Starr-Diamond v Diamond

Judgment 1HOEBEN JA: Nature of application The first respondent relied upon an Amended Notice of Motion filed 16 October 2012. That motion sought the following orders: "1. The appellant to provide security for the costs of the appeal in the amount of $150,000 or such other amount as the Court directs. 2. That the proceedings be stayed until such security is provided or until further order of the Court. 3. Further or in the alternative, an order that the Notice of Appeal be struck out and/or the appeal be dismissed. 4. Costs. 5. Such further or other orders as the Court sees fit." 2The issue argued before the Court on 28 November 2012 related only to the order for security for costs. Factual background 3The proceedings, the subject of the appeal, were heard before Slattery J between 6 and 10 February 2012. His Honour delivered judgment on 19 June 2012 in relation to the substantive matter. On 20 July 2012 his Honour delivered a further judgment which dealt with the form of final orders and costs. The appellant was unsuccessful in the proceedings (Starr-Diamond v Diamond [2012] NSWSC 675). 4The background to the claim is as follows: The appellant and first respondent lived in the one household in a same sex de facto relationship for a period of about five - six years. When the relationship terminated, they were unable to agree upon the just and equitable division of their property. There were no children of the relationship. At the time of the hearing, the financial position of both parties was significantly reduced and the net value of the real estate that the parties shared was worth about $370,000 (at [93]). 5The appellant filed a Statement of Claim on 22 April 2008 seeking orders pursuant to s 20 of the Property (Relationships) Act 1984 to adjust the interests in property held by herself and the first respondent and other relief. The first respondent cross-claimed seeking, inter alia, orders for the sale of various properties which were held by the parties as tenants-in-common in equal shares, the reimbursement of monies she claimed to have loaned to the appellant and the winding up of the company owned equally by the parties after the sale of a property owned by the company. 6The appellant was not represented before the primary judge. In that regard, his Honour said: "21 The plaintiff showed considerable self-possession. She was across all the detail of her and the defendant's financial affairs. She presented her own case in a factually and, no doubt for her, emotionally demanding five-day hearing. Much of that presentation was quite competent, although in final submissions the plaintiff's case often descended into ungrounded and irrelevant assertion. 22 But the Court could not comfortably rely upon her as a witness in part because of the unsubstantiated exaggeration inherent in many of her evidentiary claims.... But present examples of this are her statement that "the defendant has also seized monies from my bank accounts and credit cards without my authority"; she did not establish any such conduct on the part of the defendant. Also she says throughout her affidavit and oral evidence that she repaid the loans that the defendant made to her to purchase her joint share in the jointly held property at Baker's Beach in Tasmania and to purchase the investment property in the plaintiff's name in Jubilee Pocket Queensland. But she provides no objective substantiation of such alleged repayments and I do not accept her oral evidence that she made them. ... 23 Moreover she made baseless attacks in final and other submissions on the defendant's lawyers, accusing them of taking the plaintiff's documents. She did not advance evidence of any cogency whatsoever to support this most serious charge. She seemed to think that anyone, who assisted the defendant, including the defendant's lawyers, must be in a conspiracy against her. Through repeating such allegations she showed a persisting lack of objective judgment. 24 But at times what the plaintiff said was obviously right. She did make a few concessions against her interest. It was necessary for the Court to pick its way through her evidence and make findings either for or against her on important pieces of evidence. This is not a case where her account is displaced by a wholly more reliable account from the defendant. The defendant's account was generally more reliable but it cannot be completely accepted either." 7The conclusions arrived at by the primary judge were: "187 In my view, there is no basis for making an adjusting order in the plaintiff's favour in this case. To the contrary, there is a strong basis to grant relief on the defendant's cross-claim. 