Luna & Luna (No 6)
[2024] FedCFamC1F 119
•1 March 2024
FEDERAL CIRCUIT AND
FAMILY COURT OF AUSTRALIA (DIVISION 1)Luna & Luna (No 6) [2024] FedCFamC1F 119
File number(s): BRC 11516 of 2019 Judgment of: HOGAN J Date of judgment: 1 March 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE –Where the proceedings were stayed pending the husband’s payment of an amount representing security for costs – Where an application was made by the wife for the dismissal of the proceedings – Where it has been 14 months since the security for costs order was made – Where the husband has not complied with the security for costs order – Where the proceedings are dismissed Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 10.22, 10.26, 10.27
Cases cited: Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 744
Joachim & Joachim [2000] FamCA 729
Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 96 ALR 200
Luna & Luna (No 3) [2022] FedCFamC1F 1011
Luna & Luna (No 4) [2023] FedCFamC1F 29
Division: First Instance Number of paragraphs: 46 Date of hearing: 1 March 2024 Place: Brisbane Counsel for the Applicant: Mr Alexander Solicitor for the Applicant: Results Legal Counsel for the Respondent: Mr Brown Solicitor for the Respondent: Alroe Somers & O’Sullivan Solicitors ORDERS
BRC 11516 OF 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LUNA
Applicant
AND: MR LUNA
Respondent
ORDER MADE BY:
HOGAN J
DATE OF ORDER:
1 MARCH 2024
THE COURT ORDERS BY WAY OF FINAL ORDER THAT:
1.The proceedings which were commenced by an application contained within the Amended Response to Initiating Application filed 27 April 2020 by the Respondent are dismissed.
AND IT IS FURTHER ORDERED THAT
2.In the event that any party seeks an order that another party pay the costs of and incidental to the proceedings commenced by the Amended Response to Initiating Application filed 27 April 2020:
a.any such party shall, within twenty-eight (28) days of today, file and serve:
i.any Application in a Proceeding setting out the relief sought; and
ii.any affidavit necessary to support such application; and
iii.written submissions in support of such application for costs; and
b.the party against whom an order for costs is sought shall, within a further fourteen (14) days thereafter, file and serve:
i.any affidavit necessary for the determination of any such application for costs; and
ii.any written submissions in answer to the submissions filed and served by the party seeking an order for costs; and
c.the party seeking an order for costs shall, within seven (7) days of being served with the submissions relied on by the party against whom an order for costs is sought, file and serve any further written submissions, strictly in reply, to the submissions served by the party against whom an order for costs is sought,
and any such application for costs shall be considered in Chambers.
NOTATION
A.There is no Court known by the name “Federal Circuit and Family Court of Australia”.
B.The design of the seal affixed to this order issued by the Federal Circuit and Family Court of Australia (Division 1) has been determined by the Attorney-General pursuant to the undated Federal Circuit and Family Court of Australia (Seal) Determination 2021 signed by the Attorney-General.
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 the pseudonym Luna & Luna has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENT[1]HOGAN J:
[1]The Court extends its apologies to the parties for referring to Ms Luna as “[…]” and Mr Luna as “[…]” when delivering these Reasons orally – this misspeaking was an accidental slip and has been corrected in these settled Reasons.
On 16 December 2022, I made orders that Mr Luna pay $70,000 to the Registry Manager of the Brisbane Registry by 4.00 pm on 16 January 2023, with such sum to be held as security for any costs awarded to Ms Luna in the substantive proceedings.
I also ordered that, in the event that Mr Luna failed to comply with the order for the payment of the money to be held as security for costs, the substantive proceedings – by which he sought orders setting aside a Binding Financial Agreement into which the parties entered on 23 February 2017 – be stayed pending his payment of that sum.
The proceedings by which Mr Luna sought an order setting aside the Binding Financial Agreement were commenced by an Application filed in the Court in April 2020.[2]
[2] Amended Response to Initiating Application (Family Law) filed 27 April 2020, page 18, paragraph 32.
The Reasons for Judgment delivered on 16 December 2022[3] should be read together with these Reasons delivered orally this afternoon, as the earlier Reasons provide an overview of the circumstances of this matter, as well as containing, of course, an exposition of the reasoning which underpinned the decision to make the orders which were then made.
[3] Luna & Luna (No 3) [2022] FedCFamC1F 1011.
It is uncontroversial that Mr Luna did not pay the $70,000 required to be paid by 16 January 2023.
It is also uncontroversial that, as at today, that amount remains outstanding.
No payment of any amount has been made by Mr Luna in relation to the order for security for costs made on 16 December 2022.
By Application in a Case filed on 6 October 2023 (and sealed on 13 October 2023), Ms Luna seeks that Mr Luna’s application for an order setting aside the Binding Financial Agreement be dismissed pursuant to either Rule 10.22(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) or pursuant to Rule 10.27(1)(a) of those Rules.
