Silke and Silke and Ors

FAMILY COURT OF AUSTRALIA

SILKE & SILKE AND ORS

[2020] FamCA 72

FAMILY LAW – SECURITY FOR COSTS

Family Law Act 1975, ss.117(2), 117(2A).

Family Law Rules 2004, rr. 19.05, 19.05(2)(b)

Luadaka & Luadaka (1998) FLC 98 830

APPLICANT:

Mr Silke

FIRST RESPONDENT:

Ms Silke

SECOND AND THIRD RESPONDENTS

Mr B Silke and Ms C Silke

FILE NUMBER:

ADC

3365

2016

DATE DELIVERED:

13 February 2020

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

Mead J

HEARING DATE:

6 December 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Roberts of Counsel

SOLICITOR FOR THE APPLICANT:

Gallagher and Co

COUNSEL FOR THE FIRST RESPONDENT:

Mr Praolini of Counsel

SOLICITOR FOR THE FIRST

RESPONDENT:

Robert Chrzaszcz & Associates Pty Ltd

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS:

Ms Lewis of Counsel

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS:

Anderson's Solicitors

Orders

That paragraphs 1 and 2 of the interim orders sought in the amended response filed by the second and third respondents on 19 July 2019 be 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 Silke & Silke and Ors 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 ADELAIDE

FILE NUMBER: ADC 3365 of 2016

Mr Silke

Applicant

And

Ms Silke

First Respondent

And

Mr B Silke and Ms C Silke

Second and Third Respondents

REASONS FOR JUDGMENT

Background

These proceedings had been transferred from the Federal Circuit Court to the Family Court of Australia by order of 14 February 2019.
On 19 July 2019 the second and third respondents Mr B Silke and Ms C Silke filed an amended response wherein they sought an interim order (inter alia) in the following terms:
“1.That within 30 days of the date of this order the first respondent pay the sum of twenty thousand dollars ($20,000) to the Federal Circuit Court of Australia by way of security of costs pursuant to Rule 21.01 of the Federal Circuit Court Rules 2001 and in the event that the first respondent fails to pay those funds to the Court that orders two and three of the final orders sought by [the] first respondent in her response filed 21 August 2018 be dismissed.”
On 2 September 2019 the applicant filed an application in a case seeking the following orders:
“1.That [to] the extent that leave be needed to file an Answer to the first respondent’s claim against the second and third name (sic) respondents such leave is sought.
2.That the first respondent be restrained and an injunction granted restraining her from using or disposing any monies paid to her or for her benefit by the second and third respondents until such time as the property settlement as a whole has been finalised.
3.That the business known as F partnership be terminated and the parties do all things necessary for that partnership to be terminated as of the 30^th June 2019.
4.That the first respondent pay the costs of and incidental to this application.
5.Such further or other order as the Court deems fit.”
On 30 August 2019 the applicant filed an affidavit in support of orders sought in the application in a case to which I have referred.
On 14 November 2019 the first respondent filed a response to the applicant’s application in a case seeking that it be dismissed with costs.
On the same date she also filed an affidavit addressing both the interim orders sought by the second and third respondents by way of security for costs in their amended response and the applicant’s application in a case filed 2 September 2019, together with a financial statement.
On 27 November 2019 an affidavit was filed by the second respondent Mr B Silke in support of the interim application for security of costs. Financial statements were filed by each of the second and third respondents on the same date.
The interim application for security for costs was heard on the papers on 6 December 2019.