188 The defendant's financial and non-financial contributions to the acquisition, conservation and improvement of their property and to their financial resources very substantially outweigh the plaintiff's contributions. Such a general conclusion can be drawn and acted on by the Court: Proudman v Dickason [2008] NSWSC 681. The disparity in contributions arises in two main areas. The first is in the assets brought to the relationship. The second is in the conservation and improvement of those assets. The defendant brought a little over $1 million to the relationship. The plaintiff brought about $67,000 in October 2000. During their relationship the plaintiff was in my view fully paid for her work in the defendant's podiatry practices. Moreover, and more importantly, the plaintiff bears personal responsibility for the destruction of much of the value of the property, which the defendant brought to the relationship, specifically the podiatry practices. I find that but for the influence of the plaintiff that the defendant would have been able to conserve and improve her five podiatry practices. But three were closed during the relationship and the remainder lost value for reasons in my view associated with the conduct of the plaintiff within them. Far from such conduct warranting an order in the plaintiff's favour; it is in my view more likely to warrant an order in the defendant's favour for an adjustment of property against the plaintiff. 189 The position is no different with respect to the parties' investing activities in Queensland. The defendant conferred considerable benefits on the plaintiff, allowing her to acquire an investment property in Queensland she would not otherwise have been able to do. The plaintiff has not paid the defendant or Kitty Winks back the loans made to the plaintiff to acquire this property. At the same time the plaintiff did not financially contribute to the defendant's investments in the same area. There is no basis looking at that area of the parties' lives for an adjustment in the plaintiff's favour. 190 The same is true of their domestic life. I do not accept on the plaintiff's income that she was able to contribute financially to the maintenance of their joint household more than the defendant. In my view the defendant was a considerably greater financial contributor to the financial maintenance of their joint domestic life and the plaintiff's lifestyle. 191 The plaintiff's attempts to make non-financial contributions in the business side of the parties' relationship through the podiatry practices contributed to the loss in their net assets. Her contribution, in my view, was negative on this front. No adjusting order in the plaintiff's favour is warranted by reason of her non-financial contributions. Although the plaintiff's non-financial contributions in domestic matters were probably much the same as those of the defendant. ... 194 In my view, the defendant should: (1) retain No. 13 and No. 14 Jubilee Pocket because of her contributions to them and because they funded the Ambleside property; (2) retain Suite 207 which was acquired well before the relationship started; (3) have the benefit of the sale of the Tasmanian properties and receive her half share after she is credited with the interest payments of $120,000 she made to conserve the Ambleside property; and (4) Dogstar Diamond's assets should be sold and any net proceeds divided equally, after its external liabilities and liabilities to Kitty Winks are discharged." 8A costs hearing took place on 20 July 2012. At the end of that hearing, Slattery J stayed the operation of the orders which he had made until 5pm on 6 August 2012. On 2 August 2012 a Notice of Motion brought by the appellant sought to further stay the orders. This was referred to Ball J who dismissed the motion with costs. 9On 3 August 2012 the appellant filed a Notice of Appeal which challenged the whole of the decision and orders of Slattery J. On 6 August 2012 a motion by the appellant to stay the orders of Slattery J and replace them with alternate orders, came before me as Duty Judge. The appellant's motion was dismissed with costs. 10On 6 September 2012 the first respondent filed the Notice of Motion seeking security for costs which is presently under consideration. When that motion came before the Registrar on 24 September 2012 the appellant did not appear and the Motion and Appeal were listed for directions on 3 October 2012. The directions hearing was stood over to 8 October 2012. 