LOK & HUO
[2020] FamCA 118
•28 February 2020
FAMILY COURT OF AUSTRALIA
| LOK & HUO | [2020] FamCA 118 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Application – Dismissal or Striking Out – where the wife filed an application seeking orders that the husband’s application be summarily dismissed – where the wife’s application is dismissed – where costs are reserved FAMILY LAW – SECURITY FOR COSTS – where in the event that the husband’s application was not summarily dismissed the wife was seeking security for costs – where the wife’s application is dismissed |
| Family Law Act 1975 (Cth) ss 45A, 75, 78, 79, 117 Family Law Rules 2004 (Cth) rr 10.3, 10.12, 10.13, 10.14 |
| Alexander and Alexander [1977] FLC 90-257 Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634 B and B [1986] FLC 91-749 Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 Equity Access Ltd v Westpac Banking Corporation [1989] ATPR 40-972 Henderson v Henderson (1843) 67 ER 313 J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 70 FLR 261 Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248. Lindon v Commonwealth (No 2) (1996) 136 ALR 251; [1996] HCA 14 Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164 Luadaka v Luadaka [1998] FLC 92-830 Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133 Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Parkinson & Co v Triplan Pty Ltd [1973] QB 609 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45 Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420 Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 Stanford & Stanford (2012) 247 CLR 108; (2012) FLC 93-518 Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 73 ALR 289 |
| APPLICANT: | Ms Lok |
| RESPONDENT: | Mr Huo |
| FILE NUMBER: | MLC | 1165 | of | 2019 |
| DATE DELIVERED: | 28 February 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Macmillan J |
| HEARING DATE: | 24 September 2019 and Written submissions |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Strum QC and Mr Nehmy of Counsel |
| SOLICITOR FOR THE APPLICANT: | Barry Nilsson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms O'Connell of Counsel |
| SOLICITOR FOR THE RESPONDENT: | Oceania Lawyers and Consultants |
Orders
IT IS ORDERED THAT
The Husband’s Amended Initiating Application filed 13 March 2019 and the Wife’s Response to Initiating Application filed 4 April 2019 be listed for mention before Justice Macmillan at 10.00 am on 27 March 2020.
The costs incidental to the Wife’s Application in a Case filed 4 April 2018 be reserved for determination in chambers.
By 4.00pm on 13 March 2020 the parties file and serve any written submissions in support of an application for costs arising out of or incidental to the Application in a Case filed 4 April 2019.
By 4.00pm on 27 March 2020 the parties file and serve any written submissions in reply to the application for costs.
That any submissions as to costs should be limited to 10 pages.
The Wife’s Application in a Case filed 4 April 2019 be otherwise 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 Lok & Huo 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: MLC 1165 of 2019
| Ms Lok |
Applicant
And
| Mr Huo |
Respondent
REASONS FOR JUDGMENT
On 5 February 2019 the husband filed an Initiating Application seeking final orders for property settlement and interim injunctive relief. On 13 March 2019 he filed an Amended Initiating Application seeking orders in similar terms save that he also sought a declaration pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act’) to the effect that the wife holds the property known as and situate at B Street, Suburb C in the State of Victoria (“the Suburb C property”) upon trust for he and the wife.
On 4 April 2019, the wife filed a Response to the husband’s Initiating Application together with an Application in a Case in which she sought inter alia that the husband’s Initiating Application be summarily dismissed or in the event of that application not being summarily dismissed, that the husband pay the wife $200,000 by way of security for her costs. It is that application that was listed for a one day hearing before me on 24 September 2019.
On 9 April 2019 an order was made by Registrar George requiring the husband to file and serve a Response to the wife’s Application in a Case and an Affidavit setting out the evidence in support of the orders he sought in the Response to the Application in a Case filed pursuant to these orders and the final orders sought in the Amended Initiating Application filed 13 March 2019.
Although the husband filed four Affidavits on 21 May 2019 in support of his Amended Initiating Application filed 13 March 2019, he did not file a Response to the wife’s Application in a Case filed 4 April 2019.
On 24 September 2019, orders were made appointing a single expert witness to prepare a report in relation to the ability of Chinese Courts and/or parties to deal with foreign assets under Chinese law and the status of the two divorce agreements entered into between the parties. The report prepared by that single expert witness was in evidence before me.
