Guo v Gao (No 2)

1. [1]

   This is the second judgment in these proceedings, the first having been published bearing the medium neutral citation Guo v Gao [2021] NSWSC 1059. In the reasons for judgment, arising from the determination of a question separately from any other question and prior to the final hearing of the proceedings, the Court made a declaration that it was satisfied that Weihong Guo (to whom I shall refer in these reasons as “the deceased”), on presumption of death, was no longer alive and, amongst other findings, that she had made no Will. The Court also noted that the Plaintiff and the Defendant, were the only persons who are, or who may be, entitled to share the estate of the deceased under the operation of the rules of intestacy, and that each had consented to an independent administrator, Mark Peoples, a solicitor, being appointed to administer the estate of the deceased on intestacy. I shall refer to those proceedings as the presumption of death proceedings.

2. [2]

   In the substantive proceedings, the Plaintiff, Sijia Guo, is the daughter of the deceased. The named Defendant is Yong Wei Gao, the husband of the deceased (but not the father of the Plaintiff). They were married to each other in about March 2000 and remained married at the date of the deceased’s disappearance in about April 2001. The Court also found the deceased had not been heard of since her disappearance at that time.

3. [3]

   By Summons filed on 1 October 2019, the Plaintiff had sought various forms of relief, including for a family provision order under Chapter 3 of the Succession Act 2006 (NSW). Relevantly, she also sought a declaration that the Defendant held real estate, situated at Carlingford (the Carlingford property) on trust for the estate of the deceased and an order that the Defendant account to the estate for rent obtained by him from the Carlingford property from 2004 to date.

4. [4]

   Due to the nature of some of the relief sought, an order was made on 7 September 2020 that the matter continue by way of pleadings. On 14 September 2020, the Plaintiff filed a Statement of Claim seeking the same relief, in essentially the same terms, as sought in the Summons.

5. [5]

   The Defendant filed a Cross-Claim on 9 October 2020. In summary it sought:

6. [6]

   Whilst the Statement of Claim sought various forms of relief, the Defendant’s current notice of motion, filed 8 September 2021, only seeks security for part of the Plaintiff’s claims. It seeks, in part, that the Court:

7. [7]

   The matter the subject of these reasons relates to the application for security for costs sought by the Defendant.

8. [8]

   I have dealt with the application in Chambers and although counsel for each of the parties, considerately, stated that written reasons for the decision would not be required, I have decided to provide reasons in view of the conclusion reached, namely that the notice of motion should be dismissed.

Background Facts

1. [9]

   It is fair to say that the factual background is somewhat complex. I have described the relevant facts in the judgment in the presumption of death proceedings. What is set out below is merely a summary to provide some clarity.

2. [10]

   The deceased and the Defendant commenced communicating by letters and telephone calls in about 1990. They commenced a relationship and began living together in February 1992. In December 1992, the Defendant emigrated from China to Australia and the relationship ended in 1993.

3. [11]

   In 1994, the deceased married Jin Hua Guo. The Plaintiff was born in March 1995. The deceased and Jin Hua Guo separated in 1999. They were divorced in about January 2000.

4. [12]

   The Defendant and the deceased then recommenced their relationship and in around February 2000, they returned, together, to Australia. They were married on 18 March 2000.

5. [13]

   The Defendant and the deceased then purchased the Carlingford property, as joint tenants, on 3 October 2000. The purchase price was $470,000. There is a dispute as to the source of the purchase price.

6. [14]

   At the date of the contract for the purchase of the Carlingford property, the deceased was overseas. She had travelled to China in September 2000 and only returned to Australia in October 2000.

7. [15]

   The deceased disappeared on or about 11 April 2001.

8. [16]

   I have set out in the judgment, in the presumption of death proceedings, the events that occurred after April 2001 at [71] – [94].

Submissions

1. [17]

   The Defendant seeks $55,440 by way of security for the costs of defending the trust claim in the Plaintiff’s proceedings. In the affidavit in support of the notice of motion, Mr Smith, the solicitor for the Defendant, who was not cross-examined, explained that 75% of the Defendant’s total costs of the proceedings from the date of the affidavit to the conclusion of a four day hearing would be spent defending the trust claims specifically. He estimated that $73,920 would be the total future costs incurred by the Defendant and thus, $55,440, being 75% of the total costs, was estimated as the ordinary costs, to defend the trust claims.

2. [18]

   The three main bases for the Defendant’s claim for security for costs, are:

3. [19]

   The Defendant also submitted that there was no credible admissible evidence to support the assertion that the deceased had contributed to the payment of the purchase price of the Carlingford property, especially bearing in mind the Defendant’s evidence to the contrary.

4. [20]

   The Defendant noted that the Court should consider the possibility the Plaintiff might be able to obtain financial assistance from her uncle, the brother of the deceased, who has taken an active part in the proceedings. (In my view, this is speculation, as there is no evidence of his financial circumstances or his ability, or willingness, to assist the Plaintiff financially.)

5. [21]

   The Plaintiff submitted that it was inapt for the Defendant to separate the trust claims from the rest of the proceedings as the trust issue is integral to the determination of the claims, by each of the parties, for a family provision order, if one is to be made. How the Carlingford property is held must be determined as part of the case brought by the Statement of Claim and the Cross-Claim. This will be necessary to determine the nature and value of the deceased’s estate and notional estate, and whether it is then necessary to make a notional estate order, if the Carlingford property passes by survivorship, to the Defendant.

6. [22]

   The Plaintiff also noted that her trust claim relating to the rent received by the Defendant from the Carlingford property will also need to be determined as rent received would not pass to the Defendant by survivorship.