11On 8 October 2012 when the matters were before the Registrar, the Court of Appeal Registry received a phone call to advise that the appellant was ill and would not be able to attend the directions hearing on that day, either in person or by telephone. The motion was stood over to 12 November 2012 for hearing. On 12 November 2012 an email was received by the Registry advising that the appellant was not in a position to deal with the motion on medical grounds and because she had not received all of the documents in time. The motion was fixed for hearing on 28 November 2012 and was heard on that date. 12At the present time, the appellant continues to reside in the Ambleside property in Tasmania but has not been paying rates and other outgoings in respect of the property since October 2012. Since that date, these have been paid by the first respondent. The condition of the property is not known, although an appraisal prepared for the trial noted that the condition of the house was poor. 13The financial situation of both the appellant and the first respondent is problematic. The appellant has been in receipt of income support from Centrelink for several years. The first respondent has qualified for a disability support pension, but has not yet received it pending an investigation of her financial situation by Centrelink. According to the affidavit of her solicitor, sworn 24 September 2012, she is living on charity and can no longer afford to pay the rent on her home. The bill of costs in relation to the proceedings before the primary judge of $346,516.63 remains unpaid by the appellant. The bill of costs has not yet been assessed. In that same affidavit, the first respondent's solicitor estimated her costs of the appeal at approximately $80,000. 14The appellant's Notice of Appeal comprises 233 paragraphs. The appellant continues to be self-represented. Many of the grounds of appeal include sub-paragraphs. Legal principles 15Special circumstances must be shown before an order for security for the costs of an appeal can be made under r 51.50 of the Uniform Civil Procedure Rules 2005 (NSW). In Preston v Harbour Pacific Underwriting Management Pty Limited [2007] NSWCA 247 at [18], Basten JA referred with approval to the statement of principle by Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd [1995] 56 FCR 189 (at 197-198) in that an unfettered discretion remains relevant in assessing "special circumstances" for the purposes of the rules applicable when considering security for the costs of an appeal. 16In KP Cable v Meltglow the factors generally to be taken into account on applications for security for costs were set out as follows: (a) The promptness with which the application is brought; (b) The strength and bona fides of the case (including whether the costs order is likely to be made at the conclusion of the litigation); (c) Whether the impecuniosity of the relevant party has been caused by the other party's conduct the subject of the claim; (d) Whether the application for security is being used to deny an impecunious party the right to litigate. (e) Whether there are any persons standing behind the party bringing the proceedings who are likely to benefit and who are willing to provide security; (f) Whether the person standing behind the party bringing the proceedings have offered any undertaking for the costs; (g) Whether the party bringing the proceedings is in substance a plaintiff; (h) The public interest, if any, in the litigation. 17In Preston (at [18]), Basten JA said: "18 ... The considerations engaged by the concept of "special circumstances" in relation to security for costs were considered by this Court in Transglobal Capital Pty Ltd v Yolarno Pty Ltd (2004) 60 NSWLR 143 (Beazley, Santow and Ipp JJA), and in Porter v Gordian Runoff Ltd [2004] NSWCA 171 (Bryson JA, Sheller and Giles JJA agreeing). The following principles were identified: (1) no order for security should be made in the absence of "special circumstances"; (2) consideration of what may constitute special circumstances should not be fettered by some general rule of practice; (3) impecuniosity, without more, will usually be insufficient; (4) an order may be appropriate if the appeal is shown to be hopeless, unreasonable or of an harassing nature; (5) where a bona fide and reasonably arguable appeal would be stifled by an order for security, such an order should usually not be made, and (6) the subject matter of the appeal, including an issue as to the liberty of the individual, or a public interest may provide a reason for not imposing a security order which would stifle the continuation of the appeal." 18As noted in Ritchie's Uniform Civil Procedure NSW, cases where special circumstances have been found to exist include where the appeal is manifestly groundless or where there is a risk that the appeal will involve unnecessary costs (Lall v 53-55 Hall Street Pty Ltd (1978) 1 NSWLR 310); where the appeal involves an apparent abuse of process (Weldon v Maples, Tyeesdale & Co (1887) 20 QBD 331); and where there has been unexplained non-compliance with procedural directions (at least where the appeal prospects lack power and substance) (Levy v Bablis [2011] NSWCA 411). In this case the issues raised by the parties relate to whether the appeal is manifestly groundless, the risk that it will involve unnecessary costs and whether an order for security for costs will in effect stifle the appeal. 