Sawer & Sawer
[2007] FamCA 140
•5 March 2007
FAMILY COURT OF AUSTRALIA
| SAWER & SAWER | [2007] FamCA 140 |
| FAMILY LAW – APPEAL – SECURITY FOR COSTS |
| Family Law Act 1975 (Cth) Luadaka v Luadaka (1998) FLC 92-830 |
| APPLICANT/ RESPONDENT: | Sawer |
| RESPONDENT/ APPELLANT: | Sawer |
| FILE NUMBER: | SYF | 3549 | of | 2003 |
| FIRST APPEAL NUMBER: | EA | 80 | of | 2005 |
| SECOND APPEAL NUMBER: | EA | 67 | of | 2006 |
| DATE DELIVERED: | 5 March 2007 |
| PLACE DELIVERED: | Canberra |
| JUDGMENT OF: | Finn, May and Thackray JJ |
| HEARING DATE: | 22 February 2007 |
| LOWER COURT JURISDICTION: | FAMILY COURT OF AUSTRALIA |
| LOWER COURT JUDGMENT DATES: | 13 September 2004 12 July 2006 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT/ RESPONDENT: | Mr Serisier |
| SOLICITOR FOR THE APPLICANT/ RESPONDENT: | Mr Greg Alfonzetti DX 21811 |
| THE RESPONDENT/ APPELLANT APPEARED ON HIS OWN BEHALF |
Orders
(a) That the Appellant Husband provide security for the costs of the
Respondent Wife in relation to appeal No. EA 80 of 2005 in the sum of $5,000.
(b)That the sum of $5,000 be paid by the Appellant Husband to the solicitor for the Respondent Wife within twenty-eight (28) days of the date of this Order and that the sum of $5,000 be retained in the trust account of the solicitor for the Respondent Wife pending further Order of the Full Court.
(c)That in the event that the Appellant Husband fails to comply with Order 1(a) and 1(b) of these orders then the appeal No. EA 80 of 2005 be permanently stayed.
(d) That the costs of the application for security for costs in relation to appeal No. EA 80 of 2005 be reserved as costs in the appeal.
(a) That the Appellant Husband provide security for the costs of the
Respondent Wife in relation to appeal No. EA 67 of 2006 in the sum of $5000.
(b) That the sum of $5,000 be paid by the Appellant Husband to the solicitor for the Respondent Wife within twenty-eight (28) days of the date of this Order and that the sum of $5,000 be retained in the trust account of the solicitor for the Respondent Wife pending further Order of the Full Court.
(c)That in the event that the Appellant Husband fails to comply with Order 2(a) and 2(b) of these orders then appeal No. EA 67 of 2006 be permanently stayed.
(d) That the costs of the application for security for costs in relation to appeal No. EA 67 of 2006 be reserved as costs in the appeal.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Court delivered this day will for all publication and reporting purposes be referred to as Sawer & Sawer.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 80 of 2005; EA 67 of 2006
File Number: SYF 3549 of 2003
| Kyriaci Koula Sawer |
Applicant/ Respondent
And
| Renos Sawer |
Respondent/ Appellant
REASONS FOR JUDGMENT
These reasons for judgment concern applications by the wife for orders that the husband lodge the sum of $5,000 by way of security for any costs of the wife, which he may be ordered to pay in relation to two appeals which he has instituted, and which arose out of property settlement proceedings between himself and the wife under s 79 of the Family Law Act 1975 (“the Act”).
The wife seeks that the sum of $5,000 by way of security be lodged in relation to each of the two appeals, and that a failure to lodge security should result in the appeal, or appeals, being dismissed.
Both applications for security are opposed by the husband.
Background
The parties married in Cyprus at the end of 1971 and migrated to Australia in 1976. They finally separated in December 2002.
On 15 May 2003 the wife commenced proceedings for property settlement. Those proceedings were ultimately heard by Mullane J from 9 to 11 August 2004.
