Sanil and Lennon - [2019] FamCAFC 204

FAMILY COURT OF AUSTRALIA

SANIL & LENNON

[2019] FamCAFC 204

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Security for costs – Where the applicant seeks an order that the respondent pay security for his costs of the appeal brought by the respondent – Where an order to pay security for costs is likely to stifle the appeal – Where the prospects of the appeal succeeding are poor – Where caution must be taken in assessing the merits of an appeal on an application such as this since there is no access to the transcript, evidence or considered submissions in relation to the appeal – Application for security for costs dismissed.

Family Law Act 1975 (Cth) ss 4AA, 90SM, 114, 117
Family Law Rules 2004 (Cth) r 19.05

Atkins & Hunt (Security for Costs) (2015) FLC 93-646; [2015] FamCAFC 66
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Lee v Lee (2019) 93 ALJR 993; [2019] HCA 28
Luadaka v Luadaka (1998) FLC 92-830; [1998] FamCA 1520
Palma & Caleffi and Anor (Security for Costs) [2011] FamCAFC 174
Patterson v BTR Engineering (1989) 18 NSWLR 319
Robinson Helicopter Company Incorporated v McDermott (2016) 331 ALR 550; [2016] HCA 22
Skyworks v 32 Drummoyne Road [2017] NSWSC 343

APPLICANT:

Mr Sanil

RESPONDENT:

Ms Lennon

FILE NUMBER:

DNC

378

2014

APPEAL NUMBER:

2019

DATE DELIVERED:

7 November 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Aldridge J

HEARING DATE:

24 October 2019

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

16 August 2019

LOWER COURT MNC:

[2019] FamCA 556

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Tockar

SOLICITOR FOR THE APPLICANT:

Pigdon Norgate Family Lawyers

APPLICANT:

In Person

Orders

The Amended Application in an Appeal filed with leave on 24 October 2019 is dismissed.
There be no order as to costs.

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 Sanil & Lennon 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).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY

Appeal Number: EA 87 of 2019
File Number: DNC 378 of 2014

Mr Sanil

Applicant

and

Ms Lennon

Respondent

REASONS FOR JUDGMENT

Introduction

Mr Sanil (“the respondent”) is the applicant in these proceedings and the respondent to an appeal brought by Ms Lennon (“the appellant”) against orders made by McClelland DCJ on 16 August 2019.
By an Amended Application in an Appeal filed with leave on 24 October 2019, the respondent seeks an order that the appellant pay to the Court the sum of $38,489, or such other sum as the Court may see fit, as security for his costs of the appeal. In the alternative, the respondent seeks an order that the appellant be restrained from selling or otherwise dealing with a property in Suburb A owned by her and from charging or encumbering it pending finalisation of the proceedings between the parties. The respondent also seeks an order against the appellant requiring her to do all such things and acts as would permit the respondent to lodge a caveat on the title to that property.

Background

The proceedings between the parties commenced on 19 August 2014 with the appellant seeking orders for a property settlement pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”). On 7 September 2017, the respondent filed an Application in a Case seeking a declaration that a de facto relationship had never existed between the parties. In her Response to the Application in a Case filed by the respondent, the appellant sought a declaration that the parties had been in a de facto relationship and that the Court ought to determine the period during which it had existed.
Before the primary judge, the appellant contended that she had been in a de facto relationship with the respondent, as defined by s 4AA of the Act, between January 2006 and April 2013. The respondent denied any such relationship.
The primary judge dealt with the issue of the existence of any de facto relationship and its length by way of a four day hearing that was conducted separately to the substantive property settlement proceedings. His Honour made a declaration that the parties “were in a de facto relationship in the period from 13 October 2010 until 15 August 2012”. As the relationship was found to have existed for less than two years, s 90SM of the Act does not apply and the appellant is not entitled to seek orders for a property settlement (s 90SB(a) of the Act).

