Armington and Armington & Ors (No. 2)
[2020] FamCA 751
•9 September 2020
FAMILY COURT OF AUSTRALIA
| ARMINGTON & ARMINGTON AND ORS (NO. 2) | [2020] FamCA 751 |
| FAMILY LAW – LITIGATION FUNDING – dollar-for-dollar orders made in the Federal Circuit Court of Australia on 13 May 2019 – case transferred to this court – respondent applying to discharge the dollar-for-dollar order – Johns J refusing that application – respondent applying again to discharge the orders made on 13 May 2019 – application refused. |
| Corporations Act 2001 (Cth) s 500(2) Family Law Act 1975 (Cth) s 117 |
| Armington & Armington (No.2) [2019] FCCA 1232 J. Beames, General Orders of the High Court of Chancery (1815) |
| APPLICANT: | Ms Armington |
| FIRST RESPONDENT: | Mr Armington |
| SECOND RESPONDENT: | Company A Pty Ltd (ACN …) |
| THIRD RESPONDENT: | Company B Pty Ltd (ACN …) |
| FOURTH RESPONDENT: | Company C Pty Ltd (ACN …) |
| |
| |
| SEVENTH RESPONDENT: | Company K2 Pty Ltd (Formerly Company K Pty Ltd) |
| FILE NUMBER: | MLC | 1627 | of | 2016 |
| DATE DELIVERED: | 9 September 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| HEARING DATE: | 19 August 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms S. Mariole |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE FIRST RESPONDENT: | Not applicable |
| SOLICITOR FOR THE FIRST RESPONDENT: | Not applicable |
| COUNSEL FOR THE SECOND RESPONDENT: | Not applicable |
| SOLICITOR FOR THE SECOND RESPONDENT: | Not applicable |
| COUNSEL FOR THE THIRD RESPONDENT: | Not applicable |
| SOLICITOR FOR THE THIRD RESPONDENT: | Not applicable |
| COUNSEL FOR THE FOURTH RESPONDENT: | Not applicable |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Not applicable |
| |
| |
| |
| |
| COUNSEL FOR THE SEVENTH RESPONDENT: | Not applicable |
| SOLICITOR FOR THE SEVENTH RESPONDENT: | Not applicable |
Orders
The first respondent’s application in a case dated 7 August 2020 is dismissed.
I make an order nunc pro tunc under s 500(2) of the Corporations Act joining the fifth, sixth and seventh respondents to this proceeding.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Armington & Armington has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 1627 of 2016
| Ms Armington |
Applicant
And
| Mr Armington |
First Respondent
And
| Company A Pty Ltd (ACN …) |
Second Respondent
And
| Company B Pty Ltd (ACN …) |
Third Respondent
And
| Company C Pty Ltd (ACN …) |
Fourth Respondent
And
| |
Fifth Respondent
And
| |
Sixth Respondent
And
| Company K2 Pty Ltd (Formerly Company K2 Pty Ltd) |
Seventh Respondent
REASONS FOR JUDGMENT
Introduction
Having accepted a transfer of this proceeding from the docket of Johns J and into mine, on 4 August 2020 I heard various applications about the ongoing management of this case.
On that date the parties formulated consent orders for the removal of the fifth and sixth respondents as parties to the proceeding. I ordered the applicant to file and serve the applicant’s fifth further amended initiating application. Further on the application of the first respondent, I ordered that any application in respect of litigation funding was to be notified by letter from him to the applicant’s solicitor with his affidavit in support by 4pm on 11 August 2020. The trial fixed for 30 November 2020 was confirmed.
The applicant duly filed her fifth further amended initiating application. In it she deleted references to and claims against the former fifth and sixth respondents and she made consequential amendments.
