Tothill and Crowther
[2017] FamCAFC 229
•10 November 2017
FAMILY COURT OF AUSTRALIA
| TOTHILL & CROWTHER | [2017] FamCAFC 229 |
| FAMILY LAW – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – Where the basis on which the application is made is unclear – Where very little of the applicant’s primary affidavit in support of the application engages with any of the factors this Court needs to take into account – Where security for costs is not intended to provide funds for the applicant to secure his legal representation for the purposes of the appeals – Where at this stage of the proceedings it is impossible for this Court to form a definitive view as to the success or failure of the appeals – Where no issue can be raised as to the bona fides of the appeals the respondent having complied with all orders of the court – Where the respondent’s case is that she will be able to borrow the necessary funds to meet any order for costs – Where there is no justification to require the respondent to provide security for costs – Application dismissed. |
| Family Law Act 1975 (Cth) s 117 |
| Family Law Rules 2004 (Cth) rr 19.05(2) and 22.53 Atkins & Hunt (Security for Costs) (2015) FLC 93-646 |
| APPLICANT: | Mr Tothill |
| RESPONDENT: | Ms Crowther |
| INDEPENDENT CHILDREN’S LAWYER: | Ashley Kent | ||||
FILE NUMBER: | ADC | 4457 | of | 2013 | |
| APPEAL NUMBERS: | SOA | 41 & 48 | of | 2017 |
| DATE DELIVERED: | 10 November 2017 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 18 September 2017 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 May 2017 |
| LOWER COURT MNC: | [2017] FamCA 307 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Roder SC with Mr Anderson |
| SOLICITOR FOR THE APPLICANT: | Nicholls Gervasi & Co |
| COUNSEL FOR THE RESPONDENT: | Dr Ingleby |
| SOLICITOR FOR THE RESPONDENT: | Marshalls & Dent | ||||
| Mr Kent Legal Services Commission of SA |
Orders
The application in an appeal filed on 30 August 2017 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 Tothill & Crowther 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).
|
Appeal Numbers: SOA 41 & 48 of 2017
File Number: ADC 4457 of 2013
| Mr Tothill |
Applicant
And
| Ms Crowther |
Respondent
And
| Independent Children’s Lawyer |
REASONS FOR JUDGMENT
Introduction
This is an application in an appeal filed on 30 August 2017 by Mr Tothill (“the father”) seeking orders by way of security for costs. The application is opposed by Ms Crowther (“the mother”).
The application is made in the context of two appeals (SOA 41 and SOA 48 of 2017) filed by the mother against orders made by Hannam J. On 28 July 2017 those two appeals were consolidated and ordered to be heard at the same time. It is likely that they will be listed for hearing in the March 2018 sittings of the Full Court.
There is also a third appeal filed by the mother (SOA 59 of 2017) against another order made by the trial judge in the same proceedings. That appeal has also been consolidated with the other two appeals and will be heard at the same time.
To explain, SOA 48 of 2017 is the appeal against the final parenting orders made by the trial judge on 30 June 2017, SOA 41 of 2017 is the appeal against her Honour’s refusal on 14 March 2017 to adjourn the hearing of the trial on the application of the mother, and SOA 59 of 2017 is the appeal against her Honour’s refusal on 15 May 2017 to reopen the proceedings, again on the application of the mother.
The application primarily seeks an order that the mother pay the sum of $30,000 to the father’s solicitor’s trust account by way of security for the costs of appeals SOA 41 and SOA 48 of 2017. That application is supported by an affidavit of the father filed on 30 August 2017. The response by the mother filed on 14 September 2017 is supported by two affidavits and a financial statement also filed that day.
Background
The proceedings relate to the parenting arrangements for the one child of the relationship born in 2011, and they were commenced in November 2013.
The trial of those parenting proceedings took place between 4 – 7 October 2016 and 14 – 17 March 2017.
The mother was legally represented between December 2013 and January 2016, and between April 2016 and October 2016. She was represented by counsel during the October hearing, but she had no legal representation for the resumed hearing in March 2017. She is now represented again, and has been since 15 May 2017.
The father has been legally represented throughout the life of the proceedings.
The mother has obtained the transcript of the hearings before her Honour, filed the appeal books, and filed her summary of argument.