The matter proceeded on submissions and where the evidence is disputed it is yet to be tested.
Background
The Affidavit filed by the wife setting out the history of the relationship is significantly more detailed than those Affidavits filed by the husband. The relevant background for the purposes of the hearing before me is as follows.
The husband is 37 years of age and lives in China. The wife is 35 years of age and lives in Australia. She has applied for permanent residency in Australia and is awaiting the outcome of that application.
The husband and wife were married in China on … 2009 and separated in about December 2014 (“the first marriage”). They entered into a Divorce Agreement in China on … 2016 (the “first Divorce Agreement”).
The parties remarried in China on … 2017 separating finally on 15 September 2018 (“the second marriage”). They entered into a second Divorce Agreement on … 2018 (“the second Divorce Agreement”).
There are three children of their marriage:
X who is 8 years of age;
Y and Z who are both 6 years of age.
At the commencement of the first marriage the husband worked for the Chinese government. The wife had been studying in County M and upon her return to China worked in her father’s business. The wife’s evidence is that neither she nor the husband had any significant assets at the commencement of the first marriage, however shortly after that marriage they acquired the property at D Street, J District, K City. The parties were able to acquire this property as a result of their marriage, the property being reserved for married government employees.
The parties lived in a property owned by the wife’s mother rather than the F City property, as it was closer to their employment. They lived in the wife’s mother’s property rent free. The wife deposes that the husband retained his income as he saw fit, whereas she applied her income to their day to day living expenses. It is her evidence that her parents provided her with significant financial support, as her income was not sufficient to meet their living costs. She says that following the birth of the children her parents’ financial support increased. That support included paying for nannies and the children’s day to day expenses and education.
The wife says that in early 2014 she began exploring the different categories of immigration visas with a view to the family relocating to Australia. Having decided to apply for a 188C Immigration Visa, the wife’s mother signed a “gift statement” confirming a proposed gift of AUD$5million and thereafter transferred something over that amount into the wife’s personal accounts in China. On or about 15 August 2015, the wife opened two accounts with the Commonwealth Bank of Australia in her name and transferred a total of AUD$5,146,345.59 into one of those accounts. In September 2014, the wife and her mother travelled to Australia and opened a G Bank account transferring $AUD$5milion from her Commonwealth Bank account to her G Bank account. That left a balance of AUD$146,345 in her Commonwealth Bank account. The wife paid G Bank a handling fee of AUD$50,000 out of the monies remaining in her Commonwealth Bank account. It is the wife’s evidence that AUD$5 million remains invested with G Bank.
The parties separated the first time in December 2014, shortly after the wife was granted a 188C Immigration Visa. The wife needed to activate that visa by mid-2015.
The husband deposes that whilst in Australia in 2015, the wife became the registered proprietor of the Suburb C property. The wife’s evidence is that her parents originally intended acquiring a real property in Australia in which the wife and children could live, however upon arrival in Australia they discovered that it would be easier to purchase property in the wife’s name. Accordingly the wife purchased the Suburb C property for AUD$3.2 million. The wife’s mother transferred the deposit of AUD$320,000 to the wife’s Commonwealth Bank account and thereafter the wife’s mother directed repayment of monies owed to her to be paid to the wife. The wife received a total of AUD$4,989,396. It is her evidence that the husband made no contribution to the purchase.
The wife and the children returned to China on 2 July 2015 and on … 2016 she and the husband entered into the first Divorce Agreement. That agreement provided that the children live with the wife, that the husband be excused from paying child support and that he retain the F City property.
In January 2017, the husband and wife reconciled. In July 2017, the husband sold the F City property for approximately AUD$188,000, the wife says applying the proceeds as he saw fit rather than using them for the benefit of the family. In September 2017, the wife transferred AUD$1,790,000 of the money given to her by her mother to purchase the Suburb C property to her mother’s account with the Commonwealth Bank.
The husband left his employment in late 2017. At about this time the wife’s parents purchased a property in the name of the husband and the wife at H Street, J District, K City.
In June 2018, the husband and the wife travelled to Australia with the children with a view to relocating permanently to Australia. The parties remained in Australia until returning to China on 15 September 2018. Whilst in Australia they opened an account in their joint names and an account in the husband’s name at the Commonwealth Bank. They returned to China on 15 September 2018 and separated at that time.
