Tomaras & Tomaras [2021] FamCAFC 4 (25 January 2021)

Last Updated: 12 February 2021

FAMILY COURT OF AUSTRALIA

TOMARAS & TOMARAS

[2021] FamCAFC 4

FAMILY LAW – APPLICATION IN AN APPEAL – SECURITY FOR COSTS – Where the husband seeks that the wife pay security for costs – Where there is substantial delay in the application being brought – Where in the interim the wife has incurred significant expense to prepare the appeal book and is impecunious – Where an order for security for costs in the amount sought by the husband would likely stifle the hearing of this appeal – Where there is no suggestion that the appeal is not brought bona fide – Application dismissed – No order as to costs. FAMILY LAW – APPLICATION IN AN APPEAL – EXTENSION OF TIME – Where the husband sought an extension of time to file his Summary of Argument and List of Authorities – Where the husband has a history of non-compliance with orders for filing material – Where the wife does not identify any particular prejudice that is occasioned to her if the extension of time was granted – Extension of time granted – No order as to costs.

Family Law Act (1975) (Cth) s 90AE

Federal Commissioner of Taxation v Tomaras & Ors (2018) 265 CLR 434; [2018] HCA 62 Revanka & Medapati (2020) FLC 93-936; [2020] FamCAFC 1 Tomaras & Tomaras and Anor and Commissioner of Taxation (2017) FLC 93-806; [2017] FamCAFC 216 Tomaras & Tomaras & Anor [2019] FCCA 1126 Tomaras & Tomaras & Anor (No.2) [2019] FCCA 2830

APPELLANT:

Ms Tomaras

FIRST RESPONDENT:

Mr Tomaras

SECOND RESPONDENT:

Official Trustee in Bankruptcy

INTERVENOR:

Commissioner of Taxation for the Commonwealth of Australia

FILE NUMBER:

BRC

11325

of

2013

APPEAL NUMBER:

NOA

95

of

2019

DATE DELIVERED:

25 January 2021

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Kent J

HEARING DATE:

25 January 2021

LOWER COURT JURISDICTION:

Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE:

8 October 2019

LOWER COURT MNC:

[2019] FCCA 2830

REPRESENTATION

THE APPELLANT:

In person

COUNSEL FOR THE FIRST RESPONDENT:

Mr Hodges (direct brief)

SOLICITOR FOR THE SECOND RESPONDENT:

No appearance

SOLICITOR FOR THE INTERVENOR:

Ms Kershaw

ORDERS

(1) The husband be granted leave to rely upon submissions provided to the Court on Friday, 22 January 2021.

(2) The husband’s Application in an Appeal filed 15 October 2020 seeking security for costs be dismissed.

(3) The time within which the husband is to file and serve his Summary of Argument and List of Authorities be extended to no later than 4.00pm on Monday 15 March 2021.

(4) The submissions on behalf of the husband dated 6 October 2015 be included in the Appeal Book for consideration by the Full Court at the hearing of the appeal.

(5) There be no order as to costs.

NOTATION:

(A) Should the husband fail to file and serve his Summary of Argument and List of Authorities by the time provided for in order 3, the Full Court may give consideration to not hearing from the husband at the hearing of the appeal.


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 Tomaras & Tomaras 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 BRISBANE

Appeal Number: NOA 95 of 2019
File Number: BRC 11325 of 2013

Ms Tomaras

Appellant

And

Mr Tomaras

First Respondent

And

Official Trustee in Bankruptcy

Second Respondent

And

Commissioner of Taxation for the Commonwealth of Australia

Intervenor

EX TEMPORE REASONS FOR JUDGMENT

1. On 8 October 2019 a primary judge in the Federal Circuit Court of Australia (“the FCC”) delivered judgment in these proceedings, dismissing the applications of Ms Tomaras (“the wife”) for property settlement and, in the alternative, spousal maintenance.
2. In summary the primary judge found:
   1. There was no property of significance available for adjustment (at [78]);
   2. At the time of taking evidence Mr Tomaras (“the husband”) was an undischarged bankrupt (at [79]);
   100. There was no persuasive evidence that the husband had any interest in any horses as the wife had contended (at [83]);
   4. The husband’s policy of insurance (known as “the FF Insurance policy”) did not constitute property within the meaning of the Family Law Act (1975) (Cth) (“the Act”) (at [84] to [99]); and
   5. The wife had not proved to the requisite standard that the husband had any legal or beneficial interest in an entity known as Q in which the wife asserted the husband had an interest (at [119] to [152]).
3. In dismissing the wife’s alternative application for spousal maintenance the primary judge found:
   1. The wife had been studying since at least 2009 to obtain tertiary qualifications to retrain and obtain employment (at [179]);
   2. It was not unreasonable to expect that the wife would have made some attempt to obtain employment in the period she had been receiving spousal maintenance. The husband paid to the wife $900 per week by way of spousal maintenance funded from his income protection payments from 24 March 2014 to 8 October 2019 (at [40] and [183]);
   100. The wife was in good health (at [191]);
   4. The wife had previously worked at the parties’ business (at [195]);
   5. The wife had sworn in her material that it was her intention to complete her studies and apply for work (at [199]).

