Woodby-Chatterjee and Chatterjee (No. 2)
[2018] FamCAFC 265
•19 December 2018
FAMILY COURT OF AUSTRALIA
| WOODBY-CHATTERJEE & CHATTERJEE (NO. 2) | [2018] FamCAFC 265 |
| FAMILY LAW – PRACTICE AND PROCEDURE – ADJOURNMENT – Where the appellant seeks to adjourn the hearing of the application for security of costs pending the consolidation of her two appeals – Application dismissed. FAMILY LAW – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – Where an order for security for costs would stifle the appeal – Where the parties are in a poor financial position – Where the appeal is reasonably arguable – Where there has been a delay in bringing the application – Where there would be difficulty in enforcing an order for costs against the appellant – Application dismissed. FAMILY LAW – APPLICATION IN AN APPEAL – COSTS – Application for costs of a previous Application in an Appeal seeking reinstatement of the appeal and the provision of transcript – Where the reinstatement application was successful but the application for provision of transcript was not – Appellant ordered to pay two-thirds of the respondent’s costs of the application. FAMILY LAW – APPLICATION IN AN APPEAL – COSTS – Application for costs of the unsuccessful application for security for costs – Respondent ordered to pay four-fifths of the appellant’s costs of the application. |
| Family Law Act 1975 (Cth) s 94(1AA), 117 Family Law Rules 2004 (Cth) r 19.05(2) |
| Atkins & Hunt (Security for Costs) (2015) FLC 93-646 Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577 Halsbury & Halsbury [2008] FamCAFC 170 Luadaka v Luadaka (1998) FLC 92-830 Morris v Hanley [2001] NSWCA 374 Palma & Caleffi (Security for Costs) [2011] FamCAFC 174 |
| APPELLANT: | Ms Woodby-Chatterjee |
| RESPONDENT: | Mr Chatterjee |
| FILE NUMBER: | SYC | 3822 | of | 2013 |
| APPEAL NUMBER: | EA | 61 | of | 2018 |
| DATE DELIVERED: | 19 December 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 19 December 2018 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 April 2018 |
| LOWER COURT MNC: | [2018] FamCA 474 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Obrart |
| SOLICITOR FOR THE APPELLANT: | G & D Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Bridger |
| SOLICITOR FOR THE RESPONDENT: | Bricknell Legal |
Orders
IT IS ORDERED:
The appellant’s oral application for an adjournment is dismissed.
The appellant is granted leave to file a Further Amended Notice of Appeal.
The appellant is to pay two-thirds of the respondent’s costs of the Application in an Appeal filed on 17 August 2018.
The Application in an Appeal filed on 5 October 2018 is otherwise dismissed.
The respondent is to pay four-fifths of the appellant’s costs of the Application in an Appeal filed 5 October 2018.
IT IS DIRECTED:
The appellant is to file and serve her Summary of Argument and List of Authorities on or before 25 January 2019.
The respondent is to file and serve his Summary of Argument and List of Authorities on or before 15 February 2019.
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 Woodby-Chatterjee & Chatterjee (No. 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 61 of 2018
File Number: SYC 3822 of 2013
| Ms Woodby-Chatterjee |
Appellant
And
| Mr Chatterjee |
Respondent
REASONS FOR JUDGMENT
Application for an adjournment
Listed before the Court today is an application for security for costs of an appeal filed by Mr Chatterjee (“the respondent”). The appeal is provisionally listed for hearing on 28 February next year. Although the Application in an Appeal was filed on 5 October 2018, the parties were only recently given notice of this hearing date. As can readily be seen, it would be difficult for this application to be considered next year and, if security for costs is ordered, for Ms Woodby-Chatterjee (“the appellant”) to comply with that order with the impending appeal.
Three grounds are put forward in support of the application for an adjournment. The first requires some explanation. The present appeal concerns the refusal of the primary judge to recuse herself from the hearing of the matter. That application was made on 5 April 2018 and refused on the following day. An appeal was lodged from that decision on 2 May 2018. The hearing continued before the primary judge and final orders were ultimately made on 15 November 2018. A Notice of Appeal from that decision was filed recently.
It is suggested that the issues raised by both appeals substantially overlap in that both will require a close consideration of the transcript and it is suggested that it would be expedient for both appeals to be heard together. Whilst there is some force in that, the difficulty that arises is that it is extremely unlikely that the appeal recently filed will be able to be prepared so that it could be heard along with the appeal listed on 28 February 2019. Therefore, the hearing on 28 February 2019 would have to be vacated and it would be some months before another appeal date would become available.
Secondly, the appeals raise different considerations. The first appeal raises a consideration as to whether or not the primary judge should have continued with the hearing. That consideration must be heard and determined first because, if the primary judge was found to have erred in failing to disqualify herself, in effect, a fair trial has not been held and the matter would have to be reheard (Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd (2006) 229 CLR 577).
Therefore, there is some merit in this appeal proceeding because, if successful, the second appeal would become otiose. As I have said, the matter would have to be reheard. Given the course taken by the appellant – that is, to proceed with the prosecution of this appeal and not make any application to adjourn it pending any possible later appeal – it seems to me that this is not a strong ground for adjourning the application.
The second reason is that the solicitor for the appellant has deposed that he has insufficient time to prepare the evidence that he wishes to call in support of the appellant’s case in relation to the application for security for costs. It can be accepted that he says he has only had two clear days’ notice of the listing of this application and that period is insufficient to prepare the evidence. However, the application was filed on 5 October 2018. Unsealed copies of the application and affidavits were provided to him on 4 October 2018. That is more than ample time for this matter to have been prepared. It is not appropriate, as he suggested it would have been, to wait until the Court directs to prepare your evidence.
Finally, it is suggested that, as the respondent intends to apply for security for costs in the appeal that was filed on 13 December 2018, it would be appropriate for both applications for security to be heard together. That would only be a sensible course if the appeals were to be heard together and, as I have said, I am not persuaded that, in the circumstances, that is an appropriate course. I am not satisfied that the matter should be adjourned and the application for an adjournment is dismissed.
Application for security for costs
By an Application in an Appeal filed on 5 October 2018 the respondent seeks an order that the appellant pay $36,964.90 as security for costs in appeal EA 61 of 2018. In that appeal, the appellant challenges the decision of a judge of the Family Court to refuse to disqualify herself from the further hearing of the proceedings. An appeal as of right lies from such a decision: see s 94(1AA) of the Family Law Act 1975 (Cth) (“the Act”).
The hearing, which dealt with both property and parenting issues, commenced before the primary judge on 3 April 2018. On 5 April 2018, the appellant made the disqualification application which was said to be based upon comments made by the primary judge over the preceding two days and upon what was said to be her Honour’s discriminatory approach to rulings on objections to evidence.
The application was not successful and the hearing proceeded. For reasons it is unnecessary to recount, it ultimately continued only in relation to the parties’ property. A financial agreement entered into between the parties on 28 January 2003 was central to the proceedings. The respondent sought orders enforcing it, whereas the appellant sought to have it set aside on a number of grounds, including fraudulent misrepresentation, unconscionable conduct and undue influence.
Her Honour ultimately delivered judgment on 15 November 2018. The claims made by the appellant were dismissed and orders made as sought by the respondent. A Notice of Appeal from that decision was filed on 13 December 2018 and the effect of the failure to set aside the financial agreement is that the only significant property available for division between the parties is the sum of $536,000. This represents the net proceeds of the sale of the former matrimonial home in Suburb B, which was sold in 2016.
After the sale, the respondent’s father, the respondent and the appellant were engaged in proceedings in the Supreme Court of New South Wales and the Court of Appeal. The upshot of those proceedings was that the respondent’s father was found to be entitled to repayment of $1.2 million and interest of $464,000 from the proceeds of sale. The appellant was ordered to pay the respondent’s father’s costs of the trial and of the appeal.
At the commencement of the hearing before me today, the appellant sought an adjournment. That application was refused. The only evidence proffered to the Court by the appellant was in support of that adjournment application. The consequence is that the only evidence that is before the Court is that which has been called by the respondent.
The principles to be applied
It is well established that the Court has power to make an order for security for costs. That power is found in s 117 of the Act.
The Full Court in Atkins & Hunt (Security for Costs) (2015) FLC 93-646 (“Atkins”) at [12] regarded it as well settled that, in addition to the matters referred to in s 117(2A) of the Act, the following matters should be considered under section 117(2A)(g):
·the prospects of the success of the appeal;
·whether the claim for security for costs was made bona fide;
·whether or not an order for security for costs would stifle the litigation;
·whether or not the litigation may involve a matter of public importance;
·whether or not there has been a delay in bringing the application for security;
·whether or not there would be a difficulty enforcing an order for costs.
See also Palma & Caleffi (Security for Costs) [2011] FamCAFC 174; Luadaka v Luadaka (1998) FLC 92-830.
