Yew & Lin & Anor (No 2)

[2015] FamCA 970

FAMILY COURT OF AUSTRALIA

YEW & LIN & ANOR (NO 2) [2015] FamCA 970

FAMILY LAW – SECURITY FOR COSTS – Application for security for costs by the respondent – where the applicant has failed to comply with orders for the filing of material – where the respondent seeks to bring property proceedings pursuant to s 44(3) almost 26 years after the divorce order took effect – question as to the merit of the applicant’s application – where the respondent is likely to face significant costs in responding to the application – interim orders made for security for costs

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Luadaka & Luadaka (1998) FLC 92-830

APPLICANT: Mr Yew

FIRST RESPONDENT: Ms Lin

SECOND RESPONDENT:  B Pty Ltd

FILE NUMBER: MLC 3498 Of 2014

DATE DELIVERED: 17 September 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 17 September 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Scriva

SOLICITOR FOR THE APPLICANT: Lawyers R Us

COUNSEL FOR THE FIRST AND SECOND

 RESPONDENTS:

Mr Holmes

SOLICITORS FOR THE FIRST AND

SECOND RESPONDENTS:

Kennedy Partners

Orders

IT IS ORDERED

1. That on or before 14 October 2015 the husband do all such acts and things as may be necessary to pay the amount of $15,000 into the trust account of the lawyers for the wife, Kennedy Partners, by way of security for costs.

2. That the proceedings be listed for mention before the Honourable Justice Johns at 9.30am on 21 October 2015 for the re-listing of the husband’s application seeking leave to institute property settlement proceedings pursuant to s 44(3) of the Family Law Act 1975 for final hearing.

3. That the hearing on 8 October 2015 be vacated.

4. That all extant applications be adjourned to the mention hearing listed on 21 October 2015.

5. That the time for the husband’s compliance with Order 3 and Order 7 of the Orders dated 1 June 2015 (“the Orders”) be extended to 2 October 2015.

6. That the time for the wife’s compliance with Order 4 of the Orders be extended to 30 October 2015.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Yew & Lin and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: MLC 3498 of 2014

Mr Yew

Applicant

And

Ms Lin

First Respondent

And

B Pty Ltd
Second Respondent

REASONS FOR JUDGMENT

1. These reasons for judgment were delivered orally.

2. This is an application filed on behalf of the wife on 14 August 2015 seeking inter alia an order for security for costs.  The orders sought by her are contained in the minute of orders filed on her behalf this day.  That minute will be marked with the letter A and be retained upon the court file. 

3. The material relied upon by the wife in support of that application is her application in a case filed 14 August 2015 and an affidavit of the wife filed 14 August 2015. 

4. The application was opposed by the husband.  In support of his position he relied upon his affidavit filed 7 September 2015. 

5. By way of background I note the following. 

6. The wife is aged 70 years and was born in Country C.  She is retired. 

7. The husband is aged 72 years and was also born in Country C.  In his affidavit filed 7 September 2015 he states his address as E Street, Suburb F, Victoria.  However, the husband is currently in Country C and to date has been unable to secure a visitor’s visa permitting him to return to Australia to prosecute his case.  At this stage it is uncertain whether such visa will issue in time for the adjourned mention hearing or indeed whether such visa will issue to enable him to return to Australia to prosecute his case. 

8. The parties married in 1966.  They separated on 25 December in 1983, some 32 years ago.  There are six children of the marriage, who are now adults and live independently of the parties.  The parties divorced on 20 November 1988. 

9. The wife deposes in her affidavit that to the best of her knowledge the husband remarried in or about 1989.  Whilst it is clear from the husband’s affidavit that he has remarried, there is no date provided by him as to when that second marriage occurred. 

10. It is the wife’s position that the parties agreed to sever their financial relation in or about 1986 or 1987.  She deposes at paragraph 8 of her affidavit filed 14 August 2015 as follows:-

    In 1986/1987, the husband and I agreed to formally dissolve our marriage and end all financial ties with each other.  The husband agreed to give me all of our assets in Australia on the basis that he would retain all of our assets in [Country C], which were much more substantial.  At the time our assets in Australia comprised an interest in some real properties, which we held by the corporate entity [B Pty Ltd] as trustee for the [B Trust]. 