Rule 10.27(1)(a) provides that, if an applicant is in default, the Court may order that the proceeding be stayed or dismissed as to the whole or any part of the relief claimed by the applicant. Whether a party – in this case, the Applicant in the substantive proceedings, Mr Luna – is in default is a matter that is dealt with by Rule 10.26 of the Rules which provides, relevantly in subrule (1), that, for the purpose of Rule 10.27, an applicant is in default if the applicant fails to comply with an order of the Court in the proceedings.
Consequently, it is clear – and it is uncontroversial it seems to me – that Mr Luna is in default as that term is defined by Rule 10.26 of the Rules because he has not complied with the order I made on 16 December 2022 that he pay $70,000 into Court to be held as security for any costs awarded to Ms Luna.
The relief sought by Ms Luna is that the proceedings be dismissed and that Mr Luna be ordered to pay her costs of and incidental to the same on the indemnity basis as either agreed or assessed.
Mr Luna opposes an order dismissing his proceedings. The relief he seeks, as particularised in the Response to Application in a Proceeding filed 22 December 2023, is simply that: Ms Luna's Application in a Proceeding be dismissed; there be an order as to costs; she produce “all outstanding subpoena and disclosure material”.
As I have already said, the Reasons for Judgment I published on 16 December 2022[4] provide a useful overview of these proceedings.
[4] Luna & Luna (No 3) [2022] FedCFamC1F 1011.
Ms Luna’s contentions in support of an order dismissing the proceedings are as contained in the Outline of Case Document (Interim Hearing)[5] filed on her behalf and as supported by the evidence contained within the affidavits[6] read in support of the Application. In addition, Mr Alexander of Counsel, who appeared for her, made a number of submissions in support of the orders sought.
[5] Filed 26 February 2024.
[6][6] Affidavit of Ms Luna filed 6 October 2023; affidavit of Ms Luna filed 19 January 2024.
By way of very broad summary, Ms Luna’s contentions can, I think, be regarded as being, in essence, the following:
(a)that she has been exposed to litigation commenced by Mr Luna for a significant period of time, given that the proceedings commenced in April 2020; and
(b)that there is nothing in the evidence relied upon by Mr Luna in answering the current Application to suggest that he is likely, at any foreseeable time in the future, to comply with the order made on 16 December 2022 that he pay $70,000 into Court to be held by way of security for any costs awarded to her in the substantive proceedings; and
(c)that Mr Luna has, in any event, no real basis for seeking an order that the Binding Financial Agreement into which the parties entered in 2017 be set aside; and
(d)that she is prejudiced by Mr Luna’s inability to continue to prosecute his claim, and that such prejudice extends, in essence, across not only the financial sphere but also generally, in the sense that being engaged in litigation (as she and Mr Luna have been since April 2020) has been a significant impost on both her financial resources and time.
In addition, Mr Alexander’s submissions were, in essence, that the existence of the ongoing litigation – in circumstances where there is nothing in the evidence to suggest that it is likely to be further prosecuted by Mr Luna in the foreseeable future – is, of itself, a prejudice to Ms Luna in that the prospect that she may be involved in a trial at some indeterminate time in the future “looms”, to take up Mr Alexander’s word, over her head.
I do not intend, at this stage, to recount further the submissions made by Mr Alexander on behalf of Ms Luna but, of course, I have taken them into account, given that the matter was only before me a number of hours ago.
Mr Luna’s contentions in opposing an order dismissing the proceedings he commenced in April 2020 are as set out in the affidavits[7] relied upon in support of his position and as contained in the Outline of Case Document (Interim Hearing) filed on his behalf. [8]
[7] Affidavit of Mr Luna filed 21 December 2023; affidavit of Mr Luna filed 27 January 2024.
[8] Filed 26 February 2024.
In addition, submissions were made by Counsel who appeared for him, being Mr Brown.
In essence, Mr Luna’s contentions may be summarised as follows: he refutes the assertion that he has no case to have the 2017 Binding Financial Agreement set aside; he contends he has made a number of attempts to obtain finance, but these have been unsuccessful, and he has, amongst other things, been told to improve his employment stability; he has made a number of investigations with a number of potential employers which did not eventuate into offers of employment; he is currently in discussion with a person who is looking to launch a program and, in the event that that platform is launched, he will be employed in a managerial role; he suffered a further impost to his income earning capacity as a consequence of, not only motor vehicle repairs but also, a motor vehicle accident he suffered in late 2023 which resulted in him being unable to work for about two months and which also resulted in him being required to decrease the hours during which he can work.
In addition, Mr Luna’s evidence includes that he has money in investments (which are unspecified in one sense) and that, whilst he has attempted to obtain access to the same, he has been unsuccessful in that regard also.