Background

4. The background to the matter is set out in the reasons for judgment of the primary judge and the matter has an unfortunate litigation history.
5. The 2015 trial was interrupted after several days essentially by a case stated to the Full Court as to whether, in respect of debts in the name of the wife to the Commissioner of Taxation, the husband could be substituted for the wife in respect of those debts pursuant to s 90AE(1)(b) of the Act.
6. In the result, on the case stated the Full Court confirmed that the relevant section applied to the Commissioner of Taxation such that it could be operative in the case of the Commissioner of Taxation, but noted that the requirements of that section would need to be fulfilled before there was substitution, in short that it would not defeat the ability of the Commissioner of Taxation to recover the debt.^[1]
7. An appeal by the Commissioner of Taxation to the High Court of Australia from that determination was dismissed with the High Court reiterating that s 90AE of the Act has application to the Commissioner of Taxation, but it is also noted in the High Court judgments that the requirements of that section would need to be fulfilled for the section to be operative.^[2]
8. In the result, in the resumed trial before the primary judge, her Honour was not satisfied of any basis of a substitution order being made in compliance with that section. In a judgment on that issue delivered on 30 April 2019 the primary judge held:^[3]
   28. With reference to s.90AE(3)(a), the court is unable to conclude that the making of the substitution order is “reasonably necessary or reasonably appropriate.......to effect a division of property between the parties to the marriage”.
   29. This is because the court has a range of options to effect a just and equitable division of property between the parties including for example, Part VIII of the Act empowering the court to make an order under s.80(1)(f) directing a party to a marriage to pay a debt owed by the other party, which could include a direction to pay a tax debt owed to the Commonwealth if the court determines that justice and equity require such an order to be made.
   30. Next, by virtue of s.90AE(3)(b) before a substitution order can be made in relation to the wife’s taxation debt, it would be necessary for the court to be affirmatively satisfied that “it is not foreseeable at the time the order is made that to make the order would result in the debt not being paid in full”.
   31. The court could not be so satisfied. This is because at trial whilst the wife was solvent, the husband was bankrupt. He evidenced no capacity to pay the debt, then well overdue.
   32. By virtue of the husband’s bankruptcy the provisions of s.90AE(3)(b) cannot be satisfied.
   33. With respect to s.90AE(3)(d), the court cannot be satisfied that, “in all the circumstances, it is just and equitable to make the order”.
   34. This is because of the inability of the husband to exercise rights of objection and review under the Taxation Administration Act 1953 (Cth.) The time allowed to the wife for objections has long since expired. This and other difficulties for the husband were identified in Tomaras.

(Footnotes omitted) (As per the original)

9. The history of the parties’ marriage is recounted in the primary judge’s judgment delivered on 8 October 2019^[4] and there is no need for me to detail the factual background to the same level of detail for present purposes.
10. In short, since December 1997 the husband has been receiving payments under an income protection policy, known as the FF Insurance policy, following an injury from an accident. From 2002 he has been in permanent receipt of income protection payments which pays up to a sum in the order of $150,000 per annum with CPI increases whilst the husband remains permanently disabled from returning to his former occupation as a chiropractor.
11. In November 2008 the husband also received a payment of about $700,000 under a total and permanent disability policy, as referred to by the primary judge at [20]. As a result of an audit conducted by the Australian Taxation Office (“the ATO”) in 2005 the husband was found to have tax debts of over $700,000, and the wife was found to have tax debts of approximately $130,000, as referred to by the primary judge at [21].
12. There is no dispute that the husband did not use any of the lump sum payment received to meet those debts. The husband was declared bankrupt on 5 November 2013 with debts of over $1 million at that stage, mainly comprised of unpaid tax, as referred to at [35] of the primary judge’s reasons.
13. The central issue as between the parties in the trial before the primary judge was responsibility for payment of the wife’s debt to the ATO and the characterisation of the husband’s FF Insurance policy.
14. The wife contended before the primary judge that the FF Insurance policy ought be treated as property and could be assigned to her, or that she receive, in the alternative, payments by way of spousal maintenance referenced to the FF Insurance policy payments.
15. Initially, the matter proceeded to trial on 9 and 10 July 2015 when it was adjourned for the purpose of the case stated to the Full Court and then the subsequent proceedings in the High Court that I have briefly mentioned.