Legislative provisions

Section 117(2) of the Family Law Act 1975 provides the legislative basis for an order for security for costs 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), (4A), (5) and (6) 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 only subsection relevant to this matter is subsection (2A), which sets out matters to which the court shall have regard in considering what if any order should be made under subsection (2).
The applicable Rule of Court is Rule 19.05[1] which is in the following terms:
[1] Family Law Rules Rule 19.05
“(1)A respondent may apply for an order that the applicant in the case give security for the respondent’s costs.
(2)In deciding whether to make an order, the court may consider any of the following matters:
(a)       the applicant’s financial means;
(b)      the prospects of success or merits of the application;
(c)       the genuineness of the application;
(d)whether the applicant’s lack of financial means was caused by the respondent’s conduct;
(e)whether an order for security for costs would be oppressive or would stifle the case;
(f)       whether the case involves a matter of public importance;
(g)whether a party has an order, in the same or another case (including a case in another court), against the other party for costs that remains unpaid;
(h)      whether the applicant ordinarily resides outside Australia;
(i)       the likely costs of the case;
(j)       whether the applicant is a corporation;
(k)      whether a party is receiving legal aid…”
In this case the application for security of costs is being made by the second and third respondents as against the first respondent in circumstances where she but not the applicant seeks orders against them and against their property and business interests.

History of proceedings

On 10 July 2018 the applicant husband filed an application for settlement of property as between he and the first respondent wife.
He sought that the first respondent transfer her interest in a property at D Street, E Town to him together with her interest in the partnership between the applicant and the first respondent styled F partnership.
He further proposed that he indemnify the first respondent for any liability to National Australia Bank with respect to the parties’ joint debts to that institution as well as with respect to any liabilities of the partnership. He proposed that otherwise each of the applicant and the first respondent retain the assets in their respective possession and control.
On 21 August 2018 the first respondent filed a response. She sought orders not only with respect to property settlement as between she and the husband but also a declaration that the applicant’s parents, Mr B Silke and Ms C Silke, hold their interests in a farming property together with the farming stock, plant and equipment held by them in a partnership styled G partnership “in whole or in part on constructive trust for the applicant and respondent herein”. The applicant’s parents were named as the second and third respondents.
In the statement of financial circumstances filed by the applicant on 18 July 2018, he deposed to his debts exceeding his assets by $26,000.00. He deposed to total liabilities in the sum of $201,534.00.
In the first respondent’s statement of financial circumstances filed 21 August 2018, she deposed to owning assets in the sum of $30,579.00. She deposed to total liabilities in the sum of being $171,557.00.
On 10 October 2018 a response was filed by the second and third respondents with respect to the orders sought against them by the first respondent. They sought inter alia that her application for a declaration of constructive trust be dismissed and further that she pay the sum of $20,000.00 to them by way of security for costs. They further sought that in the event the amount was not paid that her application with respect to constructive trust issues be dismissed.
A conciliation conference was held on 14 February 2019 before a Registrar but no agreement was reached between the parties. On that same day the matter was transferred to the Family Court of Australia together with an order:
“That within sixty (60) days of today’s date the first respondent particularise her claim as against the second and third respondents.”
On 19 July 2019 the second and third respondents filed the amended response to which I have already referred including again the interim order sought with respect to security for costs.
On 30 May 2019 the first respondent filed an amended response to the initiating application wherein she sought to better define the orders she sought against the second and third respondents with respect to her claim for constructive trust. On an interim basis she sought orders for transfer of the proceedings to the Family Court of Australia, a delay until further order with respect to the issue of particularising the quantum of the sum claimed against the second and third respondents and further orders for valuations. This was accompanied by an affidavit to which she annexed:
“A true copy of the particulars of my claim against the second respondent and third respondent.”
The matter came before me for a judicial mention on 12 November 2019, at which time the outstanding interim issue with respect to security for costs was listed for argument on 6 December 2019.
Although the applicant’s application in a case filed on 2 September 2019 to which I have already referred was also listed for hearing at that time, argument with respect to those issues was further adjourned pending a determination with respect to the security for costs issue.