On 13 September 2004 Mullane J delivered his reasons for judgment in which he found the parties had net assets valued at $1,277,026 which he divided $700,000 to the wife and $577,026 to the husband. To achieve this division the husband was required to pay the wife the sum of $614,433 by 11 October 2004.
Some fifteen months later, on 7 December 2005, his Honour made orders under the slip rule whereby he adjusted the net value of the parties’ property to $1,077,156 and amended his orders to require the husband to pay the wife the sum of $504,876 instead of the sum of $614,433 originally ordered to be paid.
Meanwhile in April 2005 (if not earlier) the wife had commenced enforcement and contravention proceedings against the husband.
On 11 July 2005 the husband filed an application to extend time to appeal the property settlement orders made by Mullane J on 13 September 2004. That application was heard by Boland J on 13 September and 25 October 2005 and was then the subject of written submissions.
On 2 June 2006 Boland J delivered reasons for judgment and made orders extending the time for the husband to file an appeal against the orders of 13 September 2004 (as amended by the orders of 7 December 2005) until 23 June 2006.
Following Boland J’s orders the husband on 19 June 2006 filed a notice of appeal (EA 80 of 2005) against the orders of 13 September 2004. Subsequently on 31 July 2006 he filed an amended notice of appeal.
On 12 July 2006 Mullane J had heard and dismissed an application by the husband for a range of orders, including orders staying the property settlement orders made on 13 September 2004, and/ or discharging or varying those orders, and also orders for the release of his passport.
On 17 July 2006 the husband filed an appeal (EA 67 of 2006) against Mullane J’s orders of 12 July 2006 dismissing the application for a stay and other relief. Subsequently on 5 September 2006 and again on 4 October 2006 the husband filed amended notices of appeal against the orders of 12 July 2006.
On 20 July 2006 the wife filed an application seeking (amongst other orders) an order that the husband provide security for her costs in the appeal (EA 80 of 2005) against the property settlement orders in the sum of $5,000 within 28 days, and an order that in the event that the husband failed to comply with such order for security, then the appeal be dismissed.
On 28 September 2006 the wife filed a similar application seeking that the husband provide a further sum of $5,000 by way of security for any costs which she might be awarded in the appeal (EA 67 of 2006) against the orders dismissing the application for a stay and other relief.
Also on 28 September 2006 Boland J ordered at a procedural hearing attended by the husband and by the legal representative of the wife, that the application of the wife for security filed on that date be consolidated with and heard at the same time as the application for security filed by the wife on 20 July 2006. That order by her Honour can, in our view, be regarded as a grant to the wife of any necessary extension of time to file the application of 28 September 2006 for security (if indeed any such extension of time was needed).
It is these applications by the wife, filed 20 July and 28 September 2006, for orders for security which are the subject of these reasons for judgment. It should be noted that although the wife’s applications filed 20 July and 28 September 2006 sought certain other orders in addition to the orders for security, only the applications for security were pursued before us at the hearing on 22 February 2006.
It should also be noted by way of background that the husband appeared without legal representation in the proceedings before Mullane J in August 2004 and in July 2006, in the proceedings before Boland J in the second half of 2005, and at the hearing before us on 22 February 2007. On all those occasions the wife was legally represented.
Principles Governing Applications for Security for Costs
The power in this Court to make an order for security for costs is to be found in s 117(2) of the Act, which is in the following terms:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
The provisions of s 117(2A) are as follows (- s 117(4) and (5) are not presently relevant):
In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(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.
The authorities establish that in exercising the discretion to order security for costs, it may also be relevant for the Court to consider in addition to the financial circumstances of the parties and the other five specific matters mentioned in s 117(2A), the following matters:
a)the prospect of success of the litigation;
b)whether the claim for security is made bona fide;
c)whether or not an order for security would stifle the litigation;
d)whether or not the litigation may involve a matter of public importance;
e)whether or not there has been a delay in bringing the application for security;
f)whether there would be difficulty in enforcing an order for costs
(Luadaka v Luadaka (1998) FLC 92-830; Jones and Jones (2001) FLC 93-080; Adult Guardian and Mother's Parents and B and Child's Representative (2002) FLC 93-116.)
