Andrews and Andrews and Ors

[2015] FamCA 601

FAMILY COURT OF AUSTRALIA

ANDREWS & ANDREWS AND ORS [2015] FamCA 601

FAMILY LAW – INTERIM PROPERTY – Litigation funding.

APPLICANT: Ms Andrews

FIRST RESPONDENT: Mr Andrews

SECOND RESPONDENT: B Pty Ltd (ABN …)

THIRD RESPONDENT: C Pty Ltd (ACN …)

FILE NUMBER: BRC 6346 of 2013

DATE DELIVERED: 21 July 2015

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 21 July 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Drummond, Ramsden Lawyers

SOLICITOR FOR THE RESPONDENT: Mr Thomas, McMillan Kelly & Thomas

Orders

IT IS ORDERED BY WAY OF INTERIM ORDER THAT

1. Within seven (7) days of the date of this Order, the parties direct Ms Andrews’ solicitors, Ramsden Lawyers, to pay from funds held in their Trust Account on behalf of the Applicant and the First Respondent, a sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) to be paid to the Trust Account of Mr Andrews’ solicitors, McMillan Kelly & Thomas Lawyers, for the purpose of meeting his legal expenses in relation to the matter.

2. Those funds paid to Mr Andrews’ solicitors Trust Account be held in trust by his solicitors and applied for the purpose of meeting his legal expenses in relation to the matter.

3. Mr Andrews is restrained from directing his solicitors to release those funds paid into their Trust Account per to Clause 1, without order of the Court or written agreement as between the parties.

4. In the first instance, Order 1 is made pursuant to s 79 of the Family Law Act 1975 with the question of how the said payment received by Mr Andrews’ solicitors pursuant to this Order will be categorised and dealt with in the final property adjustment order proceedings, to be a matter entirely for the trial Judge.

5. Mr Andrews is, at first instance, responsible for paying the costs associated with obtaining an updated Family Report and/or updated valuations but shall be able to seek that Ms Andrews reimburse him for 50 per cent of the costs of the same.

6. Save as is ordered above, and in relation to any application for costs arising out of the Order made today, the Amended Application in a Case filed 16 July 2015 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Andrews & Andrews and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 6346 of 2013

Ms Andrews

Applicant

And

Mr Andrews

First Respondent

And

B Pty Ltd (ABN …)

Second Respondent

And

C Pty Ltd (ACN …)

Third Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. The Court is asked to deal with an Application in a Case, amended and filed on 16 July 2015, by which Mr Andrews seeks an order for the payment out of $100,000.00 from funds currently held in the trust account of Ms Andrews’ solicitors.  The basis upon which the Application is brought is that Mr Andrews asserts that there is a necessity for him to be able to access those funds for the purpose of meeting legal expenses associated with the proceedings currently before the Court and as they progress towards final determination. 

2. The circumstances of the parties may be very broadly summarised as being that Mr Andrews was born in 1967 and will be 48 years of age this year.  He is engaged in employment as a wholesaler, an occupation undertaken by him through a corporate structure and a business in which Ms Andrews previously worked.  She was born in 1963 and will be 52 years of age this year. 

3. The parties commenced their cohabitation in 2003, married in 2004 and separated on 13 June 2013.  There is one child of their relationship, U, born in 2005, and he will, obviously, be 10 years of age this year. 

4. Previous orders have been made by the Court both after contest and by consent.  In August 2013, Forrest J made a raft of orders included in which, in essence, was a requirement that income received by Mr Andrews from the business be paid into a bank account in his sole name, that he withdraw $510.00 per week for his own use and pay to Ms Andrews $510.00 per week for her use and that any moneys other than those applied to meet mortgage, rates, utilities, tax and the payment of child support paid from the account be paid equally between the parties. 

5. In August 2014, that order was varied to include the requirement that Mr Andrews also cause to be paid from this “income bank account” (as it was characterised) the sum of $650.00 per week to himself and to Ms Andrews for use towards rental and costs of accommodation. 

6. On 16 October 2014, arrangement was made for Ms Andrews to receive $100,000.00 for use towards her legal costs. In August, further payment to the parties of funds for legal expenses in amounts of $100,000.00 to Ms Andrews’ solicitors and $25,000.00 to Mr Andrews’ solicitor’s trust account occurred.

7. In summary, then, it appears that the material before the Court as at today establishes that Ms Andrews has thus far had from joint funds the sum of $189,500.00 for use towards the payment of legal costs associated with the proceeding and a further $100,111.42 by way of interim property order.  Thus, her receipt thus far has been in an amount of about $289,611.00.  Mr Andrews has had access to the sum of $63,284.63, which has been applied towards meeting legal costs. 

8. He seeks in the current application access, as I have said, to a further $100,000.00 to be applied towards meeting the costs estimated to be incurred between now and final hearing, inclusive of a final hearing. 

9. There does not appear, quite properly, to be a dispute between the parties that the Court should entertain the Application and that the circumstances in this particular case are such that it is appropriate that the Court entertain the exercise of power to make an interim order;  such a submission is quite properly made. 