As the Court in Atkins pointed out at [22], these factors largely mirror the considerations referred to in r 19.05(2) of the Family Law Rules 2004 (Cth) (“the Rules”). I would add that, in the present circumstance, it is also a relevant consideration as to whether or not there are unpaid costs orders (r 19.05(2)(g)).
The application is based on the poor financial positions of the parties. The respondent submits that the appellant will be unable to meet any costs order that may be ordered in his favour if the appeal is ultimately unsuccessful. The respondent also relied on what he said was the poor prospects of success of the appeal.
Would an order for security for costs stifle the appeal?
The respondent’s evidence is that the only asset of significance held by the parties is the proceeds of sale held in the controlled money account. In his evidence, the respondent refers to the appellant’s Financial Statement filed on 26 March 2018 in which she stated she had assets totalling $267,000. This included a half-share of the controlled money account. This statement continued to assert that she owed $204,000 to her lawyers, $31,707 to one bank, $13,948 to another, and $28,727 to other creditors.
In an affidavit sent to the respondent’s solicitors on 27 June 2018, the appellant deposed that the sum owed by her to her lawyers was $158,000. On 19 January 2018, the solicitors acting for the respondent’s father in the Supreme Court proceedings asserted that the costs the appellant was liable to pay to their client pursuant to the orders of the Supreme Court and the Court of Appeal were $300,889. The solicitors gave notice that they intended to oppose any payment out of the controlled money account to the appellant other than to pay their client’s costs. Those solicitors are the holders of the controlled money account.
The respondent also deposes that he understands that the appellant is presently unemployed.
Given that the major asset of the appellant is her interest in the funds in the controlled money account, to which she does not presently have access, it is readily apparent that the appellant does not have the means to comply with the proposed orders. Whilst it is true that the appellant’s present solicitors have acted for her for some time without being paid, and the solicitor has himself apparently paid for the preparation of the appeal books and the provision of the transcript, I would not infer from those matters that the solicitor would, or indeed could, meet the appellant’s obligation under the proposed order. The proposed order would in all probability not be met, and the appeal would thus be brought to an end. Counsel for the respondent very properly accepted this to be so. This speaks against making the order.
The financial circumstance of the parties
I have already dealt with the financial position of the appellant. Whilst she asserts that, if she is successful in the appeals and ultimately successful in setting aside the financial agreement, there may well be another $3 million available for division between the parties, that is not the position now.
The respondent has borrowed heavily from his father to meet the costs of the various proceedings. Having regard to that debt, his interest in the controlled money account and his superannuation, he estimates that his debts exceed his assets by $193,141.
The appeal therefore will be a significant financial strain on both parties, neither of whom appear to have the ability to pay for it from their own funds.
Prospects of success of the appeal
The appeal focuses on comments and rulings made by the primary judge over two days. The Summary of Argument is not yet available, so it cannot be seen how the argument is to be put. Whilst I have read the grounds of appeal and the relevant transcript, it is difficult, in these circumstances, to form a concluded view as to the prospects of success of the appeal. I am prepared to proceed on the assumption that the grounds are reasonably arguable.
Has the claim for security been made bona fide?
There is no suggestion that the application has not brought bona fide.
Has there been a delay in bringing the application?
As the Court pointed out in Atkins at [42], whilst the Rules do not provide a time limit for bringing of an application for security for costs, “it is desirable for an application for security for costs to be filed as soon as practicable after the appeal has been instituted”.
Such an application should be heard before the appellant has spent significant funds on preparation for the appeal.
This application was brought only after the appellant had filed the appeal books, and shortly before the transcript was due to be filed. The only reasonable inference that can be drawn is that at the time of the filing, the appellant had ordered and paid for the transcript or, at least, that her solicitor had done so on her behalf.
The respondent’s evidence does not give any explanation as to why the application was not filed earlier than it was. I was informed from the bar table that it was intended that the respondent would file an application for security for costs at an earlier date, but that did not occur because the appeal was deemed to be abandoned on 31 July 2018 for failure to file the appeal books by that time. That may be so, but even that was late. The issue of security was not raised at the reinstatement hearing, and the application for security was not filed immediately after the appeal was reinstated on 19 September 2018. Even accepting the material given from the bar table, I do not think that this improves the respondent’s position.
This consideration favours refusal of the application.
Does the appeal involve a matter of public importance?
The appeal does not involve a matter of public importance.
Would there be a difficulty in enforcing an order for costs?
This issue has largely been canvassed earlier in these reasons. The appellant has not paid a number of earlier costs orders, and appears to be insolvent. On 23 March 2016, Rees J ordered the appellant to pay the respondent’s costs of an Application in a Case that was before her in the sum of $8,000. This has not been paid. The only available conclusion is that the appellant would not voluntarily meet any costs order.
This consideration supports the application.
Other relevant matters
There is one other relevant matter to take into consideration. The only evidence in support of the amount of the payment sought is contained in a cost estimate that has been given to the respondent. The estimate is for the solicitors’ costs of the appeal to be $20,000, barristers’ costs of $16,500, together with other incidental expenses and storage fees. No detail is given as to how these estimates have been arrived at. The role of a solicitor acting for a respondent in an appeal where counsel is to appear and is to prepare the Summary of Argument is limited. In the absence of evidence as to precisely how that sum has been arrived at, I would not accept the bald estimate as a reasonable prediction of the costs likely to be recovered under a costs order.
Further, security for costs is normally given only for the costs to be incurred after the date of the order, and not for costs already incurred. The estimate was sent to the respondent on 18 June 2018. It is unlikely, therefore, that it is likely to be an accurate estimate of costs to be incurred from today. This imprecision makes the formulation of any order for security difficult.
Conclusion
It is important to bear in mind that the starting position under s 117(1) of the Act is that each party is to bear his or her own costs.
I also bear in mind what was said by the Court in Halsbury & Halsbury [2008] FamCAFC 170 at [35]:
Appeals are a part of our system of law. They operate as part of the proper checks and balances on the actions and decisions of trial judges. Litigants have a right to appeal in circumstances where they, properly and bona fide, allege error on the part of the trial judge (subject of course to the requirements in certain circumstances of leave to appeal being granted). That right to appeal is an important part of our system of law. It should not be fettered except for good reason.
The core financial position of the respondent and the likelihood that the appellant will not voluntarily meet any costs order do support the application. However, the failure to bring this application promptly, and the reality that any order for security for costs would stifle the appeal, speak persuasively against it.
In Morris v Hanley [2001] NSWCA 374 at [29], Heydon JA, speaking as a member of the Court of Appeal, said:
It is never easy for defendants to succeed in an application for security for costs against a natural person where that application is in part based on the ground of that natural person’s lack of funds. It becomes significantly harder for defendants to succeed where they permit the plaintiff to throw money away on the litigation which will never be recoverable in a costs order against the defendants by reason of the successful application for security.
These comments are particularly relevant to the present application. I am not persuaded that an order for security for costs should be made.
Application for costs of the Application in an Appeal filed 17 August 2018
The Application in an Appeal seeking security for costs also sought an order for the costs in respect of the application for reinstatement and for the provision of transcript that was determined on 19 September 2018.
As I have said, I accept that both parties are impecunious.
The reinstatement application was required because the solicitor for the appellant had difficulties in filing the appeal books. It was not suggested there was any failing on the appellant’s part. The application was brought promptly after the appeal was deemed to be abandoned. Ordinarily, one would have expected in those circumstances that any application for reinstatement would not have been opposed, thus avoiding the need for a contested hearing.
The respondent’s evidence is that he would have consented, but for the further application for the provision of transcript. I do not understand, however, why there could not be consent to the reinstatement application, yet opposition to the order seeking that the respondent provide the transcript. The application for the provision of transcript was entirely unsuccessful.
On balance, I consider that the appropriate order is that the appellant pay two-thirds of the respondent’s costs of the Application on Appeal filed on 17 August 2018. This takes into account the failure to consent to the reinstatement application and the unmeritorious application for the provision of transcript.
Application for costs of the Application in an Appeal filed 5 October 2018
An application has been made for the costs of the unsuccessful application for security for costs. It is to be recalled that coupled with that application was a successful application for costs of the reinstatement application. So it is not correct say that the application was wholly unsuccessful. However, I find persuasive the delay in bringing the application. The authorities speak quite clearly that applications for security for costs must be brought as soon as practicable. This application was brought after the appellant had spent considerable sums of money preparing the appeal.
I accept that both parties are impecunious. However, that, of itself, does not justify the bringing of applications which otherwise ought not be brought.
I take into account the fact that the application for costs was partly successful. That application largely should not have been opposed. However, the bulk of today was taken up with the security for costs issue. Taking into account each of these competing considerations, I am of the view that the appropriate order is that the respondent pay four-fifths of the appellant’s costs of the Application in an Appeal filed on 5 October 2018.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 19 December 2018.
Associate:
Date: 23 January 2019
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