Akana & Akana
[2024] FedCFamC1F 607
•10 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Akana & Akana [2024] FedCFamC1F 607
File number(s): SYC 4515 of 2022 Judgment of: BEHRENS J Date of judgment: 10 September 2024 Catchwords: FAMILY LAW – Property – Costs – Litigation funding – Where the wife seeks that the husband pay her anticipated legal costs pursuant to s 117 of the Family Law Act 1975 (Cth) in a lump sum – Where a “dollar for dollar” costs order entered into by consent has been frustrated – Where the husband controls all of the income of the only substantial asset of the parties – Where the making of the costs order in the amount sought is just – Child Support – Where the wife sought a departure from the administrative assessment under the Child Support (Assessment) Act 1989 (Cth) – Where there are no special circumstances justifying such an order – Interim property – Where the wife seeks an order that the husband pay the ongoing maintenance costs of a vehicle owned by his business, but driven by the wife – Where such an order is just and equitable – Spousal maintenance – Where the husband seeks a variation of a spousal maintenance order – Where no change in circumstances which justifies a variation – Application dismissed Legislation: Child Support (Assessment) Act 1989 (Cth) Pt 7, Div 4, ss 116, 118
Family Law Act 1975 (Cth) ss 72, 75, 79, 83, 117
Tribunals Amalgamation Act 2015 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: COG15 & Child Support Registrar [2016] FamCAFC 272
Gyselman & Gyselman (1992) FLC 92-279
Hall v Hall (2016) 257 CLR 49; [2016] HCA 23
Lao & Zeng (2021) FLC 94-053
Salvage & Fosse (2020) FLC 93-966
Saberton & Saberton [2013] FamCAFC 89
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693
Division: Division 1 First Instance Number of paragraphs: 63 Date of hearing: 12 August 2024 Place: Sydney Counsel for the Applicant: Mr Watkins Solicitor for the Applicant: Manning Lawyers Counsel for the Respondent: Mr Schonell Solicitor for the Respondent: Boyce & Boyce ORDERS
SYC 4515 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR AKANA
Applicant
AND: MS AKANA
Respondent
ORDER MADE BY:
BEHRENS J
DATE OF ORDER:
10 SEPTEMBER 2024
BY CONSENT THE COURT ORDERS, PENDING FURTHER ORDER, THAT:
1.Orders 3 to 8 of Exhibit 1 to the orders dated 19 January 2024 are discharged.
2.The child support payable other than by way of periodic amounts by way of the orders made by consent on 12 August 2024 is in addition to periodic child support as assessed and is not to reduce the child support payable pursuant to any child support assessment.
THE COURT FURTHER ORDERS, PENDING FURTHER ORDER, THAT:
3.Pursuant to s 117 of the Family Law Act 1975 (Cth), the Applicant Husband shall pay to the trust account of the solicitors for the Respondent Wife the following sums to be applied solely in respect of legal costs and disbursements:
(a)On or before 15 October 2024 the sum of $50,000;
(b)On or before 15 January 2025 the sum of $50,000.
4.The Respondent Wife's application for a child support departure order is dismissed.
5.The Applicant Husband's application to vary the spousal maintenance order made 19 January 2024 is dismissed.
6.In the event either party pursues an application for costs, that party is to file and serve an Application in a Proceeding and Affidavit in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
7.The matter remains listed on 23 October 2024 before His Honour Justice Campton for Compliance and Readiness Hearing.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Akana & Akana has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BEHRENS J
SUMMARY
The parties to these proceedings are the applicant, Mr Akana, and the respondent, Ms Akana. To their credit, Mr and Ms Akana have resolved parenting matters in respect of their three children and the outstanding matters are financial only.
Currently before the Court is an Amended Application in a Proceeding ("the Application") brought by Ms Akana seeking the following interim relief:
(a)The discharge of a "dollar for dollar" costs order made by consent on 19 January 2024 ("the January orders");
(b)A costs order by way of a lump sum payment to her of $100,000 pursuant to s 117 of the Family Law Act 1975 (Cth) ("the Act") to be applied wholly in respect of her anticipated legal costs in these proceedings;
(c)A child support departure order fixing the periodic child support amount at $824 a week and a non-periodic child support order that Mr Akana pay school fees and orthodontic expenses for the parties' children, such order not to reduce the periodic child support payable; and
(d)An interim partial property order that she have continued exclusive use of a vehicle owned by Mr Akana's business but used by Ms Akana and that Mr Akana be responsible for the maintenance costs of that vehicle.