11. At paragraph 9 of the affidavit the wife deposes that the husband and B Pty Ltd entered into a deed of agreement in June 1987, the effect of that deed being that the husband relinquished his interests in assets held by or in the control of the B Trust. 

12. The wife deposes at paragraph 12 of her affidavit that in 1991 the husband remitted the sum of $330,000 to Australia from Country C.  She describes that remittance as “a one-off payment” and deposes that otherwise the husband did not pay any maintenance or child support or make any further contribution towards the children’s living or educational expenses. 

13. The husband takes issue with the wife’s allegations, both with respect to the severance of their financial relationship or indeed as to the extent of financial support provided by him for the children after the parties’ separation. 

14. Some 26 years after the parties divorced the husband commenced proceedings in this court in April 2014. In his initiating application filed on 24 April 2014 he sought orders for leave pursuant to s 44(3) of the Family Law Act1975 (Cth) (“the Act”). Further he sought that there be a just and equitable division of the parties’ financial interests. In his amended application filed 4 May 2015 the husband sought orders that:-

    (a)   he be re-instated as a director and shareholder in B Pty Ltd; and

    (b)  he be paid an amount equal to one half of the value of the properties held in those entities. 

    That application is opposed by the wife. 

15. The matter came on for a first day of hearing before me on 1 June 2015. On that day I determined that it was appropriate that there be a bifurcation of the proceedings and that the issue as to s 44(3) should be listed as a discrete matter. I made orders that that issue be listed for a two-day hearing, to commence on 8 October 2015.

16. Paragraph 3 of the orders made on 1 June 2015 required the husband to file and serve all documents upon which he seeks to rely by 13 July 2015.  Paragraph 7 of those orders requires the husband to provide to the wife the following documents in his possession, power and control by 29 June 2015:-

    (a) his passports held since 1982; and

    (b) copies of all documents he proposes to tender and/or rely upon at the bifurcated hearing. 

17. The husband has not complied with the orders of 1 June 2015.  He has not filed his affidavit pursuant to paragraph 3 of those orders.  The affidavit of the wife filed 14 August 2015 annexes a letter sent on behalf of the wife through her lawyers to the husband’s former solicitors seeking compliance with those orders.  That letter is dated 17 July 2015.  There has been no response to that order. 

18. Although the husband has filed an affidavit in respect of the interim application currently before me, he has yet to comply with my trial directions. 

19. The husband’s explanation for his non-compliance with those orders is that he was not aware of the due date for the filing of the affidavit.  I note that he was present at Court on 1 June 2015, when those orders were made.  Further I note that the husband was represented by his solicitor at that hearing. 

20. At paragraph 2 of the husband’s affidavit filed 7 September 2015 he deposes that he travelled to Country C on 9 July 2015.  The purpose of that trip, as set out at paragraph 3 of that affidavit, was to enable him to make all necessary efforts to comply with paragraph 7 of the orders made on 1 June 2015.  I note that those orders were to be complied with by 29 June 2015, some 10 days prior to his travel to Country C. 

21. On the basis of that history, I am satisfied that the husband to date has made little effort to comply with orders of the Court to ensure that this matter is able to proceed to conclusion.  The husband in his affidavit also appears to take issue with the legitimacy or otherwise of the parties’ divorce.  At paragraph 6 of the affidavit he deposes as follows:-

    Having reviewed the documents discovered by the wife in these proceedings, it is now my contention that our marriage has not been legitimately dissolved either in 1988 nor at any other time.

22. On the face of that evidence it would appear that the husband seems to be relying upon that fact as a basis for not requiring leave pursuant to s 44(3). I note the submissions of his counsel today that that is not a matter that will be pressed in support of the leave application. In any event, it is conceded by the husband that he has been aware of the divorce since at least 1991. The husband has taken no active steps to seek to set aside the divorce order or indeed to make any application for property since he became aware of the divorce order, on his own case, at least some 24 years ago.

23. The husband submits that there is merit in his case and that there has been no significant delay on his part.  The basis for that submission is that on his evidence he says that he only became aware of his removal as a director and shareholder in the trustee company of the B Trust in about 2013 and that he was informed of that fact by the parties’ son.  It would appear on the face of that evidence that the husband has played no active role in that entity since at least the 1980s.  It would seem on the face of his evidence that he has attended to none of his responsibilities as a director since that time and it is only by chance through conversation with the parties’ son that the husband has learned of his removal. 

24. The law in relation to applications for security for costs is to be found in s 117 of the Act. The matters relevant to the current application are set out in ss 117(1) to 117(2A) of the Act as follows:-

    (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

    (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.

    (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; an

    (g)such other matters as the court considers relevant.

25. The Family Law Rules 2004 (Cth) also provide guidance as to the application of these provisions. Rule 19.05 provides that a respondent may apply for an order that the applicant in the case give security for the respondent's costs (r 19.05(1)). The matters to be taken into consideration by the Court in determining whether to make such order are set out at r 19.05(2). Those matters are:-

    (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.

26. The relevant principles which apply to an application for security for costs are set out by the Full Court in the decision of Luadaka & Luadaka (1998) FLC 92-830. At paragraph 38, the Full Court said as follows:-

    Section 117(1) provides that, subject to sub-section (2), each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides that if in proceedings under the Act the court is of the opinion that there are circumstances that justify it in doing so the court may, subject to sub-section (2A), make such order for security for costs as the court considers just. Section 117(2A) provides that in considering what order should be made the court shall have regard to the matters set out in paragraphs (a) – (g) inclusive. Section 117(2A)(g) provides that the court shall have regard to such other matters as the court considers relevant.

27. At paragraph 61 the Full Court held:-

    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 section 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.

28. Paragraph 62 of that decision sets out the matters relevant to the consideration of whether or not to make such order:-

    62.1It may be relevant to take into account the means of an applicant to satisfy an order for costs if he or she is unsuccessful. Ordinarily the means of the applicant is not alone sufficient to justify an order for costs because of the rule that poverty should be no bar to justice. This is reinforced by s.117 (1). However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order. Financial weakness may be relevant, for example, if the applicant is a company. In relation to the means of the respondent, who is the applicant for security, it was held by Goldstein J in Alexander and Alexander (supra) and Gee J in B and B (supra) that the question is whether or not the respondent is able to pay his or her costs. Section 117(2A)(a) requires consideration of the financial circumstances of both parties. However, we do not accept that it will only be in cases where the applicant for security does not have the means to meet his or her costs that an order would be made. In appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.

    62.2The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd (supra). 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) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation (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.

    62.3It is a relevant consideration whether the applicant's claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham: Parkinson & Co Ltd v Triplan Pty Ltd (supra); Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133; J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790.

    62.4It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation. In Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Byrne J said at 306:

    ''A factor in deciding whether security should be required is that the order may well mean that the action cannot proceed. That prospect does not require refusal of the application but it is often a significant matter.''

    See also Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 and Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480.

    62.5It may be relevant to consider whether or not the litigation may involve a matter of public importance: Equity Access Ltd v Westpac Banking Corporation (supra); Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248. In Quick on Costs at [ 4.9440] it is said that this will militate against the making of an order.

    62.6It may be relevant to consider whether or not there has been delay in bringing the application. An application may be refused if there is delay in making the application and prejudice is caused to the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164.

    62.7Other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.

29. Turning then to the considerations as set out in r 19.05(2) and , firstly, the applicant’s financial means. It is evident from the material that the wife has already incurred substantial costs in responding to the husband’s application.  On the previous occasion the matter was before me I fixed and reserved the costs of that day, being a total of $2,400.  It is evident from the financial statement of the wife filed 16 June 2014 that she has assets at her disposal.  She there discloses to having interests in property valued at approximately $1.1 million.  She also deposes to having income, that income being derived from the B Trust. 

30. The picture insofar as the respondent’s financial circumstances is somewhat unclear.  He swore a financial statement, which is filed 24 April 2014.  He discloses there that his weekly income is nil, that he has personal expenditure of $49 per week and alleges property valued at $3.8 million, although when one considers part I of that financial statement, in fact the property there identified is property held by the wife or entities controlled by her in Australia. 