The Financial Circumstances of the Parties
It will be seen that the first matter to be considered in determining an application for security for costs under s 117(2A) is the financial circumstances of the parties.
So far as the wife’s financial circumstances are concerned, it was stated in the affidavits by her solicitor in support of her applications for security, that her only source of income is from Centrelink and that she has no property of any significance. It was also stated that she had not received any payment from the husband under the property settlement orders made on 13 September 2004. We did not understand the husband to take issue with any of these statements concerning the wife’s financial position – although he did submit in effect that it was the wife’s own fault that she had not received any payment under the property settlement orders because of the enforcement action which she had taken.
So far as the husband is concerned, it was initially the wife’s case before us that his financial position was unknown. However, the husband claimed in his oral submissions to us that he was impecunious and had been exempted from paying the filing fees for his two appeals. Counsel for the wife then accepted that we should proceed on the basis that the husband was in fact impecunious.
The significance in the determination of an application for security in relation to an appeal, of the fact that the appellant is impecunious was explained in the following way by the Full Court in Jones (supra):
21. It has long been recognised that, as a general rule and in the exercise of an unfettered discretion, mere impecuniosity of a litigant who is a natural person, will not of itself be a basis for ordering that person to provide security. There is, however, an exception to that general rule, namely in the case of appeals. See Cowell v Taylor (1885) 31 Ch D 34 at 38, J & M O’Brien Enterprises Pty Ltd v Shell Co of Australia Ltd (No 2) (1983) 70 FLR 261 at 264, Ciappina v Ciappina (1983) 70 FLR 287 at 290 and Paton v Campbell Capital Ltd (unreported, Federal Court of Australia, 1 July 1993).
22. The fact that the [appellant] would be unable to pay the costs awarded against her, if her appeal was dismissed, is, in our view, a significant factor to take into account in considering whether to exercise the discretion to order security in favour of the [respondent], but it is not the only or deciding factor.
23. If an appeal appears to have little merit, a court may be more disposed to make an order for security for costs. …
It will be thus seen that the impecuniosity of the appellant in the present case must be a significant factor in our determination of the applications before us. However, it is a factor which must be balanced against other factors, particularly the prospects of success of the appeals.
We will turn shortly to the merits of, or prospects of success of, the husband’s appeals. Before doing so, it will be useful to refer to another matter on which Counsel for the wife placed significant reliance in support of the applications for security; that matter is the alleged history of non-compliance by the husband with previous court orders.
Non-Compliance of the Appellant with Previous Orders
It will be seen from the principles set out above which emerge both from ss 117(2) and (2A) of the Act and from the relevant authorities, that it may be relevant for the court to have regard to the appellant’s previous compliance with court orders when considering an application for security and particularly when determining whether there might be difficulties in enforcing any order for costs made in favour of the respondent to the appeal.
Although the husband may now dispute the wisdom of the steps which the wife took to enforce the property settlement orders, there can be no doubt that the wife considered it necessary to resort to enforcement procedures in relation to those orders. Notwithstanding having taken enforcement and also contravention proceedings, the wife has not received from the husband anything due to her under those orders. Furthermore the husband did not seek to appeal the property settlement orders until some ten months after they were made.
But whatever controversy might surround the husband’s compliance with, and the wife’s attempts to enforce, the property settlement orders, there is apparently no dispute that on 24 December 2004 Mullane J ordered that the husband pay the wife’s costs in the sum of $82,500 in relation to the property settlement proceedings, and that that order has not been complied with. Nor has that order been appealed. In our view, the husband’s non-compliance with the unchallenged costs order of 24 December 2004 is a powerful argument in favour of requiring that the wife be provided with some security in the event that costs orders are made in her favour in relation to the appeals.
