Agapetos & Armani
[2023] FedCFamC1F 1072
•13 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Agapetos & Armani [2023] FedCFamC1F 1072
File number: SYC 2768 of 2023 Judgment of: CAMPTON J Date of judgment: 13 December 2023 Catchwords: FAMILY LAW – CHILD SUPPORT – Application for departure – Where the wife seeks a departure order for periodic and non-periodic child support – Where the husband opposed the departure order – Where the husband’s mother currently pays for the child’s school fees – Departure order for school fees refused – Where the Court finds the husband has significant financial resources available to him – Finding of grounds for a departure order – Orders made for periodic and non-periodic child support departure.
FAMILY LAW – COSTS – Litigation funding – Dollar-for-dollar – Where the wife seeks litigation funding for legal costs already incurred and future legal costs – Where the husband opposes the relief – Where the wife seeks a trust that the husband is a beneficiary of be treated as property of the husband – Where the trust may receive $30 million to $120 million from the husband’s late father’s estate – Where the husband and the third-party respondents related to the trust opposed this course – Where it would be fraught with danger determining whether the trust is property – Where the husband receives distributions from the trust and receives funds from his mother – Finding the husband has financial resources in the trust and his mother – Consideration of principles regarding litigation funding – Where there is a clear disparity in the financial position between the husband and the wife – Finding litigation funding is required to overcome the David and Goliath situation the wife finds herself in – Litigation funding ordered in fixed sum for expenses incurred and dollar-for-dollar funding for future expenses.
FAMILY LAW – PRACTICE AND PROCEDURE – Discovery – Where all parties sought orders in relation to information and documents as part of full and frank disclosure – Where the wife seeks disclosure in relation to the trust that the husband is a beneficiary – Where the third-party respondents object to disclosure on the basis of relevance – Where the relevance of full and frank disclosure is a cumulative value of the information and documents considered together – Orders for discovery made – Valuations – Where the wife sought valuation of a group of companies and trusts – Where the cost and logistics of these valuations is excessive – Relief refused – Where the wife and husband sought valuation of a company and trust – Where there is agreement as to mechanism but dispute as to payment of costs – Orders for costs of expert be shared equally.
FAMILY LAW – SPOUSAL MAINTENANCE – Where the wife sought periodic and non-periodic spousal maintenance – Where the husband opposed the relief – Consideration of the parties’ respective financial positions – Where some expenses of the wife were not qualified with evidence and were unreasonable – Where the Court finds the husband has significant financial resources available to him – Orders made for periodic and non-periodic spousal maintenance.
Legislation: Child Support (Assessment) Act 1989 (Cth) Pts 6A, 7, ss 116, 116(1)(b)(i), 116(1)(b)(ii), 117, 117(1)(b), 117(2), 117(2)(b)(ii), 117(2)(c)(i), 117(4), 117(5).
Family Law Act 1975 (Cth) ss 72, 72(1), 74, 75(2), 79, 79(2), 79(4), 79(5), 80(1)(h), 85A, 90AE, 106B, 114, 117, 117(1), 117(2), 117(2A).
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68.
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Ch 6, rr 1.04, 6.01, 6.02, 6.06, 6.06(2), 6.17.
Cases cited: Australian Broadcasting Corporation v Australasian Performing Right Association Limited (1973) 129 CLR 99; [1973] HCA 36.
Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45.
Bing and Bing (2007) FLC 93-318; [2007] FamCA 418.
Chang & Song [2023] FedCFamC1F 387.
Charisteas & Charisteas (2022) FLC 94-109; [2022] FedCFamC1A 160.
Davidson and Davidson (1991) FLC 92-197; [1990] FamCA 187.
Goodwin and Goodwin Alpe (1991) FLC 92-192; [1990] FamCA 147.
Gyselman and Gyselman (1992) FLC 92-279; [1991] FamCA 93.
Halabi v Artillaga & Ors (1994) FLC 92-470; [1993] FamCA 154.
Hall v Hall (2016) 257 CLR 490; [2016] HCA 23.
Kennon v Spry (2008) 238 CLR 366; [2008] HCA 56.
Lao & Zeng (2021) FLC 94-053; [2021] FedCFamC1A 17.
Lesley & Lesley [2015] FamCA 894.
Marchant & Marchant (2012) FLC 93-520; [2012] FamCAFC 181.
Masoud & Masoud (2016) FLC 93-689; [2016] FamCAFC 24.
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34.
Muir & Rodelo (No 2) [2023] FedCFamC1F 845.
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578.
Prince and Prince (1984) FLC 91-501; [1984] FamCA 7.
Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 144.
Stein and Stein (1986) FLC 91-779; [1986] FamCA 27.
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2011] FamCAFC 126.
Swift & Swift [2020] FamCA 991.
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69.
Zhu & Xie [2023] FedCFamC1F 615.
Zschokke and Zschokke (1996) FLC 92-693; [1996] FamCA 79.
Division: Division 1 First Instance Number of paragraphs: 208 Date of hearing: 30 August 2023, 20 October 2023, 28 November 2023 Place: Sydney Counsel for the Applicant: Mr Beaumont SC with Mr Condylis (30 August 2023), Mr Richardson SC (20 October 2023), Ms Winning as solicitor advocate (28 November 2023) Solicitor for the Applicant: Barkus Doolan Winning Counsel for the First Respondent: Mr Sullivan KC with Mr Livingstone (30 August 2023), Mr Sullivan KC (20 October 2023), Mr Holmes as solicitor advocate (28 November 2023) Solicitor for the First Respondent: Holmes Donnelly and Co Solicitors Counsel for the Second, Third and Fourth Respondents: Dr O’Mahoney with Mr Flick (30 August 2023, 20 October 2023), Mr Flick (28 November 2023) Solicitor for the Second, Third and Fourth Respondents: Cleary Hoare Solicitors ORDERS
SYC 2768 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS AGAPETOS
Applicant
AND: MR ARMANI
First Respondent
MS ARMANI
Second Respondent
ARMANI PTY LTD (and another named in the Schedule)
Third Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
13 DECEMBER 2023
THE COURT ORDERS THAT:
Litigation funding
1.Pending further order, by way of litigation funding:
(a)On or before 15 January 2024 the husband pay to the solicitors for the wife by way of litigation funding the sum of $100,000; and in addition thereto
(b)Within 7 days after any payment made by or on behalf of the husband, for accounts rendered by his family law solicitors for work undertaken by them and disbursements (other than counsel’s fees or single expert fees for the valuation of the interests of the husband and the wife in Agapetos Pty Ltd and the C Trust) incurred for the purposes of these proceedings, the husband pay or cause to be paid the same sum of money to the wife’s family law solicitors for their costs and disbursements (other than specified in this order) of these proceedings;
(c)Within 7 days after any payment made by or on behalf of the husband, for accounts rendered by counsel engaged in respect of these proceedings, the husband pay or cause to be paid the same sum or money to the wife’s family law solicitors, to be held in trust, for the payment of the wife’s counsel of these proceedings; and
(d)That for the purposes of the payment of legal fees:
(i)Should the husband or a third party on his behalf place any monies in the trust account of the husband’s solicitors, for the purposes of his counsel’s attendance at any hearing (whether interim or final), then within 7 days of placing such money in the husband’s solicitors trust account, he shall pay or cause to be paid the same sum or money to the wife’s family law solicitors trust account, for the purposes of counsel fees for any hearing (interim or final), with any fees remaining in excess of that required to meet such fees to be refunded forthwith upon completion of the final hearing;
(ii)That payments made by the husband to his family lawyers, or to his counsel engaged in these proceedings pursuant to these orders shall be held in trust by the husband’s solicitors and not applied in payment of the account of his family law solicitors, or counsel engaged, until such time as the payment required under these orders have occurred; and
(iii)The amounts that the wife’s solicitors and counsel received from the husband pursuant to these orders are to be applied only to meet the wife’s solicitors costs and disbursements and the wife’s counsel’s fees for the purposes of the family law proceedings.
Spousal maintenance
2.Pending further order the husband pay to the wife by way of spouse maintenance the sum of $3,000 per month with the first payment to be made within 7 days of the date of these orders and monthly thereafter.
3.The spouse maintenance referred to in Order 3 shall be paid into CBA account BSB … account number …26 held in the name of the wife or otherwise as directed in writing by the wife or her legal representatives.
4.Pending further order, by way of spouse maintenance, the husband pay as and when they fall due and if possible, direct to the service providers, expenses/outgoings referable to the property at D Street, Suburb E until that property is sold and referable to the property at F Street, Suburb G as and from the date the wife occupies that property:
(a)Council rates;
(b)Water rates including usage charges;
(c)Strata fees; and
(d)Lift maintenance.
5.In the event the wife pays for any of the expenses outgoing as set out in Order 6, the wife will provide to the husband within 14 days of payment a copy of the receipt confirming payment and the husband, within 14 days thereafter, will reimburse the wife into the bank account identified in Order 4 above, or as otherwise notified by her in writing.
Child support
6.Pending further order as and by way of departure from the administrative assessment of child support for the child X born 2015:
(a)The husband pay by way of periodic child support the amount of $550 per week, the first payment to be made within 7 days of the date of this order and then weekly thereafter into a bank account nominated by the wife;
(b)The husband pay or cause to be paid by way of non-periodic child support the current Private Health Insurance for X at the top level of cover and 100 per cent of gap medical expenses referable to X not covered by Medicare or the private health insurer;
(c)The periodic and non-periodic child support paid by the husband pursuant to these orders is to account for 100 per cent of the annual rate of child support payable by the husband under any administrative assessment; and
(d)The parties forthwith do all acts and things necessary to cause a copy of this order to be lodged with the Child Support Registrar.
Disclosure and valuations
7.By 4.30pm on 2 February 2024, each party is to provide to the other parties a list of documents identifying:
(a)The documents to which the duty of disclosure applies;
(b)The documents (if any) no longer in the disclosing party’s possession or control to which the duty would otherwise apply (with a brief statement about the circumstances in which the documents left the party’s possession or control); and
(c)The documents (if any) for which privilege from production is claimed.
8.By 4.30pm on 9 February 2024, each party is to file and serve an Undertaking as to Disclosure.
9.By 15 January 2024, the third respondent provide to each of the husband and the wife the following documents by way of disclosure:
(a)A copy of the Grant of Probate referable to the husband’s late father’s estate (if any) and copies of any letters of administration and applications made to the Supreme Court in respect of granting probate in relation to the estate (if any);
(b)A document identifying the assets and liabilities of the late Mr H insofar as those assets or liabilities may relate to the Armani Trust or the Armani Will Trust;
(c)A copy of the J Group Compliance Certificate Ratio Summary and Valuation Summary for each quarter during the year ended 30 June 2023;
(d)Consolidated financial statements referable to the J Group and controlled entities for the financial years ending 2022, 2021, and 2020;
(e)Tax returns and financial statements for the financial years endings 2022, 2021, and 2020 for the following entities that do not form part of the consolidated financial statements referred to in Order 9(d):
(i)Armani Pty Ltd; and
(ii)B Pty Ltd.
(f)A copy of all email exchanges between the husband and Mr K and/or the late Mr H from 1 July 2021 to date regarding the Armani Trust, distributions to be made to the husband by the Armani Trust, and/or the will and estate of the late Mr H not already in evidence;
(g)Any documents identifying any past distributions for the past 3 years or potential future distributions to be made to the husband from the J Group or the Armani Trust;
(h)All documents identifying the assets received by the husband or to be received by the Armani Trust by way of an inheritance or distribution of the estate of the late Mr H; and
(i)All documents provided to the husband by accountants, financial advisors and/or executors of his late father’s estate relating to any distributions to be made to the husband or the Armani Trust from the estate.
