for costs that will effectively stifle the litigation. The wife has a right to have an appeal heard even though it appears on the face of it that the prospects of success in that appeal are not great.
After balancing the competing considerations, we are of the view that it is appropriate that a modest order for security now be made. The order that was made in Jones and Jones (above) was that security be made in a form acceptable to the Registry Manager. It is probably more appropriate that we make an order that the security be in the form acceptable to the Appeal Registrar so that if the Appeal Registrar declines to accept the security offered the Appeal Registrar’s decision can be the subject of a review.
We would draw to the parties’ attention an order made by the Full Court (Faulks DCJ, Kay and Boland JJ) in Beaumont& Cross (Security for Costs) [2007] FamCA 1129 in the following form:
1.That the husband provide security for costs of the appeal in the sum of $3,000 as follows:
(a)by providing to the wife’s solicitors within 7 days an authority to enable the solicitors to obtain $3,000 drawn against the husband’s [credit card with his Bank] in the event that any costs order is made against the husband by the Full Court at the hearing of the appeal and an authority enabling the solicitors to request that the Bank reserve an adequate sum to meet any such claim for payment; or
(b)by payment of the sum of $3,000 to the wife’s solicitors to be held by them pending further order.
2.The wife’s solicitors are to hold the authority to draw on the sum pending any further order of the court.
3.The husband is restrained pending the determination of the appeal or further order from doing any act which would diminish the capacity of the wife’s solicitors to execute against his credit facility up to the sum of $3,000.
4.In the event that the husband fails to provide the security referred to in order 1 hereof within 7 days, the appeal stand dismissed.
5.The wife’s solicitors be at liberty to provide a sealed copy of this order to the husband’s Bank.
It may be that the wife in these proceedings is able to provide a similar security.
I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court
Associate:
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