In addition, Mr Luna relies upon evidence given by his solicitor,[9] who has made inquiries on his behalf with a number of litigation funders. Two of those entities have informed that the application for funding is unsuccessful. It seems that inquiries of the third remain unresolved.
[9] Affidavit of Ms E filed 21 December 2023 and sealed 22 December 2023.
What is clear, though, is that, on the evidence before the Court, the likelihood of Mr Luna being able to comply with an order that he pay $70,000 into Court by way of security for any costs that Ms Luna may be awarded is, on my view, very slight.
It is also relevant, of course, to note that the time for payment of that amount was 16 January 2023, approximately 14 months ago; as I have said, it is uncontentious that there has been no payment by Mr Luna of any amount into Court.
A further relevant consideration, in my view, is the fact that these proceedings have been twice listed for trial. On 30 July 2021, orders were made setting the matter for trial for three days commencing on 7 February 2022. This hearing was, it seems, subsequently vacated by order made on 21 January 2022 following the filing of an Appeal in relation to an earlier order.
The second listing occurred in June 2022, at which time the matter was ultimately listed for three days commencing on 13 February 2023 – a listing that was vacated by an order made on 27 January 2023 after Mr Luna failed to pay the $70,000 into the Registry as ordered on 16 December 2022.
On 27 January 2023, I also dismissed, for the short Reasons delivered orally that day,[10] Ms Luna’s oral application at that time that I dismiss, summarily, Mr Luna’s proceedings. The Reasons expressed on 27 January 2023 must, of course, be seen and assessed in the context in which they were made – namely, that, at that time, only 11 days had passed since the date by which Mr Luna had been ordered to pay the $70,000 into Court by way of security for costs.
[10] Luna & Luna (No 4) [2023] FedCFamC1F 29.
As noted in the Reasons for Judgment delivered on 16 December 2022,[11] particularly at [22] of the same, the evidence relied upon by Mr Luna in prosecuting his application to set aside the 2017 Binding Financial Agreement seemed to me to consist of little more than his assertions of belief, which, as I said at [22]:
(which would likely be inadmissible at the final hearing) that [Ms Luna] failed to provide the necessary disclosure prior to the parties entering into the Binding Financial Agreement; this remained the position despite the Court having earlier made orders, in the face of her opposition to the same, requiring [Ms Luna] to provide extensive disclosure to [Mr Luna].
[11]Luna & Luna (No 3) [2022] FedCFamC1F 1011.
Nothing in the evidence relied upon by Mr Luna in opposing the orders sought by Ms Luna today changes that position. There is no additional evidence relied upon by him in support of his application for an order setting aside the 2017 Binding Financial Agreement.
To the extent, as I have said, that it is relevant and helpful (because it sets out the circumstances of the matter and an assessment of matters that follow from the terms of the 2017 Binding Financial Agreement), I make particular reference to the contents of [23] onward of the Reasons for Judgment delivered on 16 December 2022.[12]
[12] Luna & Luna (No 3) [2022] FedCFamC1F 1011.
Unlike the situation on 27 January 2023, the current position, to my mind at least, differs.
As at January 2023, there had been a very short period of time during which Mr Luna had failed to comply with a requirement to pay funds into Court. At present, as I have already said, some 14 months have passed, and the default is continuing.
Whilst neither Counsel who appeared for either party made reference to any authority, it seems to me that assistance can be gleaned from the comments of the Full Court of the Federal Court in Lenijamar Pty Ltd v AGC (Advances) Ltd (1990) 96 ALR 200: in particular, the discussion of the majority in relation to the exercise of discretion that is enlivened by the failure of a party to comply with an order of the Court. Whilst the Court in Lenijamar,[13] of course, referred to the Rules of the Federal Court as they then were, reference to that authority suggests that the terms of the Rules were not dissimilar in that the Rule considered in Lenijamar[14] included a provision that, where a party failed to comply with an order of the Court directing that the party take a step in the proceedings, if the party was in default of the Court order, the proceeding could be stayed or dismissed.
[13] (1990) 96 ALR 200.
[14] (1990) 96 ALR 200.
As I have said, Ms Luna relies upon both Rule 10.27, being orders on default, and also Rule 10.22, which is a Rule that deals with circumstances where a party has not taken a step in a proceeding for six months. I consider the more appropriate Rule, though, of the two is Rule 10.27.
