WAI & GWOK
[2019] FamCA 407
•5 July 2019
FAMILY COURT OF AUSTRALIA
| WAI & GWOK | [2019] FamCA 407 |
| FAMILY LAW – COSTS – SECURITY FOR COSTS – Where the Third Respondent seeks security for costs pending Final Hearing to be paid by the First Respondent – where the First Respondent joined the Third Respondent to proceedings – where the First Respondent opposes the Third Respondent’s Application for security for costs – whether rule 19.05 of the Family Law Rules 2004 (Cth) applies to an application between respondents – where the Court determines an order for security for costs of the Third Respondent is appropriate, but in a lesser sum than sought. |
| Family Law Act 1975 (Cth) ss 79, 117 Family Law Rules 2004 (Cth) r 19.05 |
| Adult Guardian & Mother's Parents & B & Child's Representative (2002) FLC 93-116 Anderson v McPherson [No.2] [2012] WASC 19 Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 720 Brown & Brown; Eley and Henty (Interveners) (1991) FLC 92-265 Buffrey v Buffrey (2006) 12 BPR 23,619; [2006] NSWSC 1349 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353 Currie v Hamilton (1984) 1 NSWLR 687 Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 Feravante & McVie [2013] FamCA 758 Frazier & Valdez [2016] FamCAFC 163 Green v Green (1989) 17 NSWLR 343 Halsbury & Halsbury [2008] FamCAFC 170 Jones and Jones (2001) FLC 93-080 Kessey & Kessey (1994) FLC 92-495; 18 FamLR 149 Lindon v Commonwealth (No.2) [1996] HCA 14; (1996) 136 ALR 251; 70 ALJR 541 Luadaka & Luadaka (1998) 24 Fam LR 340 Martin v Martin (1959) 110 CLR 297; [1959] HCA 62 Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4 Ryan v Ryan [2012] NSWSC 636 Sawer & Sawer [2007] FamCA 140 Sullivan & Tyler and Anor [2015] FamCAFC 167 Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6 Wirth v Wirth (1956) 98 CLR 228 |
| APPLICANT: | Ms Wai |
| RESPONDENT: | Mr Gwok |
| FILE NUMBER: | SYC | 5603 | of | 2017 |
| DATE DELIVERED: | 5 July 2019 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Harper J |
| DATE OF LAST SUBMISSION: | 13 May 2019 |
REPRESENTATION
| SOLICITOR-ADVOCATE FOR THE APPLICANT: | Ms Lee |
| SOLICITOR FOR THE APPLICANT: | Stephanie Lee Family Lawyers |
| SOLICITOR-ADVOCATE FOR THE RESPONDENT: | Mr Sukari |
| SOLICITOR FOR THE RESPONDENT: | Herald Legal |
Orders
Within 45 days of the date of these orders, the First Respondent husband, Mr Gwok (“the husband”), provide security for costs of the Third Respondent in these proceedings, Ms Wai (“the Third Respondent”), in the sum of $25,000, to be held in trust by the Third Respondent’s solicitors, pending further order of the Court.
In the event the husband fails to comply with Order 1, the proceedings against the Third Respondent in relation to the A Street, Suburb B property (as contained in his Response filed 4 October 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 Wai & Gwok 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 SYDNEY |
FILE NUMBER: SYC5603/2017
| Ms Wai |
Applicant
And
| Mr Gwok |
Respondent
REASONS FOR JUDGMENT
Introduction
This judgment is in respect of an Application in a Case filed 1 March 2019 by the Third Respondent in the substantive proceedings, Ms Wai (“Ms Wai”), seeking, in summary, that the First Respondent husband, Mr Gwok (“the husband”), provide security for costs pending Final Hearing.
The substantive property proceedings are between the Applicant wife, Ms Gwok (“the wife”), and the husband. The wife commenced the substantive proceedings by filing an Initiating Application on 29 August 2017 in the Federal Circuit Court of Australia. The husband filed a Response on 4 October 2017.
The Second Respondent to the substantive proceedings, Ms C (“Ms C”), is the daughter of the spouse parties. She is a party, broadly speaking, because she contributed money to, and was involved in, property dealings with the wife and the husband. It is not necessary for the purposes of this Judgment to set out these dealings in detail.
