Lorenzi & Lorenzi
[2022] FedCFamC2F 1506
Federal Circuit and Family Court of Australia
(DIVISION 2)
Lorenzi & Lorenzi [2022] FedCFamC2F 1506
File number(s): NCC 2218 of 2020 Judgment of: JUDGE KEARNEY Date of judgment: 8 November 2022 Catchwords: FAMILY LAW – Parenting – where the mother filed an application seeking the father pay for security of costs in the sum of $34,177.02 – where the application comes less than a month out from trial – where the father opposes the mother’s application – where the Court dismisses the mother’s application – where the trial remains listed. Legislation: Family Law Act 1975 (Cth), PT XV
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Cases cited: Boxall & Boxall (No. 2) [2008] FamCA 587 (‘Boxall’)
Fennessy & Gregorian (security for costs) [2008] FamCAFC 89 (‘Fennessy & Gregorian’)
Hayes & Stapleton (surety for costs) [2009] FamCAFC 223 (‘Hayes & Stapleton’)
Luadaka & Luadaka (1998) FLC 92-830 (‘Luadaka’)
Division: Division 2 Family Law Number of paragraphs: 66 Date of last submission/s: 7 November 2022 Date of hearing: 7 November 2022 Place: Newcastle Counsel for the Applicant: Mr Tregilgas Solicitor for the Applicant: Merridy Elphick Lawyers Solicitor for the Respondent: Self represented Solicitor for the Independent Children’s Lawyer: Legal Aid NSW, Newcastle Family Law Table of Corrections 9 November 2022 In paragraph 47 the date “13 September 2021” has been corrected to show “13 September 2022”. 9 November 2022 In paragraph 60 the date “October 2021” has been corrected to show “October 2022”. 9 November 2022 In paragraph 60 (b) the date “September 2021” has been corrected to show “September 2022”. ORDERS
NCC 2218 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS LORENZI
Applicant
AND: MR LORENZI
Respondent
INDEPENDENT CHILDREN'S LAWYER
order made by:
JUDGE KEARNEY
DATE OF ORDER:
8 NOVEMBER 2022
THE COURT ORDERS THAT:
1.The application for security for costs filed 21 October 2022 is dismissed.
2.The trial remains listed for hearing over two days, commencing 10.00am Wednesday 9 November 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Lorenzi & Lorenzi has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
“Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Division 1) Rules 2021 (Cth) on 9 November 2022”
Judge Kearney
INTRODUCTION
Less than one month before the parenting trial is to be heard, the mother filed an application seeking that the father pay in excess of $34,000 by way of security for her costs. The father opposed the application. In the event that I granted the relief sought by the mother, and the father did not comply by the trial, then I heard that the mother contended the trial would proceed on an undefended basis insofar as the father was concerned. What should I do?
The proceedings invoke s 117 of the Family Law Act 1975 (Cth) and unless otherwise specified, any reference to “the Act” or any other legislative reference is a reference to the Family Law Act 1975 (Cth).
The substantive proceedings were commenced by MS LORENZI (‘the mother’) with the respondent being MR LORENZI (‘the father’).
The substantive proceedings are listed for a two-day trial commencing tomorrow and involve two subject children –
(a)X born in 2016 (‘X’); and
(b)Y born in 2018 (‘Y’); and
whom shall be collectively described as ‘the children’.
The children are independently represented by Natalie Spinks (‘the ICL’).
PRECIS
The genesis for these costs proceedings by the mother was the father’s inaction on three fronts and through that prism - the injustice she says will be caused to her if her legal costs for the trial are not secured by the time the trial commences.
For the reasons that follow, I will dismiss the mother’s application for security for costs and confirm the trial will commence tomorrow.
THE PARTIES’ PROPOSALS AND APPLICABLE LAW - Security for costs
The mother sought a security for costs order against the father fixed in the sum of $34,177.02, payable on or before the first day of the trial.
The father resisted the application and the ICL did not take any formal position, save to say, that the children need closure, which could only come from the finalisation of the substantive proceedings at a trial.
Section 117(1) sets out a rebuttable presumption that each party to family law proceedings should bear their own costs. Section 117(2) permits me to rebut that presumption and make a security for costs order against a party provided I consider it is just to do so and subject to subsections (2A), (4) and (5) and the applicable rules of court.