The husband, being the first respondent, brought an application in a case dated 7 August 2020[1] returnable on 19 August 2020 being the adjourned date stipulated in paragraph 9 of my orders made on 4 August 2020. In that application in a case the first respondent sought one order, as follows –
I am seeking to have a previous Order made by the Honourable Judge C.E. Kirton on 13 May 2019 in the Federal Circuit Court vacated (2019 FCCA 1232, Clause 5, 6 & 7). The Order states “if he (the husband) pays any money for legal representation he will have to pay the same amount to the Wife’s lawyers”. My financial circumstances since this Order was made have changed considerably and being bound by this “dollar for dollar” costs order is making it impossible for me to afford counsel. My Affidavit filed 7 August 2020 will provide evidence to support this.
[1] That was the date he signed it, in any event.
In support of that application he relied on his own affidavit affirmed on 7 August 2020 and the exhibits thereto. One exhibit was a copy of the reasons for judgment delivered by her Honour Judge Kirton of the Federal Circuit Court of Australia on 13 May 2019[2] after one month’s reservation of judgment. In the passages below I have addressed aspects of her Honour’s reasons.
[2]Armington & Armington (No.2) [2019] FCCA 1232.
Her Honour Judge Kirton was persuaded to make what her Honour called a “dollar for dollar” costs order. That was an expression attributed to the decision of Hannam J of this court in Judd & Treasure.[3] Its practical workings were explained by her Honour Judge Kirton in paragraph 48 of her Honour’s reasons, quoting from the applicant’s application in a case in which the applicant sought an order for litigation funding pursuant to s 117 of the Family Law Act. The precise application for an order was in the following terms –
For every dollar paid by the Husband by himself or via the businesses to his legal representatives for professional fees or disbursements legal advice in relation to these proceedings (sic), the Husband pay or cause to be paid the same sum to Taussig Cherrie Fildes on behalf of the Wife.
[3] [2018] FamCA 50.
The first respondent sought orders from me relieving him of that order. He advanced three main contentions on point, namely –
a)the wife’s legal costs were being met by her very wealthy brother so there was no need for the first respondent to continue with the dollar-for-dollar structure;
b)since the making of the dollar-for-dollar costs order, the first respondent’s financial circumstances have been dramatically, adversely affected such that he said he is unable to meet such an order in the lead up to trial; and
c)he no longer has any financial support from members of his immediate family.
The applicant contended that the first respondent’s application in paragraph 1 of his application in a case should be dismissed.
The first respondent’s father, who for ease of reference I shall call in these reasons Mr V and who appeared with leave to represent the second, third and fourth respondents, informed me that his son no longer has the financial support of his parents who are not even parties to the litigation.
In opposing the first respondent’s application the applicant submitted that an end must be reached to the interlocutory skirmishing in this case and that the end had in fact been reached in this case when her Honour Judge Kirton made the orders pronounced on 13 May 2019. The applicant disputed that new relevant circumstances had emerged to warrant the making of the orders the first respondent sought.
Against that factual overview my decision on this application must be made.
Synopsis
For the reasons that follow, in my judgment the first respondent’s application to be relieved of the orders made on 13 May 2019 should be dismissed.
Brief factual overview
It is sufficient to incorporate by reference the factual matters to which her Honour Judge Kirton previously adverted.[4] Purporting to rely on s 500(2) of the Corporations Act her Honour made orders joining the fifth, sixth and seventh respondents. I say her Honour “purported” to rely on s 500(2) of the Corporations Act because a judge of the Federal Circuit Court of Australia has no power to make orders under the Corporations Act as the exercise of powers under that Act is reserved to the Justices of State Supreme Courts, the Federal Court of Australia and this court. Her Honour’s joinder of those parties was not a nullity becuase her Honour had power to join those parties under the Family Law Rules and equivalent provisions that have application in the Federal Circuit Court of Australia. However her Honour lacked power to do so under s 500(2) of the Corporation Act. Lest it be necessary, I am prepared to make an order under s 500(2) of the Corporations Act as recorded in paragraph 8(a) of her Honour’s reasons of 13 May 2019, nunc pro tunc.[5]
[4]Armington & Armington (No.2) [2019] FCCA 1232.