Mr Akana, by his third Amended Response to an Application in a Proceeding belatedly filed on 9 August 2024 ("the Response"), consents to the discharge of the "dollar for dollar" order, but otherwise opposes the relief sought by Ms Akana. Further, he seeks a variation of an interim spousal maintenance order provided for in the January orders reducing the sum payable from $2,500 to $800 per week. On 29 July 2024, less than two weeks prior to the filing of the Response, he filed a second Amended Response to an Application in a Proceeding in which he did not seek to amend the spousal maintenance order and sought an order that he pay to Ms Akana the sum of $60,000 in three instalments "to be categorised by the Trial Judge".
At the hearing of the Application and Response, interim orders were made by consent providing for Mr Akana to make the non-periodic child support payments sought by Ms Akana, and for Ms Akana to have continued exclusive use of the vehicle. Subsequently, the parties sought the making of consent orders confirming that the non-periodic child support payments are not to reduce the assessed child support payable, and discharging an injunction on Mr Akana which restrained him from using business funds to pay legal fees other than in accordance with the "dollar for dollar" orders. I will make those orders, and discharge the "dollar for dollar" orders by consent. The other aspects of the Application and Response remain to be determined by me.
For the reasons that follow:
(a)the s 117 order sought by Ms Akana will be made;
(b)Ms Akana's application for a child support departure order will be dismissed; and
(c)Mr Akana's application to vary the spousal maintenance order will be dismissed.
EVIDENCE AND MATERIAL RELIED UPON
On 9 August 2024, which was the Friday before these proceedings were to be heard on the following Monday, Mr Akana filed the Response. Ultimately, after discussions with counsel, Mr Akana was given leave to rely upon the Response, despite its late filing. By consent I also gave both parties leave to rely on the affidavits sought to be relied on in their respective cases, notwithstanding some failure on both sides to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ("the Rules") and directions made in the matter.
At the hearing before me Ms Akana relied upon:
·Her affidavit filed on 1 August 2024 without annexures;
·The affidavit of Mr B filed on 9 August 2024;
·Her Financial Statement filed on 1 August 2024; and
·Her Case Summary Document filed on 11 August 2024.
Mr Akana relied upon:
·His affidavit filed on 8 August 2024 without annexures;
·The affidavit of Mr C filed on 9 August 2024 without annexures;
·His Financial Statement filed on 9 August 2024; and
·His Case Summary Document filed on 9 August 2024.
The Exhibits tendered on behalf of Ms Akana and received into evidence during the proceedings were:
·Pages 66-68 of the annexures to Ms Akana's affidavit filed on 1 August 2024, being the Child Support Assessment (Exhibit W1);
·Pages 199-200 of the annexures to the affidavit of Mr B filed on 9 August 2024, being the terms of the CBA loan agreement dated 24 September 2021 (Exhibit W2);
·The affidavit of Mr C filed on 22 May 2024 (Exhibit W3);
·Husband's Costs Notice filed on 7 August 2024 (Exhibit W4); and
·Wife's Costs Notice filed on 9 August 2024 (Exhibit W5).
The Exhibits tendered on behalf of Mr Akana and received into evidence during the proceedings were:
·Pages 8, 9, 16, 18, 19, 27, 28 of the Exhibits to his affidavit filed 9 August 2024, being pages of the single expert report of D Accountants (Exhibit H1);
·CBA Loan agreement of 2 March 2023 (Exhibit H2); and
·CBA summary of the terms and conditions of the CBA working capital loan (Exhibit H3).
BACKGROUND
The parties commenced cohabitation in about 2007 and married in 2013. Mr Akana is now 49 and Ms Akana is 45. They have three children: X ("X"), who is aged 16, Y ("Y"), who is aged 12, and Z ("Z"), who is aged 9 (together "the children"). Mr and Ms Akana separated in early November 2021 and divorced in 2023.
Mr Akana commenced parenting proceedings under Pt VII of the Act on 30 June 2022 and on 28 July 2022 Ms Akana joined financial proceedings. The parties have been able to resolve the parenting aspect of the proceedings, and final parenting orders were made by consent on 3 May 2024. The broad terms of those parenting orders are that the parents share parental responsibility for the children, they live with Ms Akana and spend time every other weekend and half the school holidays with Mr Akana.