In this case, those rules are the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’) and unless otherwise specified, a reference to ‘the Rules’ or to subordinate legislation shall be a reference to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Rule 12.02 permits the respondent to make an application for security for costs and sets out a non-exhaustive list of considerations that I may have regard to when determining the application.
As observed by counsel for the mother, there is an internal tension between r 12.02 (which specifically permits the respondent to bring these types of applications and s 117(2) which does not impose any limitation upon who can bring a security for costs application.
I accept the submission of the mother’s counsel that the tension is resolved by case law, where (for example) the Full Court in Hayes & Stapleton (surety for costs) [2009] FamCAFC 223 (‘Hayes & Stapleton’) at [25] relied upon another Full Court decision of Luadaka & Luadaka (1998) FLC 92-830 (‘Luadaka’) at [41] for the proposition that an application for security for costs may be brought by either the applicant or the respondent because one of the quirks of the family law jurisdiction is that both parties may be seeking relief such that the distinction between them as applicant and respondent is less important.
In Fennessy & Gregorian (security for costs) [2008] FamCAFC 89 (‘Fennessy & Gregorian’) the Full Court reflected on the principles governing applications for security for costs by referencing passages from Luadaka including at [16] where at 62.4, it was recorded in part that –
62.4 …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.
In Hayes & Stapleton at [26] the Full Court further explored the reasoning in Luadaka where it was observed that –
(a)No special circumstances need to be established to found a security for costs order;
(b)The decision to order security for costs is discretionary both as to the making of the order and as to quantum;
(c)The purpose of such an order is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.
(d)In addition to the matters set out in s 117(2A), other matters that may be relevant include –
(i)The means of an applicant to satisfy an order for costs if they are unsuccessful noting that poverty should be no bar to justice. As for the respondent, the question is whether they can pay for their own costs. In light of s 117(2A) both parties’ financial circumstances are considered and it is no bar to a security for costs order if the applicant seeking the benefit of the order has the means to pay their costs nonetheless;
(ii)The prospects of success is relevant although a detailed assessment as to prospects will not be undertaken unless there is a demonstrable probability of success or failure;
(iii)Whether the claim for security for costs is bona fide, genuine and not trivial, is vexatious or a sham;
(iv)Whether a security for costs order would be oppressive or stifle the litigation, meaning that if it is made, the result may be that the substantive proceedings cannot proceed and whilst on it is own, this consideration does not mean the security for costs application should fail, it can often be a significant matter.
(v)Whether the litigation involves a matter of public importance which could militate against the making of security for costs order;
(vi)Whether there has been a delay to bringing the application which causes prejudice to the respondent;
(vii)Whether there are other relevant matters including difficulties in enforcing a prospective costs order and the quantum of costs to be incurred.
Subrule 12.02(2) sets out a non-exhaustive list of considerations which I can use in the exercise of my discretion and some of the matters set out in Luadaka (as cited in Fennessy & Gregorian and Hayes & Stapleton) are incorporated therein. I have had regard to the considerations set out within the Act and the Rules as are relevant to a determination of this particular dispute and the circumstances of the parties.
As may be relevant, this reflection has taken account of the case law, both as cited above and as referred to in the mother’s outline of case document and during oral submissions. I record here my gratitude to counsel for the mother for the deliberate and diligent approach he took to the task at hand.
Finally, both the Court and the parties have obligations to either promote or conduct the proceedings in a way that accords with the overarching purpose (see s 190 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (‘the Court Act’) which is set out below –
Section 190 Overarching purpose of civil practice and procedure provisions
(1) The overarching purpose of the civil practice and procedure provisions is to facilitate the just resolution of disputes:
(a) according to law; and
(b) as quickly, inexpensively and efficiently as possible.
Note 1: See also paragraphs 5(a) and (b).
Note 2: The Federal Circuit and Family Court of Australia (Division 2) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.
(2) Without limiting subsection (1), the overarching purpose includes the following objectives:
the just determination of all proceedings before the Federal Circuit and Family Court of Australia (Division 2);
(a) the efficient use of the judicial and administrative resources available for the purposes of the Court;
(b) the efficient disposal of the Court’s overall caseload;
(c) the disposal of all proceedings in a timely manner;
(d) the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
…
The parties and lawyers have an obligation to conduct their proceedings in a way that is consistent with the overarching purpose – see s 191 of the Court Act – the relevant parts of which are set out below -
Section 191 Parties to act consistently with the overarching purpose
(1) The parties to a civil proceeding before the Federal Circuit and Family Court of Australia (Division 2) must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
…
(4) In exercising the discretion to award costs in a civil proceeding, the Federal Circuit and Family Court of Australia (Division 2) or a Judge must take account of any failure to comply with the duty imposed by subsection (1).