We return finally to the merits, or the prospects of success of, the appeals.
The merits of the Appeals
Again as we understood the husband’s submissions, he has not so far filed any appeal books (including any transcripts) because of the uncertainties surrounding the future of his appeals occasioned by the applications now before us. This means that in assessing the merits of, or the likely prospects of success of, the appeals, we can only consider the judgments which are the subject of the appeals (being the judgments of Mullane J of 13 September 2004 and 12 July 2006) and the grounds of appeal directed to those judgments as contained in the last amended notices of appeal filed by the husband.
The grounds of appeal directed to the judgment of 13 September 2004 as contained in the husband’s amended notice of appeal filed on 31 July 2006 are as follows:
1.Procedural unfairness.
2.Bias in favour of the wife.
3.Error of Judgment in the net value of the estate by double counting figures totalling $199,870.
4.Error of Judgment in Real estate valuations and net value of the business totalling $530,000.
5.Error of Judgment by not granding [sic] the opportunity to my expert witness Mr. Dickie to satisfy the affidavit requirements of expert evidence.
6.Error of Judgment in rushing through the trial.
7.Judicial duties were ignored by not guiding me though [sic] the procedures though [sic] the trial while His Honour was well aware I had no legal experience.
8.Judicial duties were ignored by allowing the wife’s barrister to take control over the trial.
Apart from Ground 3 which would appear to be directed to a slip rule issue, the remainder of the grounds of appeal would all appear to be directed to the conduct of the trial. In the absence of a transcript of the trial, it is impossible for us to determine whether the appeal is likely to have any merit or any prospect of success.
The grounds of appeal directed to the orders of 12 July 2006 as contained in the amended notice of appeal filed 4 October 2006 are as follows:
1.The husband has been denied procedural fairness.
2.Incorrect weight afforded to parties.
3.Biased discretion exercised by his honour J Mullane [sic].
It is impossible to know exactly what is intended by Ground 2. Grounds 1 and 3 appear to be directed to the conduct of the hearing on 12 July 2006. However again without full transcript of that hearing, it is impossible to assess the merits of, or prospects of success of, the appeal.
Conclusion
Thus in circumstances where we cannot assess the prospects of success of either appeal, but where we have found that the husband has not complied with, nor challenged, a previous costs order for a very significant amount, we can only conclude that given the husband’s admitted impecunious position, the circumstances justify the making of the order for security sought by the wife in relation to each appeal.
Accordingly, we propose to make a separate order for security in relation to each appeal. If the security is paid in respect of both appeals both appeals can proceed. If the security is paid in respect of one appeal only that appeal can then proceed but the other appeal will be stayed. If the security is not paid in respect of either appeal then neither can proceed.
We emphasise for the benefit of the husband, that the fact that we are ordering him to lodge security for the wife’s costs in respect of his appeals, does not necessarily mean that he will have to pay the wife’s costs in relation to the appeals. Any liability of either party to pay the costs of the other in relation to the appeal will only be determined after the appeals have been heard and determined, and an application or applications for costs made and determined.
Costs of the Applications for Security
In the event that her applications for security were to be successful, the wife sought that the husband pay her costs of, and incidental to, such applications. In support of her application for costs, the wife relied on the matters which she had relied on in support of the applications for security. The husband opposed the application for costs principally for the reason that he contended that it had emerged in the proceedings before Boland J that the wife was not being charged for her legal representation.
Whatever be the position in relation to the fees of the legal representatives of the wife, we consider the preferable course is for the costs of these applications for security to be reserved as costs in the appeals. However should the husband’s appeals become permanently stayed on account of his failure to lodge the security to be ordered by us, then the wife would be entitled to make applications to us in respect of his costs of and incidental to these applications for security.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.
Associate: Helen Bryson
Date: 5 March 2007
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