The broad background to the financial dispute is as follows. Ms Akana has not been in the paid workforce since before the birth of X. She has been occupied with the primary care of the children. Previously she was employed in the service industry and earned a modest income. Mr Akana runs a business, E Pty Ltd ("the business"). The business provides certain services to businesses in Sydney. It is uncontroversial that the business made a profit of a little over $740,000 after tax in the 2024 financial year. The business operated throughout the marriage.
The business is the only significant asset of the parties, apart from approximately $300,000 in superannuation. The parties engaged a single expert to value the business in December 2022. The single expert valued the business at $1,931,000 as at October 2022 ("the valuation") but identified that the assets of the business were made up largely of loans to the parties then totalling $1,423,130, which the single expert opined should be included as liabilities payable by the parties on the "Family Law Balance Sheet." Ms Akana gives evidence of her intention to engage a shadow accountant in respect of that evidence. In any case, the valuation is nearly two years' old and counsel for Ms Akana indicated to the Court that it is proposed to update the valuation.
On 27 October 2022, consent orders were made providing for Ms Akana to receive a payment of $70,000 by way of interim property order. In January 2024, Mr Akana and Ms Akana reached a further agreement about interim financial matters, resulting in the making of the January orders by consent. Those orders consisted broadly of:
·An order for interim spousal maintenance pursuant to s 72 of the Act providing for Mr Akana to pay to Ms Akana the sum of $2,500 a week;
·An order pursuant to s 117 of the Act in the form that is colloquially referred to as a "dollar for dollar" order; and
·An interim property order pursuant to s 79 of the Act for Ms Akana to receive the sum of $20,000.
The January orders have been complied with, save that, since they were made, Mr Akana's solicitors have not rendered any invoices to him for their own work. This contrasts with their previous pattern of invoicing Mr Akana regularly. As a consequence, Ms Akana has only received the sum of $11,605 pursuant to the "dollar for dollar" order since it was made - and this related to an invoice issued by counsel who represented Mr Akana in January and an invoice issued by Mr Akana's solicitors prior to the "dollar for dollar" order being made.
It is not in dispute that Ms Akana has no independent source from which to fund her legal fees. Her solicitors have been acting and will continue to act on a deferred basis. Her evidence is that if the parties are unable to resolve the matter and it proceeds to trial, she will have to fund counsel's fees, experts' fees and other disbursements to an estimated amount of $97,257. It is in that context that she has brought the Application.
PRELIMINARY COMMENTS
These are interim proceedings and the orders I am asked to make are interim orders. That has three significant consequences for the decision-making process I must engage in. The first is that the evidence is untested, and I need to proceed cautiously in making any findings of fact. The second is that "the evidence need not be so extensive and the findings not so precise" (Redman and Redman (1987) FLC 91-805 at 76,081 ("Redman")) as would be the case in relation to the making of final orders. The third is that interim orders are "intended to be reconsidered" (Redman at 76,081) as part of the process of making final orders. Relatedly, there will be an opportunity for the terms of the interim orders to be taken into account in any agreement the parties reach about final terms of settlement and by the Court in making final orders.
THE S 117 ISSUE
Both parties seek the discharge of the "dollar for dollar" order in the January orders, and I discharge that order by consent. By consent I also discharge Order 8, which restrains Mr Akana from paying his legal fees from funds held by the business except as provided for in the "dollar for dollar" order.
Ms Akana then seeks a lump sum payment of $100,000 pursuant to s 117 of the Act to be applied wholly in respect of her costs in these proceedings. The first issue I must decide is whether I should make that order.
Legal principles applicable to the s 117 issue
While it is more usual to seek a "litigation funding" order by way of a partial property settlement pursuant to s 79 of the Act, the Court has the power to make an interim order to fund anticipated litigation costs pursuant to s 117 of the Act. In particular, s 117 is a useful source of power where there is no readily identifiable property which can be realised or transferred to raise the funds and/or where the Court may not be satisfied that the ultimate property settlement entitlement (if any) will be large enough to enable the interim payment to be "clawed back" in full as part of the final settlement. Full Court authorities are clear that s 117 can be used to make interim orders for payment of costs "in advance", but have emphasised that the factors which are relevant under the two main sections which provide the source of the power to make litigation funding orders (s 79 and s 117) are quite different - as is the appropriate approach to their application (Lao & Zeng (2021) FLC 94-053 at [40] ("Lao")).
Section 117 provides as follows:
117 Costs
(1)Subject to subsection (2), subsection 102QAB(6) and sections 117AA and 117AC, each party to proceedings under this Act must bear the party’s own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
The correct approach to s 117 has been set out by Ryan J in Lao:
42. …[T]he general rule enunciated by s 117(1) that each party should bear his or her own costs is not paramount to s 117(2) and that the former will yield to the later where there are circumstances that justify an order as to costs (Penfold v Penfold (1980) 144 CLR 311 at 315). As the primary judge said, the question to be answered is whether in all the circumstances the costs order is just [197] (Salvage & Fosse (2020) FLC 93-966 at [14] (“Salvage & Fosse”)). When considering whether it is just to make an order pursuant to s 117(2) the matters contained in s 117(2A) must be addressed to the extent they are relevant and to which the attribution of weight to individual matters is quintessentially discretionary.
Part of the inquiry involves consideration of whether the case raised by the respondent is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [15] ("Strahan")). This is important in part because of the need to be able to have regard to the amount paid pursuant to the interim costs order when making any final order.
Submissions as to the approach to the s 117 issue
So far as the question of the ability to "clawback" the interim funds on a final basis is concerned, counsel for Ms Akana submitted that there is a distinction between what the Court has to be satisfied of when making interim orders pursuant to s 79 and when making interim orders pursuant to s 117. The submission was that, when considering making interim orders pursuant to s 79, the Court needs to be satisfied that "upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party" (Strahan at [139]); whereas when considering making interim orders pursuant to s 117, the Court only needs to be satisfied that there is scope to at least have regard to the amount paid pursuant to the interim costs order - and that the overriding question is whether the making of the order is just.
I was referred to the Full Court decision in Zschokke & Zschokke (1996) FLC 92-693 and to the decision of Ryan J in Lao. I accept that the latter is authority that "[r]eversibility and the ability to take the payment into account in the final hearing are considerations of fluctuating relevance having regard to the source of power under which the payment is sought" (per Ryan J at [48]). It is also authority that lack of "reversibility" is not fatal to the making of an interim order under s 117 (per Ryan J at [51]). Counsel for Ms Akana also drew my attention to the relevance of the "lack of a level playing field" in relation to the ability to fund litigation, and I accept that is a relevant consideration.
Mr Akana's opposition to the making of the interim lump sum costs order is three-fold. First, he says that the business cannot afford to pay it and that the requirement to make the payment will put the business in financial jeopardy. This is the "affordability issue" and relates directly to s 117(2A)(a). Second, he says that making a payment to Ms Akana will simply encourage and enable her to pursue litigation which is "disproportionate" to the likely gain, given the value of the business according to the single expert. This is the "proportionality issue", which is relevant to the overall question of whether the making of a costs order is just and a matter I should consider under s 117(2A)(c) and (g). Thirdly, he says that Ms Akana has already received more from the non-superannuation pool than she would receive on a final determination of the property matter, and that this means I should not make the order sought. This is the "reversibility" issue and is relevant to the question of whether the making of a costs order is just.
The financial circumstances of each of the parties (s 117(2A)(a))
It is without controversy that it is Mr Akana who has the control of the business and therefore all of the income which is available to the parties. Ms Akana relies entirely on spousal maintenance and child support in a context where she has been out of the paid workforce caring for the parties' children for more than 16 years and where her evidence that the family had a very comfortable lifestyle prior to separation is not contested. She has no independent means to fund her legal fees and has only been able to continue to be legally represented to this stage because of the willingness of her solicitors to act on a deferred basis. The litigation "playing field" is far from level.
In relation to the affordability issue, there was competing evidence. Mr Akana relied on the evidence of Mr C by his affidavit filed 9 August 2024. Mr C is employed on a part-time basis as a senior executive of the business. Ms Akana relied on the evidence of an adversarial expert, Mr B, which was ultimately admitted without objection in a context in which some of Mr Akana's material was filed late. Counsel for Ms Akana also tendered a previous affidavit of Mr C, filed 22 May 2024 ("W3") where Mr C gave evidence that the business could afford to pay Ms Akana's costs of approximately $60,000. There was no explanation as to why his evidence had changed between that date and the date when he made his second affidavit relied upon by Mr Akana in the proceedings.
Mr C’s evidence was that the business made a trading profit after tax in the financial year just ended of approximately $740,000. That profit is available to borrow (subject to the rules around Div 7A loans), or to take by way of dividends or drawings and is also available to pay back debt.