Even before the advent of the overarching purpose, the Court has taken seriously the parties’ conduct and as part and parcel, their obligations to act in good faith when it comes to settlement negotiations, with Mullane J making a costs order because of a party’s failure to participate in further mediation: Boxall & Boxall (No. 2) [2008] FamCA 587 (‘Boxall’) at [14], [28] & [39].
THE EVIDENCE
In terms of the evidence, the mother read and/or relied upon the following documents:
(a)The application in a proceeding filed by the mother on 21 October 2022;
(b)The affidavit of Ms Lorenzi filed 3 November 2022;
(c)The financial statement of Ms Lorenzi filed 3 November 2022;
(d)Exhibit ‘M1’ – the Outline of Case document filed by the mother on 3 November 2022;
(e)Exhibit ‘M2’ – the tender bundle filed by the mother and consisting of 27 pages;
(f)Exhibit ‘M3’ – the amended response to initiating application filed by the father on 30 August 2022.
The mother also relied on the expert reports prepared in the substantive proceedings which I have marked as –
(a)Exhibit ‘A’ – the family reported prepared by Mr B and dated 1 September 2021;
(b)Exhibit ‘B’ – the update family report prepared by Mr B and dated 7 September 2022.
The father read and/or relied upon the following documents:
(a)The response to an application in a proceeding filed 31 October 2022.
(b)The affidavit of Mr Lorenzi filed 28 October 2022.
Given the late filing of the mother’s affidavit and financial statement, the father was given the opportunity to consider the material. He raised no objection to me reading the documents sought to be relied upon by the mother, including the tender bundle and his amended response to initiating application. On that basis I accepted the mother’s material.
Statements of facts as set out below should constitute findings of fact unless otherwise expressed. Where there is controversy, I have done my best to highlight this.
DISCUSSION & ANALYSIS – costs
Given the short turnaround between the hearing of the application and the trial, I do not propose to record here each of the matters set out within s 117(2A) and subrule 12.02(2). Having said that I have considered all the matters set out within the relevant legislation and the Rules.
I will now focus on those matters that were explored by the parties and/or I considered to be significant in my determination about the making of an order that is just to the parties in light of the purpose of a security for costs order being to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.
In summary these matters were –
(a)The financial circumstances of the parties;
(b)The father’s prospects of success in the substantive proceedings;
(c)The father’s failure to conduct the proceedings in a way that is consistent with the overarching purpose insofar as engaging in negotiations for settlement;
(d)The prospect of the relief sought stifling the proceedings;
(e)Whether the mother has delayed the bringing of the application which causes prejudice to the father.
The financial circumstances of the parties
The mother’s financial statement transparently sets out her financial circumstances. In summary she is in receipt of a disability support pension and is the primary carer of the children. The mother pays less-than-market rent to her parents which includes her use of electricity and this expense and the other living expenses for her and the children are just covered by the Commonwealth benefits she receives and the minimal child support paid by the father.
The mother’s parents are paying for her legal fees, recorded by way of a loan agreement she has with them and having a principal sum of $74,831 (as at June 2022). The mother says she pays this debt off in weekly instalments of $200.
In August 2021, the mother says that the parties resolved their property dispute with the mother receiving about $363,000 and the father receiving about $81,000. In just over a year, the mother’s funds have diminished by about $130,000. The mother says that the father has failed to answer a request for disclosure to support his contention that his share of the property settlement has been expended by him in living expenses when he lived in Sydney and legal fees.
The mother says that the remainder of her property settlement funds will be used to support herself and the children in circumstances where she does not expect to receive any significant child support from the father.
The father’s evidence about how he has disposed of his $81,000 share of the property settlement funds is conclusionary in nature. It is no wonder the mother sought disclosure from him, albeit I also accept that during the same period, the mother appears to have disposed of a significant proportion of her share of those funds.
If I accept his evidence at face value, the father has no tangible assets and the Commonwealth benefits he receives are entirely dissipated on his day-to-day living expenses.
In submissions, the father says he has no capacity now or in the future to secure the $34,000 sought by the mother for security for costs.
The mother expresses her belief that members of the father’s family are holding funds on trust for the father and that deposits made into the father’s Commonwealth Bank of Australia account #...21 originate from accounts held by the paternal uncle MR C and/or the paternal grandmother MS D (‘MS D’). In other words, just like the mother, the father has a financial resource in the form of his family, albeit she says that she has made disclosure about this benefit whereas the father has not.
Based on his evidence and the concerns expressed by the mother, I accept that if a costs order was made against the father by the Court after the conclusion of the parenting proceedings, the mother may have some difficulty in enforcing the order.
The father’s prospects of success in the substantive proceedings
It is common ground that despite interlocutory orders made on 17 August 2020 for the children to spend supervised time with the father (‘the August 2020 orders’), no further time has occurred since January 2021. It is contended by the mother that for three months, the time was exercised each week, but then for two months between November 2020 and January 2021 it stopped, then re-started then stopped.
The mother says that the cessation in time between the father and the children is entirely as a result of the father’s unilateral decisions. If the mother is right, then the children have not seen their father since they were respectively four and two years of age.
By September 2021, the father had travelled to Country F and through that prism, the family report recommended that the father share a clear outline of his plans moving forward and made various recommendations including that if the court found it is in the children’s best interests to do so, supervised time re-commence.
Having spent about six months overseas, father returned to Australia in January 2022. He now lives at Town E and still the children have not spent any supervised time with him, despite the August 2020 orders.
About a week before the update family report was produced, the father filed an amended response to initiating application which conceded that the children should live with the mother who should exercise sole parental responsibility for them (provided he is given the opportunity to be heard before such decisions are made). I heard in submissions that as for the “time with” relief, the father’s position had changed as of last week. I don’t have that document before me and given the father is a litigant in person, I was careful in ensuring that he did not inadvertently waive the legal professional privilege that attaches to any discussions he has had with his lawyers and/or disclose any offers of settlement that may have been made. Suffice to say, in the absence of the father having the new proposal in front of him, the best I could make out was that just like in his formal relief before the court, his new proposal involves MS D being involved to facilitate time.
I observed to the father that even without making any other findings about his relief, which patently I can’t at this stage of the proceedings - there was no evidence about MS D’s capacity to comply with any orders that he seeks about her involvement. I do not know whether the failure to call MS D was an oversight or because MS D is unwilling to give evidence (noting that there remains a suspicion by the mother that MS D is a financial resource for the father) or is because of some other reason. No doubt having had the benefit of this judgment, the topic will be explored tomorrow, if indeed the father’s relief makes reference to the involvement of MS D.
What is apparent is that the prospects of success for the father’s relief (whatever that looks like) is impinged by the failure to call MS D and/or the abject failure of the August 2020 orders which has meant that the children (now six and four years of age) have not spent time with the father for almost two (2) years. Given the submissions of the mother’s counsel and the tenor of exhibits ‘A’ and ‘B’, the father’s commitment to the children and his ability to prioritise their needs ahead of his own are undoubtedly going to be the source of rigorous cross-examination.
Because I do not know what the father’s final relief looks like, I cannot make the finding as sought by the mother but certainly I am concerned that from a practical perspective, if it involves MS D (as the father submits it does), then his prospects of success are diminished.
The father’s failure to conduct the proceedings in a way that is consistent with the overarching purpose insofar as engaging in negotiations for settlement
It is common ground that following the release of the update family report in September 2021, the mother and the ICL were willing to participate in an informal mediation with a view to resolving and/or at least narrowing the issues in dispute. On 13 September 2022, the father’s solicitor emailed the mother’s solicitor flagging the prospect of the father securing a grant of aid for a litigation intervention conference. A week later, annexure D to the mother’s affidavit records the father’s position that an application for an extension of aid would need to be made to support a litigation intervention conference but having thoroughly gone over the updated family report and its recommendations with in depth written advice on several occasions to our client… we are instructed that he wishes the matter to proceed to court (‘the 20 September email’).
The father’s submission was to the effect that he would not participate in mediation without legal representation.
Based on the evidence, I am satisfied that the father’s conduct is adverse to his obligations to conduct proceedings in accordance with the overarching purpose and reflects poorly in light of s 117((2A)(c) and/or is otherwise a relevant matter: s 117(2A)(g), r 12.02(2)(l) and s 191(1) of the Court Act.
The prospect of the relief sought stifling the proceedings
During the course of submissions, the Court and the father learned for the first time, that the upshot of the mother’s relief (if made) was that if the father could not secure about $34,000 in less than 48 hours’ time, the mother intended to make application for the trial to proceed on an undefended basis insofar as the father was concerned.