I note also that that the Full Court of this Court in Joachim & Joachim [2000] FamCA 729[15] expressed, at [79] of those Reasons, that they were prepared to adopt the principles stated by the majority in Lenijamar[16] as applicable to a discretion to dismiss for failure to comply with directions. Reference to [78] of Joachim[17] – wherein their Honours set out the decision of the majority found at page 208 and 209 in Lenijamar[18] – includes reference to two situations described as obvious candidates for the exercise of power to dismiss a proceeding for non-compliance. The first is said to be where the history of non-compliance by an applicant is such as to indicate an inability or unwillingness to co-operate with the Court and the other party or parties in having the matter ready for trial within an acceptable period; the second category of case was said there by their Honours to be, whatever an applicant’s state of mind or resources, a case in which non-compliance is continuing and which occasions unnecessary delay, expense, or other prejudice to the respondent.
[15] Finn, Holden and May JJ.
[16] (1990) 96 ALR 200.
[17] [2000] FamCA 729.
[18] (1990) 96 ALR 200.
Their Honours in Lenijamar[19] also said, in relation to the second category of case (that is, the one in which there is a significant continuing default) that because, in essence, the default is continuing and imposes an unacceptable burden on the respondent, the non-compliance is of the essence of the situation.
[19] (1990) 96 ALR 200.
I consider the comments of the Court in Lenijamar[20] as adopted by the Full Court of this Court in Joachim & Joachim[21] at [79] to be of assistance in the exercise of the discretion enlivened by Mr Luna’s failure to comply with the order that he pay money into Court to be held by way of security for any costs ordered to be paid to Ms Luna.
[20] (1990) 96 ALR 200.
[21] [2000] FamCA 729.
I accept the submissions advanced on behalf of Ms Luna to the effect that, in this case, given that:
(a)it was commenced in April 2020; and
(b)orders for the payment of funds by way of security for costs were made in December 2022 and the same have not been complied with,
there is prejudice to her of being required to be engaged in the litigation – particularly in circumstances where, I accept, the evidence adduced by Mr Luna does not provide any basis for any optimism that he will be in a position to meet the order for security for costs at any foreseeable time in the future.
Whilst I accept that the Court must always be careful to ensure that orders for security for costs do not work injustices against parties in respect of whom such orders are made, there is also, in my view, a countervailing requirement to ensure that the existence of an uncomplied with order for security for costs does not work an injustice upon the person who is intended to benefit from the same.
Further assistance in terms of matters to be considered in the exercise of the discretion can be found in Idoport Pty Ltd v National Australia Bank Ltd [2002] NSWSC 744 where Einstein J summarised a number of factors as being relevant to the exercise of discretion whether to dismiss a proceeding in which there has been a failure to comply with an order for security for costs. Those factors can be summarised as being as follows:
(a)the period of time that has elapsed since security was ordered; and
(b)the fact that a plaintiff has been on notice of the application for dismissal; and
(c)the seeming inability of a plaintiff to further fund the main proceedings; and
(d)prejudice to defendants; and
(e)the position of the Court.
In the present case, the order for security for costs was made on 16 December 2022 and 14 months have elapsed since the time Mr Luna was required by it to pay funds into Court. Secondly, I accept that Mr Luna has been on notice of Ms Luna’s intention to bring the current application on the basis of his non-compliance with the December 2022 order since no later than October 2023 and, yet, even with the benefit of that notice, there is, as I have already said on a number of occasions, no evidence of any payment of any funds into Court.
I consider that there is, on the evidence adduced by Mr Luna, little prospect of him meeting the order for payment of security for costs in the foreseeable future. Consequently, there is little prospect of the proceedings being prosecuted with diligence and brought to a conclusion. In this respect, it is also, in my mind, relevant to take into account the overarching purpose of the Rules as referred to in the Outline of Submissions[22] relied upon by Ms Luna – the overarching purpose being found at Rule 1.04 of the Rules: namely, to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible.
[22] Outline of Case Document (Interim Hearing) filed 26 February 2024, page 5.
Whilst Mr Luna has given evidence of his attempts to obtain funds sufficient to enable him to comply with the order for the payment of funds into Court by way of security for costs, his evidence does not persuade that it is likely that he will be in a position in the foreseeable future to comply with such an order.
I consider that the continuation of the proceedings, which began in April 2020 – that is, nearly four years ago – will cause prejudice to Ms Luna in the form of ongoing disruption and legal expense.
Given the overarching purpose of the Rules, the requirement on the Court to bring proceedings before it to an end and the requirements that justice, in the sense of resolution in a timely manner, be afforded to the parties, and for the reasons I have already expressed, I am persuaded, having regard to the history of the litigation and the matters to which I have referred, that it would now be oppressive to Ms Luna to permit the litigation to proceed in light of Mr Luna’s ongoing failure to comply with the order made in December 2022 for the payment of funds into Court by way of security for her costs.
As raised with Counsel during the course of the hearing earlier today, orders will also issue in terms which afford the parties the opportunity to be heard about the issue of costs, and for the same to be determined in Chambers following the receipt of written submissions and supporting affidavit.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Hogan. Associate:
Dated: 1 March 2024
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