The Relevant Principles
Section 117(2) of the Family Law Act 1975 (Cth) (“the Act”) provides the power to make an order for security for costs, and it is in the following terms:
(2)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), 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.
Section 117(2A) provides as follows (s 117(4), (4A) and (5) are not presently relevant):
(2A)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.
In addition to, or in the context of the matters referred to in the legislation, it is well settled that pursuant to s 117(2A)(g) the following matters should be considered
a)The means of an appellant to satisfy an order for costs if he or she is unsuccessful.
b)The financial circumstances of both parties – impecuniosity of the appellant is not alone sufficient to justify an order for costs but nor does it prevent an order being made if there are other grounds which justify an order.
c)The prospects of success of the proceedings – ordinarily the court will not undertake a detailed assessment of the likelihood of the appellant’s success unless it can be demonstrated that there is a high probability of success or failure.
d)Whether the appeal is bona fide, whether it is genuine and not trivial, vexatious or a sham.
e)Whether an order for security for costs would be oppressive or stifle the litigation – that prospect does not require a refusal of the application but is often a significant matter.
f)Whether or not the litigation involves a matter of public importance – if so, this will militate against the making of an order.
g)Whether or not there has been delay in bringing the application for security and consequent prejudice to the respondent.
h)Any difficulties in enforcing an order for costs and the amount of costs to be incurred.
(See Luadaka & Luadaka (1998) FLC 92-830, [62], as summarised in Frazier & Valdez (2016) FLC 93-729 per Kent J at [12] with the agreement of Strickland and Aldridge JJ)
Many of the above factors mirror considerations referred to in r 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”).
Discussion
It is unclear from the documents on precisely what basis the application for security for costs is made. The primary affidavit filed by the father on 30 August 2017 in support of the application, ranges from pointing out the history of the mother’s legal representation, to the mother’s financial means and conduct in the proceedings, to the mother’s legal expenses, to the father’s financial position and the impact of the proceedings to date, and finally, the father’s appeal costs. Unfortunately, very little of that directly engages with any of the factors that this Court needs to take into account. The closest it comes is in the last few paragraphs of the affidavit where various claims are made, and it is useful to set out those paragraphs as follows:
Appeal Costs
97.I am instructed that my likely legal expenses for the appeal will be in the range of $25,000-$30,000. These costs will be comprised of solicitor and counsel fees in respect of receipt and perusal of documents, providing advice, preparing submissions, and attendance at hearings.
98.In the event my costs are not secured in the Appeal I will have to terminate the services of my solicitor. I believe this will stifle the proceedings as I will have great difficulty representing myself due to the complexity of the Appeal and particularly due to the manner it has been conducted to date. I am in no position to make submissions to the Court in relation to the complex legal issues involved in the Appeal.
99.I have no doubt the Mother has protected any assets or income which she is able to access, from the reach of any costs order. It is clear however that the Mother has access to significant resources when she chooses to call upon them.
100.I am concerned that any Order requiring the Mother pay my costs in respect of the Appeal will be ineffective in that I will not be able to meaningfully enforce the Order and recover the costs from the Mother due to her previous claims that she is impecunious.
101.I therefore seek an Order that the Mother provide security for costs in the sum of $30,000.00 in respect of the Appeal, and I seek an Order that the Mother pay the costs of and incidental to this Application in the sum of $3,000.00
…
As can be seen, there the father raises issues such as the stifling of the proceedings because he may not be able to secure his legal representation, having exhausted his means to privately pay their costs, and the concern that any order requiring the mother to pay costs in the appeals will be “ineffective” because the mother is “impecunious”.
In relation to these matters, the first is irrelevant because security for costs is not intended to provide funds for the father to engage legal representation for the purposes of the appeals. A primary rationale of an order for security for costs is to address the prospect that a respondent will not be able to enforce any order for costs that might be made if the appeal is unsuccessful. That of course is raised by the father in paragraph 100 of his affidavit, but the claim there fails to engage with two highly relevant issues. First, the prospects of success of the appeals, and secondly, as identified in the authorities, impecuniosity will not of itself be a basis for not ordering security for costs, and it must be balanced against all other relevant factors.