[5] The origins of orders made nunc pro tunc can be traced to Williamson v Henshaw [1747] 21 ER 217, Jesson v Brewer [1763] 21 ER 312, Donne v Lewis [1805] 32 ER 1221, Lawrence v Richmond [1820] 37 ER 367 and Ex parte Swift [1835] 131 ER 1300. More recently in Australia the learning on the doctrine of nunc pro tunc was explained by the High Court in Emanuele v Australian Securities Commission (1997) 188 CLR 114, 131 to mean “now instead of then” citing Lord Clarendon’s speech in Ex parte Robert Devenish and Henry Devenish v Richard Bernford (1691) referred to in J. Beames, General Orders of the High Court of Chancery (1815). In Australia, the concept of nunc pro tunc has been considered in Parsons v Bunge (1941) 64 CLR 421, In the Matter of Excelsior Textile Supply Pty Ltd [1964] VR 574, Re Testro Bros Consolidated Ltd [1965] VR 18, Re Sydney Formworks Pty Ltd (in liq) [1965] NSWR 646, Battiston v Maiella Construction Co Pty Ltd [1967] VR 349, Re Horsham Kyosan Engineering Co Ltd [1972] VR 403, Woods v Bate (1986) 7 NSWLR 560, National Mutual Holdings Pty Ltd v Sentry Corporation (1989) 22 FCR 209, Crayford Freight Services Ltd v Coral Seatel Navigation Co (1998) 82 FCR 328, Hartley Poynton Ltd v Ali (2005) 11 VR 568 and Simonds v Coyle (2019) 59 Fam LR 410, although in that last case one judge called the principle of nunc pro tunc a “rule of practice and procedure to regularise the records of the court”. The above survey of cases reveals that the principle goes very much further than a practice rule to regularise the court records. In Emanuele Dawson J mentioned the false dichotomy of dividing a statutory provision affecting an entitlement to commence a legal proceeding into jurisdictional and procedural issues.
The case as articulated in the fifth further amended initiating application does not take the form of a statement of claim. In Cao & Trong[6] I essayed the applicability of pleadings in a family law case where the nature of the applications were factually or legally complicated and where entities that were not connected to the husband and wife were involved. In this case, in my view a statement of claim should have been ordered. However, one was not. With the trial date so shortly to hand, it would be unhelpful now to require the parties to plead their cases as if this was a commercial case. That said, it resembles a commercial case.
[6] [2019] FamCA 336.
The nature of the claims on which the applicant advances this case to trial are set out as an annexure to the fifth further amended initiating application. Lengthy as that annexure is, it is necessary to go to it to illustrate the 32 separate prayers for relief that the wife seeks. The amended version of the annexure was as follows –
Annexure A
Declaration
1.Pursuant to s 78 of the Family Law Act 1975 (Cth) the Court declares that:
(a)the trustee for the Armington Family Trust holds any interest it has in the Company G Unit Trust on behalf of the husband;
(b)Company C Pty Ltd holds its interest in all of the businesses (as valued by Accountants) on behalf of the husband.
Property Settlement
2. On or before the expiration of 30 days (“Date”):
(a)the Husband do all such acts and things and sign all such documents as may be required to pay to Taussig Cherrie Fildes on behalf of the Wife the sum equivalent to 65% of the net assets of the parties (excluding the amount to be paid to her pursuant to order 3(a)), including the Company G and Company K business(es) as assessed by this Honourable Court (”Payment”);
(b)the husband transfer the luxury motor vehicle driven by the wife to her free of any encumbrance, at the husband’s sole expense.
3.Until the date on which the Payment is made in full (together with interest):
(a) the husband pay to the wife by way of spousal maintenance:
(i)the sum of $2,005 per week less any periodic amount actually paid each week pursuant to any administrative assessment for child support by the husband to the wife (excluding arrears);
(ii)the Wife’s private health insurance at the current level of cover;
(b)all costs associated with the luxury motor vehicle driven by the Wife including, maintenance, repairs, insurance and registration (excluding petrol);
the Husband provide the Wife with sole use of a motor vehicle for her use of equivalent value to her current motor vehicle and pay or cause to be paid all taxation and costs associated with the use of the motor vehicle including petrol, maintenance, repairs, insurance and registration;(c)Subject to order 10 herein the Husband by himself his servants or agents, and the Second, Third and Fourth
and Seventhrespondents be and are hereby restrained from:(i)effecting any allotment of shares or granting of any convertible note by
(A)the Second, Third and Fourth
and SeventhRespondents(B)Armington Pty Ltd;
(“Entities”)
(ii)encumbering, mortgaging or charging the assets of the Entities including the business(es) conducted by any of them allotting any shares or granting of any convertible note by any of the Entities other than with the prior written consent of the wife;
(iii)incorporating any new company or settling any new trust or superannuation fund without providing the Wife and her solicitors with 30 days prior notice in writing with such notice to include an explanation as to the reason for the proposed incorporation and without obtaining the wife’s prior written consent.
Adult Child Maintenance
4.That pursuant to section 66L of the Family Law Act 1975 (Cth) (“Act”) the husband pay or cause to be paid to:
(a)Ms Q born … 1999:
(i)the sum of $150 per week weekly in advance increasing with upward movements in CPI on 1 July 2020 and annually thereafter; and
(ii)her rent of $170 per week
all accommodation costs (including fees charged by any hall of residence;(iii)health insurance at the current level of cover, and all out of pocket medical, orthodontist, optical and dental and psychologist costs.
until the completion of her first tertiary degree; and
(b)X born … 2001:
(i)the sum of $150 per week weekly in advance increasing with upward movements in CPI on 1 July 2020 and annually thereafter; and
(ii)fees for her attendance at University in the UK;
(iii)accommodation fees for residence halls associated with University in the UK, or her rent (whichever applies);
all accommodation costs (including fees charged by any hall of residence;and(iv)health insurance at the current level of cover, and all out of pocket medical, orthodontist, optical and dental and psychologist costs;
until the completion of her first tertiary degree.
Child Support
5.That pursuant to Section 124 of the Child Support (Assessment) Act 1989 the husband pay to the wife for the benefit of Y born … 2004
and X born … 2001 (“Children”):(a)all costs associated with the
Children’sY’s attendance at school (noting that Y currently attend’s School R and has applied for a place at School NN commencing in 2021) including but not limited to:(i)all tuition, registration and attendance fees together with school levies and contributions to school funds;
(ii)all costs associated with school excursions, trips and camps;
(iii)all costs associated with school uniforms, school equipment and other requirements for attending school;
(iv)all costs associated with sports including sports uniforms, sports shoes, fees tuition fees and lessons whether organised through the school or externally to the school; and
(b)100% of all medical expenses for Y including but not limited to:
(i)all private health insurance (including extras);
(ii)all gap expenses not covered by health insurance or Medicare;
(iii)all out of pocket costs of any dental, optical, orthodontic treatment or allied health professional service for the children.
such sums not to be credited against administrative assessment for child support.
6.That pursuant to Section 117 of the Child Support (Assessment) Act 1989 there be a departure from any administrative assessment of child support payable by:
(a)the husband to the wife for
the ChildrenY such that the husband pay to the wife the sum of $600 per week per child payable weekly commencing within seven (7) days of the date of these orders increasing with upward movements in CPI each year with the first increase to be on 1 July 2021 and annually thereafter until she completes her secondary school education; and(b)the wife to the husband for Y until the she turns 18 or complete her secondary school education such that the wife’s liability to pay support to the husband be reduced to NIL.
7.That all payments of child support be paid to such bank account as the wife may nominate from time to time.
8.That with respect to Y’s
the children’sschool expenses, the husband do all such things and sign all such documents as are necessary to have any school accounts placed in his name so that the invoices are forwarded directly to the husband.9.That the husband within seven days of being requested to do so reimburse to the wife any expenses paid by her in relation to paragraph 6 hereof which would otherwise be payable by the husband pursuant to these Orders upon the wife providing to the husband a copy of the invoice or proof of payment of the invoice, such reimbursement to be made by direct debit into the wife’s nominated bank account.