Ms Wai is the mother of the wife. She was joined on the application of the husband. By his Response, the husband claims that Ms Wai holds a property at A Street, Suburb B (“A Street, Suburb B”) on trust for the husband and the wife, and seeks an order Ms Wai transfer A Street, Suburb B to the wife. Ms Wai rejects this claim and the relief sought.
Ms Wai was joined as a party on 5 October 2017. She filed a Notice of Address for Service on 26 February 2018. She is represented by solicitors.
Ms Wai filed an Application in a Case in the Federal Circuit Court of Australia on 1 March 2019 seeking an order that the husband pay $125,000 by way of security for her costs of the proceedings, in default of which she be removed from the proceedings and the husband’s claims against her be dismissed. The husband denies there is any basis for security being ordered. In her submissions, Ms Wai seeks security for her costs from the date of her joinder, being 5 October 2017.
Also on 1 March 2019 the proceedings were transferred to this Court. Ms Wai’s Application in a Case was listed before me in a duty list on 15 April 2019. On that date, orders were made for Ms Wai and the husband to provide written submissions in support of their contentions.
Material relied upon
In support of her application Ms Wai relied upon the following documents:
a)Written submissions dated 29 April 2019;
b)Application in a Case filed 1 March 2019;
c)Affidavit of Ms Wai filed 1 March 2019;
d)Affidavit of Ms Wai filed 5 September 2018; and
e)Affidavit of Mr D filed 5 September 2018.
The husband relied upon the following documents:
a)Written submissions filed 13 May 2019;
b)Husband’s Points of Claim filed 6 July 2018;
c)Affidavit of the husband affirmed 18 March 2019, with exhibits, filed in court on 15 April 2019 and forming part of Exhibit “1”;
d)Affidavit of the husband affirmed 5 July 2018, with exhibits, filed in court on 15 April 2019 and forming part of Exhibit “1”;
e)Affidavit of Mr Sukari filed 13 May 2019; and
f)Affidavit of Mr Sukari affirmed 18 March 2019, with exhibits, filed in court on 15 April 2019 and forming part of Exhibit “1”.
In addition, the following documents were tendered and placed into evidence:
| Exhibit Label | Document | Tendered by? |
| A | Exhibit Bundle to Affidavit of Ms Wai filed 1 March 2019 | Ms Wai |
| B | Cost Agreement from Stephanie Lee Family Lawyers dated 21 February 2018 | Ms Wai |
| C | Cost Agreement from Chris Othen, Barrister, dated 15 March 2018 | Ms Wai |
| 1 | Affidavit of Mr Gwok affirmed 18 March 2019, filed in court 15 April 2019, with exhibits; Affidavit of Mr Sukari affirmed 18 March 2019, filed in court 15 April 2019, with exhibits; Affidavit of Mr Gwok affirmed 5 July 2018, filed in court 15 April 2019, with exhibits | The Husband |
The wife and Ms C made no submissions in relation to Ms Wai’s application but filed Responses to her Application in a Case on 18 and 25 March 2019 respectively, consenting to the orders sought by Ms Wai.
The Law
Ms Wai brings her application pursuant to s 117(2) of the Family Law Act 1975 (Cth) (“the Act”). She also referred to r 19.05 of the Family Law Rules 2004 (Cth) (“the Rules”).
The husband submitted that r 19.05 does not apply because its application is circumscribed by the terms of sub-rule (1), which provides that “a respondent” may apply for an order that “the applicant in the case” give security. He nonetheless went on to address the subparagraphs of r 19.05 in some detail. The expression “the applicant in the case” presents some ambiguity. The wife is the Applicant in the substantive proceedings but in the Dictionary to the Rules, “applicant” is defined to include “a cross-applicant who is seeking other orders in a response to an application”. The term “case” is defined, relevantly, to mean “a proceeding under the Act, the Regulations, these Rules or any other law that vests jurisdiction in the Family Court.” The husband is the First Respondent in the substantive proceedings. The application for security is brought by one respondent against another respondent. However, the husband has filed a Response seeking “other orders” so falls within the definition of “applicant” in the Dictionary. The ambiguity arises because r 19.05 applies to “the” applicant in “the case”. The husband seems to fall within the definition of an “applicant” in “the case” because he has filed a Response and “the case” can be understood here as the substantive proceedings. The remaining problem is that the husband appears to be “an” applicant not “the applicant” in the case. This distinction arises purely from the use of the definite (“the”) as opposed to the indefinite article (“an”) in r 19.05. I am satisfied it is appropriate to read “the applicant in the case” in r 19.05 as the applicant (including a Respondent who has filed a Response by reason of the Dictionary definition of applicant) in the substantive proceedings who relevantly is the object of a claim for security. As explained above, by reason of the definition of “applicant” in the Dictionary, the husband would fall within this interpretation of “the applicant in the case.”
I have taken account of the matters set forth in r 19.05. It is unnecessary to set them out in full.
In any event, s 117(2) is also a well-known source of power to make orders for security for costs. It 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), (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.
Appellate decisions have emphasised the importance of the basic rule in s 117(1) of the Act, namely, that each party pays his or her own costs in proceedings under the Act: Halsbury & Halsbury [2008] FamCAFC 170. The Court starts from the position that Ms Wai would have to pay her own costs of the proceedings, unless there are “circumstances that justify” making some other order, including an order for security, within s 117(2).
The court must have regard to the factors set forth in s 117(2A) of the Act when exercising its discretion under s 117(2).
The provisions of s 117(2A) of the Act are as follows:
(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.
Whilst the exercise of the discretion depends upon the relevant circumstances of each case, a long line of cases have confirmed a list of “other matters” which may be taken into account in an application for security for costs.
The Full Court of the Family Court of Australia in Sullivan & Tyler and Anor [2015] FamCAFC 167 at [7] cited with approval the decision of the Full Court in Sawer & Sawer [2007] FamCA 140, which identified the following matters at [21]:
[21] 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.
…
In Sawer (supra) the Full Court followed the decisions in Luadaka & Luadaka (1998) 24 Fam LR 340, Jones and Jones (2001) FLC 93-080 and Adult Guardian & Mother's Parents & B & Child's Representative (2002) FLC 93-116.
The applicant for security has the onus of establishing circumstances that justify an order as to costs. The Court has a wide discretion to make an order as to costs (see Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4) but a wide ambit of discretion does not mean that the facts upon which the discretion falls to be exercised are necessarily of wide compass: Frazier & Valdez [2016] FamCAFC 163 at [11].
In Frazier (supra) at [11] the Full Court of the Family Court of Australia also confirmed the purpose of an order for security for costs is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other.
In Brown & Brown; Eley and Henty (Interveners) (1991) FLC 92-265 at 78,778 15 Fam LR 69 at 73, Butler J made a number of pertinent observations about orders for security for costs:
Costs security orders prevent abuse of court process by, inter alia, preventing impecunious persons from litigating without responsibility. An appropriate example is the issuing of Mareva injunctions: see Riley McKay Pty Ltd v McKay [1982] 1 NSWLR 264.
Generally orders are made where the defendant is an unwilling participant in the litigation and should not be prejudiced by the plaintiff's lack of funds: see Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301. But the court must carefully balance this consideration against the possibility that the plaintiff might be shut out or unfairly dealt with if security is ordered: see Cameron's Unit Services Pty Ltd v Kevin R Whelpton and Associates (Aust) Pty Ltd (1986) 11 ACLR 43.
It is of essential importance to consider as far as possible whether the plaintiff's shortage of funds has been brought about as a consequence of the defendant's conduct of which the plaintiff complains. If so, it would be unfair to require the plaintiff to provide security for the defendant's costs: Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133.
While there is a strong social trend that litigants short of funds should have their day in court without suffering any disadvantage caused by lack of means, the fact that an appellant will be unable to pay the costs of the appeal if the appeal fails is a special circumstance where the appellant should provide security for costs: see Scerri v Northam Holdings Pty Ltd [1967] VicRp 76; [1967] VR 674.
These observations continue to be applicable: Feravante & McVie [2013] FamCA 758 at [60].
Discussion
In this matter it was not contended that there was an absence of bona fides in Ms Wai making her application for security.
The central debate was directed to five relevant considerations:
a)The financial circumstances of the parties;
b)Whether an order for security would stifle the litigation?;
c)The strength of the husband’s case and his prospects of success;
d)The delay by Ms Wai in bringing her application; and
e)The conduct of the husband in the proceedings.