As to the prospects of success of the appeals, again, as identified in the authorities, ordinarily the court will not undertake a detailed assessment of the likelihood of the appellant’s success, unless it can be demonstrated that there is a high probability of success or failure. Here, all that is said about this factor in the father’s affidavit is in paragraph 69, namely:
The Mother’s prospects of success on appeal are far from certain, particularly in circumstances where the Judgment delivered by The Honourable Justice Hannam is a discretionary judgment.
Dwelling for the moment on that issue, it is impossible for this Court at this stage of the proceedings, and with the documentation that has been put before it, in other words, not including the transcript or the appeal books, to form a definitive view as to its success or failure. It would seem though that even the father concedes that there are some prospects of success, albeit uncertain, and on that criterion alone this Court cannot proceed on the basis that there is a high probability of failure, and that there will necessarily be an order for costs in favour of the respondent.
As to the issue of impecuniosity, the mother addresses her financial position in her affidavit and in her financial statement. The latter reveals that she has an average weekly income of approximately $1,250 per week, personal expenditure of approximately $1,162 per week, assets to the value of $125,859, and liabilities totalling $253,962. In her affidavit she deposes that her parents are currently paying her living expenses, she owes her lawyers $29,000, and she owes $216,400 to third parties who have lent her money to meet her legal fees. Significantly, she will be reliant on third parties continuing to lend her money to fund her legal fees in relation to the appeals, which she anticipates will be approximately $75,000, and for any rehearing, which she says will add a further $100,000 to the overall costs.
The mother also says that if an order is made for security for costs she will need to borrow that amount from third parties as well.
What can be taken from that evidence is that if the appeal is dismissed, and if an order for costs is made, it cannot be said that the same could not be enforced against the mother. There is no reason to doubt that she would not be able to borrow the necessary amount, and there is no issue such as was raised in Atkins & Hunt(Security for Costs) (2015) FLC 93-646 at [29], namely although funds may be able to be borrowed, “there must still be the capacity to repay that borrowing”. In Atkins that capacity was not apparent on the wife’s evidence, but here, that has not been put in issue by the father.
In oral submissions the father’s senior counsel argued that an order for security for costs should be made for two reasons, namely the mother does not suggest that such an order will stifle the appeals, and she is impecunious such that she could not meet any order for costs. As I have identified above, it is correct that there is no claim that an order will stifle an appeal, but that is just one of many factors to be taken into account in determining whether an order should be made, and indeed, by itself, it cannot satisfy the onus that the father has in seeking an order for security for costs. Thus, the focus again becomes the issue of impecuniosity, and putting aside for the moment whether it can be said that impecuniosity is a factor that is present, to repeat, that too is insufficient by itself. Is then the combination of the fact that an order will not stifle the appeals and, if it is the case, impecuniosity, sufficient to justify an order for security for costs? In my view it may be, but that would still depend on whether the impecuniosity is such that it can be said with confidence that the appellant (the mother in this case) would not be able to meet any order for costs. I will return to that shortly, but more importantly, it seems to me that the two factors identified still need to be balanced against all other relevant factors, including, significantly, the prospects of success, and to a lesser degree, the bona fides of the appeals.
I have addressed the issue of the prospects of success, and in terms of the bona fides of the appeals, no issue is raised and nor could there ever be; the mother has complied with all orders made and the applicable Rules, and in a timely fashion. She has filed her appeal books and summary of argument, and is ready to proceed. Thus those factors do not provide a basis for the order being made.
To return to the question of impecuniosity. I have indicated the mother’s case is that she will be able to borrow the necessary funds to meet any order for costs, and thus her inability otherwise to meet them cannot be utilised to justify an order for security for costs. It is also interesting to note that the reason the mother says that an order for security for costs will not stifle the appeals is because she will be borrowing the funds to run the appeals in any event. Thus, it is somewhat hypocritical for the father to accept and rely on that in support of his application, but to then suggest that the mother’s ability to borrow cannot be relied upon to say that she is not impecunious.
Conclusion
I am not persuaded that there is any justification for requiring the mother to provide security for costs, and I propose to dismiss the application.
Costs
In relation to any question of the costs of and incidental to the application before the court, pursuant to r 22.53 of the Rules, either party is able to bring an application to this Court within 28 days of the orders being made, if so advised.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 10 November 2017.
Associate:
Date: 10 November 2017
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