Issues in dispute

By way of an amended response to the applicant’s initiating application for settlement of property, the first respondent seeks by way of property settlement that the property of she and the applicant be divided between them in equal shares.
She further seeks a declaration that the second and third respondents hold their interests in a property described in Certificate of Title Register Book Volume … Folio … as well as the farming stock, plant and equipment and other assets held by them in a crop farming business on the property in a partnership styled “G partnership” in whole or in part on constructive trust for she and the applicant. The property is known as “Property H”.
She seeks such further or other relief from the court as is necessary to give effect to the interest of the applicant and the first respondent by way of constructive trust over the property and the business and that the second and third respondents pay to her a sum to be determined by the court.
She seeks in the alternative that the second and third respondents pay equitable damages or equitable compensation to her in an amount to be determined by the court.
The first respondent further seeks that the second and third respondents forthwith transfer to she and the applicant the farm and the farming business and do all things necessary to effect the transfer of those assets to them.
In the alternative to those orders she seeks a declaration that she and the applicant hold an equitable lien over the farm and the farming business owned by the second and third respondents and that the second and third respondents not transfer, deal with or dispose of the farming property without accounting to she and the applicant for their work and expenditure on the family farm.
She seeks a further order that the second and third respondents pay equitable compensation or equitable damages to she and the applicant in respect of the profits derived from:
“…the ongoing exploitation and use of the Family Farm, the assets of the family farming business since 1996 and in respect of the profits derived from the sale of the 1996 to 2017 crops.”
In a further alternative to a transfer of the property and the business to she and the applicant the first respondent seeks that the second and third respondents pay equitable compensation and equitable damages to she and the applicant, and she claims further or other relief as is necessary to give effect to her claims for a constructive trust over the farming property, plant equipment and other assets of the farming business.
These orders are all set out in [1] to [13] of the final orders specified in the further amended response filed 15 November 2019.
In the applicant’s reply filed 23 July 2019, he opposed all of the orders sought by the first respondent in her first amended response filed 5 May 2019 wherein she sought the same orders as in her second amended response filed 15 November 2019 save and except that in the first amended response she had referred to herself as the second respondent rather than the first respondent.
In the amended response of the second and third respondents filed on 19 July 2019, the second and third respondents opposed all of the orders sought by the first respondent save as to an order for property settlement as between she and the applicant. They further sought on a final basis costs on an indemnity basis and on an interim basis an order for security of costs in the sum of $20,000.00.
The applicant and the second and third respondents deny any basis for:
·the first respondent’s claim of a constructive trust over the property and farming business owned by the second and third respondents in favour of the applicant and the first respondent; or
·any claim in equity against the second and third respondents with respect to the property and farming business; or
·an equitable lien over the property; or
·an equitable entitlement to compensation or damages arising from profits derived from the property or the business operated on the property between 1996 and 2017; or
·any liability on the part of the second and third respondents for equitable compensation or damages in favour of the applicant and the first respondent.
In the particulars of claim relied upon by the first respondent and annexed to her affidavit filed 30 May 2019 she asserts, inter alia and paraphrasing in part:
·The parties commenced cohabitation in 1990;
·They married in 1995;
·They had three children now aged 23, 20 and 15 years of age;
·Separation occurred in 2014;
·Parties were divorced in 2017;
·Applicant remained residing in homestead on Property H;
·That the second and third respondents Mr Silke and Ms C Silke are the applicant’s parents;
·That the second and third respondents are the co-registered proprietors of the farming property and own and operate a crop growing business on the property;
·The farming property (Property H) consists of the whole of the land comprised in CT Register Book Volume … Folio …;
·It comprises some 4500 acres;
·The applicant’s parents reside in a homestead on the property;
·The applicant resides in another homestead on the property which homestead was also occupied by the first respondent between 1996 and 2014;
·The current Certificate of Title comprises two Crown Leases transferred to the present title on or about 5 February 2003;
·The second and third respondents acquired the property comprising one Crown Lease in or about February 1977;
·They acquired the property in the second Crown Lease from the second respondent’s parents in or about June 1984;