19When considering those matters, the observation by Spender J in Tait v Bindal People [2002] FCA 332 at [3] is relevant. Spender J there observed that the difference in principle in relation to orders for security for costs at first instance and at the appellate level is that at the latter stage there has already been a determination adverse to the person against whom security for costs is ordered and that it would be clearly unjust if there were a substantial risk that even if successful, the respondent to the appeal would be deprived of costs. Special circumstances 20Both parties to the appeal are impecunious. The appellant has been in receipt of social security benefits for several years. The first respondent who worked for many years as a successful podiatrist had a fall in 2010, suffered a brain injury and has been unable to work as a podiatrist. Although she has applied for Centrelink payments, those have not yet been made and she is currently relying upon the generosity of friends and a church group for her daily living requirements. 21The assets, the subject of the proceedings, are limited. From the affidavit material filed in support of the application and from the material in his Honour's judgment, the available assets appear to be: (i) A property at Ambleside, Tasmania valued at $244,500. (ii) Vacant land at Bakers Beach, Tasmania valued at $130,000. An adjustment from that amount is to be made in favour of the first respondent of $120,000 being the value of interest payments made by her to conserve the property at Ambleside (judgment [194]). Once selling fees, rates, insurances, valuation fees due to trustees on the sale and related fees and disbursements (excluding outstanding costs orders) are taken into account, there will be a little over $100,000 per person available. 22The first respondent submitted that the grounds of appeal do not disclose any reasonable basis for the appeal and that because the appeal lacks reasonable prospects of success, it was "hopeless" in the relevant sense. 23The first respondent submitted that the appeal was an abuse of process because it prolonged the proceedings in such a way as to cause the value of the assets to diminish. She submitted that any equity of the parties was being eroded by the ongoing proceedings and legal costs and might well lead to the eventual bankruptcy of one or both parties. She submitted that the point had been reached, as was explained in Lall v 53-55 Hall Street Pty Ltd where the pursuit of the rights of the litigant in person (the appellant) has become an instrument of grave injustice to her. 24The first respondent submitted that the appeal operated as a delaying tactic by the appellant, who was residing in the Ambleside property. That circumstance was further aggravated by the adjournments granted to the appellant, either due to her non-appearance or illness. The first respondent submitted that there was no public interest reason for not imposing a security for costs order which might stifle the continuation of the appeal. This was particularly so when the appellant had twice been unsuccessful in obtaining a stay of the orders of the primary judge. 25The appellant participated by way of telephone link on the hearing of the motion. She confirmed that she had no assets and that an order for security for costs would prevent her being able to continue with the appeal. She submitted that the decision of the primary judge was replete with error and that if allowed to stand, she would be the victim of a significant injustice. Consideration 26The Notice of Appeal is bad in form and content and is liable to be dismissed on the basis that it discloses no reasonable ground and has a tendency to cause prejudice, embarrassment or delay. In its present form it is almost impossible to defend. The Notice of Appeal introduces the third and fourth respondents, who are new parties to the proceedings, without leave and without explanation. 27The grounds of appeal themselves are indicative of the very matters identified by the primary judge at [7]. Grounds 5 -29 involve repetitive complaints concerning matters of evidence and disputes as to factual findings of the primary judge. Other grounds comprise submissions as to the primary judge's factual findings without identifying error which would be successful on appeal. Other grounds are simply argumentative or relate to matters of evidence. Grounds 63 - 125 are essentially submissions with unsubstantiated assertions or which argumentatively refer to evidentiary matters of doubtful relevance to any finding or order of the primary judge. 28In summary, the grounds of appeal consist substantially of irrelevant or unsubstantiated assertions, submissions and matters relating to evidence which either were not before the primary judge or which are irrelevant to the issues which were before him. 29It is apparent from the Notice of Appeal that the appellant intends to conduct the appeal in the same way as she conducted the hearing. Many unsubstantiated assertions will be made with attempts to adduce additional evidence which will undoubtedly lengthen any appeal. This is likely to occur even if the Notice of Appeal is substantially amended. The appellant seeks to raise on the appeal all of the factual matters which she argued before the primary judge without having any regard to the findings made at the hearing. In the circumstances, the first respondent's solicitor's estimate of the length of the appeal at three days may well be optimistic. 