The appeal

16. Within the time limit provided for an appeal the wife filed her Notice of Appeal from the final judgment of the primary judge of 8 October 2019, filing her first Notice of Appeal on 23 October 2019, which has since been amended on a couple of occasions. The appeal, in the usual course, came before an Appeals Registrar for the making of procedural orders.
17. Without detailing all of the instances before the Registrar, on 15 June 2020 the Appeals Registrar made orders in the usual form to progress the appeal, with orders being made including that the wife file and serve an appeal book by 21 August 2020.
18. In the event, the appeal book was filed on 19 August 2020 and, notably, that involved the wife having to incur the expenditure of obtaining the trial transcript and the other relevant documents for consideration by the Full Court.
19. An order was also made by the Appeals Registrar for the wife to file and serve her Summary of Argument and List of Authorities for the appeal by 11 September 2020, and both were filed within time.
20. At that procedural hearing the husband was ordered to file and serve his Summary of Argument and List of Authorities by 2 October 2020, and those documents are yet to be filed.

Security for costs

21. Before the Court today is the husband’s Application in an Appeal filed on 15 October 2020, seeking an order for security for his costs of the appeal. The husband seeks, by reference to an estimate of fees obtained from the counsel who he wishes to represent him on appeal, the amount of $25,300 by way of an order for security for costs.
22. I note, in passing, that on 30 October 2020 the Appeals Registrar made an order for the husband to file submissions and a list of documents he sought to rely upon by 20 November 2020 for the purpose of this application.
23. In the event, the husband did not comply with that order either, and this morning the Court received written submissions on his behalf prepared by his counsel.
24. I should record that at the outset of the hearing today leave was given to the husband to rely on the late filed submissions in relation to his current application for security for costs, it being the case that the wife did not identify any specific ground of prejudice occasioned to her by the late receipt of the submissions. Of course, that is not to absolve the husband from his failure to file the documents in compliance with a formal order of the Court, as is the case with respect to his failure to comply with the orders of 15 June 2020.
25. In relation to the application for security for costs, the principles that apply to such an application are well settled. I referred to them recently in Revanka & Medapati^[5] as follows:

It is well settled that 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 Frazier & Valdez [2016] FamCAFC 163; (2016) FLC 93-729 the Full Court observed the following about the exercise of the discretion and the factors which may be relevant to its exercise:

12. Whilst the exercise of the discretion depends upon the relevant circumstances of each case, in Luadaka & Luadaka (1998) FLC
    92-830 the Full Court of this Court, after extensive review and reference to authority (and a leading text on costs), identified (at [62]) a (non-exhaustive) list of factors, additional to or in the context of those identified in s 117(2A) of the Act, which may be relevant to an application for security for costs. In summary, transposing that list to the context of an appeal, those factors are:

(a) The means of an appellant to satisfy an order for costs if he or she is unsuccessful;

(b) The financial circumstances of both parties: impecuniosity of the appellant is not alone sufficient to justify an order for costs but nor does it prevent an order being made if there are other grounds which justify an order. As regards the respondent, an order is not confined to cases where the respondent (the applicant for security) does not have the means to meet his or her costs – in appropriate circumstances an order may be made even if the applicant for security has the means to meet his or her costs;

(c) The prospects of success in the proceedings – ordinarily the Court will not undertake a detailed assessment of the likelihood of the appellant’s success unless it can be demonstrated that there is a high probability of success or failure;

(d) Whether the appeal is bona fide, whether it is genuine and not trivial, vexatious or a sham;

(e) Whether an order for costs would be oppressive or stifle the litigation: that prospect does not require a refusal of the application but is often a significant matter;

(f) Whether or not the litigation involves a matter of public importance (if so, this will militate against the making of an order);

(g) Whether or not there has been delay in bringing the application for security and consequent prejudice to the respondent (appellant);

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

13. Many of the above factors find reflection in r 19.05(2) setting out the matters the Court may consider in deciding whether to make an order for security for costs.
14. Notably, subparagraph (g) of r 19.05(2) identifies as a potentially relevant factor:

(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;