Counsel for Ms Akana drew my attention to the inconsistency between that figure, and Mr C’s general evidence in his affidavit relied on by Mr Akana that the business is now in a financially precarious position and may need to go into voluntary liquidation or administration. I find that there is an inconsistency. The figures for after-tax trading profit, about which Mr C gives evidence, are consistent with the financial position of the business significantly improving in 2024 as compared with previous years. The after-tax profit in the 2023 financial year was approximately $248,000 and the after-tax profit in the 2024 financial year was approximately $740,000. Mr Akana receives a wage of $175,000 per annum, plus superannuation plus benefits from the business, but also takes funds and authorises funds to Ms Akana which are accounted for as Div 7 director loans in separate loan accounts for Mr and Ms Akana. It is those funds which have been used to meet the spousal maintenance order and previous payments. Further, the Balance Sheet which is included in Mr C’s 9 August 2024 affidavit shows that current liabilities for the business decreased by approximately $500,000 from the 2023 financial year to the 2024 financial year, and that is inconsistent with the evidence that the financial position of the business is deteriorating.
Mr B opined that the business would likely be in a position to pay each of Mr Akana and Ms Akana the sum of $120,000 – more than is sought by Ms Akana by way of the Application –from 2025 trading profit. His evidence was that if the 2025 trading profit is at least $506,758, the business could pay its outstanding ATO debt and $240,000 in legal fees. He opined that it is likely the after-tax profit will exceed that amount, given the history.
Mr B also gave evidence that a CBA loan facility ("CBA overdraft") is available and could be used to make the payments of legal fees, in the event trading profits were not sufficient. Tendered in Ms Akana's case and marked "W2" was a summary of the terms of the CBA overdraft showing the availability of credit up to $750,000 or 80 per cent of trade debtors. The Balance Sheet in the affidavit of Mr C relied upon by Mr Akana shows Accounts Receivable (trade debtors) as at 30 June 2024 of $701,225. Mr C's evidence is that the balance of the CBA overdraft as at 31 July 2024 was $173,791. His evidence was also that, rather than being able to borrow 80 per cent of the trade debtor balance, "[i]n practice, after facility adjustments and limits, it provides an average 50 [per cent] facility on debtors [sic] balances" (affidavit, para 30). Notwithstanding that trade debtors will necessarily move up and down and that there is significant interest payable on monies borrowed pursuant to the CBA overdraft, I accept that there is available to be borrowed sufficient funds to cover the costs order sought, in the event that there are insufficient funds from trading profit. In effect, this loan facility allows the business to access a proportion of trade debtors, and I am satisfied that it is therefore a financial resource available to Mr Akana.
I am fortified in this conclusion by the concession effectively made by Mr Akana by his second Amended Response that he could afford to keep paying the spousal maintenance he was paying pursuant to the January orders, and pay (albeit in three tranches), the sum of $60,000 to Ms Akana. There was no explanation in the evidence as to why that position was said to have changed between the end of July and 9 August 2024.
Merits of Ms Akana’s case and the reversibility issue
On behalf of Mr Akana, it is said that making an order for Ms Akana to receive funds for her legal expenses will encourage the continuation of a disproportionate approach to this litigation, which the parties' respective Costs Notices reveal has so far cost Mr Akana $265,017.85 (of which $98,488.50 has not been paid) and Ms Akana $220,168 (of which $147,958 remains outstanding). On behalf of Mr Akana, it was said that, if I am to make any order for litigation funding, it should be of the order of $10,000 to enable the parties to attend mediation.
The merits of a party's case go to the question of whether it is just to make a costs order and are therefore relevant to my decision. The submission on behalf of Mr Akana asked me to accept his as yet untested case based on expert evidence from two years ago, to assume an equal division of non-superannuation and superannuation assets, and to find that Ms Akana's claim has been close to being exhausted by the interim payments of $101,605 already made.
There are difficulties with this approach. First, it is difficult to see how Ms Akana would not receive more than 50 per cent of the parties' assets, particularly as this is a small pool. Ms Akana has a strong prima facie case to receive a significant adjustment pursuant to s 75(2) of the Act, at least for her future primary care of the children, but also having regard to the fact that Mr Akana is currently able to operate a business producing a trading profit of about $740,000 a year and Ms Akana has not engaged in paid work for 16 years (save for a brief attempt at a business).