I expressed some apprehension about this turn of events because of the lack of procedural fairness accorded to the father in making this abundantly clear within the mother’s relief.
The father submitted that he could not find the money and wondered what was the point of turning up on Wednesday with his lawyers if that was going to be the outcome?
I suggested alternatives to the mother’s contention including the trial being vacated to next year in order for either the father to be given more time to comply with any security for costs order I might make and/or the parties to participate in a dispute resolution process.
The ICL submitted that given the father’s recorded attitude towards resolution of the dispute (see the 20 September email) and in light of her already informing the parties of her strong views on this matter, a registrar and court child expert led family dispute resolution event would hold the best chances of resolving the dispute. I advised that such a resource would be unlikely to be available until April or May 2023.
The ICL submitted that in weighing up the competing interests between a party-led resolution of the dispute, versus the children benefitting from a timely conclusion to the dispute (via a trial which could happen tomorrow), her view was that the trial should proceed. As I understood her careful submissions, the ICL did not express a view about the mother’s contention that the trial occur on an undefended basis.
Based on the lack of persuasive documentary evidence that the father has the capacity to quickly meet a security for costs order and the mother’s contention that in the absence of compliance with any such order, the trial should proceed on an undefended basis - I am concerned that the mother’s application will stifle the proceedings. Although my concern may not warrant a refusal of the mother’s application, it is often a significant matter: see Fennessy & Gregorian at [16] and in particular the recitation of paragraph 62.4 from Luadaka contained therein.
Whether the mother has delayed the bringing of the application which causes prejudice to the father
I raised this issue with counsel for the mother. In reply I heard that the mother had demurred until receipt of the update family report and the consequential position adopted by the father (see the 20 September email) which identified his unwillingness to negotiate.
The mother did not file her application for security for costs until a month later.
The pressure placed on the resources of the court and the need to give procedural fairness to the other parties, meant that I could not list the application until days before the trial was due to commence.
In my view, the mother did not need to wait until October 2022 to file her application. This is because –
(a)Following the making of the August 2020 orders, she says that she knew that the father had failed to comply with those orders from at least January 2021 onwards;
(b)The family report recommendations were known to the parties in September 2022 and despite this, she says she knew that the father continued not to comply with at least some of the recommendations;
(c)From 30 August 2022, the mother knew the father’s final relief which apparently did not accord with some of the recommendations of the family report;
(d)From 20 September 2022 the mother knew the father wanted to go to trial and not mediation.
With that background in mind, I am satisfied that the mother’s delay in bringing these proceedings has caused prejudice to the father. He is in receipt of Centrelink benefits, has no tangible assets in his own name and submits he cannot possibly find the funds on short notice to answer any order that may be made for security for costs.
CONCLUSION
I am required to make an order that is just and secures justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.
Notwithstanding my recorded concerns about the father’s prospects of success and the difficulties the mother may have in enforcing any costs order that may flow from the substantive proceedings – having carefully weighed up the evidence and the submissions made by the parties I will dismiss the mother’s application. This is because –
(a)The mother’s delay in bringing the application will cause prejudice to the father because he has had less than a month to secure the resources she speculates he has;
(b)There is no persuasive evidence upon which I could safely find that the father has access to the financial resources to make a payment for security for costs;
(c)I am concerned that if I make the security for costs order, the proceedings will be stifled (with the potential that not all the evidence will be available for me to determine the children’s best interests) because the mother contends that any failure by the father to comply with the order would warrant the trial proceeding on an undefended basis, just over 24 hours after the security for costs order would have been made and despite the father having secured legal representation and filed his trial material.
Make no mistake, the father’s conduct including his failure to comply with the overarching purpose insofar as engaging in settlement negotiations remains a significant concern to me. Subject to cross-examination and at the risk of inviting more litigation, the untested evidence before me would warrant one or more parties being potentially exposed to a costs order either as sought by the ICL and/or another party. I make this comment so that a thorough cross-examination of any controversial evidence can occur once the trial begins tomorrow.
For this reason, I have committed my judgment to writing at extremely short notice so that those advocates who were not present at the hearing and/or could not attend today’s event, are fully aware of my concerns.
For the reasons above, I am satisfied that the Orders I make are just.
I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Kearney. Associate:
Dated: 8 November 2022
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