The application for security for costs

The Court is empowered by s 117(2) of the Act to make an order for security for costs. The Full Court in Atkins & Hunt (Security for Costs) (2015) FLC 93-646 (“Atkins”) at [21] regarded as “well settled” that in addition to matters referred to in s 117(2A) of the Act, the following matters should also be considered under s 117(2A)(g) of the Act:
·the prospects of success of the litigation (relevantly the [appellant’s] appeal);
·whether the claim for security is made bona fide;
·whether or not an order for security would stifle the litigation;
·whether or not the litigation may involve a matter of public importance;
·whether or not there has been a delay in bringing the application for security; and
·whether there would be difficulty in enforcing an order for costs.
(As per the original) (See also Palma & Caleffi and Anor(Security for Costs) [2011] FamCAFC 174; Luadaka & Luadaka (1998) FLC 92-830).
As the court pointed out in Atkins at [22], “[t]hese factors largely mirror the considerations referred to in r 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”).”
The respondent based his application on three propositions. The first proposition is that he has already spent a considerable amount on legal fees in relation to this matter ($90,424.82) and faces further legal fees for the appeal (estimated to be $38,489). The second proposition is that there will be difficulty in enforcing any costs order against the appellant should he obtain one in his favour if the appeal is unsuccessful. Finally, the respondent submitted that the appeal lacks merit and its prospects of success are weak.
The respondent accepts that his financial circumstances are superior to those of the appellant. The respondent has assets which he values at $3,924,838 including cash at bank of $154,838 and he is the beneficiary of a self-managed superannuation fund which has assets of $1,615,000. He has a mortgage in the sum of $780,000 (Respondent’s affidavit filed on 4 October 2019, paragraph 42). His assets therefore exceed his liabilities by $4,759,838.
Nonetheless, I accept that the cost of this litigation is a significant burden on the respondent.
The appellant works as a professional. She owns two properties, one is her home and one is rented to others. Both of the properties are mortgaged. The appellant estimates that she has equity of $200,000 in her home and $430,000 in the rental property.
The appellant deposed that she currently has $9,760.46 in a bank account, a large part of which represents a gift made to her by a friend for the purpose of obtaining the transcripts needed for the appeal.
The appellant asserted that she has “an outstandingly good credit history. However, if [she] was ordered by the Court to pay [the respondent’s] legal costs, as sought by his solicitors and did not pay them, [she] could potentially risk bankruptcy” (Appellant’s affidavit filed on 22 October 2019, paragraph 49). She submitted that this, in turn, could adversely affect her ability to retain her practicing certificate and thus to continue in her employment.
This paragraph of the appellant’s affidavit filed on 22 October 2019 must be contrasted with her oral submissions at the hearing of the application, in which the appellant reputedly said that she was not impecunious and that she had the ability to pay the costs sought should they ultimately be awarded.
I do not understand why the bankruptcy of the appellant would be a likely event if costs were awarded against her given the equity that she holds in her two properties. Even if the appellant was not in a position to borrow further funds, one of her properties could be sold to pay any future debt.
The respondent has not, however, identified any asset reasonably available to the appellant, such as cash or an asset readily revertible into cash, from which the appellant could meet the proposed order for payment of $38,489 as security for the respondent’s costs of the appeal, or indeed any other reasonable sum. I am unable to speculate as to the appellant’s ability to borrow funds to meet such an order.
I note, however, that in her submissions the appellant raised the distinct possibility of her further encumbering her properties to obtain the funds to pay for legal representation on the appeal. Whilst that may be her hope or expectation, I am unable to place much weight upon it to find that she would, more likely than not, be able to borrow funds for the purposes of providing security for costs.
It follows that there is no obvious likelihood that the appellant could readily comply with an order for the payment of a fixed sum as security for costs. Such an order therefore is likely to stifle the appeal.
The alternative order proposed by the respondent, namely the restriction on the appellant selling or otherwise dealing with the Suburb A property, involves no cash outlay on the part of the appellant whatsoever and a restriction over only one property. Nonetheless, the appellant submitted that such an order would be even more likely to stifle the appeal. This is apparently for two reasons.
The first is, as I have discussed, the appellant may wish to seek to borrow funds to obtain legal representation on the appeal which would involve further encumbering her properties.
Secondly, the respondent has filed an Application in a Case seeking that the appellant pay his costs of the hearing before the primary judge in the sum of $90,424.82. The making of such an order could adversely affect the ability of the appellant to raise funds to meet any order for security, although the recovery of any costs ordered to be paid could be delayed until the determination of the appeal.
Thus, such an order would not necessarily stifle the appeal but nonetheless the matters raised by the appellant are ones that must be taken into account.
It was submitted by the appellant that the application for security for costs was not bought before the Court bona fide because the costs of doing so are likely to exceed the costs of any security that would be ordered. Whether that be so or not, I do not consider that it would make the present application anything other than one which is genuinely brought.
A significant plank of the respondent’s case was what was said to be the weakness of the appeal. Certainly the grounds of appeal show little promise. They simply state:
1.The learned trial judge erred on the facts.
2.The learned trial judge took into account irrelevant matters.
3.The learned trial judge failed to take into account a material consideration.
4.The learned trial judge provided inadequate reasons.
5.The learned trial judge’s decision is ‘plainly wrong’.
6.The learned trial judge was biased.
7.The learned trial judge failed to afford the appellant procedural fairness.
(Notice of Appeal filed on 11 September 2019) (As per the original)
These grounds are not elaborated on in the appellant’s material in any meaningful way. In the course of oral submissions, I raised this with the appellant who responded to the effect that the merits of her appeal were very strong and that there are patent errors in the judgment both as to fact and as to credit, however those matters cannot presently be identified further as the appeal is at a very early stage. Such a stance is as unacceptable as it is illogical. For errors to be asserted in a Notice of Appeal, even broadly, they must have been identified.
Further, there is an obligation on every appellant to identify the asserted errors of the primary judge with precision.
It is to be noted that the appellant, who I repeat, is a practising lawyer, has included a ground that the primary judge was biased, as opposed to an assertion that a reasonable bystander might form an apprehension of bias. This was confirmed in the appellant’s oral submissions at the hearing of the application. Such an allegation is a most serious one to bring against any judge and could only be done with great thought and consideration. Nonetheless, when asked to identify the nature of the bias, the appellant was quite unable to give any satisfactory answer.
In the light of this, it is difficult to be sanguine about the appellant’s prospects of success as to the appeal.
It is apparent from his Honour’s reasons that the credit of the parties was a most significant issue in the proceedings. The primary judge’s reasons make it plain that the evidence of the respondent was preferred to that of the appellant where they differed (at [60]). In doing so, the primary judge took into account not only the appellant’s demeanour and the manner in which she answered questions (which was said to be non-responsive and argumentative) but also the fact that the primary judge regarded the appellant’s evidence as inconsistent with facts that his Honour considered had been independently established. The High Court of Australia has spoken frequently and recently about the limits upon which an appellate court can review a primary judge’s findings of credit, particularly where the primary judge has had the benefit of seeing witnesses and having the evidence unfold before them over the course of a trial (Fox v Percy (2003) 214 CLR 118, Robinson Helicopter Company Incorporated v McDermott (2016) 331 ALR 550; Lee v Lee 93 ALJR 993).
This too suggests that the prospects of the appeal succeeding are not high.
There is, of course, an obvious difficulty in a court assessing the merits of an appeal on an application such as this where it does not have access to the transcript, the evidence, the benefit of considered submissions or the time to consider the issues in any detail.
Accepting that to be so, the presentation by the appellant of the appeal to date leads to the conclusion that the prospects of the appeal cannot be described as anything other than poor.

Conclusion

I accept that an application for security for costs need not identify exceptional circumstances, it is enough that there are circumstances that justify the making of the order proposed. Even so, orders for security for costs, particularly against individuals, are not common because a court should not unduly fetter a person’s undoubted right of appeal.
The two significant considerations which are to be weighed in the balance are whether the proposed orders would stifle the appeal and the merits of the appeal. As I have said, the latter are not high as things stand at the present but some caution must be taken as to the weight to be given to this matter, as just discussed.
Taking into account these matters, I would not make an order for the payment of a cash sum as security for costs because I am satisfied, on balance, that it could stifle the appeal which is a most significant consideration.
Turning then to the proposed injunction. It is not an order for costs pursuant to s 117(2) of the Act but it is, as its terms plain, sought under s 114 of the Act. It is, therefore, a freezing order. Ordinarily a person seeking such an order must demonstrate that there is a real risk that assets will be dissipated (Patterson v BTR Engineering (1989) 18 NSWLR 319 at 321 and 327; Skyworks v 32 Drummoyne Road [2017] NSWSC 343 at [24]).
It is accepted by the respondent that there is no immediate risk of sale of the appellant’s properties, although as identified by the appellant in her oral submissions, there may be a risk that the properties will be further encumbered as set out earlier.
This is not a sufficient basis upon which to grant the injunction. That such an order might be convenient or desirable is not enough to justify it.
It follows that the respondent’s Application in an Appeal for security for costs will be dismissed.

Costs

The appellant acted for herself on the application and incurred no legal expenses. There will be no order as to costs.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 7 November 2019.

Associate:

Date: 7 November 2019