·On dates not known to the first respondent the second and third respondents commenced crop farming on both properties;
·They have continued carrying on a crop farming business on the property now comprised in the new Certificate of Title;
·That the applicant worked and continues to work for the second and third respondents in what is described as the “family” farming business from his latter school years and after leaving school to the present time except for a short time when he worked as a tradesman and during the time that he worked in a stock business that he and the first respondent owned and operated between 1994 and the present time;
·That the applicant regularly worked as many as seven days a week and not less than five days per week as a labourer for the second and third respondents for no wages or remuneration for his labour, no employer compulsory superannuation contributions and no paid leave entitlements;
·That the applicant’s labour for the second and third respondents was particularly intensive between April and June and between October and early in the New Year each year comprising seeding time and harvest time;
·That the applicant invested about $70,000.00 in about 1985 for use by the second and third respondents in the farming business;
·That between 1987 and 1996 the first respondent was employed in the Public Service and was paid regular remuneration, compulsory superannuation contributions and leave entitlements;
·That the first respondent had a strong interest in pursuing a career working for a Community Service which she deferred pursuing until after separation in May 2014;
·That from about August 1996 until separation the first respondent worked in the farming business assisting the applicant and the second respondent from time to time and during seeding and harvest time each year;
·That in about 1996 the second and third respondents offered the main homestead on the farming property to the applicant and the first respondent to move into and exclusively occupy as their place of residence;
·That at the same time the second respondent said to the applicant and first respondent words to the effect that when they moved in the house would be theirs and that they would be moving into that house in preparation for them eventually taking over Property H;
·That the applicant and first respondent carried out renovations to the house property during 1996, 2011 and 2012 together with repairs and maintenance and expended monies on same including $3300.00 to replace the kitchen oven;
·That the applicant and first respondent purchased plant and equipment used by the second and third respondents in their farming business for which the applicant and first respondent were not reimbursed and that they also paid for repairs to the second and third respondent’s plant and equipment which was not reimbursed;
·That in about 2009/2010 the second and third respondents made an insurance claim for loss and damage to plant and equipment owned by the applicant and first respondent and retained the financial proceeds of the claim.
In [23] and [24] of her statement of claim the first respondent stated as follows:
“23.From about 1996 and on numerous occasions during the marriage, Mr B Silke and Ms C Silke represented, promised and or induced the assumption and encouraged the expectation in Mr Silke and Ms Silke that the Family Farm and the family farming business (including the plant, machinery and other assets of the business, the “family farming business”) would upon the retirement or death of Mr B Silke and Ms C Silke be transferred by Mr B Silke and Ms C Silke to Mr Silke and Ms Silke and the Family Farm and the family farming business would ultimately be held by Mr Silke and Ms Silke in their own names or in any entity controlled by them.
24.The representations, promises and or inducement and encouragement referred to in the preceding paragraph were made by Mr B Silke and Ms C Silke to Mr Silke and Ms Silke, as follows:
24.1by statements made by Mr B Silke and Ms C Silke from about 1996 and on numerous occasions during the marriage:
24.1.1requesting Mr Silke and Ms Silke to work full time on the Family Farm and the family farming business; and
24.1.2that upon their (Mr B Silke and Ms C Silke’s) death the Family Farm and the family farming business would be transferred to Mr Silke and Ms Silke;
24.2by statements made by Mr B Silke from about 1996 and on numerous occasions during the marriage, to Mr Silke and Ms Silke that in the future and referring to the Family Farm and the family farming business “This is not ours. It is all yours”;
24.3by statements made by Mr B Silke and Ms C Silke at the parents’ homestead, in about 1996, to Mr Silke and Ms Silke in the presence of a local National Australia Bank representative as to their wishes regarding their mutual Last Wills and Testaments to the effect that the Family Farm and the family farming business would come to Mr Silke and Ms Silke accompanied by a wish expressed by Mr B Silke and Ms C Silke as to Mr Silke and Ms Silke paying Mr Silke’s siblings $10,000 for ten (10) years;
24.4by statements made by Mr B Silke and Ms C Silke in about 1996 and on several occasions during the marriage, to Mr Silke and Ms Silke that Mr B Silke and Ms C Silke and (sic) executed mutual Last Wills and Testaments to the effect that the Family Farm and the family farming business would come to Mr Silke and Ms Silke accompanied by a wish expressed by Mr B Silke and Ms C Silke as to Mr Silke and Ms Silke paying Mr Silke’s siblings $10,000 for ten (10) years;”