Financial circumstances of the parties
Ms Wai is 84 years of age and her husband, Mr D (“Mr D”), is 82 years of age. They are retired and reside in Asia. Ms Wai relies upon her husband for financial support. She says she is the sole registered proprietor of A Street, Suburb B, and sole legal and beneficial owner. According to her evidence A Street, Suburb B was purchased in 1994 for $367,000. Ms Wai gave no evidence of the present value of A Street, Suburb B but at paragraph 51(f) of her Case Outline, Ms Wai asserts the A Street, Suburb B property has a value of $1,500,000. The husband gave evidence that he believed A Street, Suburb B was now worth $1,700,000.
Ms Wai asserts absolute ownership of A Street, Suburb B. If Ms Wai is correct about the ownership of A Street, Suburb B, she may have more substantial assets than the husband. However, she is elderly, as is her husband upon whom she relies. Ms Wai requires her husband to travel with her because of her age. She and her husband suffer from medical problems. According to her evidence, she pays health insurance whilst in Australia. Her living expenses for herself and her husband whilst in Australia are about $500 per week.
The husband conceded that he earns about $1,080 per week. He owns a 40% share of a property at Suburb G. The other 60% is owned by his daughter, Ms C. It was purchased in 2011 for $660,000, and the husband gave evidence that he believes it is currently worth $1,200,000.
Ms Wai may be in a slightly stronger financial position than the husband, but the evidence does not permit the Court to form anything other than a broad impression.
The husband submitted the evidence showed he could not presently meet the security sought, if ordered, but he had sufficient assets to satisfy any costs order made in favour of Ms Wai upon the resolution of the proceedings. I accept this submission to the extent that it is likely the husband could not meet an order for security of $125,000. However I am satisfied the husband has sufficient assets and income to meet a more modest order for security.
Whether an order for security would stifle the litigation?
If the security sought by Ms Wai is ordered, I am satisfied that it is more likely than not the claims of the husband against Ms Wai will be brought to a premature end. In these circumstances, an analogy with summary dismissal is apt and I discuss this in further detail later in these reasons. I am satisfied it is unlikely the husband will be unable to raise $125,000 as security.
This consideration militates against an order for security of the size sought by Ms Wai.
Husband’s Prospects of Success against Ms Wai
Ms Wai impugned the husband’s prospects of success in his claim against her, arguing he had very slight prospects of success of establishing any trust over A Street, Suburb B in his or the wife’s favour.
It is well-settled that the prospects of success of a party from whom security is sought are a relevant consideration. In Luadaka (supra) at 354 [62.2] the Full Court said:
[62.2] The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Ltd [(1973) 1 QB 609]. However, ordinarily the court will not undertake a detailed assessment of the likelihood of the applicant’s success unless it can be demonstrated that there is a high probability of success or failure: Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd [1988] FCA 15; (1988) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation [1989] FCA 361; (1989) ATPR 40-972. This is because of the lack of material at the time the application is dealt with. However, such an assessment may be possible in circumstances where, as in this case, affidavits have been filed in which the case sought to be made out is set out.
The initial question is how an evaluation of the husband’s prospects of success should be approached, if no detailed assessment of the likelihood of his success should be undertaken, unless it can be demonstrated that there is a high probability of success or failure.
Several decisions of the Federal Court of Australia elucidate this question, in the context of a summary dismissal application pursuant to s 31A of the Federal Court of Australia Act1976 (Cth). Where an order for security is liable to stultify the litigation it can operate analogously to summary dismissal. Thus decisions concerning summary dismissal have force by analogy in an application for security for costs where the prospects of success are seriously in issue.
In Boston Commercial Services Pty Ltd v GE Capital Finance Australia Pty Ltd (2006) 236 ALR 720 at 731 [45] Rares J held:
…the Court must be very cautious not to do a party an injustice by summarily dismissing the proceedings where, in accordance with the principles in Hocking (1947)[1], contested evidence might reasonably be believed one way or the other so as to enable one side or the other to succeed. As soon as the evidence may have such an ambivalent character prior to a final determination, I am of opinion that then, as a matter of law, at that point there are reasonable prospects of success within the meaning of s 31A. Unless only one conclusion can be said to be reasonable, the moving party will not have discharged its onus to enliven the discretion to authorise a summary termination of the proceedings which s 31A envisages…
[1]Hocking v Bell [1947] HCA 54; (1947) 75 CLR 125
In Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955, Gilmour J observed that:
a)“… in a case where evidence can give colour and content to allegations, and where questions of fact and degree are important, the Court should be more reluctant to dismiss a proceeding on the face of a pleading”: at [6(c)]; and
b)“… if there was a real issue of fact or law to be decided, and the rights of the parties depend upon it, it is obviously appropriate that the matter goes to trial. It cannot be said that where there is a real factual dispute and that factual dispute must be resolved to determine whether the claims succeeds that there is ‘no reasonable prospect of success’”: at [6(e)]; and
c)“… evidence of an ambivalent character will usually be sufficient to amount to reasonable prospects”: at [6(h)].