7. [23]

   In arguing that the trust claim had merit, the Plaintiff pointed to the documentary evidence referred to in the affidavit of 13 July 2020 of Xian Guo and the Coroner’s Report which noted that the deceased had sent large sums of money from China, to Australia, at about the time of the purchase of the Carlingford property. She also submitted that the Defendant’s case was based on mere assertions and lacked documentary evidence to support those assertions.

8. [24]

   The assertions and counter-assertions raise a disputed matter of fact and each of the parties will, undoubtedly, be cross-examined about them. Accordingly, I cannot determine, at this stage, who will succeed on the trust question. Yet, the investigation of the issue will be relevant, also, on the contribution of the Defendant and of the deceased to the purchase of the Carlingford property.

9. [25]

   The Plaintiff also argued that as the only child of the deceased, she has a strong claim for a family provision order. She submitted that the strength of her claim is important to the question of security as any family provision order will provide her with assets in Australia in which to meet any adverse costs order on the trust claims.

10. [26]

    The Plaintiff submitted that as the trust claims had been raised in October 2019, it had been open to the Defendant to make an application for security for costs, but he had not done so until September 2021, when the matter was ready, or almost ready, to obtain a hearing date.

11. [27]

    Finally, I note the Plaintiff’s evidence in her affidavit sworn 22 September 2021, that she deposed that if she were ordered to pay the costs sought, “I would probably have no choice but to pause or even stop the current proceedings”.

The Law

1. [28]

   In Milosevska v Milosevski [2019] NSWSC 711, I summarised, what in my view, were the general principles relating to security for costs. I stated that I did not intend those general principles to be considered to be rigid formulae, or elevated into rules of law. Nor, do I suggest that they constrain the wide discretion provided to the Court in these matters.

2. [29]

   At [76] I stated:

3. [30]

   These are the principles that I adopt.

Determination

1. [31]

   It appears the Plaintiff concedes that the threshold test in the Uniform Civil Procedure Rule 2005 (NSW) r 42.21(1)(a) has been met, in that she is ordinarily resident outside Australia and that she would not be able to meet a costs order on the trust claim, if one is made in the substantive proceedings. By her own admission she is impecunious and has no assets in Australia, or in China, to meet an order for security for costs.

2. [32]

   I also accept, as did the Court of Appeal in Li v State of New South Wales [2013] NSWCA 165, that the Defendant, as in those proceedings, would likely have difficulty, and would inevitably incur additional costs, in attempting to enforce, in China, any costs judgment he might obtain against the Plaintiff.

3. [33]

   Having established these matters, I turn to consider whether to exercise the discretion to order security for costs, and if so, the quantum of any order. In doing so, I have considered a wide range of factors.

4. [34]

   It seems to me that important in the Court’s consideration is the need to take into account the nature of the proceedings in respect of which an order for security is sought. In this regard, I note the claims made by each of the parties in the Statement of Claim and the Cross-Claim, particularly that each has sought a family provision order and that each is asserting a trust.

5. [35]

   At [28.4], GE Dal Pont, in his Law of Costs (4th ed, 2018, LexisNexis Butterworths, Australia), referred to by Lindsay J in Re Estate Condon; Battenberg v Phillips [2017] NSWSC 1813, notes that:

6. [36]

   A similar view was expressed by Gaudron J’s decision in Singer v Berghouse (1993) 114 ALR 521; [1993] HCA 35, in which her Honour dismissed an application for security for costs of an appeal to the High Court upon the basis that, due to the nature of family provision cases, so far as costs are concerned, there was no certainty that, even if unsuccessful in the appeal, the appellant would be ordered to pay the costs of the appeal.

7. [37]

   It is also important to note that the nature and value of the deceased’s estate and notional estate must be determined and that will include the determination of the trust claims. Considering both parties have a claim for a family provision order on foot, it would seem it is also in the Defendant’s interests to determine the nature and value of the deceased’s estate out of which any order for provision can be granted.

8. [38]

   It is also important that it was not suggested that the Plaintiff’s claim is not bona fide. Whilst it is not ordinarily appropriate to give detailed consideration to the merits of the Plaintiff’s case, as the only child of the deceased for whom no provision is likely to be made under the operation of the rules of intestacy, the Plaintiff has a reasonable prospect of success in regards to her claim for a family provision order. More than just being an eligible person under s 57 of the Succession Act, she has filed evidence (to which I have referred in the previous judgment) that the deceased wished to provide for her and bring her to Australia before her disappearance. Inevitably, this will need to be weighed up against the Defendant’s competing financial needs and moral claim as the spouse of the deceased. However, considering it was not a long relationship before the deceased’s disappearance and the circumstances regarding her disappearance, on its face, the Plaintiff has a bona fide claim with reasonable prospects of success depending upon the nature and value of the deceased’s estate and notional estate. Even if she were unsuccessful, it could be argued that she should not be ordered to pay costs.

9. [39]

   The Plaintiff has stated that if any order for security is made, she would have no choice but to pause, or stop, the current proceedings. The allegation was not the subject of challenge. Thus, if an order for security were made, it would stultify an arguable case being made by the Plaintiff.

10. [40]

    Furthermore, if a stay of the Plaintiff’s proceedings were ordered, that would not assist either party and would simply delay the completion of the administration of the deceased’s estate.

11. [41]

    I have remembered that an application for security for costs should be brought promptly. Whilst the Defendant was aware of the trust claim for over 18 months before filing the notice of motion, it was not unreasonable that he waited until the determination of the presumption of death proceedings. Furthermore, there is no reason to suppose that the delay in making the application, in the circumstances, has caused any prejudice to the Plaintiff.

12. [42]

    In all the circumstances, I am not prepared to exercise my discretion and the application for security for costs must be refused.

13. [43]

    The Court orders that: