Agapetos & Armani

Case [2023] FedCFamC1F 1072

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…

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Agapetos & Armani [2023] FedCFamC1F 1072
Case
[2023] FedCFamC1F 1072
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Ms Agapetos, the applicant, and Mr Armani, the first respondent, were engaged in a complex family law dispute concerning child support, spousal maintenance, litigation funding, and property disclosure. The central issues revolved around the financial resources available to Mr Armani, the adequacy of spousal and child support, and the necessity of litigation funding to ensure a fair trial. Ms Agapetos contended that Mr Armani had significant financial resources, primarily from his mother and the Armani Trust, which should be considered in determining support orders. Mr Armani, while conceding some financial support, opposed the wife's claims for additional spousal maintenance, child support, and litigation funding.

The Court found that Mr Armani had substantial financial resources, including distributions from the Armani Trust and support from his mother. Given the significant financial disparity between the parties, the Court deemed it necessary to order litigation funding to level the playing field. The Court ruled in favour of Ms Agapetos, ordering Mr Armani to provide litigation funding to cover the wife's legal costs, both past and future. Additionally, the Court made orders for periodic and non-periodic child support, as well as spousal maintenance, recognising Mr Armani's capacity to contribute significantly towards these expenses. The Court also mandated comprehensive disclosure of financial documents and assets, ensuring that both parties had access to the necessary information for an informed mediation and trial process.

In summary, the Court granted Ms Agapetos' requests for litigation funding, child support, and spousal maintenance, while denying the request for a departure order regarding school fees. The Court emphasised the importance of equitable financial disclosure and ordered both parties to share the costs of expert valuations for specific assets. The matter was adjourned for further case management, with an expectation that the parties would attempt to reach a mediated settlement.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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.

Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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.