Paraphrasing [25] to [29] of the said statement of claim the first respondent claimed:
·That the applicant worked long hours for many years and undertook hard physical labour on the family farm to his financial detriment;
·That the first respondent forwent an opportunity for a career in the Public Service to her financial detriment;
·That she deferred pursuing an interest in a career with a Community Service until after separation;
·That the first respondent assisted the applicant and the second respondent by providing general labouring services between 1996 and 2014 to her financial detriment;
·That the applicant and first respondent forwent an opportunity to purchase their own farming property/ies and to improve and consolidate same;
·That the applicant and first respondent undertook considerable unpaid labour and effected renovations to the main homestead on the farm;
·That they have suffered substantial detriment by their assumptions and expectations arising from the matters set out in paragraph 23 of the statement of claim not being fulfilled;
·That the second and third respondents knew or intended that the applicant and first respondent would act or refrain from acting on those assumptions and expectations;
·That it was the common intention of the second and third respondents, the applicant and the first respondent that the assumptions and expectations referred to would be fulfilled;
·Since separation between the applicant and the first respondent the relationship between the second and third respondents and the applicant and first respondent has been severed;
·That from 1996 to 2014 the applicant and first respondent contributed to the maintenance and improvement of the farming property and the earning of income by the second and third respondents from the farming business;
·That by reason of those matters it is unconscionable for the second and third respondents to resile from the representations, promises, inducements or encouragements referred to and deny the first respondent any interest in the farm and the assets of the farming business.
Those are the basic facts upon which the first respondent relies to support her claim for a constructive trust over the farming property and the assets of the farming business of the second and third respondents.
She further alleges that the second and third respondents have not acted to avoid the detriment that will be suffered by the applicant and the first respondent if their assumptions and expectations are not fulfilled, that they now seek to resile from the representations, promises, inducements or encouragements made by them to the applicant and first respondent and are accordingly estopped and precluded from denying the interest of the applicant and first respondent in the farm and farming business and that they are required to transfer to the applicant and first respondent their interest in the family farm together with their interests in the assets in the farming business including the assets of the family farm.
She further relies on the same facts to assert that in the event that the court determines that she and the applicant do not have claims for the imposition of a constructive trust or claim for any interest in the farm or farming business that they hold an equitable lien over the farm.
It is common ground that when the applicant and first respondent first commenced cohabitation in 1990 they lived in rented premises away from the farm owned by the second and third respondents.
It is common ground that when the applicant and first respondent met in 1990 the applicant had a business trading business trading livestock.
It is the applicant’s case that he commenced that business with stock gifted to him by the second and third respondents.
The applicant and first respondent are in dispute as to when their partnership in trading livestock commenced, with the first respondent alleging it was in 1994 and the applicant deposing to the partnership of F partnership being formed after the applicant and first respondent’s marriage and after the first respondent left work in 1996.
The first respondent deposes to the stock being agisted on the second and third respondents’ farm.
The applicant deposes to the stock not being agisted but rather being there free of charge in exchange for his labour.[2]
[2] Applicant’s affidavit filed 14 November 2018 – paragraph 2(vi)
The applicant and first respondent are agreed that they moved into the main homestead on the second and third respondents’ farm in 1996 before the birth of their first child.
The applicant denies that the second and third respondents ever said it was theirs to keep.[3]
[3] Applicant’s affidavit filed 14 November 2018 – paragraph 2(ix)
The second respondent also denies the first respondent’s claim as to any representations made by him at the time the applicant and first respondent moved in to the main house.[4]
[4] Affidavit of Mr Silke filed 10 October 2018 – paragraph 36
In the applicant’s affidavit filed 14 November 2018 he also denied that he and the first respondent undertook any significant renovations of the main house as alleged by the first respondent. The second respondent takes issue with her allegations as to the extent of renovations.[5]
[5] Affidavit of Mr Silke filed 10 October 2018 – paragraph 37
The applicant and second respondent also dispute the allegation of the first respondent that she and the applicant paid the electricity for the main house with the second respondent deposing to have done so between 1996 and 2006.
The applicant and the second and third respondents dispute that any representations were made to the applicant and the first respondent that could form the basis of a finding of a constructive trust.
The applicant alleges that he together with the first respondent, and the second and third respondents together, ran completely different farming businesses on the same property, with the second and third respondents operating a crop farming business and the applicant and the first respondent running livestock on the second and third respondents’ farm at no cost to them, in return for the applicant providing assistance to the second and third respondents primarily at seeding and harvesting time in respect of their cropping operation.
It is the applicant’s case that at no time did he have an expectation that in due course the second and third respondents’ farm and farming business would come to he and the first respondent. He denies that he undertook any work on the farm for the second and third respondents with that expectation. He denies ever representing to the first respondent that such was to be the case.
It is the applicant’s case that he always knew that if he wanted to have the farm, he would have to purchase it as it would be divided between himself and his siblings.
It is also the applicant’s case that the first respondent left her government employment of her own choice and not because of any representations or understanding of inheriting the second and third respondents’ farm.
He argues that if he and the first respondent had been required to pay lease and agistment costs, water costs and grain costs, the expenses for same would have been significant and it was in return for those advantages that he provided labour from time to time for the second and third respondents.