26. In my judgment there are two fundamental discretionary considerations operating against the grant of security for costs in this matter. First and foremost is the delay in the application being brought. As earlier referred to, this appeal had been on foot for about a year before the current application was filed, and the relevant directions for the appeal were made in June 2020. As I have noted, prior to the filing of this application for security for costs the wife has gone to significant expense in terms of the expenditure required to prepare the appeal book she was ordered to file, which she filed on time, having expended the monies required to prepare the appeal book.
27. Second, and related to the first, it is clear on the material that the wife is impecunious and that an order for security for costs in the amount as sought by the husband would likely stifle the hearing of this appeal. Obviously then, if an order is imposed and the appeal is stifled, the wife will have been put to the significant expense to prepare the appeal books in compliance with orders of the Court, which expenditure would be wasted.
28. In terms of other discretionary considerations, as it seems to me, the financial circumstances currently as between the parties can be assessed as significantly favouring the husband in the sense that he is in continued receipt of the income protection payments on the FF Insurance policy, and I confirmed with his counsel on the hearing of today’s application that he has an excess, according to his Financial Statement, of $948 per week after meeting his own expenses. In comparison, the wife on her material, including her sworn material, is obviously impecunious.
29. As to the prospects of success of the appeal – ordinarily, as the authorities emphasise, the Court does not undertake a detailed assessment of the likelihood of success of the appeal unless it can be demonstrated that there is a high probability of success or failure. On the current state of the evidence and on the current state of the authorities, by reference to the determination of the primary judge, it can be concluded that there is likely a high probability of failure of the appeal in respect of the wife’s contention that the FF Insurance policy falls to be treated as property within the meaning of the Act.
30. Less clear, though, as it seems to me, is her prospects in relation to the spousal maintenance order she seeks, albeit that the husband’s counsel emphasises on the hearing of this application the adverse credit findings that were made by the primary judge in relation to the wife, and I have referred earlier to the specific findings that the primary judge made in terms of the wife’s capacity to meet her own support.
31. However, for the purposes of this application, even if I proceed on the basis that there is a high probability of failure of the appeal, it seems to me that the two matters to which I have referred – namely, the prejudice to the wife in the circumstances occasioned by the delay in the bringing of this application and the feature that an order for security for costs would stifle the appeal – overwhelm the other discretionary considerations. It seems to me, that there is no suggestion that the appeal is not brought bona fide in the sense that it is not trivial, vexatious or a sham in that the wife seeks to argue, on a basis she identifies in her materials, for the Court revisiting the question of whether the FF Insurance policy is property within the meaning of the Act.
32. I also note, in passing, that there may be some degree of a public importance element involved in this appeal in respect of a Full Court addressing the question of whether the FF Insurance policy or, more generally, whether disability policies of this kind can be treated or ought be treated as property within the meaning of the Act.
33. For these reasons, the application for security for costs of the appeal is dismissed.

Extension of time

34. The husband sought an extension of time to file his Summary of Argument and List of Authorities for the appeal to on or before 4.00 pm on 15 March 2021. As I indicated during the course of the hearing this morning, it is unlikely that this appeal will be heard earlier than the May 2021 Brisbane sittings of the Full Court. The wife emphasises in opposition to the extension of time sought that the delay that is occasioned to the hearing of her appeal has, essentially, been brought about, she would say, by the husband.
35. As against that, as I have earlier indicated, there are serious reservations about the prospects of success of the appeal, which is a counterbalancing feature as it seems to me. In the result, the wife does not identify any particular prejudice that is occasioned to her if the husband files his Summary of Argument and List of Authorities by 15 March 2021 for an appeal to be heard in the May 2021 sittings of this Court.
36. I take this opportunity to emphasise, as I emphasised in the course of the hearing, that given the apparently repeated failures by the husband to file documents in accordance with time limits ordered, whilst it will be a matter for the Full Court to consider, if the occasion arises that the husband has not filed or complied with an order to file a Summary of Argument and List of Authorities – that the husband is fast running out of opportunities to not comply with orders and expect a Court to grant him the indulgence of late filed material.
37. I interpolate here that whilst the husband seeks to rely upon the feature that he is in receipt of a thing called a “companion card” as evidencing some medical difficulties that he has had to address, there is no medical evidence whatsoever before the Court to support the proposition that throughout the relevant period – ever since the appeal has been filed and, more importantly, since directions were made by the Appeals Registrar for both parties to file documents – that there has been a medical impediment to the husband complying. It may be that the husband, in fact, does have a genuine medical problem that has had an impact on his ability to comply with orders, but I cannot assess that in the absence of any appropriate and cogent medical evidence.
38. For these reasons the application for security for costs is dismissed and an order will be made extending time for the husband to file and serve his Summary of Argument and List of Authorities for the appeal. I will further order that there be no order as to costs of the present applications.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Kent delivered on 25 January 2021, edited to correct grammatical errors and some infelicity of expression.

Associate:

Date: 4 February 2021

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^[1] Tomaras & Tomaras and Anor and Commissioner of Taxation [2017] FamCAFC 216; (2017) FLC 93-806.

^[2] Federal Commissioner of Taxation v Tomaras & Ors [2018] HCA 62; (2018) 265 CLR 434.

^[3] Tomaras & Tomaras & Anor [2019] FCCA 1126 at [28]–[34].

^[4] Tomaras & Tomaras & Anor (No.2) [2019] FCCA 2830.

^[5] [2020] FamCAFC 1; (2020) FLC 93-936.