31. The husband in that same document indicates at part E that he lives with his landlord, Ms G.  She is there stated to be the husband’s landlord.  I am uncertain whether indeed that is his landlord or his wife, given that in his most recently filed affidavit the husband deposes firstly to having remarried and secondly to living with his wife in a unit that has been acquired by her and in which she has equity.  The confusion with respect to the husband’s living arrangements is compounded in that document when one looks at part G, section 2, under the heading Mortgage Payments/Rent, where the husband deposes that he pays to his landlord Ms G the sum of $19.23 per week. 

1. The husband has been represented throughout the proceedings.  The husband has had the financial wherewithal to travel between Australia and Country C, most recently returning to Country C on 9 July 2015.  The husband has the financial wherewithal to engage a migration agent to assist him with the issues around his visa.  The husband proposes to return to Australia to prosecute his application.  Seemingly he does have the capacity to meet expenses associated with his living and his travel when he sees fit. 

2. The next matter I must consider is the prospects or merits of the application.  I have already provided much detail as to the dispute between these parties.  There is a significant dispute as to whether or not the husband did in fact execute a deed of agreement between the parties, said to have been executed in 1987.  The husband takes issue with that.  He says in fact he was not in Victoria at the time that deed was executed.  That allegation is denied by the wife.  She indicates through her counsel that she proposes to issue a subpoena to the Department of Immigration to clarify those matters.  I am not in a position to make a finding in relation to that aspect of the case at this time.  However, I note that that is but one part of the factual matrix which underpins these proceedings. 

3. The reality is that the parties divorced in 1988.  The husband has been aware of the divorce since about 1989 or 1991, depending on whether the wife or the husband is accurate as to that timeline.  On any view, the husband has been aware of that divorce for some 24 years or more.  Since 1991, when he remitted the $330,000 to Australia, he has taken no steps to seek any entitlement he may have with respect to the interests held by the wife or entities controlled by her in Australia. 

4. In those circumstances, particularly where it is clear from the husband’s own evidence that the parties have acted independently of each other in a financial sense, there are serious concerns and indeed misgivings as to the merits of the husband’s case.  That view is bolstered when one looks at the husband’s own affidavit material, where he deposes to his business activities through the 1990s and 2000s.  He deposes to his independent exercise in terms of investing in properties in Country H and selling property in Country C, in commencing business activity in Country I and then in Country C.  Seemingly, those are the actions of a man who does not seek to pursue any interests in properties held in Australia at that time.  I note that the husband indicates that there have been periods when he has been in significant financial difficulty through the 1990s.  It is noteworthy that he took no action at that time to pursue any rights he may have with respect to property in Australia. 

5. I am required at subparagraph (e) to consider whether or not an order for security for costs would be oppressive or stifle the case.  The husband has demonstrated throughout the proceedings a commitment to prosecute his claim.  He has been represented throughout, notwithstanding on the face of his financial statement very limited financial resources.  Seemingly, on the basis of the affidavit recently filed, he is in close communication with his son.  It may well be that he needs to call on assistance from his son or his wife.  In any event, I am confident that the husband is in a position to pursue his application, should he choose to do so.  In any event, I should note that that matter is but one of the factors that I am required to consider, pursuant to r 19.05(2). 

6. The husband has lived in Country C for significant periods since the parties’ divorce.  He has returned to Country C in July of this year, and there is no certainty that he will return to prosecute his claim.  He has not attended Court on the last two occasions the matter has been listed before me, being the hearing this day and the mention hearing conducted on 31 August 2015.  The wife is likely to incur significant costs in responding to the husband’s application.  Given that the husband’s interests appear to be based in Country C, his wife lives in Country C and her property is held there, I have no confidence, were the husband to be unsuccessful in his application, that he would meet any order for costs made in favour of the wife. 

7. In those circumstances and having regard to all of the factors I have identified, in my view, I am satisfied that it is appropriate to make an order for security for costs as set out in paragraph 1 of the orders I have made.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 17 September 2015.

Associate:

Date:  17 September 2015