Security for costs

In Luadaka & Luadaka (1998) FLC 98-830 the Full Court said, in consideration of the question of an order for security of costs:
“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.”
It was submitted on behalf of the second and third respondents that they are unwilling participants in these proceedings in circumstances where they are involved because the first respondent asserts that assets they legally own should be subdivided for her benefit.
They submitted that the property was purchased by them, that they alone meet the liabilities with respect to the property and that there has been no merging of the interests in the property or the farming partnerships run thereon between them on the one part and the applicant and the first respondent on the other.
It was further submitted on their behalf that the first respondent had been tardy in the preparation and presentation of her case which had resulted in numerous unnecessary hearings resulting in additional legal fees being incurred by them.
Taking into account the matters deposed to in the first respondent’s financial statement filed on 14 November 2019, it was submitted that in circumstances where the first respondent’s case is without merit, the second and third respondents were incurring significant and increasing legal fees which they would be unable to recover from the first respondent if she was unsuccessful in achieving the orders she seeks.

Consideration of Rule 19.05 factors[6]

[6] Family Law Rules 2004 Rule 19.05(2)

The first respondent deposed in her most recent statement of financial circumstances to owning net property in the sum of approximately $22,000.00, having weekly income of approximately $1500.00 and total superannuation entitlements of $92,985.00. She deposed to having $20,000.00 standing to her credit at that time in her solicitor’s trust account.
It was submitted on behalf of the first respondent that the only funds she had available were those paid into her solicitor’s trust account and that as at the date of the swearing of her affidavit on 14 November 2019, she was indebted to her solicitors in the sum of approximately $20,000.00 including disbursements such as Counsel Fees. It was submitted on her behalf that if she was ordered to pay $20,000.00 by way of security of costs, she would be “stifled” in pursing her claim.
In financial statements filed by each of the second and third respondents on 27 November 2019, they deposed to a combined weekly income of $581.00. Neither the second nor third respondent deposed to assets of significance over and above the value of the farming property and the farming business they own and operate jointly. At the ages of 75 and 74 respectively, they have modest superannuation entitlements of $175,998.00 and $187,418.00 as at November 2019. There are substantial liabilities to National Australia Bank secured over the farming property. The second and third respondents are solely liable for the National Australia Bank debt.
The reality is that although the second and third respondents may be what is sometimes referred to as more “asset rich” than the first respondent, their affidavit material filed and their statements of financial circumstances do not suggest that they have any funds readily available to expend in litigation.
The first respondent owns no property of any significance and has modest superannuation. Her weekly income significantly exceeds that of the second and third respondents combined. She deposes to total weekly personal expenditure of $1010.00 resulting in her income exceeding her expenses on a weekly basis by $552.00.
Neither the first, second nor third respondents are in a position, on the face of the material contained in their various statements of financial circumstances, to fund litigation from their income. The second and third respondents certainly have greater assets than the first respondent, although significantly encumbered.
The court is required to consider the prospects of success or merits of the application.
It is argued on behalf of the second and third respondents that orders sought by the first respondent are without merit.
The applicant adopts the same position.
The matters raised by the second and third respondents in that regard are essentially as set out in [62] of these Reasons.
The first respondent argues that she and the applicant have acted to their detriment by relying on representations made to them by the second and third respondents with respect to their future entitlement to what she refers to as “the family farm”.
The second and third respondents deny that any representations to that effect were ever made to the applicant or the first respondent. The applicant adopts the same position.