10.For Agapetos Pty Ltd and L Pty Ltd as trustee for the C Trust, the wife shall within 28 days provide to the husband her written estimate of the value of her interest in those entities, including a brief statement of reasoning and any supporting documents. Thereafter if the parties are unable to agree on a value of their interests in those entities for the limited purpose of mediation then the following shall apply:
(a)Within 7 days of the parties’ failure to agree as to value, the wife shall nominate in writing to the husband’s solicitor 3 suitably qualified valuers;
(b)Within 7 days of receipt of the nominated valuers, the husband shall provide to the wife’s solicitor a nomination of 1 of the proposed valuers and failing such nomination within the period for in these orders, the wife shall be entitled to elect the valuer appointed; and
(c)Within 7 days of the choice of valuer, the wife’s solicitor shall provide to the husband’s solicitor a proposed joint letter of instruction to the appointed expert valuer.
11.In respect of Superannuation Fund 1 the wife shall cause the fund to have draft financial statements and member account statements prepared for the period from the commencement of the fund to the year ended 30 June 2023 and submit a copy of them to the husband by no later than 31 January 2024. Thereafter if the parties are unable to agree on a value of their interests in the fund and provided a mediation has been completed, the husband shall have liberty to bring such further application as to valuation evidence of the parties’ interests in the fund as he may determine.
12.The husband and the wife shall be equally responsible and equally share for meeting all costs association with the single expert valuations to be obtained pursuant to these orders.
Procedural
13.The costs of all parties of the interim applications determined by way of the orders made 13 September 2023, 20 October 2023, and these orders are reserved.
14.Save and except as determined by these orders, all outstanding applications in a proceeding or responses thereto and applications for interim orders are dismissed.
15.The matter be adjourned for case management at 9.30am on 14 May 2024 by way of Microsoft Teams.
16.On or before 22 March 2024, the husband and the wife and the second to fourth respondents together with their legal representatives are to confer and prepare a draft joint balance sheet to include:
(a)All assets, liabilities, superannuation interest and financial resources suggested to be relevant and to include values as alleged by each party;
(b)Wheresoever controversy exists as to the inclusion of an item or the value of an item a footnote shall be appended to explain the controversy; and
(c)A final, settled version of the draft joint balance sheet shall be filed and served on or before 4.30pm on 29 March 2024.
17.All parties have leave to submit consent orders for consideration in chambers in the event of compromise at mediation.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Agapetos & Armani has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
These are financial proceedings commenced on 21 April 2023 by Ms Agapetos (“the wife”) upon filing an Initiating Application in the Federal Circuit and Family Court of Australia (Division 2). She currently prosecutes a Further Amended Initiating Application filed 3 August 2023. Broadly, she seeks orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“Act”) adjusting property between herself and Mr Armani (“the husband”) and as to periodic and non‑periodic child support departure pursuant to the Child Support (Assessment) Act 1989 (Cth) (“CSAA”). Part of her application seeks orders pursuant to ss 85A and 90AE of the Act as an adjunct to her substantive property relief affecting the interests of other respondents to the proceeding.
The husband, by way of his Response to Initiating Application filed 29 May 2023, seeks different orders adjusting property as between he and the wife.
The husband is 47 years old. The wife is 46 years old.
They commenced cohabitation in 2009 and married in 2011. They have one child, X who is currently seven years old. She attends M School and is in Year 2.
The husband and the wife separated on or about 1 May 2022. They are not yet divorced.
It is broadly agreed that X lives with the wife and currently spends on average four nights per fortnight during the school term, and approximately 40 per cent of the school holiday time, with the husband.
Ms Armani (“the husband’s mother”) is the second respondent to the proceeding. The third respondent is Armani Pty Ltd (“Armani Pty Ltd”) in its capacity as the trustee of the Armani Trust. The fourth respondent is B Pty Ltd.
The husband’s late father, Mr H (“the husband’s late father”), passed away in 2022. He was the sole shareholder of B Pty Ltd and so remains. His estate (“Estate”) is yet to be administered. The husband’s mother is the sole director of B Pty Ltd. The husband’s mother is also the sole shareholder and a director of the trustee of the Armani Trust, Armani Pty Ltd. The husband’s brother, Mr K, is also a director of the trustee.
The wife contends that the Armani Trust is property of the husband in the s 79 dispute. The husband, his mother and the Armani Trust itself, disputes this contention.
The husband and B Pty Ltd are the equal legal owners of a property occupied by the wife at D Street, Suburb E (“Suburb E”). The wife continues to occupy that property. The wife contends that the husband can currently exercise rights to achieve the entire unencumbered legal and beneficial interest in Suburb E valued in the range of between $6.2 million (as contended by the husband) to $7.5 million (as contended by the wife) at a not substantial cost. The husband puts several of the integers of the wife’s contentions into issue. The other respondents broadly contend that the husband does not hold his interest in Suburb E for his own benefit.
The last will of the husband’s late father is dated 4 October 2016 (“Will”). The husband’s siblings, Ms N and Mr K, are the named executors in the Will. No application for probate of the Estate has been made.
The Estate is not a party to the proceeding.
The second to fourth respondents oppose the relief as sought by the wife insofar as it affects their contended interests and seek relief in their favour including broadly a declaration that the interest held in Suburb E by B Pty Ltd and any interest of the husband as a beneficiary of the Armani Trust does not form part of the property of the husband and the wife for the purposes of s 79 of the Act.
They additionally seek a declaration that in late 2021, the husband, the wife, and the husband’s late father entered into a binding agreement for the purchase of an “off the plan” property at F Street, Suburb G (“Suburb G”) on terms whereby the wife would hold her interest in the Suburb G beneficially for the Estate, and that the deposit, transfer duty and interest paid by the husband’s late father in respect of Suburb G forms part of the Estate such that it is money owed to the Estate in equal portions by the wife and the husband. The primary beneficiary of the declarations sought, the Estate, is not a party to this proceeding. It is unclear as to the standing of the second to fourth respondents to seek the declaratory relief identified as to Suburb G. The wife opposes the relief sought.
The legal representatives for the second to fourth respondents say that each of their respective clients’ interests are not in conflict. The same legal representatives are instructed by the nominated executors of the yet-to-be administered Estate. It is implicit that the instructions to the legal representatives, who appear for each of the second and fourth respondents, originate from the husband’s mother, and that some degree of alignment exists as to their interests and that there is also an alignment as to their interests and each of those of the third respondent and those of the yet-to-be administered Estate.
The proceeding was transferred to Division 1 on 7 June 2023. It was allocated to the Major Complex Financial Proceedings List on 1 September 2023.
Some of the interlocutory disputes listed for hearing on 30 August 2023 included:
(a)As to mandating the husband exercising a right to have the interest of B Pty Ltd in Suburb E transferred to him;
(b)As to the whether the loan provided by the husband’s late father to the husband at the time of acquisition of Suburb E had been forgiven or was required to be repaid;
(c)Whether Suburb E was to be sold;
(d)If Suburb E was not to be sold, as to the wife’s continued exclusive occupation of it;
(e)As to the fact of completion of the late 2021 exchanged contract to purchase Suburb G for over $8,500,000 (initially scheduled to for late 2023 but now revised to early 2024), or whether the interests of the husband and the wife in the contract itself ought to be sold. At the time on entering the Suburb G contract, the husband’s late father paid the deposit of over $850,000. The husband and the wife themselves at the time of exchange did not have capacity to pay the balance of purchase price of Suburb G. Dispute existed as to the terms by which the husband’s late father would enable completion of the acquisition of Suburb G. Part of that dispute included the fact of the sale of Suburb E and the application of the proceeds of sale to Suburb G; and
(f)If the purchase of Suburb G was now to be completed, in circumstances where the husband’s late father has passed away, issue existed as to the source of funds to enable that completion and the terms of the provision of such funds.
The hearing event on 30 August 2023 did not conclude. Parts of the interlocutory dispute were compromised and reduced to a Minute of Consent Order made in chambers on 13 September 2023. Those orders provide that:
(a)The wife is to have exclusive occupation of Suburb E pending its sale;
(b)The sale of Suburb E is to occur in alignment with the completion of the purchase of Suburb G;
(c)If at any point these events do not align, the second to fourth respondents are to finance the wife and X’s accommodation in the interim;
(d)The proceeds of sale from Suburb E, after deduction of sale costs but not paying any contended liability relating to the property, are to be paid into an interest-bearing trust account held in the joint names of the husband and the wife and then applied by the husband and the wife in part payment of the sum required to complete the purchase of Suburb G (estimated in the range of $8 million together with stamp duty of $576,775);
(e)The husband’s mother will loan to the husband and the wife, secured by way of mortgage, the shortfall or balance between the proceeds of sale of Suburb E and the sum due to complete the Suburb G contract, with the loan to not carry interest; and
(f)Following the completion of Suburb G, the wife to have exclusive occupation of that property pending further orders made by the Court.
The consent orders further provided:
3. The interim regime is without prejudice to the parties’ respective claims as those claims are currently framed and it is intended by all parties to preserve such rights as each of them contends that they presently have, including without limit:
a) In respect of the Applicant Wife, to a claim in respect of an interest in the entirety of the [Suburb E] property, and in respect of an interest in the [Suburb G] property comprising the interest of a purchaser on contract prior to settlement, with 90% of the funds for completion (in relation to the property purchase price) outstanding and including without limit the Wife’s claims as to the rights that the Husband enjoys with respect to his capacity to have the whole of the beneficial interest in [Suburb E] transferred to him and have any loan to him forgiven and with those rights also applying to [Suburb G] in all respects (if found to exist);
b) In respect of the Respondent Husband, to a claim in respect of an interest in the entirety of the [Suburb E] property and the [Suburb G] Property beneficially held by the Second to Fourth Respondents on the basis of an oral and/or written agreement, and/or a resulting and/or constructive trust, and/or an estoppel binding the Applicant Wife and Respondent Husband from denying the agreement or trust claimed;
c) In respect of the Second to Fourth Respondents, to a claim to the entirety of the beneficial interest in the [Suburb E] property and the [Suburb G] property on the basis of an oral and/or written agreement, and/or a resulting and/or constructive trust, and/or an estoppel binding the Applicant Wife and Respondent Husband from denying the agreement or trust claimed.
4. The intention of the parties is to preserve the status quo in terms of their respective interests and rights and claims as they currently stand in relation to [Suburb E] and [Suburb G].
The balance of the interlocutory disputes were listed for hearing on 20 October 2023. On that day:
(a)The wife’s relief for orders that the husband reimburse her $18,846.63 for a tax refund for the year ended 2022 paid into the husband’s mother’s account was not pressed, and it will be dismissed; and
(b)The husband’s relief as to the Self-Managed Superannuation Fund 1 (“the SMSF”) of which the husband and the wife are the sole members was determined. The sequential relief he sought was:
(i)Firstly, as to disclosure, and
(ii)Secondly, for the appointment of a single expert to undertake what appeared as an audit of the published financial statements and conduct of the SMSF, and upon the completion of that process, for the valuation of the interests of the parties in the SMSF.
The following order was made on 20 October 2023 as to his relief on this subject matter:
4.That the relief sought by the husband on a interlocutory basis in paragraph 5 of his Response filed 29 May 2023, save and except as to disclosure, be dismissed without prejudice to the husband bringing such further Application in a Proceeding as he is advised as to the integrity of the financial statements and statutory accounts of [Superannuation Fund 1] and/or as to the valuation of the interests of the husband and the wife in that fund.
The reasons for that order pivot from the nature and character of the assets of the SMSF, the approximate value of the interests of the husband and the wife in the SMSF, and the current early stage of the proceeding, including that a mediation is yet to occur. A sequential process to this cascading relief as sought by the husband progresses the obligations identified in ss 67 and 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) and r 1.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“Rules”). Both ss 67 and 68 and r 1.04 mandate that the overarching purpose of the FCFCOA Act and the Rules is to facilitate the just resolution of disputes according to law as quickly, inexpensively, and efficiently as possible, and that parties to family law proceedings must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.
Putting it simply, the costs of the relief he sought by way of an audit and reconstruction of the SMSF published financial statements by a single expert is disproportionate, at this time in the litigation, to the value of the interests of the parties in the SMSF. A preferred course is to complete disclosure of documents and information as to the SMSF to distil what is, in fact, in issue on this subject matter. The husband’s capacity to make such further application as he is advised as to the integrity of the financial statements and statutory accounts of the SMSF and/or as to the valuation of the interests of he and the wife in the SMSF after disclosure and a mediation is concluded will be preserved.
It was anticipated during the hearing on 20 October 2023 that further compromise would be achieved between all parties as to:
(a)Outstanding issues as to disclosure;
(b)Restricting, for the purpose of a mediation, a broad range as to the value of the Armani Trust that would include the distribution it will receive from the Estate. This would currently obviate the relief of the wife to appoint single experts to value the Armani Trust; and
(c)As between the husband and the wife, the process of obtaining single expert opinion evidence as to the valuation of their interests in the C Trust, L Pty Ltd and Agapetos Pty Ltd (“Agapetos Pty Ltd”).
The hearing conducted and concluded on 20 October 2023 was as to the following as sought by the wife to which judgment was reserved:
(a)Litigation funding pursuant to ss 79 and 80(1)(h) or s 117 of the Act;
(b)Periodic and non-periodic interim spousal maintenance; and
(c)Periodic and non-periodic interim child support departure.
Notwithstanding the expression of optimism, compromise was not achieved as to the issues that were not the subject of hearing on 20 October 2023. The hearing of the remaining issues was listed for a third interlocutory hearing event on 28 November 2023. On that day, the outstanding relief of each party as to those subject matters (identified above at [23]) was reduced to further minutes of order, being:
(a)Exhibit 15 as sought by the wife;
(b)Exhibit 16 as sought by the husband; and
(c)No further interlocutory relief was prosecuted by the second to fourth respondents on the issues recorded above at [23]. A document, being Exhibit 17, was the second to fourth respondents proposed orders engaging with the relief sought by the wife as contained in Exhibit 15.
By way of Exhibits 15 and 16, part of the relief sought by each of the husband and the wife was to again agitate relief with respect to the SMSF.
It was agreed between the husband and the wife at the hearing on 28 November 2023 that no annual published financial statements of the SMSF had been prepared since it was established in 2018. Each party made allegations against the other as to the conduct of the SMSF and directing responsibility to the other.
Each of the husband and the wife proposed to tender letters from solicitors containing assertions, seeking to have the Court decide as to their competing relief as to the SMSF by accepting those assertions as fact.
It appears the parties are the personal trustees of the SMSF or officers of its corporate trustee. Neither party agreed to the other taking primary responsibility for preparing the first draft accounts of the SMSF for consideration by the other. Issue existed as to the cost of retaining an accountant to prepare those draft accounts and how it would be funded.
It is not appropriate to determine this newly emerged contested subject matter “on the run” absent proper evidentiary foundation. The relief agitated by either party as to the SMSF, including as to the preparation of the statutory accounts for the SMSF is determined on the basis that the wife appears to have had the primary operation of the SMSF, including the provision of cash from the SMSF’s assets by way of loan. She can prepare the first draft of the accounts for the SMSF for consideration by the husband. In the ordinary course this cost would at first instance be paid from the property of the fund. If dispute continues to exist as to the value of the parties member entitlements in the SMSF after the mediation, the single expert valuation of those interests in the SMSF can be determined in the ordinary course prescribed by the Rules, and in the event of any dispute as to the identity of the expert or instructions to the expert or the like, such disputes can be determined upon the filing of an Application in a Proceeding and an affidavit in support thereof.
These reasons determine the remaining interlocutory disputes in the proceeding not compromised, withdrawn, or determined by orders made on 13 September 2023, 20 October 2023 or 28 November 2023. For reasons that follow, the husband will be ordered to pay to the wife the sum of $100,000 by way of litigation funding directly to her solicitor and in addition a dollar-for-dollar costs order will be made in the wife’s favour. The husband will be ordered to pay to the wife interim periodic spouse maintenance of $3,000 per month and non-periodic outgoings as to Suburb E and Suburb G. An interim order for periodic child support departure will be made for the husband to pay to the wife $550 per week and non-periodic child support for health insurance and any gap in medical expenses not covered by Medicare or private health insurance. Orders are made as to disclosure. Orders are made as to a process of either agreement as to value of the interests of the husband and the wife in the C Trust and Agapetos Pty Ltd for mediation or as to the appointment of a single expert to opine as to the value of such interests in default of agreement. The wife’s application to value 15 corporations and trusts holding 16 trading enterprises comprising the “J Group” is currently refused. All other applications for interlocutory relief are dismissed. Costs are reserved.
The parties agree to engage in a private mediation to be conducted by Mr P. It is anticipated that it cannot occur until well into 2024. Directions will be made adjourning the proceeding to allow sufficient time to complete that process.
DOCUMENTS RELIED UPON BY EACH PARTY
The wife relied upon her:
·Further Amended Initiating Application filed 3 August 2023;
·Case Outline filed 24 August 2023 (Exhibit 3);
·Affidavits filed 21 April 2023, 14 June 2023, 3 August 2023, and 20 October 2023;
·Financial Statement filed 21 April 2023; and
·Amended Minute of Order dated 28 November 2023 (Exhibit 15).
The husband relied upon his:
·Response to an Initiating Application filed 29 May 2023;
·Case Outline document filed 23 August 2023 with the chronology and submissions as Annexures A and B (Exhibit 4);
·Affidavits filed 29 May 2023 and 18 October 2023;
·Financial Statement filed 18 October 2023;
·An affidavit of Luke Meehan, his solicitor, filed 19 October 2023;
·A balance sheet filed 27 July 2023; and
·Amended Minute of Order dated 28 November 2023 (Exhibit 16).
The second to fourth respondents relied upon:
·Amended Response to Final Orders filed 10 August 2023;
·Case Outline (Exhibit 5);
·Affidavits of Mr K filed 28 June 2023, 18 August 2023 and 27 November 2023;
·Affidavit Mr Q sworn filed 13 July 2023;
·Affidavit of Mr R filed 8 August 2023;
·Affidavit of Ms Armani filed 18 August 2023;
·Additional written submissions provided at the hearings; and
·Their document detailing their position as to orders sought in Exhibits 15 and 16 dated 28 November 2023 (Exhibit 17).
At the hearing on 20 October 2023, the wife sought pending further order:
Spouse Maintenance
8.That pursuant to Section 74 of the Family Law Act, the Husband pay to the Wife by way of spouse maintenance the sum of
[$15,000] $10,291 [as amended during the hearing] per month with the first payment to be made within 7 days of the date of these Orders and monthly thereafter;9. The spouse maintenance referred to in Order 8, shall be paid into CBA account BSB […] account number […26] held in the name of the Wife or otherwise as directed in writing by the wife or her legal representatives;
10.The spouse maintenance payable by the Husband pursuant to Order 8 shall be varied on 1 July (“the review date”) each year commencing 1 July 2024, to such sum as shall be determined by multiplying the spouse maintenance being paid on the review date by the fraction N/B were “B” is the consumer price index or groups for Sydney (“CPI”) in respect of the quarterly year ended on the day 12 months prior to the review date, and “N” is the CPI in respect of the quarterly year ending on the date immediately preceding the review date.
11.That as by way of spouse maintenance, the husband pay as and when they fall due and if possible, direct to the service providers, expenses/outgoings referable to [D Street, Suburb E] [and as amended during the hearing as to [F Street, Suburb G]] including:
11.1 Council rates;
11.2 Water rates including usage charges;
11.3 Electricity/gas;
11.4 Internet;
11.5 Strata fees;
11.6 Lift maintenance; and
11.7 Streaming services […].
12.That in the event the Wife pays for any of the expenses outgoing as set out in Order 9, the Wife will provide to the Husband within 14 days of payment a copy of the receipt confirming payment and the husband, within 14 days thereafter, will reimburse the Wife into the bank account identified in Order 2 above, or as otherwise notified by her in writing.
…
Partial property settlement/Legal costs
18.That within 28 days of the date of these Orders, the Husband pay to the Wife the sum of $800,000 by way of partial property settlement;
19. That in the alternative to Order 18 above, from the making of these orders:
19.1The husband pay to the wife $400,000 by way of partial property settlement;
19.2Within seven (7) days after any payment made by or on behalf of the Husband, for accounts rendered by his family law solicitors for work undertaken by them and disbursements (other than counsel’s fees) incurred for the purposes of these proceedings, the Husband pay or cause to be paid the same sum of money to the Wife’s family law solicitors for their costs and disbursements (other than counsel’s fees) of these proceedings.
19.3Within seven (7) days after any payment made by or on behalf of the Husband, for accounts rendered by counsel engaged in respect of these proceedings, the Husband pay or cause to be paid the same sum or money to the Wife’s family law solicitors, to be held in trust, for the payment of the Wife’s counsel of these proceedings;
19.4 That for the purposes of the payment of legal fees:
19.4.1Should the Husband or a third party on his behalf place any monies in the trust account of the Husband’s solicitors, for the purposes of his counsel’s attendance at any hearing (whether interim or final), then within seven (7) days of placing such money in the Husband’s solicitors trust account, he shall pay or cause to be paid the same sum or money to the Wife’s family law solicitors trust account, for the purposes of counsel fees for any hearing (interim or final), with any fees remaining in excess of that required to meet such fees to be refunded forthwith upon completion of the final hearing;
19.4.2That payments made by the Husband to his family lawyers, or to his counsel engaged in these proceedings pursuant to these orders shall be held in trust by the Husband’s solicitors and not applied in payment of the account of his family law solicitors, or counsel engaged, until such time as the payment required under paragraphs 19.2 and 19.3 have occurred.
19.4.3The amounts that the Wife’s solicitors and counsel received from the Husband pursuant to these orders are to be applied only to meet the Wife’s solicitors costs and disbursements and the Wife’s counsel’s fees, for the purposes of the family law proceedings.
19.4.4For the purposes of these orders, the Husband’s solicitors, engaged in the family law proceedings, shall issue invoices no less than once a month.
19.4.5For the purposes of these Orders, the Husband’s counsel shall issue invoices no less than once every 3 months.
…
Child Support Departure
24.That as and by way of departure from the administrative assessment of child support for the chid [X] born […] 2015 (“[X]”):
24.1The Respondent pay by way of periodic child support the amount of $950 per week, the first payment to be made within 7 days of the date of this order and then weekly thereafter into a bank account nominated by the Wife;
24.2That the amount of child support payable by the Husband pursuant to the preceding subparagraph is to be varied on 1 July each year (“the review date”) commencing 1 July 2024 to such sum as shall be determined by multiplying the child support being paid on the review date by the inflation factor (if any) applicable to each child support year as prescribed by the Child Support (Assessment) Regulations;
24.3The husband pay or cause to be paid 100 per cent of all tuition costs of [X] including school fees, uniforms, text books, private tuition, stationary, compulsory school excursions and extra-curricular activities as and when they fall due and noting that [X] attends [M School].
24.4The Husband pay or cause to be paid 100 per cent of all costs associated with [X’s] extra-curricular activities including registration and enrolment costs and uniform;
24.5The Husband pay or cause to be paid Private Health Insurance for [X] at the top level of cover;
24.6The Husband pay or cause to be paid 100 per cent of Gap medical expenses referable to [X] not covered by Medicare or the private health insurer;
24.7That the periodic and non-periodic child support paid by the Husband pursuant to Orders 24.1 to 24.6 is to account for 100% of the annual rate of child support payable by the Husband under any administrative assessment and the annual rate of child support under any assessment issued for each year from the date of this Order be reduced by that amount; and
24.8That the parties forthwith do all acts and things necessary to cause a copy of this Order to be lodged with the Child Support Registrar.
(As per the original)
The husband opposed the orders sought by the wife as to partial or interim property settlement for litigation funding.
It is uncontroversial that the husband had:
(a)Paid into the account of the wife at and post-separation the sum of $15,000 per month, reducing to $7,500 per month in June 2022, further reducing to $5,000 per month in July 2022, and again further reducing to $2,000 per month in June 2023, which continues to date; and
(b)Paid or secured payment post-separation of the land and water rates, strata fees, and lift fees for Suburb E, and continues to do so.
An administrative assessment of child support payable by the husband to the wife was issued on 4 April 2023. No application for administrative review of that or the current assessment has been made to the Child Support Agency pursuant to Pt 6A of the CSAA. Notice of the wife’s application for child support departure was given to the Child Support Agency on 13 June 2023 (Exhibit 12).
The current administrative assessment of periodic child support payable by the husband to the wife is $93.20 per week ($405.25 per month) issued 4 April 2023 for the period 13 February 2023 to 3 February 2024. The assessment records the husband’s child support income amount being $186,030 and the wife’s child support income amount being $240,247.
The grounds for departure prosecuted by the wife are:
l.The [wife] has made an application for an administrative assessment of child support for the child of the relationship.
2. A child support assessment has issued by the Child Support Registrar.
3. The [wife] and the [husband] are the parents of the child.
4.The child lives with the [wife], and spends limited time with the [husband].
5. The [wife] is entitled to receive child support from the [husband].
6.The [husband] is the person liable to make the payments under an assessment.
7.The [wife] and the [husband] are parties to proceedings currently on foot in the Sydney Registry of the Federal Circuit and Family Court of Australia with respect to financial issues, including spouse maintenance and adjustment of property interests.
8.This Court has jurisdiction under the Child Support (Assessment) Act to hear and determine the child support application at the same time that it deals with the financial matters.
9.It would be in the interest of the [wife] and the [husband] for the Court to consider at the same time as it hears the pending applications of the [wife] and the [husband], whether an Order should be made for departure from the assessment in the circumstances of the case.
10.There are grounds for a departure in the circumstances of this case. It would be just and equitable, with regards to the child, the [wife] and the [husband], and otherwise proper, to make the Orders sought by the [wife].
11.Application of the administrative assessment in relation to the child would result in an unjust and inequitable determination of the level of financial support to be provided by the [husband] for the child.
12.The [wife] and the [husband] are the parents of the child and have the primary duty to maintain the child.
13.The [wife] has identified, and described to the best of her knowledge and ability in her Financial Statement and in the Affidavit to which this document is attached:
13.l. the income, property and financial resources of the parties;
13.2. the commitments that are necessary to enable the support of the child;
13.3.the proper needs of the child; and
13.4.the direct and indirect expenses incurred by the [wife] in providing for the care of the child, including housing, clothing, food, entertainment, daycare and other costs.
14.The [husband] has the capacity to pay the amount sought by the Orders, through his income derived from distributions received by him from a family trust which he is the specified beneficiary of.
15.The child does not have any ability to earn or derive income from any source within his control and she no assets under his control, or held for his benefit, that produce, or are capable of producing income.
16.Hardship would be caused to the [wife] and the child if the Orders sought by the [wife] are not made, insofar as the [wife] will be unable to meet the child’s proper needs.
In her affidavit filed 21 April 2023, the wife deposed that she believes that the second respondent has paid for X’s school and tutoring expenses since September 2022. In his affidavit filed 18 October 2023, the husband deposed that he receives support from his mother (i.e. the second respondent) for X’s school fees, extra-curricular activities and “other miscellaneous expenses”. The second respondent is silent on this matter but I accept that she is currently paying for X’s school and other educational expenses.
The husband, appropriately and to his credit, conceded during the hearing, notwithstanding his contentions that the wife was not exercising her full earning capacity and that her claims as to her own weekly reasonable expenses and those of X were overinflated, that:
(a)The wife achieved the s 72 threshold, such that she is unable to meet her reasonable periodic costs of self-support from her income, property, and resources; and
(b)The wife had established a special circumstance to ground a departure from the current administrative assessment of child support and it was appropriate for the Court to exercise an interim child support departure discretion.
This concession emerged from the value of the husband’s current payment to the wife of $2,000 per month ($461 per week not including him securing payment of some of the Suburb E outgoings by way of land and water rates, strata fees and lift fees) comprising either $1,595 per month for maintenance of the wife and $405 per month by way of child support pursuant to the current assessment, or some other combination of each (should the sum of periodic child support be increased and the value of the wife’s periodic maintenance be reduced).
Further, again to his credit, by way of adjunct to this concession, the husband submitted that a reasonable claim of the wife for her own expenses for self-support on a periodic basis absent accommodation cost was in the range of $3,300 per month and that an appropriate periodic child support departure order would be in the range of $700 per month. These concessions were made in the context absent the wife’s capacity to contribute.
BACKGROUND
The husband describes his occupation as “writer” and is currently not employed. His Financial Statement records his weekly income as $7,557 per week before tax ($32,747 per month) sourced by distributions from the Armani Trust. He receives significant benefits sourced from his mother, including payments of his legal fees by way of gift and accommodation at no cost. He currently lives in a property owned by his mother.
The wife identifies her occupation as “self-employed” by Agapetos Pty Ltd, earning $673 per week before tax ($2,916 per month) and receiving $531 per week from the company in benefits for mobile phone payments, travel expenses and entertainment. Agapetos Pty Ltd is a financial firm. The directors are the wife and the wife’s father. In her affidavit filed 21 April 2023, the wife said that she was enrolled and accepted into a postgraduate course commencing mid‑2023.
Prior to the relationship, the wife worked as a professional. At the commencement of the relationship, she was self-employed at Agapetos Pty Ltd and earned an income of approximately $80,000 per annum. The husband at that time was employed full-time in the entertainment industry at V Company and earned an income of approximately $90,000 per annum.
In 2009, the husband and the wife commenced living at a property in Suburb S registered in the name of the husband’s late father. They did not pay rent. From mid-2012 to late 2012, they undertook substantial renovation work on this property funded by the husband’s parents and the parents’ associated “entities”. During the renovation work, the parties moved into a rental property at Suburb T, funded directly or indirectly by the husband’s parents.
In 2012, the husband was diagnosed with depression and prescribed medication. The wife contends that this diagnosis did not impact on the husband’s ability to work. This appears to be confirmed by his continued employment thereafter.
The Armani Trust was established by deed by the husband’s late father in 2013. The husband’s late father caused $5,000,000 to be provided to the Armani Trust by either settlement or gift. $4,934,639 was then loaned to U Pty Ltd, a trading entity of the husband’s late father, as recorded in a Loan Agreement dated 6 February 2013. That loan agreement provides for the Armani Trust to receive interest income from the loan with U Pty Ltd at 8 per cent per annum, being in the annual range of $394,771.
In 2014, the husband left V Company to commence full-time employment with W Company and began earning approximately $100,000 per annum. Later that year, he moved employment again and commenced working at Y Company for $120,000 per annum.
In 2015, the husband commenced receiving payments from the Armani Trust of approximately $30,000 per quarter. The wife conceded that the payments received by the husband from the Armani Trust had a “significant impact” on their financial circumstances and their “lifestyle improved significantly”.
X was born in 2015. The wife did not return to full-time employment following her birth.
In 2016, the property at Suburb S was sold for $1,800,000. The net proceeds of sale were retained by the husband’s parents and the associated “entities”.
In 2016, the husband acquired the one-half share of his sister, Ms N, in Suburb E for $2,000,000. Ms N had lived in that property for 10 years. The remaining half-share of Suburb E was retained by B Pty Ltd. The husband’s acquisition of the one-half share of Suburb E was funded by way of a loan obtained from the husband’s late father in the sum of $2,000,000. The husband and his father entered a Deed of Acknowledgement of Debt dated 29 July 2016. It provided that the husband’s late father, identified as “the lender”, would advance “the principal sum” of $2,095,510 to the husband, identified as “the borrower”. “The property” was identified as Suburb E. Clause 2 of the Deed provides as follows:
(a)The Lender hereby lends the Principal Sum to the Borrower the receipt of which is hereby acknowledged by the Borrower.
(b)The Borrower will not be obliged to repay the Principal Sum to the Lender until such time that the Borrower has sold his right, title and interest in the Property.
(c)In the event the Property is sold, the Borrower must pay to the Lender an amount equivalent to 50% of the price that the Property is sold for (net of amounts paid for agent commission and marketing costs incurred in selling the Property).
(d)The rate of interest payable on the principal sum or so much thereof as for the duration of the loan shall be 0% per annum.
The current value of Suburb E will crystalise upon its sale.
On 4 October 2016:
(a)The husband’s late father made his last will;
(b)A Governance Deed was entered into between B Pty Ltd and the husband’s late father; and
(c)A Deed of Variation was made varying the Armani Trust Deed.
The Will of the husband’s late father includes:
3. I MAKE the following appointments:
…
3.5 I APPOINT the following to be the trustees of the respective Testamentary Trusts:
3.5.4My son [Mr Armani] to be the trustee of the [Armani Will Trust]
…
4. I MAKE the following gifts:
4.1I GIVE the cash sums of $1,000 to the trustees of each of the following trusts to be held on the trusts of those respective trusts:
…
4.1.4 the [Armani Will Trust].
…
4.7Subject to Clause 4.8, I GIVE to the trustee of the [Armani Trust] all my right title and interest as lender under the loan by me to my son [Mr Armani].
…
4.8.4For the gifts in Clause 4.7, if the True Up Equalisation Amount for the [Armani Trust] is a positive amount THEN the trustee of the [Armani Trust] mu.st pay, and must execute documents in the form contained in the Second Schedule to this Will binding itself to pay, the True Up Equalisation Amount to those of the trustees of the [MN Trust], [MK Trust] and the [Armani Trust] who have a negative True Up Equalisation Amount and if more than one then the amount to be paid to the respective […] Trusts shall be the True Up Equalisation Amount multiplied by the Credit Percentage for that respective […] Trust
…
4.12Subject to Clause 4.13, I GIVE all my interest in any shares held by me in any private company or any publicly listed company (other than shares in [Armani Pty Ltd]) to the trustees of the following trusts and charity in the proportions opposite their name:
…
4.12.4 the [Armani Trust] - 22.5%;
…
4.13I GIVE all my interest in all of my shares in [Armani Pty Ltd] to the trustees of the following trusts in equal proportions:
…
4.13.4 the [Armani Trust];
…
4.16I GIVE the balance of my estate to the trustees of the following trusts and charity in the proportions opposite their name as tenants in common:
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4.16.4 the [Armani Trust] - 22.5%;
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11. EXCLUSION OF BENEFICIARIES
…
11.3Any Beneficiary shall cease to be a Beneficiary of the Trust upon the happening of any of the following events:
11.3.1 That Beneficiary making any application to any Court for orders or relief in respect of the Trust Fund or the administration of it or the rights of that Beneficiary.
11.3.2 That Beneficiary giving notice to the Trustee of his intention to take the actions described in this clause.
11.3.3 Any person making any application to any Court relating to that Beneficiary’s rights in respect of the Trust Fund or in respect of the administration of the Trust Fund.
(As per the original)
The husband’s late father and his mother were the shareholders of the U Pty Ltd. Pursuant to cl 4.12 of the Will, the husband’s late father’s shareholding in U Pty Ltd passes to the trustees of five trusts, one of which was the Armani Trust, which is to receive a 22.5 per cent share.
It is relatively uncontroversial that the current value of the Armani Trust is currently in the range of just under $5 million, represented by funds advanced by way of the Loan Agreement dated 6 February 2013 with U Pty Ltd.
It appeared absent controversy at the first and second tranches of the hearing that the Armani Trust will receive property from the Estate in the range of not less than $120 million. This was put into issue by the husband and the second to fourth respondents at the third tranche of the hearing on 28 November 2023. The wife during the third tranche of the hearing maintained her assertion sourced from a letter dated 3 August 2023. An extract of the letter was contained in the wife’s Case Outline, stating that the Armani Trust is to inherit some $122 million, representing 22.5 per cent of the Estate, equating to approximately $542 million. The source of this value was from documents that the wife had taken photos of in June 2022 after a meeting between the husband and his family annexed to the affidavit filed in support of her Initiating Application. The husband said he was unsure on 28 November 2023 as to what the Armani Trust will receive pursuant to the Will. When pressed, he said it may be in the range of $30 million. The husband’s mother, the director of Armani Pty Ltd and B Pty Ltd, and being imminently placed to make such estimate, suggested on 23 November 2023 that the range of $30 million could “flow” to the Armani Trust from the Estate.
In late 2016, a Deed Poll Appointing Successor Principals was executed by the husband, appointing “New Successor Principals”, being “[a]ll of the children of the Successor Principal”, on certain events occurring, and that the New Successor Principals exercise their powers jointly.
In late 2016, the parties received $10,000 from the husband’s parents to undertake landscaping at Suburb E.
The wife says that during the period from 2009 until 2019, she was solely responsible for managing the joint finances of her and the husband and that in 2019, the husband took over management of their finances. The wife gave evidence that throughout their marriage, she and the husband had utilised the funds in the husband’s account to pay for their weekly expenses including groceries, cleaning and washing services, utilities, petrol, car registrations, private health insurance, car insurances and housing expenses including strata, water, council, and lift maintenance. She says that they utilised her income to meet expenses for X, including birthday and Christmas gifts, her personal expenses and other incidental expenses that arose.
The husband ceased working at Y Company in 2019. The distributions he received from the Armani Trust increased to $60,000 per quarter. The wife said that this significant increase “once again had a significant improvement” on her and the husband’s finances and lifestyle.
Distributions were made to the wife from the Armani Trust. The tax return of the Armani Trust for the 2021 financial year records income of $398,248 distributed, consisting of $213,248 to the husband and $180,000 to the wife. It is the wife’s case that all funds were paid into the husband’s account.
The husband commenced paying into the wife’s account $5,000 per month, then $10,000, and then increasing to $15,000 per month at the time of their separation. The wife said that these transferred funds were for her own use and that she and the husband continued to use the funds in the husband’s bank account to meet all of their living expenses and expenses associated with Suburb E.
In June 2020, the husband received $500,000 into his bank account. The wife asserts this was by way of a distribution from the Armani Trust. The husband asserts this was a gift from his mother. The husband deposes that these funds were spent on “lifestyle expenditure and financial assistance to the [wife]’s family’s business ventures”. The wife provides greater particularity in her affidavit as to how these funds were utilised.
In June 2021, the husband received another $500,000. There is a similar dispute as to the source and utilisation of these funds as to the $500,000 received in June 2020. At the time of receipt, the husband invested $40,000 into L Pty Ltd as trustee for the C Trust. The husband and the wife jointly hold one of three ordinary shares in L Pty Ltd, with the other shareholders being the wife’s parents. This investment was part of the deposit applied by the C Trust on entry of a contract to acquire a three-bedroom apartment purchased off-the-plan in Suburb Z. The wife’s parents contributed $120,000 to the C Trust. Settlement is due to take place in early 2024.
In late 2021, L Pty Ltd as trustee for the C Trust purchased an apartment at AA Street, City BB. At that time, the wife borrowed $40,000 in her sole name from ANZ Bank by way of personal loan which was applied to the C Trust and used to assist in the purchase. Agapetos Pty Ltd rented the City BB property. During the period of late 2021 to early 2022, Agapetos Pty Ltd’s income reduced significantly. It was unable to meet the terms of the lease. The mortgage repayments due by the C Trust fell into arrears. The wife has obligations as a guarantor of that loan. In late 2021, the husband commenced to loan money to Agapetos Pty Ltd to assist in its financial circumstances.
In December 2021, the husband received another $500,000. There is a similar dispute as to the source and utilisation of these funds as to the $500,000 received in June 2020 and June 2021. In her affidavit filed 21 April 2023, the wife estimates that at separation approximately $180,000 of these funds had been utilised and she is unsure as to the use of the balance of this tranche of funds. The wife gives evidence that at around this time, the husband told her that he would be receiving the “same amount biannually moving forward” and that he has continued to receive funds from the Armani Trust since separation, as well as gifts from the husband’s mother. That said, he has not received a further $500,000.
In early 2022, the wife and her family attempted to sell Agapetos Pty Ltd. The husband agreed to assist financially in ensuring the sale occurred by way of a further investment in Agapetos Pty Ltd. The wife deposes as having been approached regarding the sale, but any offer did not proceed. The wife also deposes as wishing to have “tidied up” Agapetos Pty Ltd for sale or “winding it down” during the time she undergoes her postgraduate studies so that when she finishes this course, she can obtain suitable employment that can enable her to support herself and X.
The husband is currently owed by way of loan $118,979 by Agapetos Pty Ltd (Exhibit 13), reflected and agreed in the joint balance sheet. The husband asserted in his Financial Statement filed 18 October 2023 that he is owed by way of loan $40,000 by L Pty Ltd.
The husband and the wife have enjoyed the largess of the husband’s parents over the period of their relationship.
Events and financial circumstances since separation
Around separation, the husband vacated Suburb E and moved into an apartment owned by his parents in Suburb CC. In mid-2022, he moved into an apartment at DD Street, Suburb EE. From mid-2023, he commenced residing at a property owned by his mother. He says that he has been trying to locate suitable replacement accommodation since that time and has in turn been approved for a property located at FF Street, Suburb GG, in which he would be paying rent in the sum of $2,500 per week.
The husband contends that he is on “a journey of recovery” from his health challenges. He says he does not anticipate being able to be gainfully employed for the foreseeable future.
In addition to the husband either paying or sourcing payment of the outgoings for Suburb E, he has also historically paid post-separation the wife’s mobile phone, vehicle service and CTP, and pet carer, totalling $107 per week. Dispute exists as to which, if any, of these expenses are continuing to be paid.
The wife’s costs notice (Exhibit 6) records her costs paid as $176,735 sourced from personal borrowings (being from HH Pty Ltd, Ms JJ and KK Pty Ltd). She had unpaid fees rendered or for work not yet billed in the range of $89,762, including the costs of a single day interim hearing. That single day interim hearing has now occupied three hearing days. Her current outstanding costs are now very likely more than $100,000. She estimates future costs of not less than $40,000 to conclude a mediation and $810,000 to complete a final hearing. There was no evidence that the wife will be unable to obtain further loan funds.
It was agreed during the hearing that wife’s cost estimate to conclude the proposed mediation were not unreasonable.
The husband’s costs notice (Exhibit 7) records his rendered costs as of 20 October 2023 as $218,726, of which $146,544 is paid and $34,562 unpaid. The sources of his funds are recorded as $6,090 that he has paid and the balance by way of gifts from his mother. His estimate is approximately a further $273,000 in future costs and disbursements. There is no evidence to suggest his mother will not continue to meet his legal fees going forward.
The disclosure issues, including some of the relief heard on 28 November 2023
It is apparent from submissions that different interpretations are applied by these litigants to the obligations of disclosure as codified in Ch 6 of the Rules.
The wife in her Case Outline document filed 24 August 2023 (Exhibit 3) identified the challenges she has encountered in achieving disclosure. The wife’s case, at a minimum, is that the Armani Trust is a financial resource of the husband, yet no probate has been applied nor valuation of the Estate been undertaken, which causes this financial resource to not crystalise. The wife submits that the “size and significance of the financial resource compels valuation” and cited a recent decision of Curran J in Chang & Song [2023] FedCFamC1F 387. However, because the second to fourth respondents dispute the relevance of the husband’s interest in the Armani Trust and what it is to inherit upon application of probate of the Estate, a position is taken by the wife that disclosure has been challenging to receive. These challenges are echoed in the relief sought by the wife on 28 November in Exhibit 15.
The wife is critical as to the failure of the executors of the Will to apply for probate. Extensive correspondence has passed between the legal representatives of the husband and the wife as to what the wife contends is the executors’ “inaction”.
The wife submitted in the circumstances that the disclosure sought should also be ordered in accordance with r 6.06(2) of the Rules.
The second to fourth respondents initially contended that the wife sought disclosure as to entities not yet joined and that the orders of disclosure sought are “well beyond the bounds of relevance or potential relevance”. Yet, they will facilitate some disclosure to be provided. The second to fourth respondents then go on to submit that some materials sought to be produced by way of disclosure are sensitive. No orders were sought as to limit the use of these documents or that an undertaking be provide by the wife’s legal representatives. The second to fourth respondents then examine rr 6.01 and 6.06 of the Rules and highlight that relevance is the “touchstone” and is to be contrasted to the scope of disclosure in common law litigation, citing Masoud & Masoud (2016) FLC 93-689. The second to fourth respondents then specifically address each category of disclosure sought by the wife.
Notwithstanding the second to fourth respondents relying on an affidavit of Mr K filed 27 November 2023 identifying the fact of completed specific valuations of some of the J Group entities and annexing the invoices for those valuations, the request of the wife for disclosure of those same valuations has not occurred. The deponent swore the affidavit both in his capacity as a director of Armani Pty Ltd and as a named executor of the Will.
That affidavit also gave evidence by way of a newspaper article that the J Group had acquired another enterprise for over $150 million in 2023. No particulars of that acquisition, or how it was funded, has been disclosed. The affidavit recorded the deponent’s reasoning as to why he and his sister Ms N, as the named executors in the Will, are yet to apply for a grant of probate of the Estate, citing unwanted media attention, that is said to generate hurtful criticism, and not wishing the value of the J Group to be publicly known due to commercial sensitivity. It was not explained how this media attention is to later be avoided in the process of applying for a grant of probate. The deponent also broadly asserted, absent particularity, that the Estate is “extremely complex”. He says that he is under great pressure in running the J Group.
Importantly, Mr K has not given evidence as to what property he understands comprises the Estate, whether it will be valued for probate purposes, when the application for probate of the Estate is likely to be made, and if so, when it is anticipated that the Estate will be administered and distributed. Disclosure of documents relevant to this matter and information pertaining to it are in his province.
Each party in this proceeding has a duty to the Court and to each other party “to give full and frank disclosure of all information relevant to the proceeding in a timely manner”. The duty of disclosure is absolute and continuing throughout the proceeding. It is critical to the function of the jurisdiction and fundamental to achieving justice and equity. The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant. It is also significant that the obligation is as to “information” and is not simply one that attaches to the production of documents. Importantly in this case, it extends to all relevant and material facts.
So that it is clear, the test as to relevance pursuant to r 6.01 of the Rules is whether the document or information, if accepted, could, directly or indirectly, rationally affect the assessment of the probability of a fact in issue in the proceeding. This is not an assessment as to weight. The relevance of a particular document or piece of information is not to be considered in isolation from other documents or information. The cumulative value of pieces of information or documents, when considered together, including giving context or explaining the nature of relationships between them, falls within the scope of the rule.
Putting it another way, the threshold of relevance as to a particular document or piece of information to an issue in the proceeding is low. If one party seeks, pursuant to the rule, what cannot be said to be irrelevant to a fact or issue in the proceeding, it ought to be disclosed in a timely manner.
It is not a matter for the recipient party of the request to, in effect, make a summary determination of relevance. An absence of relevance can only be sustained (and hence the document or information requested not being disclosed) if there is no reasonable likelihood of establishing the fact or proposition to be made in the proceeding grounded from or supported by the document or information requested as an integer in the ultimate disputed fact or proposition in the proceeding.
The failure to comply with the duty of disclosure is codified in r 6.17, and is identified in longstanding Full Court authority, including Weir and Weir (1993) FLC 92-338, where the Full Court said at 79,593:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
It is not controversial, for the reasons recorded later herein, that the husband has, consistent with that identified by the High Court in Kennon v Spry (2008) 238 CLR 366 (“Kennon v Spry”) at 394, “a right to due consideration and to due administration of the trust but it is difficult to value those rights when the beneficiary has no present entitlement and may never have any entitlement to any part of the income or capital of the trust”. Absent controversy, the Armani Trust is a valuable financial resource of the husband. As to this resource, the trustee’s case is that the Armani Trust inherits the interest in Suburb E loan under the husband’s late father’s will. The relevance of the categories of documents and the information sought by the wife go to this issue and the value of the bequest to be received by the Armani Trust from the Estate. The scope of disclosure may reduce if the probate application was made and/or the Estate was in the process of distribution. Neither is apparent on the horizon.
It is not accepted that the documents and information as sought by the wife as to the J Group and by way of other specified disclosure requests as identified in Exhibit 15 have no relevance to the interests of the husband in the Armani Trust. The Will, absent at least the application for probate being disclosed, leaves the disclosure sought as the appropriate forensic avenue to be pursued to commence to evaluate the anticipated value of the distribution from the Estate to the Armani Trust and as to other factual issues relevant to the husband’s interests in the Armani Trust. She has sought these documents and information by way of disclosure for some time. Her efforts have been stonewalled. I accept the submission of the wife that this non-disclosure has kept her “in the dark”.
By way of Exhibit 15, the wife sought orders that the husband and Armani Pty Ltd provide a list of documents by way of disclosure pursuant to the Rules. Armani Pty Ltd by way of Exhibit 17 agreed to provide such a list and sought that the wife provide a list. The wife during the hearing agreed to provide such a list. The husband opposed providing a list of documents and sought that the parties “exchange financial disclosure that has not been disclosed to date”.
For reasons as identified during the hearing on 28 November 2023, this litigation is now assuming a rogue character. That circumstance, coupled with the failure of the husband and the second to fourth respondents to file undertakings as to disclosure in accordance with r 6.02 at any time during the litigation up to the conclusion of the third day of the interim hearing, necessitates that orders will be made as to each party, being the husband, the wife, the second respondent Ms Armani, the third respondent Armani Pty Ltd, and the fourth respondent B Pty Ltd, to:
(a)File and serve by 2 February 2024 an affidavit providing a verified list of documents identifying:
(i)The documents to which the duty of disclosure applies;
(ii)The documents (if any) no longer in the disclosing party’s possession or control to which the duty would otherwise apply (with a brief statement about the circumstances in which the documents left the party’s possession or control); and
(iii)The documents (if any) for which privilege from production is claimed; and
(b)File and serve by 9 February 2024 an Undertaking as to Disclosure in compliance with r 6.02 of the Rules.
The wife additionally sought in Exhibit 15 that the husband and Armani Pty Ltd provide by way of disclosure additional specified documents. The husband opposed providing those documents. Armani Pty Ltd in Exhibit 17 agreed to disclose some specified documents, but not precisely those mirroring the category and period as sought by the wife. At the third tranche of the interim hearing on 28 November 2023 by way of exchange, greater consensus was achieved as to the identity, category, and periods of such items. The husband continued to oppose any specified order as to disclosure. Orders will be made broadly in terms of that reflecting the consensus achieved as between the wife and Armani Pty Ltd with some further variations, extending the time for that process to occur having regard to the Christmas break period. In the event there are any further issues encountered after the filing of verified lists of documents and disclosure undertakings, the parties have capacity to file an Application in a Proceeding seeking further orders by way of disclosure, or to seek leave to issue subpoena, or to seek relief pursuant to r 6.17 of the Rules, as they are advised.
THE LAW AS TO LITIGATION FUNDING RELIEF SOUGHT
As to her relief that the husband be ordered to pay $800,000 or in the alternative $400,000 for litigation funding, the wife relied on an exercise of power by way of s 79 and s 80(1)(h) of the Act, and in the alternative, relied on the costs power pursuant to s 117 of the Act. She relied on s 117 of the Act for litigation funding by way of the “dollar-for-dollar” order. There is a long line of authority that provides power to the Court to make a litigation funding order, including on a dollar-for-dollar basis, pursuant to s 117 of the Act (Charisteas & Charisteas (2022) FLC 94-109 at [75]–[77]).
As to the exercise of an interim or partial property power pursuant to s 79 and s 80(1)(h), the Full Court in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) identified the principles effectible to interim or partial property orders, and set out effectively two steps being:
(a)First, establishing that s 80(1)(h) is enlivened. The test is not confined to “compelling circumstances”. Subject to the interests of justice, the usual approach in respect of s 79 is a once and for all order (see Swift & Swift [2020] FamCA 991 at [16]). That said, more is required than the mere fact that upon a final hearing the party seeking the order would receive the property sought (Marchant & Marchant (2012) FLC 93-520). The “overarching considering” as to the appropriateness of the exercise of an interim property power by the Court must be answered in the affirmative in the interests of justice; and
(b)Second, the “consideration of the factors which are relevant to the exercise of power under s 79” (at [115]). Given it is an imprecise exercise in the making of these orders, any discretion ought be:
(i)Conservative so as to ensure the final property outcome is not compromised;
(ii)The remaining property is sufficient to meet the legitimate expectation of both parties at the final hearing; and
(iii)The interim or partial order is capable of being reversed or adjusted if it is subsequently considered necessary to do so.
The Full Court in Medlow & Medlow (2016) FLC 93-692 reinforced that a cautious approach should be adopted by primary judges in exercising an interim property power that have a real prospect of depleting the property of the parties. That said, as was explained by the Full Court in Strahan, s 80(1)(h) is a wide-enabling provision for interim property decisions.
Before an order as to costs can be made, the Court must be satisfied that the order is, in the circumstances, just (s 117(2) of the Act). Until that point, there is no power to make an order departing from the general rule that each party pays their own costs (s 117(1)). Once enlivened, the discretion to make an order as to costs is governed by the considerations contained in s 117(2A) of the Act. There is no authority that contends that more than one of the factors in s 117(2A) need be present. Indeed, any one factor may be determinative.
In Salvage & Fosse (2020) FLC 93-966, the Full Court identified that litigation funding orders have a long history and are made to alleviate the obvious unfairness of a party with control of the assets being able to marshal them to pay lawyers, leaving the other party to attempt to pursue the proceedings without being able to resort to property that might subsequently be transferred to them. That said, each application must be looked at according to its own particular facts and circumstances.
The principles relevant to the making of a litigation funding order were identified by the Full Court in Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”), regardless of “whether the matter was determined as an interim property settlement order under s 80(1)(h), or as an interim costs (or security for costs) order under s 117(2), or indeed even a maintenance order” (at 83,217), being:
(a)A position of relative strength on the part of the respondent;
(b)A capacity on the part of the respondent to meet his or her own legal costs; and
(c)An inability on the part of the applicant to meet his or her legal costs.
The Full Court in Zschokke also identified that it may well be necessary for the Court to have regard to whether, in the circumstances of the particular case, it will be possible to take into account in the final proceedings any sum that might be payable under an order grounded from s 117 of the Act (at 83,217).
In Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (“Paris King Investments”), Brereton J said at [30]–[32] that in addition to the above three matters, the following are relevant for the purposes of a litigation funding order:
·An applicant should have “at least an arguable case for substantive relief which deserves to be heard”.
·There should be evidence of the applicant’s likely costs of the litigation.
·It is not essential that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
·An order may make provision for litigation expenses at a rate that appears reasonable in all the circumstances.
·An order can be for costs already incurred as well as for future costs and such matters as well as the question of whether the applicant’s lawyers will continue to act in the absence of a litigation costs order may be relevant to the discretion to make an order and the quantum thereof.
·Any such order should be framed to protect the parties from risk of injustice which could be done by requiring the funds to be administered by the applicant’s solicitors and applied only to meet the expenses referred to in the order.
Additionally, although the wife is the applicant in the substantive proceeding, given the position of the second to fourth respondent with respect to the unsigned Deed of Acknowledgement of Debt for Suburb G, she will be required to respond to the assertions of the second to fourth respondents that is binding on the wife and the husband, thereby affecting the assets of the matrimonial cause. I make no findings in relation to this document. It is a matter for a final hearing.
I accept that the wife’s costs to date and into the future are likely to be substantially greater than that of the husband, which is in part the consequence of the failure on the part of the husband and other respondents to provide disclosure in accordance with the Rules, and upon inspection of the discovery, may need further work before the wife may be in a position to, for example, progress to mediation.
While the conclusion in relation to the uncertainty of the amount of the applicant’s eventual property settlement may be fatal to an application under s 80(1)(h), it is not necessarily so to an application under s 117(2); instead, it is just one of the matters to be balanced in the exercise of the discretion under the latter sub-section. On the husband’s case, at least 50 per cent of Suburb E less revenue impost on transfer from B Pty Ltd is available for adjustment as between he and the wife, together with his credit loan accounts payable by the C Trust and Agapetos Pty Ltd. It is possible take into account in the final proceedings sums that might be payable by way of a s 117 order in favour of the wife. They need not be capable of claw back.
The wife also submitted, and I accept, for the purposes of this determination that it is not “an essential pre-condition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
I accept the wife’s submission that s 117 orders are not dependent upon the determination of a precise source; the existence of the financial resource can be sufficient.
I am satisfied on the evidence that the husband currently has two financial resources available to him to call upon to fund a litigation funding order as identified by the High Court in Hall v Hall (2016) 257 CLR 490 (“Hall”) at 506–507, where the Court said:
The reference to “financial resources” in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one on which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.
(Footnotes omitted)
The first financial resource is the Armani Trust. At all times, on his own case, the Armani Trust has only distributed income to he and the wife during the marriage and only to him post-separation.
There is no evidence from the Armani Trust, noting that it has filed and read an affidavit of husband’s mother and a number of affidavits of his brother, that it would not continue to make these income distributions.
There is no evidence that should the husband call upon the Armani Trust, that such a request would be refused. Rather, to use the language of Hall, the husband “is capable of drawing” from the Armani Trust, and there is a “reasonable expectation” of the exercise of discretion by the trustee of the Armani Trust. I accept that it is a financial resource available to the husband. Should that call be made by the husband, the trustee of the Armani Trust has the capacity to call upon the loan to be repaid on demand, sourcing close to $5,000,000 that could be distributed to the husband, the trustee being aware that the Armani Trust will, in the future receive, on their estimation, $30 million from the Estate.
The husband conceded that he has made no request or application by way of his solicitors to the trustee of the Armani Trust, in which he has an interest of the nature and category as identified in Kennon v Spry, to progress any enquiry as to the reason for delay in the administration of the Estate. There is no evidence as to him making enquiry by way of his solicitors as to what work has been undertaken by his siblings as the named executors of the Will in preparing the application for probate of the Estate, or even as to the items of property that make up the Estate. Implicitly, he has no concerns as to the Armani Trust not receiving its bequeathed portion of the Estate.
By further inference, the husband’s brother, Mr K, as an officer of Armani Pty Ltd and named executor of the Will, does not envisage any prejudice to the Armani Trust in delaying any application for probate or in making the distribution of the Armani Trust’s share of the Estate to Armani Pty Ltd, while being expressly aware of the wife’s contentions as to the Armani Trust being a financial resource of the husband of the character identified by the High Court in Hall.
The second financial resource is that of the husband’s mother. The husband has received, on his evidence, three tranches of $500,000 in the last three years from this source (or his parents) coupled with continued current financial assistance, particularly as to payment of his legal fees, all by way of gifts, absent any suggestion of limitation. Similarly, there was no evidence from either the husband or his mother that any request from the husband for future additional financial assistance would not be met by her.
There is an unfairness in relation to the current and future financial position between that of the husband and that of the wife. While the husband has the two financial resources at his disposal, the wife works limited hours, having the primary care of X. The financial resources of the husband and the wife are disproportionately in favour of the husband. This coupled with the wife’s claim being confronted by the husband and three other parties broadly aligned with the husband creates a compounding unfairness against the wife. The wife raises this concern in her affidavit filed 14 June 2023, saying that the husband and his family intend to “squeeze” her to accept their offer.
I accept there is a position of relative strength on the part of the husband. His costs will be paid. The wife has no apparent capacity to meet her current due and future legal costs. A necessity is established to achieve a level playing field between the husband and the wife in the litigation.
The dicta of the Full Court in Bing and Bing (2007) FLC 93-318 (“Bing”) at 81,478 is apposite in the circumstances of this case:
23.The duty judge is often in an impossible position in cases of this nature. The very issues that need to be fully investigated namely the extent of the asset pool and the financial resources of the parties cannot be adequately investigation without the provision of appropriate funds. The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot be simply accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue with the litigation. As the Court said in Zschokke …
In Lesley & Lesley [2015] FamCA 894, McClelland J (as his Honour was then known) at [50] referred to Bing, and at [51] having found that the husband took steps to prevent the wife from accessing bank accounts of various entities owned by the parties, of which most of the property of the parties were held by those entities, at [52] made the interim property orders without identification of the source of funds. That circumstance has some application here by way of the husband’s inactivity in progressing the administration of the Estate.
Taking all the above factors into consideration, I am of the view that the circumstances justify the husband paying to the wife a lump sum of $100,000 by way litigation funding pursuant to s 117 of the Act. This will meet the wife’s costs outstanding to date and may provide a modest fund to ensure the proper preparation for, and maximise the value of, the forthcoming mediation. Coupled to this lump sum, looking forward from the time of these reasons, the husband has not been bearing the costs of his own litigation funding nor is there evidence he will do so. The justice of this case requires the landscape of the future litigation playing field to permit the wife to continue pursuing a property adjustment under the Act, particularly in circumstances where there is valid concern she will be “squeezed” into settlement if the litigation funding is not granted. On this basis, the wife sought the dollar-for-dollar order, so that any and all future payments by or on behalf of the husband of any money in payment of accounts rendered by the husband’s solicitors and/or barristers, and/or any money in payment of a request made by the husband’s solicitors to hold funds in trust on behalf of the husband, the husband shall pay or cause to be paid the same sum of money to the trust account of the wife’s solicitors, on behalf of the wife on account of her legal costs and disbursements in these proceedings, whilst ever the wife remains legally represented.
I am satisfied that a consideration of the evidence justifies the making of the litigation funding orders in favour of the wife broadly on the above terms are just.
The orders for litigation funding will be payable to the wife’s lawyers on terms that require the funds to be applied towards her legal costs to ensure against any risk of injustice in application of the funds for any other purpose. No submission was made on behalf of the wife regarding the issue of the frequency of invoices nor any submission regarding the issuing of invoices and the husband’s legal representatives. I will decline to make the orders sought by the wife as contained in 19.4.4 and 19.4.5 of her Further Amended Initiating Application filed 3 August 2023. The orders preceding this relief are sufficient to overcome the David and Goliath situation confronting the wife.
Should the wife require further litigation funding, she can file another Application in a Proceeding. The Court can make more than one order for litigation funding (Lao & Zeng (2021) FLC 93-053 at [41]). The wife also alluded to if her relief for litigation funding against the husband was not achieved or frustrated, she would contemplate an application against the third-party respondents for litigation funding (see, eg, Zhu & Xie [2023] FedCFamC1F 615). I take the point no further.
SPOUSAL MAINTENANCE
As recorded earlier in these reasons, the husband conceded what the High Court in Hall at 496 described as the “gateway” requirement as set out in s 72(1) of the Act for the consideration of a spousal maintenance application pursuant to s 74 of the Act.
Issue exists as to:
(a)The quantum of the periodic amount to be paid. The wife initially sought $15,000 per month. The husband implicitly proposes to continue his current payments of $2,000 per month being a combination of child support and spousal maintenance:
(i)While the husband agrees to pay or cause to be paid on a non-periodic basis the council rates, home instance and strata fees for Suburb E, he will not commit to paying the same outgoings for Suburb G upon the wife’s occupation; and
(ii)The wife additionally seeks that the husband pays on a non-periodic basis the water rates including usage charges, electricity, gas, internet, lift maintenance, and “streaming services […]”.
The evidence as to the wife’s needs was contained in Parts G and N of her Financial Statement, being $4,541 ($6,087 including expenses for X) per week (or $19,678 per month). In oral submissions, she accepted that the loan to the CBA could not be included, and also reduced her contended reasonable weekly periodic expenses on the basis that the husband would continue to pay or secure the payment of rates, strata, and lift maintenance, to be as follows:
Expense Amount Tax Not known Food $207 Household supplies $156 Household repairs $250 Telephone $30 Motor vehicle expenses $75 Fares and parking $40 Clothes $400 Medical $200 Entertainment $227 Holidays $200 Pharmaceutical $5 Cleaning (house/pool) $150 Dry cleaning and washing $100 Gifts $150 Hairdressing and toiletries $70 Other necessary commitments (including club membership) $151 Total $2,411 + tax
As recorded earlier in these reasons, the husband provides a monthly payment to the wife, which has reduced from $15,000 at and post-separation, to currently $2,000. Each of these monthly payments included a payment of an unspecified portion by way of child support.
The husband says that the wife’s spending since separation has not changed. In his affidavit filed 18 October 2023, he deposed that she has:
7.1.Engaged in two (2) trips to [the UK] this year where [the husband] funded the flights for [X] as well as domestic travel to [City BB], Queensland and Adelaide.
7.2.Continued to pay a membership at [a sports club] where I understand the fees for membership as well as costs when [sport] is played exceed $10,000 per year.
7.3.Not paid any rent for her accommodation nor has she met any of the Strata Levies, Land Tax, Council Rates or maintenance on the [Suburb E] Property.
7.4. Made a minimal contribution to the operation of the [Motor Vehicle 1] that [Ms Agapetos] and I share. I have had my license suspended on 2 occasions this year as a result of the fines incurred by [the wife]. This suspension has occurred in circumstances where she has refused to advise me of the fines and they have been unpaid. I met these costs.
In his Case Outline, the husband submits that the following are not reasonable or necessary: rates, unit levies, strata and lift maintenance, house repairs, clothes, medical, entertainment, holidays, cleaning, dry cleaning and washing, gifts, and club membership. As to rates, unit levies, strata and lift maintenance, the husband pays them or sources their payment. An order will be made securing that responsibility.
It was the wife’s evidence, and I accept, that Agapetos Pty Ltd paid her a total sum of $6,704 in various instalments to meet airfares for her and her mother to fly to the United Kingdom as a business expense, as the trip was undertaken for the purposes of undertaking duties for Agapetos Pty Ltd. She further says that she has been lent funds from her parents and sister to meet expenses for groceries, utilities, personal expenses, medical expenses and travel expenses for X and the wife, and bills when the wife has not had funds to meet them.
The husband’s Financial Statement filed 18 October 2023 records that he has a total weekly personal expenditure of $8,926, which provided $1,634 for personal expenditure in Part N, including $380 for “Entertainment / hobbies / Dining”, $25 for “Books / magazines / movies / applications / video games”, and $226 for “Holidays”. It is insincere for the husband to suggest that the wife’s weekly expenditure is unreasonable in circumstances where his own expenditure bears some similarity to that of the wife. I find that in the financial circumstances of these parties, the wife’s expenses as to these categories are reasonable.
However, I will exclude the wife’s expenses of the following:
(a)$250 per week for house repairs: here was no evidence provided and any repairs to be undertaken for Suburb E will be done as part of its sale. The wife will occupy new premises at Suburb G on construction being completed; and
(b)$30 for telephone as the wife’s telephone is subsidised by Agapetos Pty Ltd.
I will also reduce some of the wife’s expenses, being:
(a)Motor vehicle expenses to $25 as nominated as petrol for the wife in her Financial Statement, noting “travel expenses” is a benefit from her employment at Agapetos Pty Ltd;
(b)Clothes to $200 as the amount claimed was excessive;
(c)Entertainment to $100 as “entertainment” is a benefit received from her employment at Agapetos Pty Ltd; and
(d)Cleaning reduced to $60 per week as this is the same amount as claimed by the husband in his Financial Statement filed 18 October 2023.
This reduces her expenses for self-support to $1,664 per week.
Her broad statement of the benefits she receives from Agapetos Pty Ltd are taken into account to avoid doubling up.
The wife’s capacity to meet those weekly periodic expenses from her employment (not including benefits from Agapetos Pty Ltd) as outlined in her Financial Statement filed 21 April 2023 is $673 per week before tax. She receives notionally $461 per week from the $2,000 per month the husband currently pays. She gives evidence that is not put into dispute by the husband that her monthly shortfall of expenses over income has been made up by way of advances by way of loans from her family and other personal borrowings.
It is implicit from the consent orders made on 13 September 2023 that upon the wife vacating Suburb E for its sale and moving into Suburb G, the wife would not be responsible for strata, rates, and lift fees, etcetera. The oral submissions on behalf of the husband were that he “would not give a warranty” for payment of these expenses given they were being paid for by a third party.