Mr Akana contends for a pool including superannuation of about $700,000 with non‑superannuation assets of about $300,000, not including add-backs. Apart from the percentage issue referred to above, it is an overly simplistic approach to say Ms Akana would receive 50 per cent of that, being $150,000 in cash and approximately $150,000 in superannuation, and that she has already received $100,000 so would only receive a further $50,000. Mr Akana's approach ignores that funds already received may or may not be "added back" and the valuation of the business will inevitably need to be updated.
In any case, even if the pool is as Mr Akana contends, being a pool including superannuation of about $700,000 with non-superannuation assets of about $300,000, I am satisfied that there is sufficient merit in Ms Akana’s claim for a further payment of around $100,000 to be taken into account at any final hearing in a way which does justice. This is likely to be able to be done out of the non-superannuation pool, but Mr Akana also concedes there would be a superannuation split in Ms Akana’s favour in an amount greater than $100,000, so it would be possible to reduce that amount in recognition of the payment of the interim costs order and in a way which does justice between the parties.
Mr Akana's (recent) position that Ms Akana should receive nothing towards her legal costs or, alternatively, $10,000 to enable the parties to attend mediation, would effectively prevent Ms Akana from pursuing her claim which has merit and in circumstances where this small pool is all that is available to meet her needs for capital and where she has no current independent income from which to accumulate further assets. She would not be able to test or even update the evidence upon which Mr Akana's case is predicated and would be left effectively to accept what Mr Akana is prepared to offer or proceed without having the funds properly to prepare and run her case.
Other factors
Pursuant to s 117(2A)(g), I also take account of the fact that Mr Akana, who was legally represented at the time, consented to "dollar for dollar" orders in January of this year, presumably on the basis that he understood them and their effect and that their underlying basis was that he would be invoiced for legal work done for him, and would pay the amount of that invoice to Ms Akana. That has not occurred. It is not putting it too strongly to say that the "dollar for dollar" orders have been frustrated or - as counsel for Ms Akana put it - "stifled". Neither party seeks that they remain in force.
Counsel for Mr Akana also sought that I consider, pursuant to s 117(2A)(c), the conduct of Ms Akana in delaying or failing to take steps to obtain further evidence about the value of the business. I can make no criticism of the conduct of Ms Akana in circumstances where she has not had access to funds to obtain such evidence.
Conclusion on the s 117 issue
Given the matters set out in the previous paragraphs, I am satisfied that there are circumstances that justify me making an interim order for anticipatory legal costs, and that the making of the costs order in the amount of $100,000 as sought is just. I accept the evidence of Ms Akana that that sum is what it is estimated she will incur in further disbursements, including counsel's fees, to the conclusion of any final hearing.
In the course of submissions I asked counsel to address me as to the timing of any payments pursuant to a costs order, noting that Mr Akana had previously proposed by his second Amended Response that he could afford to pay, in addition to the spousal maintenance ordered by way of the January orders, the sum of $60,000 in three tranches, being on 1 October 2024, 1 December 2024 and 1 February 2025. Counsel for Mr Akana indicated that a staggered payment arrangement would assist his client, and counsel for Ms Akana indicated that there was no objection to that approach. I am however concerned to ensure that the matter can progress in a timely manner with a view to it being listed for a final hearing early in 2025 if the parties are not able to reach agreement. I therefore order that the sum of $50,000, which is an estimate of disbursements other than counsel's fees, is payable by 15 October 2024, with the balance of $50,000 payable by 15 January 2025.
THE CHILD SUPPORT ISSUE
This matter was transferred from Division 2 of the Federal Circuit and Family Court of Australia to Division 1 of the Federal Circuit and Family Court of Australia on 22 April 2024. This Court therefore has jurisdiction under the Child Support (Assessment) Act 1989 (Cth) ("the Assessment Act") by virtue of s 39G of the Act. Counsel for Ms Akana confirmed that the Application had been filed on the Child Support Registrar.
By the Application, Ms Akana sought child support departure orders and non-periodic child support orders. Again, to the parties' credit, orders were able to be made by consent on 12 August 2024 for Mr Akana to continue to pay school fees for X, who is a talented performing artist and attends a performing arts school where she is in year 11. Mr Akana also agreed to pay for the children's orthodontic treatment by way of a non-periodic child support order. By consent, these payments are to be in addition to child support as assessed. Accordingly, in relation to child support, the only issue I am required to determine is whether I should make a so-called "departure order" fixing the child support amount payable by Mr Akana for the children to the amount of the current assessment ($824 a week).
The law governing the making of orders for departure from administrative assessment in special circumstances ("departure orders") is governed by Div 4 of Pt 7 of the Assessment Act. As the order is for departure from administrative assessment, there must be an administrative assessment in place. The administrative assessment in this matter provides for Mr Akana to pay to Ms Akana, by way of child support, the amount of $824 per week for the three children. The current administrative assessment is in evidence as exhibit W1. Ms Akana seeks to fix that amount through a departure order. She says frankly that she is concerned to prevent Mr Akana from applying through the administrative system to vary the amount he is required to pay based, for example, on a different (and understated) income figure for him than is used in the current assessment.
The determination of what periodic child support is payable is generally determined by Services Australia pursuant to the administrative scheme established under the Assessment Act. Before a departure order can considered, the Court must be satisfied that the provisions of s 116(1) of the Assessment Act are satisfied (Saberton & Saberton [2013] FamCAFC 89 at [12]). Section 116 of the Assessment Act provides:
Application for order under Division
(1)A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:
(b) both of the following apply:
(i)the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii)the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; or
(c)in the case of a liable parent--the administrative assessment of child support payable by the liable parent for the child is made under subsection 66(1).
(Emphasis added)
Plainly the first criterion is met. I will now consider whether the requirements of s 116(b)(ii) are met.
The Full Court has found that the meaning of "in the special circumstances of the case" requires that "the facts of the case must establish something which is special or out of the ordinary. That is, the intention of the Legislature is that the Court will not interfere with the administrative formula result in the ordinary run of cases" (In the Marriage of Gyselman and Gyselman (1992) FLC 92-279 at 79,065).
In Warwick and Cutler and Anor [2016] FamCA 934 at [59], McClelland J reiterated this point and agreed with Judge Brown in Yewen and Child Support Registrar and Anor [2014] FCCA 2399 to the effect that "court proceedings regarding administrative child support assessments should be the exception rather than the rule" and that "since the enactment of the Tribunals Amalgamation Act 2015 (Cth), this Court no longer has jurisdiction to hear appeals on questions of law in respect to child support strengthens his Honour's analysis".
Counsel for Ms Akana submitted that there is evidence of Mr Akana giving different accounts of his income, and that there is therefore a risk that he will do this in relation to the assessment, resulting in the parties being embroiled in disputes through F Service. It was argued that these constituted "special circumstances." First, I observe that the current child support assessment has been in place since 14 May 2024 and there is no evidence that Mr Akana has sought to change it. Second, the Assessment Act provides for account to be taken of changes in income from time to time and it is a significant step to close that avenue off to Mr Akana, particularly where there is little evidence before me which is relevant to a determination of what the child support payable should be and where the evidence that is available is untested.
I am not satisfied that there are such special circumstances in this case which mean it is in the interests of the liable parent and the carer for me to consider whether a departure order should be made, and I decline to do so.
Even if I was satisfied that I should consider the matter at this stage, the kinds of orders that can be made under Div 4 Pt 7 involve variation of the annual rate of child support or of the matters which are used to calculate the child support payable under the Assessment Act (s 118). The order sought does not do any of these things. Arguably, then, the order sought is not in fact an order which I have the power to make. That is not an issue I need to decide.
THE VEHICLE ISSUE
The Application also sought an interim order in respect of the use of a vehicle which has been driven by Ms Akana and is owned by the business. Ultimately, Mr Akana consented to the making of the order sought and that order was made on 12 August 2024. In relation to the vehicle, therefore, I am now only required to determine whether I should make an order that Mr Akana "pay or cause to be paid all reasonable costs of maintenance of the vehicle." Ms Akana seeks that order and agrees that such payments would be characterised at trial by way of a partial property order. This requires that I be persuaded that it is just and equitable to make an interim property order of the kind sought, and that I undertake a (limited) analysis of the applicable s 79 factors.
Mr Akana gave evidence that he has been paying the registration, service and repairs for the vehicle at a cost of approximately $15,000 per year. Ms Akana gave evidence about her use of the vehicle to transport the children and other children who are part of a "car pool" the considerable distances between the home, X’s school and the train station.