The decisions in Boston Commercial (supra) and Dandaven (supra) have been cited and followed many times in this Court in deciding applications for summary dismissal.
The husband articulated his claims in respect of A Street, Suburb B in Points of Claim filed on 6 July 2018, supported by an Affidavit filed 6 July 2018. Ms Wai relies on two Affidavits to resist his claim. It unnecessary to refer to this in detail for this judgment.
The competing factual contentions may be summarised as follows.
a)The husband and wife were married on … 1985. In around 1992, E Street, Suburb F was purchased. The wife was the sole registered proprietor. Ms Wai says she and her husband transferred funds to the wife for the purchase and the wife held the property for them. The husband’s own evidence (Affidavit of husband filed 6 July 2018, paragraphs 51-59) concedes the purchase monies came from Ms Wai and her husband in China. However he says these monies were a gift to the wife and husband for the purchase. He says he believed the property would belong to him and the wife, even though he was not on the title, and after purchase he paid expenses such as strata fees and utilities in that belief. Mr D gives evidence (Affidavit of Mr D filed 5 September 2018, paragraphs 25-26) which contradicts this version. He gives evidence that prior to the purchase of E Street, Suburb F he made it clear to the husband and the wife that the wife was holding it in her name for them and it was his and Ms Wai’s property.
b)The husband then contends that in 1994, the wife told him she wanted a bigger home. He says he and the wife found A Street, Suburb B. It was to be the matrimonial home. The purchase was funded by the sale of E Street, Suburb F and by Ms Wai and Mr D providing funds from China. It appears the husband says these funds were also a gift. He says part of the purchase monies came from accumulated income received from his employment, which the wife withdrew for the purchase.
c)Ms Wai contradicts this version. She says she found A Street, Suburb B and wanted to buy it. She contends she and Mr D received the entire net proceeds of sale from E Street, Suburb F, being $250,000, and transferred another $250,000 from an account in China. From this total of $500,000, $367,000, plus stamp duty and legal fees, was paid to settle the purchase of A Street, Suburb B, part of the balance was used to furnish A Street, Suburb B and a balance of approximately $100,000 was placed on term deposit. Ms Wai is the sole registered proprietor of A Street, Suburb B. Mr D gives evidence consistent with this version.
The prima facie position is that the beneficial ownership of real property is commensurate with the legal title: Currie v Hamilton (1984) 1 NSWLR 687 at 690; Black Uhlans Inc v New South Wales Crime Commission & Ors [2002] NSWSC 1060 at [128]. However, where the legal title does not reflect the proportionate contributions of the parties to the purchase, then (at least absent a presumption of advancement) it will be presumed that the beneficial ownership of the property is held in the proportions in which they contributed the purchase money, as tenants in common in those proportions: Ryan v Ryan [2012] NSWSC 636 at [43] per Ward J; Anderson v McPherson [No.2] [2012] WASC 19 per Edelman J (as he then was) at [106]-[116]; Trustees of the Property of Cummins (a bankrupt) v Cummins [2006] HCA 6 at [55]. Alternatively, a constructive trust may be imposed when a spouse or partner makes a financial contribution towards the cost of acquiring, improving or maintaining a property held in the other’s name, subject to proving the spouses held a common intention that they would own the property together and that the party asserting the trust acted upon that common intention by making contributions or other action to their detriment: Green v Green (1989) 17 NSWLR 343 at 354-355.