The husband contends that the wife has a greater capacity for appropriate gainful employment than she currently exercises. He broadly cites that she was once a working professional and is choosing to do a postgraduate course rather than utilising her current qualifications to obtain a greater earning. Such a contention fails to consider that the wife has not worked full-time since the birth of X and continues to have her primary care. The husband’s priorities during the marriage for the wife to be available to care for X appears to have shifted absent explanation post-separation. The wife tendered a letter from her legal representatives to the husband’s legal representatives dated 12 October 2023 which demonstrates the wife is attempting to secure employment as a professional (Exhibit 11). This reveals the wife is at least attempting to use her current qualifications to increase her income.
I find that the wife encounters a shortfall on a periodic basis of expenses in excess of her income in the range of $991 per week. This figure does not include what the wife will be required to pay as tax. The range of the wife’s shortfall is approximately $4,300 per month.
The husband also contends that he has challenges in exercising a capacity to obtain gainful employment. He did not identify evidence in support of this contention, other than by broad assertion in his affidavit that he has “health issues which currently centre around alcoholism”. The husband submitted that the wife conceded in her affidavit that he has issues with alcohol. No expert evidence was adduced as to whether the husband does have issues regarding alcoholism and that these issues impact on his capacity to obtain gainful employment. He gives no evidence of seeking employment. His last income was in the range of $120,000 per annum until the benefits he received from his parents and the Armani Trust generated a circumstance where he implicitly did not feel he needed money from employment.
Reasonableness is the key to what is a proper payment of interim spousal maintenance.
As to the husband’s capacity to pay, he agreed during submissions that he was receiving approximately just less than $20,000 per month after tax in distributions from the Armani Trust. It is his case that he has no other income to pay spousal maintenance, no other interest, entitlement, rights or powers, other than as a discretionary beneficiary of the Armani Trust to access funds to pay maintenance, or no resources upon which he can call upon to pay maintenance. This contention is put into issue by the wife. The wife:
(a)In her Case Outline, included a table which she says are payments to the husband’s bank account since 2021 that she has uncovered. Included in that table are a multitude of payments ranging from $2,370 to $57,988, some of which are described in the bank statement as “[trusts]”. She says investigations as to whether such payments were distributions from the Armani Trust are ongoing;
(b)Identifies the additional substantial payments to the husband of $500,000 in June 2020, June 2021, and December 2021;
(c)Identifies that in relation to the husband’s legal fees, nearly all has been by way of gifts from his mother, and that she also pays for all outgoings of Suburb E; and
(d)In oral submissions, and as indicated above, there are only broad and unparticularised assertions made by the husband of his “health issues”, which prevent him from obtaining gainful employment, as well as no evidence from the husband seeking said gainful employment, and absent this evidence, the range of the husband’s earning capacity be what he was earning pre-separation of $90,000 to $10,000 per annum.
There are two factors that do affect the husband’s capacity to pay spousal maintenance, the first of which are the payments to be made by way of litigation funding, and the second being the support of X when she is in the husband’s care, which the current arrangements are four nights per week and 40 per cent of school holidays.
There is no evidence in the husband’s case as to what has changed in his financial circumstances to go from paying $15,000 per month to the wife at and around separation, to now $2,000 per month for the support of her and X. His accommodation costs and legal fees are met by his mother.
In all the circumstances, I broadly find that the husband does have capacity to contribute to the wife’s maintenance in the sum of $3,000 per month ($692 per week) in addition to the non‑periodic payments identified earlier, that such contribution to the support of the wife is reasonable and is proper.
The wife sought an order that any spouse maintenance payable by the husband shall be varied by the value of changes in the consumer price index. No submissions were made as to this order. It is refused.
CHILD SUPPORT DEPARTURE
The wife seeks an order for child support departure. X lives with the wife. The wife’s evidence is that X’s reasonable periodic expenses are $1,546 per week. At the hearing, the wife reduced this quantum (by exclusion of utilities, “children’s activities”, “medical, dental and optical”, and “education expenses”) to $1,234 per week. Additional non-periodic expenses include X’s tuition fees at M School and medical expenses. The wife provides the expenses for X, as revised at the hearing to reflect the new figure of $1,234 per week, as follows:
Expense Amount Food $142 Household supplies $75 Motor vehicle expenses $63 Clothes $100 Child minding $150 Entertainment $227 Holidays $185 Pharmaceutical $5 Cleaning (house/pool) $30 Dry cleaning and washing $40 Gifts $130 Hairdressing and toiletries $27 Other necessary commitments $60 Total $1,234
In his written submissions, the husband asserts that the expenditure the wife purports to incur for X is “excessive” and beyond his income. However, a letter sent by the husband to the wife dated 29 July 2022 says that he proposes to “meet” X’s school fees, clothing, recreational, other schooling and sport expenses, entertainment, medical insurance coverage, and other “important expense[s]” that are “reasonable and appropriate”. Notwithstanding, since September 2022, the husband’s mother has been meeting the costs of X’s school fees and extra-curricular activities. Save his broad assertion as to the wife’s evidence as to the items that made up X’s weekly expenses, the husband did not identify which items were unnecessary or excessive, or the foundations for his broad assertion. However, I propose to reduce the following expenses for the reason as the current amount claimed is excessive:
(a)Food to $75 per week;
(b)Household supplies to $25 per week;
(c)Entertainment to $150 per week;
(d)Holidays to $100 per week; and
(e)Gifts to $75 per week.
This reduces the expenses for X to $900 per week.
The husband proposes to continue to meet his liability for child support pursuant to the assessment of the Child Support Agency. He opposes any order which would change that assessment.
Since September 2022, the husband’s mother has met the costs of X’s private school fees and extra-curricular activities. He says that he hopes that she will continue to do this. There is no evidence from the husband that she will not continue to meet those non-periodic educational payments in the future. There was no evidence from his mother, a party to the proceeding, that she will not. The husband’s mother had an opportunity to say so in her affidavit. She did not so say.
Section 116 of the CSAA requires certain factors to be satisfied before the Court can contemplate making a departure order. Both the wife (the carer entitled to child support) and the husband (the liable parent) are party to the proceeding (s 116(1)(b)(i)). I accept the submissions on behalf of the wife that in circumstances of the complexity of the proceeding, particularly having been included in the Major Complex Financial Proceedings List, and the practical nexus of hearing an interim child support departure order and an interim spousal maintenance application at the same time given the discretionary nature of these applications. Such is the complexity that it would be unnecessarily burdensome on the administrative review process and the parties themselves to require the parties to avail themselves to that process rather than enjoining the departure application with the spousal maintenance application. I am satisfied that it is in the interests of both the husband and the wife to consider making a departure order (s 116(1)(b)(ii)). The Federal Circuit and Family Court of Australia (Division 1) is also clearly a court having jurisdiction under Pt 7 of the CSAA (see Muir & Rodelo (No 2) [2023] FedCFamC1F 845 at [290]–[298]).
For matters the Court must be satisfied before making a departure order pursuant to s 117 of the CSAA, in Gyselman and Gyselman (1992) FLC 92-279, the Full Court said at 79,064:
Section 117(1)(b) identifies a clear three-step process:
1. Whether one or more grounds of departure in s 117(2) is established.
If so:
2.Whether it is “just and equitable” within the meaning of s 117(4) to make a particular order.
3.Whether it is “otherwise proper” within the meaning of s 117(5) to make a particular order.
I find that the wife has established a ground for departure by way of s 117(2)(c)(i) (the income, earning capacity, property and financial resources of either parent) in that by way of the current child support assessment, the husband’s income amount of $186,030 compared to that contained in his Financial Statement filed 18 October 2023 of $237,536 after tax and by way of his financial resources identified earlier in these reasons. The wife has little capacity, if any, to contribute to the reasonable expenses of X. She has insufficient income, property, and resources to meet her own reasonable periodic costs of self-support.
Notwithstanding that the wife has established by way of s 117(2)(b)(ii) (the child is being cared for, educated or trained in the matter that was expected by his or her parents) by X attending at M School and the content of the husband’s letter dated 29 July 2022, in circumstances where X’s school fees are paid for by the husband’s mother, that no evidence was given that this will change, no departure order will be made in relation to school fees. If circumstances change and the husband’s mother will not continue to pay for these school fees, then the wife, as she is entitled to, can file an Application in a Proceeding seeking a further departure.
The husband is presently paying or ensuring the payment of X’s private health and any gap payment not covered by Medicare or private health insurance. I am satisfied that it is just and equitable and otherwise proper for an interim non-periodic order to be made securing that payment for the same reasons that grounded the departure by way of s 117(2)(c)(i).
I find the husband’s capacity to contribute $550 per week to X’s periodic expenses. I am satisfied such contribution in all the circumstances is just and equitable and is otherwise proper.
SINGLE EXPERT VALUATION EVIDENCE
The wife sought to appoint single experts to value 15 entities and any others forming “the J Group”, and for the husband to meet the costs of those valuations. The purpose of these orders as to single expert valuation is to ground a finding, or at least be indicative, as to the value of the entities and trusts and other assets that make up the gross value of the Estate, in anticipation of the 22.5 per cent distribution of the Estate to the Armani Trust upon administration of the Estate. The indicative value of the Armani Trust, being the aggregate value of the U Pty Ltd loan and the value of the Estate’s distribution to the Armani Trust, as the property of the husband rather than a financial resource. She correctly identifies that inherent to the determination of whether it is “just and equitable” to adjust property for the purposes of s 79(2) of the Act, the property of the parties must be valued. She further cites the frustration of the disclosure she has sought to date in support of her relief and implicitly the failure of the process foreshadowed on 20 October 2023 at [23(c)] of these reasons.
The husband opposed this course of orders as to this stream of single expert valuation evidence, as did the second to fourth respondents. They did not proffer an alternate pathway to value the anticipated value of the Armani Trust after the Estate is distributed.
I accept the submission on behalf of Armani Pty Ltd that the cost and logistics of such a valuation exercise is likely to be very substantial and will likely need to be repeated or updated later in the proceeding prior to trial.
Although not conceded by the wife in her submissions on 28 November 2023, I am of the view that the completion of disclosure as to documents and information as to the administration and content of the Estate and as to the anticipated value of the Estate, including its current underlying assets, ought to be completed and a mediation conclude prior to consideration of the identification of the assets to be distributed to the Armani Trust and their valuation, as integers of the value of that trust for the purposes of the s 79 proceeding. Again, the overarching purpose of the FCFCOA Act and the Rules directs this conclusion, currently, in the litigation. The wife’s application on this subject matter will, at this time, be refused.
The wife sought a process by order to engage with the husband providing written estimates as to the value of their interests in Agapetos Pty Ltd and the C Trust supported by a brief statement of reasoning grounding their respective positions. If they were unable to agree within a short period of time, they would appoint a single expert to opine as to the valuation of those interests.
The husband initially sought in the first instance that a single expert be appointed, and in the alternative, that the wife’s process to be implemented. During the hearing he amended his position on this dispute to conform with the methodology and sequence as sought by the wife. Orders will be so made.
The wife sought the husband meet the costs of that single expert evidence if progressed. The husband sought that any single expert opinion evidence be shared equally between the parties. Notwithstanding the earlier determinations as to costs, any costs of this specified single expert evidence, at this time and subject to any further application, will be met in the terms prescribed by the Rules, being equally.
CONCLUSION
For the above reasons, I make the orders as set out in the forefront of these Reasons for Judgment.
I certify that the preceding two hundred and eight (208) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 13 December 2023
SCHEDULE OF PARTIES
SYC 2768 of 2023 Respondents
Fourth Respondent:
B PTY LTD
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