I have regard to the following matters: the contributions of Ms Akana by way of transporting the children, which are relevant contributions to the welfare of the family pursuant to s 79(4)(c) of the Act; the arrangement which has been in place for some years now (relevant to s 79(4)(e) pursuant to s 75(2)(o) of the Act); the fact that Ms Akana does not apparently have income in excess of her and the children's financial needs from which to meet these additional expenses (relevant to s 79(4)(e) pursuant to s 75(2)(b) of the Act); the need for the vehicle to be maintained; and the modest amount involved, which I am satisfied the business has the capacity to pay; and that the relatively modest amount likely involved between now and the final hearing will be able to be "clawed back" from Ms Akana's future entitlement to property adjustment. Having regard to those matters, I am satisfied that the order sought is just and equitable as is required by s 79(2). I make the order as sought by Ms Akana.
THE SPOUSAL MAINTENANCE ISSUE
By his Response, Mr Akana sought that I vary the spousal maintenance order that was made as part of the January orders. He seeks that the amount payable to Ms Akana should reduce from $2,500 to $800 a week. Counsel for Ms Akana agreed that - notwithstanding notice of that application was only provided by the filing of the Response on the Friday before the hearing on Monday - I should deal with that matter to avoid the parties incurring further legal costs associated with another Court date. Accordingly, the final issue that I need to determine is whether to vary the spousal maintenance order as Mr Akana seeks.
The provision which governs the modification of spousal maintenance orders is s 83 of the Act. There is a power to vary the order so as to increase or decrease any amount ordered to be paid (s 83(1)(f)). That power is subject to s 83(2), which provides:
(2)The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:
(a) that, since the order was made or last varied:
(i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii)the circumstances of the person liable to make payments under the order have so changed; or
(iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;
as to justify its so doing;
(b)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba)in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;
(c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.
The only potentially applicable paragraphs are (a)(i) and (ii) - which broadly refer to changes in the circumstances of the payer or payee that justify a variation. In a case where it is sought to discharge a spousal maintenance order, the party in receipt of spousal maintenance must establish that they are unable to support themselves adequately (Hall v Hall (2016) 257 CLR 49; [2016] HCA 23). This is not such a case. An application to decrease the amount of spousal maintenance payable in effect assumes that there is an inability on the part of the payee to support themselves adequately. If I am wrong about this, I am satisfied that, after 16 years out of the paid workforce, with her employment history, and with the primary care of three children, Ms Akana is unable to support herself adequately.
Mr Akana sought to assert that Ms Akana has the capacity to engage in paid work and so, for that reason, the spousal maintenance should be reduced. There was, however, no evidence which went to how the requirements of s 83(2)(a)(i) were met - in other words, which supported an argument that Ms Akana's circumstances had so changed since the making if the January orders as to justify varying the amount payable. No submission was made, but I have considered whether the fact that a child support assessment issued in May 2024 is a sufficient basis to justify reducing the amount of spousal maintenance payable. I have decided that the crystallisation of a liability which was presumably in existence at the time when the January orders were made is not a sufficient basis to justify a variation. Mr Akana has previously been paying X’s school fees and dental expenses for the children, so it cannot be said that there is any change by reason of the making of the consent order in relation to those matters. While Mr C's evidence was that the business revenue in the second half of the 2024 financial year was less than forecast, there was no explanation of why Mr Akana's second Amended Response, filed as recently as 29 July 2024, did not contemplate any variation to the January orders so far as they provided for spousal maintenance. His Financial Statement, filed on 9 August 2024, did not have Part N completed and so I cannot give any weight to Mr Akana's assertion on his Financial Statement that the total of "all other expenditure" in addition to tax, rent, life insurance, loan repayments, spousal maintenance and child support is approximately $2,000 a week. The affordability issues addressed above in relation to the s 117 issue are also relevant here.
For the reasons set out in the preceding paragraph, I am not satisfied that the requirements of s 83(2)(a) are met, and I therefore decline to make the order reducing the amount of spousal maintenance payable sought by Mr Akana.
FUTURE PROGRESS OF THE MATTER
Costs
Both Mr Akana and Ms Akana sought that the other pay their costs of, respectively, making and responding to the Application. However, no submissions were able to be made in relation to that issue before the outcome was known. Any party who, having read these Reasons, seeks that I now make such a costs order in their favour shall file and serve an Application in a Proceeding and an affidavit in accordance with the Rules.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Behrens. Associate:
Dated: 10 September 2024
0
5
4