On 7 July 2018, the husband and the wife transferred the AUD$1,700,000 from her mother’s Commonwealth Bank account into the husband’s Commonwealth Bank account which was offering a higher interest rate. The wife says that after the wife discovered that the husband had been transferring money from her account without permission, she requested that the money transferred from her mother’s Commonwealth Bank account be returned to her mother’s account. The husbands thereafter transferred AUD$1,635,000 to the joint account. Before the wife could transfer the funds to her own account, the husband without her permission transferred AUD$5,000 from the joint account to his own account. On 10 September 2018, the wife transferred AUD$1,630,000 from the joint account to her own account and thereafter transferred AUD$1,600,000 to her mother’s Commonwealth Bank account.
The parties separated for the second time shortly thereafter. On … 2018, they entered into the second Divorce Agreement pursuant to which the eldest child and one of the twins were to live with the wife and the other twin to live with the husband, neither party having any child support obligations to the other and the wife was to retain the K City property. Notwithstanding the terms of the second Divorce Agreement, the eldest child lives with the wife in Australia and the twins live with the husband in China. In March 2019, the wife commenced proceedings in China to enforce the terms of the second Divorce Agreement.
On 5 February 2019, the husband filed his Initiating Application in this Court seeking orders for property settlement pursuant to s 79 of the Act.
Legal Principles
The courts power to summarily deal with proceedings before it is found in s 45A of the Act and Rule 10.3 of the Family Law Rules 2004 (Cth) (“the Rules”). Section 45A of the Act provides as follows:
45A Summary decrees
No reasonable prospect of successfully defending proceedings
(1)The court may make a decree for one party against another in relation to the whole or any part of proceedings if:
(a)The first party is prosecuting the proceedings or that part of the proceedings; and
(b)The court is satisfied that the other party has no reasonable prospect of successfully defending the proceedings or that part of the proceedings.
No reasonable prospect of successfully prosecuting proceedings
(2)The court may make a decree for one party against another in relation to the whole or any part of a proceedings if:
(a)The first party is defending the proceedings or that part of the proceedings; and
(b)The court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
When there is no reasonable prospect of success
(3)For the purposes of this section, a defence or proceedings or part of proceedings need not be:
(a) Hopeless; or
(b) Bound to fail;
To have no reasonable prospect of success.
Proceedings that are frivolous, vexatious or an abuse of process
(4)The court may dismiss all or part of proceedings at any stage if it is satisfied that the proceedings or part is frivolous, vexatious or an abuse of process.
(5)To avoid doubt, proceedings or a part of proceedings are not frivolous, vexatious or an abuse or process merely because an application relating to the proceedings or the part is made and later withdrawn.
Part 10.3 of the Rules is as follows:
Part 10.3—Summary orders and separate decisions
10.12 Application for summary orders
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.
10.13 Application for separate decision
A party may apply for a decision on any issue, if the decision may:
(a)Dispose of all or part of the case;
(b)Make a trial unnecessary;
(c)Make a trial substantially shorter; or
(d)Save substantial costs.
10.14 What the court may order under this Part
On an application under this Part, the court may:
(a)Dismiss any part of the case;
(b)Decide an issue;
(c)Make a final order on any issue;
(d)Order a hearing without an issue or fact; or
(e)With the consent of the parties, order arbitration about the case or part of the case.
Note: This list does not limit the powers of the court. The court may make orders on an application, or on its own initiative (see rule 1.10).
The test governing applications for summary dismissal is settled. In Lindon v Commonwealth (No 2) (1996) 136 ALR 251 (“Lindons Case”) at page 256 Kirby J said as follows:
1.It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the court, is rarely and sparingly provided.
2.To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.
3.An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes tum an apparently unpromising cause into a successful judgment.
4.Summary relief of the kind provided for by O 26, r I8, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
5.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 pleading. A question has arisen as to whether O 26, r 18 applies to part only of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim.
6.The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
[Footnotes omitted]
As submitted by counsel for the wife this test must be read subject to s 45A of the Act and Part 10.3 of the Rules.