10. The real dispute between the parties may be summarised as follows:  Ms Andrews is concerned that permitting Mr Andrews to access $100,000.00 of the funds currently held in her solicitor’s trust account, which stand in the total amount of $546,067.54, would irreparably prejudice her entitlement to appropriate property adjustment orders - which she asserts will be found in an ultimate determination of orders which would see her receive 70 per cent of the total value of the property of the parties amenable to these proceedings.  She is concerned that if Mr Andrews has access to the funds she will in some way be, as I have said, irreparably prejudiced. 

11. Ms Andrews’ evidence as to the total asserted value of the property of the parties is estimated at this point to be $2,763,251.00 in round terms.  So much is apparent from the schedule of assets, liabilities and financial resources outlined at paragraph 6 of her affidavit filed 16 July 2015.  It is immediately apparent from recourse to that schedule that, save for the value attributed as the net value of the corporate interest (that is, the business which is currently operated by Mr Andrews) the only other real source of funds is the $546,067.00 held in the trust account of her solicitors. 

12. It is clear, therefore, that on any assessment of this case, the only way in which Ms Andrews will be able to receive the funds which are ultimately determined to be a just and equitable result as between the parties is either for Mr Andrews to borrow sufficient funds against the business interest to be able to make that payment to her or for the interest in the business to be sold.  It is currently valued, as a consequence of the appointment of a single expert witness, at $1,779,934. 

13. It seems to me that it is just and equitable and appropriate that Mr Andrews be able to access the funds in the amount sought by him for the purpose of meeting legal expenses.  I arrive at this conclusion because, even if the parties were unable to receive any funds whatsoever for the business (currently valued at just over $1.7 million) those funds remaining in trust after the payment out to Mr Andrews of $100,000.00 would be such that, with the appropriate adjustments to the overall value of the property of the parties then available to them on that assumption, there would be available to Ms Andrews (inclusive of the legal costs amounts and interim property amounts already received by her) funds of $446,067.00  - this would, on that analysis, see her receive no less than 76.65 per cent of the property of the parties. 

14. On the basis of the value of the pool as deposed to by Ms Andrews - at a little over $2.7 million - the payment to Mr Andrews of $100,000.00 from the funds currently held in the trust account of her solicitors, together with the $63,000.00-odd he has already received (and the $61,000.00 asserted by her to be an appropriate add-back of funds he is said to have used via a credit card) would see him receive $224,000.00 or approximately 8.1 per cent of the pool of $2.7 million. 

15. Even on Ms Andrews’ case of a 70/30 division of the value of the property as between the parties, it is immediately apparent that there remains more than sufficient to be able to make any appropriate adjustment at the final determination of the proceedings. 

16. As I have said during the course of discourse with the legal representatives for each of the parties, either funds will be able to be borrowed by Mr Andrews in order to pay to Ms Andrews the appropriate lump sum or appropriate sum by way of instalment payment or the interests of the parties in the business will have to be sold in order to facilitate a just and equitable result. 

17. For those reasons, then, I intend to make orders in terms of paragraph 1 of the orders sought by Ms Andrews, together with an order requiring that those funds paid to Mr Andrews’ solicitor’s trust account be held in trust by his solicitors and applied for the purpose of meeting his legal expenses in relation to the matter. 

18. To facilitate that order, I intend to make a further order restraining Mr Andrews from directing his solicitors to release funds from their trust account to him (being the $100,000.00 that will be paid from Ms Andrews’ solicitor’s trust account to his solicitor’s trust account) without order of the Court or written agreement as between the parties.  In that way, then, it will be clear that the funds received by Mr Andrews will be applied towards meeting his legal expenses associated with this particular proceeding. 

19. Insofar as Mr Andrews has sought that the costs associated with the preparation of an updated Family Report by Ms T (said to be in the amount of $4,950.00) and the costs associated with any valuations that may be required to be jointly obtained in accordance with paragraph 7 of the Order of Registrar Coutts made on 18 June 2015, it appears to me that, having regard to Mr Andrews’ financial position as deposed to by him, he has available to him sufficient funds to meet those expenses at first instance with there to be a reservation to him to seek appropriate reimbursement for 50 per cent of the same, either upon written agreement of the parties or at the final hearing and determination of the matter. 

20. I arrive at that conclusion because it appears, when the expenses he deposes to (including those which provide for the costs of accommodation for both of the parties and their financial support, the payment of health insurance, the loan repayment associated with the factory and the payment of child support for his daughter) are considered, that there is about $1,500.00 per month available to him which could be utilised to meet those expenses associated with the updated Family Report and the costs of any valuations at first instance – expenses that may be incurred before the final determination of the matter. 

21. In that way, albeit in a small manner, the funds which will remain in Ms Andrews’ solicitor’s trust account after payment out of $100,000.00 will be maximised and preserved for further consideration of the Court at either the final determination of the matter or should the parties reach resolution. 

22. I also consider it appropriate that, as the source of power exercised in arriving at the determination that I have arrived at is, I think, more properly pursuant to s 79 of the Act, the payment to Mr Andrews should, for the purpose of this interim proceeding only, be recorded as having been made pursuant to exercise of power under that section. 

23. But I will reserve to the parties, as has been the case in other orders made, the opportunity to argue further in relation to the final characterisation of that payment at the trial. 

24. The order as it issues will reflect these determinations.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 21 July 2015.

Associate:                 

Date:    21 July 2015