This is a matter where the credibility of all four parties goes to the core of determining the merits of the case of the first respondent.
The success or otherwise of her claim will involve a consideration of the matters argued against her claim by the second and third respondents and the applicant but in particular, whether her evidence as to the alleged representations is preferred by the court over that of the applicant and the second and third respondents. Such findings as to credibility can only be made at trial after the testing of the evidence in cross‑examination.
As to the genuineness of the application, that again is a matter that will be determined to a significant degree upon findings of credibility or otherwise of each of the parties which can only be determined at trial.
I am not satisfied that the conduct of the second and third respondents has had any significant impact on the financial means of the first respondent at this time.
Indeed, there have been several hearings in this matter that on their face may have resulted from the failure of the first respondent to comply with previous orders of the court with respect to the preparation of her case. The second and third respondents argue that they have already been put to significant and unnecessary cost.
The more important issue in this application however is the cost to which the second and third respondents will be put in the event of this matter proceeding to trial and the capacity of the first respondent to meet any costs order against her in the event that she is ultimately unsuccessful.
None of the parties in these proceedings are in receipt of legal aid and I am not satisfied that the factors referred to in Rule 19.05(2)(f), (g), (h) and (j), are relevant to this particular matter.
There is no doubt that all of the parties in this case are facing significant legal fees if the matter proceeds.
In the affidavit of the second respondent filed 27 November 2019 he deposes in [29] to [32] inclusive as to legal costs to that date and anticipated costs. He deposes to understanding the legal costs of defending the application by the first respondent to the date of trial will be somewhere in the realms of $60,000.00 to $100,000.00.
In the affidavit of the first respondent filed 14 November 2019 she deposes in [4] to fees incurred to that date of approximately $20,000.00, and the costs of proceeding to trial being estimated to be in the sum of $50,000.00 to $60,000.00.
In addition, the applicant will also incur legal fees.
Overall the fees already generated and likely to be generated by this matter could only be described as substantial.
I find that a significant consideration with respect to the issue of whether an order should be made for security of costs is whether such an order would be oppressive or stifle the case.
I am not satisfied on the material filed to date in these proceedings that the first respondent has had at any time the capacity to satisfy an order for security for costs other than in circumstances of significant risk to her with respect to her obtaining legal representation herself.
It must be remembered that the litigation involves a dispute not only between the first respondent and the second and third respondents but also as between the applicant and the first respondent. This of itself results in the accumulation of legal fees by the applicant and the first respondent.
In circumstances where I find that the dispute between the parties in this matter, particularly as between the first respondent and the second and third respondents supported by the applicant with respect to the claimed constructive trust or other equitable remedies can only be determined by the court making findings as to the credibility of the parties. A requirement for the first respondent to pay an amount to the second and third respondents by way of security of costs would be oppressive and potentially “stifle” the pending litigation.
I am not satisfied that there are circumstances that justify an order for security of costs in favour of the second and third respondents against the first respondent. I take into account that it is unlikely that if the claim of the first respondent against the second and third respondents is ultimately unsuccessful she would be in a position to comply with any significant order for costs in the event it was determined that the circumstances of the case justified a departure from the general principles of Section 117 of the Family Law Act 1975 as to costs.
For those reasons I make the orders as set out at the commencement of these Reasons for Judgment.

I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mead delivered on 13 February 2020.

Associate:

Date: 13 February 2020

[2020] FamCA 72

13 February 2020

Key Legal Topics

Areas of Law

Civil Procedure

Legal Concepts

Appeal

Costs

Jurisdiction

Remedies