Wife’s Case
The wife’s case that the husband’s Initiating Application should be summarily dismissed was based upon the following:
a)That on the basis of the second Divorce Agreement res judicata applies, such that the husband is estopped from seeking an alteration of property interests in this Court;
b)In the event that the Court is of the view that the Divorce Agreements did not include consideration of or deal with the parties’ property interests in Australia, Anshun estoppel applies; and
c)The husband’s application for final orders has no reasonable likelihood of success based on the principles in Stanford & Stanford (2012) 247 CLR 108 (“Stanford’s case”).
Upon receipt of the report of the single expert witness with respect to the legal position of the Divorce Agreements, the wife abandoned her case that Res Judicata applied.
The Expert Opinion
Counsel for the wife submits that the single expert report confirms inter alia that;
a)A divorce agreement is “an agreement mutually and voluntarily concluded by divorcing parties and binding to the parties.”
b)“…There is no Chinese law restricting parties from dealing with foreign assets by mutual agreement”
c)Where there is no mutual agreement to divorce, a party wanting to divorce can apply to a Chinese Court for a divorce and while dealing with the divorce issue the Chinese court must deal with children and assets if there are any;
d)Although there are different practices with respect to foreign assets most Chinese courts will not deal with foreign assets unless the parties have agreed to a settlement with respect to those foreign assets.
Anshun Estoppel
The principle of Anshun estoppel was discussed in some detail by the Court of Appeal of Western Australia in DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 at commencing at [73] as follows:
[73]The rule invoked by the appellant rests upon the principle that the court requires parties to litigation to bring forward their whole case and will not permit a party to reserve a claim and make it later when it could and should have been made in the earlier proceedings. It stems from the well-known statement of Wigram VC in Henderson v Henderson:
…where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted parts of their case.
[74] That principle was considered by the High Court in Port of Melbourne Authority v Anshun Pty Ltd in the context of a failure to plead a defence in an earlier action. In that case, Anshun had entered into an agreement with the Port of Melbourne Authority for the hire of a crane and had agreed to indemnify the Authority against any claims made against it arising out of the use of the crane. A workman suffered injury arising out of Anshun's use of the crane. He claimed damages against the Authority and Anshun, each of whom served a contribution notice on the other. The Authority's notice claimed a contribution, but not indemnity. The workman recovered damages against both the Authority and Anshun and between them liability was apportioned 90% to the Authority and 10% to Anshun. The Authority then brought an action against Anshun based on the indemnity in the agreement, claiming the amount the Authority had paid to the workman under the judgment. At trial, the Authority's claim was permanently stayed on the basis of the principle in Henderson v Henderson. An appeal by the Authority to the High Court failed.
[75] The High Court rejected, however, the proposition that it was an abuse of process to raise in subsequent proceedings matters which 'could and therefore should' have been litigated in earlier proceedings and considered that the abuse of process test was not of great utility in these circumstances. Gibbs CJ, Mason and Aickin JJ said:
…In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding. In this respect, we need to recall that there are a variety of circumstances, some referred to in the earlier cases, why a party may justifiably refrain from litigating an issue in one proceeding yet wish to litigate the issue in other proceedings eg expense, importance of the particular issue, motives extraneous to the actual litigation, to mention but a few (602 - 603).
[76]Their Honours went on to say:
…The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding. By 'conflicting judgments' we include judgments which are contradictory, though they may not be pronounced on the same cause of action. It is enough that they appear to declare rights which are inconsistent in respect of the same transaction.
It is for this reason that we regard the judgment that the Authority seeks to obtain as one which would conflict with the existing judgment, though the new judgment would be based on a different cause of action, a contractual indemnity (603 - 604).
Counsel for the wife submitted at [12] of her written submissions filed 3 December 2019 that
“…it is now settled in these proceedings that the parties were able to deal with their property interests in Australia in the Divorce Agreements. The assets in Australia were “able to be verified” [emphasis in original] and the husband was aware of the purchase of the Suburb C property prior to the execution of the first Divorce Agreement. He could have sought specific relief with respect to the Suburb C property in either the first or second Divorce Agreements but failed to do so.”
In my view, although it appears the husband and the wife could have included the wife’s Australian assets in the Divorce Agreement they would have had to agree to do so. It is also not clear as submitted by counsel for the wife that Chinese courts can deal with foreign assets if those foreign assets can be verified. The single expert witness did refer to various approaches taken by the courts in China and in particular one case in which she said at [18] a court determined that even if “…both parties are not possible to enter mutual agreement on foreign assets, if the foreign assets can be verified, the Chinese court is able to settle in the divorce proceeding” and at [18] that “the court holds that in the legal marriage all assets gained are joint assets regardless that they are located within and/or outside of the territory of the People’s Republic of China, all assets should be dealt with unless they are not possible to be verified.”
Apart from the fact that it is difficult to imagine that the wife would have wanted her Australian assets treated as joint assets, the single expert witness also concluded having referred to the three different approaches taken by the Chinese courts at [19] that “most of the Chinese courts don’t deal with the foreign assets unless both parties are possible to enter mutual agreement on the settlements of foreign assets.” She also went on to say (at [20]) that:
…If both parties have assets disputes after divorce, whether Chinese courts are able to deal with foreign assets should depend on her jurisdiction. The assets are located outside of China and the defendant party is residing outside of China, Chinese court is not able to deal with the assets due to lacking the jurisdiction. What the Chinese court can do is to suggest the applicant to do the assets division application to the court where the foreign assets are located.
In my view, the situation these parties were in is significantly different to those envisaged by the High Court in Port of Melbourne Authority v Anshun Pty Ltd 147 CLR 589 and the other authorities. In this case there was no litigation and in fact it appears that even if there had been, the Chinese courts may not have been able to deal with the foreign assets. Although the parties in this case entered into a Divorce Agreement and could have dealt with the foreign assets in that agreement, in my view they were under no obligation to do so. I do not accept that the husband is in these circumstances estopped from issuing proceedings in this Court as he has done on the basis of Anshun estoppel.
Stanford
The other limb of the wife’s case based upon which she said the husband’s Initiating Application should be summarily dismissed is that based upon the principles enunciated by the High Court in Stanford’s case, the husband has no reasonable prospect of obtaining an order adjusting the parties’ interests in property.
Counsel for the wife submitted that in this case unlike most applications for summary dismissal the Court has the benefit of the husband having filed his trial Affidavit and that the Court could not conclude, based upon that evidence taken at its highest, that it is just and equitable to make orders adjusting the parties’ interests in property, particularly in circumstances where the husband has already had the benefit of some AUD $314,879.
On 9 April 2019, the husband was ordered to file a Response to the Wife’s Application in a Case seeking summary dismissal of his Initiating Application and in support of the final orders he seeks in that application. I do not accept as submitted by counsel for the wife that this was intended to be his trial Affidavit or that one might have expected to see the level of detail one might necessarily expect to see in a trial Affidavit. Although arguably the Husband’s Affidavit might have been more comprehensive, I am not satisfied having regard to that Affidavit that responsibility for any deficiencies in the drafting of the Affidavit should lie at the feet of the husband personally and as Kirby J said in Lindon’s case if it appears that a party may have a reasonable cause of action which that party has not put in proper form a court will ordinarily allow that party the opportunity to do so.
Although in my view, the Affidavits are poorly drafted, it is clear from the wife’s lengthy Affidavit, and the husband in his Affidavit does not suggest otherwise, that both the Suburb C property and the AUD$5 million invested in the wife’s name came from the wife’s parents. However, in my view that is not the end of the matter. Financial contributions are not the only contributions the court is required to consider and the husband in his Affidavit does refer, albeit in somewhat general terms, to the contribution he has made to the care of the children of the marriage and to his current financial circumstances. The husband’s case would not be the first to be based upon contributions made to the welfare of the family and/or the matters referred to in s 75(2) of the Act.
Although given the overwhelming financial contributions made by the wife or on her behalf and the monies he has already had or retained may mean that the husband has only limited entitlements, it does not mean that he has none or as submitted by counsel for the wife should be precluded from having the court determine what if any entitlements he may have. As Kirby J opined in Lindon’s Case at page 544, “it is a serious matter to deprive a person of access to the courts of law for it is there the rule of law is upheld…” and the fact that a case appears weak and unlikely to succeed “ is, not, alone sufficient to warrant summary termination.”
In all of the circumstances, I propose to dismiss the wife’s application for summary dismissal of the husband’s Initiating Application.
Security For Costs
Section 117 of the Act provides that in proceedings pursuant to the Act parties shall each bear their own costs unless the court is satisfied that there are circumstances which justify it making an order that one party pay another party’s costs. If so satisfied, the court may make such order for costs or security for costs as it considers just. In determining what if any order it should make for costs the court must have regard to the matters in s 117(2A) of the Act as follows:
a)The financial circumstances of each of the parties to the proceedings;
b)Whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
c)The conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
d)Whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
e)Whether any party to the proceedings has been wholly unsuccessful in the proceedings;
f)Whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
g)Such other matters as the court considers relevant.
In Luadaka v Luadaka [1998] FLC 92-830 the Full Court of the Family Court of Australia said as follows:
[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:
[62.1]It 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.
[62.2]The 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.
[62.3]It 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.
[62.4]It 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.
[62.5]It 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
[62.6]It 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.
[62.7]Other 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.
Although counsel for the wife submits that the husband has retained the proceeds of sale of the F City property, his severance pay and the sum of $46,059, the wife says was transferred from her L Bank, it is her evidence that the husband applied these funds as he saw fit, which suggests that the husband may have already spent these funds. It is his evidence that he and the twins live with his parents and due to the limited space he sleeps on the couch. He deposes to a monthly salary of approximately $1,300 per month and expenses for himself and the twins of approximately $2,000. He further deposes to having borrowed AUD$19,000 from a cousin to fund these proceedings.
The wife’s solicitor deposes that the wife has incurred legal costs and disbursement of $45,073 and that the work in progress is $11,016 a total of $56,089. He provides a further estimate of the wife’s costs up to and including the case assessment conference on 9 April 2019 of $20,900 and up to and including the interim hearing of $29,700 a further sum of $50,600. This makes a total of $106,689. He then goes on to estimate costs up to and including a final hearing of $121,000. The costs are calculated on the basis of the costs agreement signed by the wife on 4 November 2018. The wife’s application for security of costs is accordingly based upon the assumption that there are likely to be circumstances which would justify the Court making an order for costs and that those costs would likely be payable on an indemnity basis. These are not assumptions based upon which the Court should make an order for security for costs, even if it were satisfied that there are other circumstances justifying that order. It is also in my view premature to conclude that there is likely to be a trial and order accordingly and I am not satisfied that even if an order for security for costs was justified, that the amount the wife is seeking would be a proper exercise of the Court’s discretion.
The husband may not have contended in his Affidavit that an order for security costs would stifle the litigation, however even leaving aside whether or not that is a matter for submissions rather than evidence. I am satisfied on the balance of probabilities based upon his evidence that he does not have the resources, other than the balance of the funds borrowed from his cousin in Australia to fund the litigation. In these circumstances, any order for security for costs let alone the order the wife seeks would most likely prevent the husband continuing the proceedings. The wife on the other hand owns the Suburb C property and has at least $5 million in an account in her name. I am satisfied that in these circumstances the wife has the means to meet her costs.
I have also taken into account, having regard to both the husband’s limited financial circumstances and the fact that he is not resident in Australia, the difficulty the wife may have recovering her costs in the event the Court were to make an order for costs. Whilst this is a matter the Court can consider it is not in my view sufficient in this case, having regard to all of the circumstances in this case to justify the order for security costs the wife seeks.
Although the prospects of success of the husband’s application is a relevant consideration, I do not accept as submitted by counsel for the wife for reasons already discussed that his application is without merit or that there is a high probability of failure as such. Success or failure are not particularly useful terms when one is considering a decision, such as the decision the Court will need to make in this case. Whilst the husband’s claim may be limited, that in my view does not mean that it has no merit or that there is a high probability of failure. These are matters that perhaps might be more usefully considered at the conclusion of the proceedings. I am also not satisfied that there is anything to suggest that the husband’s application is not bona fide or that it is vexatious.
The fact that an order for security for costs would prevent the husband from proceeding with his application does not mean if the circumstances otherwise justify it doing so, that the Court should not make such an order. However, it is a significant albeit not the only consideration in this case. I am not satisfied that in all of the circumstances of this case there are reasons that justify a departure from the general rule that each party should bear their own costs.
In all of the circumstances I propose to dismiss the wife’s Application in a Case filed 4 April 2019.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 28 February 2020.
Associate:
Date: 28 February 2020
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