In a family context, consideration should also be given to what is called the “presumption of advancement”. In Wirth v Wirth (1956) 98 CLR 228 at 237-238 Dixon CJ said where a purchase is made in the name of a child or the purchaser’s wife, the purchase is prima facie to be taken as a provision or advancement for the person in whose name the purchase has been made. In Charles Marshall Pty Ltd v Grimsley (1956) 95 CLR 353, Dixon CJ, McTiernan, Williams, Fullagar and Taylor JJ said at 363–364, if a purchaser is the father of or “a person in loco parentis to the legal owner”, the presumption arises from the relationship of the parties that the father intended to purchase the property to advance his child and to make the child not only the legal but also the beneficial owner of the property.
Edelman J said in Anderson v McPherson [No.2] (supra) at [136] that in Australia, the approach of Dixon CJ is dominant and there is no presumption of advancement at all. On the contrary, it “is simply a circumstance in which the 'presumption of resulting trust' does not arise”. Edelman J referred to the High Court decision in Martin v Martin (1959) 110 CLR 297; [1959] HCA 62, where Dixon CJ, McTiernan, Fullagar & Windeyer JJ at 303 explained that the presumption of resulting trust did not apply where a husband purchased land in the name of his wife, “as she was his wife the fact that he found the purchase money for the land raised no presumption in his favour of a resulting trust as it would or might have done had she been a stranger”; rather this constituted the absence of any reason for assuming that a trust arose. Edelman J also pointed out that various judgments in Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 also reiterate this point: Gibbs CJ (247), Mason & Brennan JJ (256), Murphy J (265) and Deane J (267).
In Buffrey v Buffrey (2006) 12 BPR 23,619; [2006] NSWSC 1349 at [14], Palmer J observed the presumptions of resulting trust and advancement “often compete”, but like all evidentiary presumptions they “give way to facts showing the contrary”; and that “whether either presumption is rebutted depends upon the intention solely of the party who provided the money” (at [14(4)(a)]). This statement could be extended in certain situations to assertions of a common intention constructive trust.
It should also be remembered that the presumption of advancement applies to gifts between father and child and mother and child, but not necessarily a daughter or son-in-law, unless, possibly, the facts support a conclusion that the gift-giver stood in loco parentis to the recipient: Anderson v McPherson [No.2] at [141] - [146].
It is also relevant to note here that in the context of assessing contributions for the purposes of s 79, which is a different exercise to determining ownership of assets, intention also plays a critical role. Kessey & Kessey (1994) FLC 92-495; 18 FamLR 149 at 181 stands for the proposition that a contribution of a parent of a party to a marriage will be taken as a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.
On an application for security for costs before a first instance judge, it is not necessary or possible to resolve differences between explanations in higher appellate courts of the correct juristic characterisation of evidentiary presumptions. However, the discussion makes clear that the central question at Final Hearing regarding A Street, Suburb B will be whether the evidence establishes circumstances, one of which may be called a presumption of advancement, which rebut any presumption of resulting or constructive trust in favour of Ms Wai in respect of the E Street, Suburb F, or circumstances which support a conclusion Ms Wai held A Street, Suburb B on resulting or constructive trust for the husband and wife.
As I understand it, the husband argues that he contributed the net sale proceeds of E Street, Suburb F to the purchase of A Street, Suburb B and some of his accumulated income. This claim relies upon findings that funds provided by his parents-in-law for the purchase of E Street, Suburb F and A Street, Suburb B were gifts to both husband and wife, and that some of his accumulated income was used in the purchase of A Street, Suburb B, or that his parents-in-law should be presumed to have intended to make provision for the advancement of him and the wife, or perhaps just the wife, in the purchase of E Street, Suburb F, or that there was a common intention between him, the wife and his parents-in-law that there would be some common ownership of E Street, Suburb F and A Street, Suburb B.
The most direct evidence of intention comes from the providers of the money, Ms Wai and Mr D. This evidence does not support either that they had any intention of providing an interest in E Street, Suburb F in favour of the spouse parties or that they had an intention to make provision for the advancement of their daughter or son-in-law through either E Street, Suburb F or A Street, Suburb B, or intended the provision of purchase monies for either property to be a gift to both spouse parties.
The same evidence would also undermine the husband’s arguments founded on an assertion his parents-in-law made gifts to the spouse parties in respect of the properties which should be characterised as contributions to both parties. Again the direct evidence of intention comes from the alleged gift-givers, Ms Wai and Mr D. As noted they state they had no intention of making either E Street, Suburb F or A Street, Suburb B a contribution to the marriage at all, except to the extent they allowed the spouse parties to live in E Street, Suburb F and A Street, Suburb B.
Viewing the competing contentions and evidence objectively, in my view, there are real issues of fact and law to be determined and it could not be said that only one conclusion, adverse to the husband, is reasonable at this interlocutory stage such that he has no prospects of success. The evidence presently available, although equivocal in places, permits more than one conclusion. Having said that, the claims of the husband regarding A Street, Suburb B, analysed in light of the evidence presently available, seem less plausible than those of Ms Wai. Even so, I am not able at this point in the proceedings to conclude his claims have such a high probability of failure as to justify an order for security of $125,000. Even if the husband’s case appears at present to manifest weakness, as against Ms Wai, this does not of itself justify a peremptory termination of his ability to bring the case at all, which would be the likely result of an order for $125,000 of security. In Lindon v Commonwealth (No.2) [1996] HCA 14; (1996) 136 ALR 251; 70 ALJR 541 Kirby J said at [14]:
An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court…
Ultimately, the onus will lie on the husband to make good his claims, however formulated. He may ultimately fail but it is not possible to reach such a conclusion at this stage.
Therefore, in the absence of evidence properly tested at Final Hearing, I conclude that it cannot presently be said the husband’s claims have a high probability of failure, as against Ms Wai. On the other hand, they are not particularly strong either. This weakness supports an order for security, but at a more modest level than that sought by the wife.
Delay
The husband argued that Ms Wai has provided no explanation for a delay of 17 months after he filed his Response, in bringing her application for security for costs. However, Ms Wai was not formally served until 26 February 2018. Nonetheless, I accept there has been some delay in bringing this application. Of itself the delay is not so excessive so as to support dismissal of Ms Wai’s application. It does however have an impact on the level of any security ordered.
Conduct of the husband
The evidence of Ms Wai shows the husband’s conduct in the proceedings has likely increased Ms Wai’s costs. The costs of Ms Wai were reserved on two occasions in the Federal Circuit Court of Australia before the transfer to this Court: on 12 April 2018 and 29 October 2018.
On 12 April 2018, the Court made orders by consent which were almost identical to orders proposed by Ms Wai in correspondence. The husband only provided his consent on 12 April 2018, whereas the costs of unnecessary appearances to Ms Wai could have been avoided if he had provided his consent in a more timely manner.
On 29 October 2018, the proceedings were listed for a compliance check with a Registrar prior to a Conciliation Conference. The husband failed to appear.
This conduct by the husband weighs in favour of an order for security.
Other Matters
The husband submitted the level of security sought was “exorbitant”.
As noted, in her submissions, Ms Wai seeks security for her costs from the date of her joinder, being 5 October 2017. Ms Wai provided estimates of future costs, based in part upon a Notice as to Costs from her solicitor, which disclosed a total estimate of $107,514.76. This however included fees already paid. Ms Wai also estimated an additional $25,000 would be required for travel expenses, accommodation, health and living expenses incurred to be present for a Final Hearing.
The husband’s solicitor gave evidence that the likely future costs for the litigation would be $51,150 and Ms Wai would be likely to recover about $35,805 if she received a costs order in her favour when the proceedings were finalised.
The total amount of security sought would almost fully equal the past and the likely future costs of Ms Wai. Whilst I am unable to form a view of which estimate of costs is more accurate, it would be appropriate in any order for security to apply a discount for the vagaries of litigation, especially bearing in mind there is presently no Final Hearing date allocated.
The delay already discussed above also militates in favour of reducing the amount of security sought.
Finally, I note neither party is in receipt of assistance by way of legal aid.
Conclusion
Taking account of the matters discussed above, I am satisfied that an order for security should be made, but a level significantly less than the $125,000 sought by Ms Wai. A more modest order for security is appropriate and would not, on balance, be likely to stultify the proceedings in which the husband’s claims, whilst seeming less plausible than Ms Wai’s evidence, do not satisfy the criterion of a high probability of failure, and would not, at the present stage of the proceedings work injustice between the parties. I will order the husband to pay security of $25,000.
The husband and Ms Wai each sought orders for costs against the other in respect of the application for security. I do not propose to make any order as to costs of this application.
I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Harper delivered on 5 July 2019.
Associate:
Date: 5 July 2019
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