30Given the difficult financial circumstances of the first respondent, it is intrinsically unfair that she should be exposed to the real prospect of a lengthy appeal in circumstances where if (as is likely) she is successful, she will be unable to recover her costs. I consider the prospects of success of the appellant to be poor. The issues before his Honour were relatively straightforward in the sense that having made factual findings and findings as to credit, he had to decide whether and to what extent any adjustment should take place in relation to the remaining assets held by the parties. I can see no obvious error in his Honour's statement of the law or in his Honour's application of it. Certainly, no such error has been identified in any ground of appeal. Insofar as his Honour's factual findings are concerned, they appear to be based on documentary evidence or on a credit based assessment of evidence which has not been properly challenged in any of the grounds of appeal. 31The only significant argument available to the appellant on the motion is that the making of a security for costs order will almost certainly prevent her continuing with her appeal. On the other side of the ledger, the appeal has little prospects of success, the assets the subject of the appeal are modest in the extreme and are likely to be subsumed by legal costs should the appeal proceed. Finally, the first respondent's parlous financial position will render it difficult for her to defend the appeal and she will have no prospect of recovering any costs against the appellant. She will, in effect, lose the benefit of the orders made by the trial judge even if she is successful. 32In Idoport Pty Ltd v National Australia Bank Ltd; Idoport Pty Ltd and Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd "JMG" v National Australia Bank Ltd [2001] NSWSC 744 Einstein J observed that the possibility of the extinguishment of proceedings is a powerful factor to be taken into account when exercising a discretion as to whether an order is appropriate. However, his Honour also noted the observation of Clarke J in Yandil Holdings Pty Ltd v Insurance Co of North America [1985] 3 ACLC 542) that the fact that a plaintiff is financially unable to provide security does not lead to the inevitable conclusion that the making of the order will stultify the plaintiff's claim, nor does it lead to the automatic refusal of an order. 33In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 McHugh J said at [97]: "97 The jurisdiction to award security for costs should thus be seen as protecting the efficacy of the exercise of the jurisdiction to award costs. The discretion should be exercised with the same rationales in mind, namely that, to the extent it can be avoided, the Court should not permit a situation to arise where a party's success is pyrrhic." 34As was submitted by the first respondent, the very circumstance identified in Lall v 53-55 Hall Street Pty Ltd has now been reached where the pursuit of the rights of the appellant has become an instrument of grave injustice to the first respondent. 35It follows that I am satisfied that there are special circumstances in the present case for an order for security for costs to be made in respect of the appeal. The appellant's current financial position has to be taken into account along with the extensive factual issues which she seeks to re-litigate in the appeal. The first respondent has already been put to considerable expense in defending proceedings brought by the appellant at first instance, in circumstances where the appellant comprehensively failed to make her case. If the appeal is allowed to proceed without a security for costs order being made, the first respondent will now be exposed to a lengthy and expensive appeal in circumstances where if she is successful, she has no prospect of recovering her costs. 36I consider that there should be an order for security for costs. The figure calculated by the first respondent's solicitor of $80,000 appears to me to be reasonable. This is particularly so given the interlocutory history from the time when a Notice of Appeal was filed. Orders 37I make the following orders: (1) Pursuant to rule 51.50 of the Uniform Civil Procedure Rules the appellant is to provide security for the costs of the appeal in the amount of $80,000. (2) The appeal proceedings are to be stayed until such security is provided or until further order of the Court. (3) The appellant is to pay the costs of this motion.