Security
10.The Husband execute and the Wife be at liberty to register General Security Agreements to be entered into by each of Company A Pty Ltd (Second Respondent) and Company B Pty Ltd (Third Respondent)
and (Seventh Respondents)as mortgagor(s) to the Wife as Mortgagee, in their respective personal and trustee capacities, over all present and after acquired property of each of the Mortgagors including but not restricted to over each of:-(a)the Husband’s interest
sharesintheCompany A Pty Ltd (Second Respondent) and Company B Pty Ltd (Third Respondent)and Seventh Respondentsas declared by the court pursuant to order 1 herein;(b)any, and all, bank accounts in the Husband’s name;
(c)the Husband’s shares in public and private companies and units in trusts;
(d)the Husband’s motor vehicles;
(e)any, and all, present and after acquired property of each of
theCompany A Pty Ltd (Second Respondent) and Company B Pty Ltd (Third Respondent)and (Seventh Respondents)pursuant to the Personal Property Securities Act 2009 (Cth) (“PPSA”), the Husband and each of the Second third and seventh respondents hereby each charge their respective property present and after acquired property.
11.The Wife serve notices with respect to interests in order 10 together with a copy of these Orders, upon any and all relevant persons and/or entities.
12.If the husband does not make the Payment to the wife in full by the due Date
(a)interest accrue on so much of the Payment as remains outstanding at the rate of 10% compounding weekly with such interest to be paid monthly to the wife (“Penalty Interest”); and
(b)if the husband remains in default for a period of seven (7) days:
(i)the husband and Company C Pty Ltd do all such acts and things and sign all such documents as necessary to transfer to the wife, on trust for sale, all of their right, title and interest in the Businesses valued by Mr T of the Accountants on 26 February 2020 currently owned by Company A Pty Ltd and Company B Pty Ltd (the Businesses) as is required to facilitate a sale of the Businesses;
(ii)the wife be at liberty to sell the Businesses on such terms and conditions as may be determined by her, including but not limited to the wife selecting the broker for the sale, noting that such sale may be limited to the business(es) or may include shares in companies through which the businesses are conducted (“Default Business Sale”);
(iii)the husband and Company C Pty Ltd, Company A Pty Ltd and Company B Pty Ltd each be restrained from doing anything which interferes with the Default Business Sale;
(iv)Upon settlement of the Default Business Sale the net proceeds be applied as follows:
(A) first in payment of any amount owing to the wife pursuant to the provisions of these Orders net of all taxation together with Penalty Interest accrued pursuant to Order 12(a); and
(B)the balance be retained by Company A Pty Ltd and Company B Pty Ltd.
(i)The sale of business agreement between Sale of Business Contract between Company K2 Pty Ltd (formerly Company K Pty Ltd), Company E2 Pty Ltd (formerly Company E Pty Ltd), Company K2 Pty Ltd (formerly Company K Pty Ltd), Company A Pty Ltd and Company B Pty Ltd on 18 November 2018 (“Contract of Sale”) be set aside pursuant to section 106B of the Family Law Act 1975;(ii)The first to seventh named respondents each do all acts and things and sign all such documents as may be necessary to transfer to the Applicant, on trust for sale, all of their right title and interest in the businesses as defined in the expert report prepared by Mr T of the Accountants dated 23 March 2018 on such terms and conditions as may be determined by the Wife in consultation with the Fourth and Fifth Respondents noting that such sale may be limited to the business or may include shares in companies through which the business is conducted (“Default Business Sale”);(iii)Upon settlement of the Default Business Sale the net proceeds be applied as follows:(A)first, in payment of any secured creditors of the Fourth and Fifth Respondents save for Mr V and Ms Y Armington or any entity in which they have an interest;(B)secondly to pay any unsecured creditors which in the opinion of the liquidator need to be repaid;(C)thirdly, the balance available be paid:(1)first in payment of any amount owing to the Wife pursuant to the provisions of these Orders together with Penalty Interest net of tax; and(2)the balance be retained by the liquidator and disbursed at his or her discretion.Indemnity
13.The Husband be responsible for and indemnify the Wife in relation to:
(a)any and all unpaid past present and future liabilities in relation to the Armington Group comprising, but not limited to the following:
(i)Company K2 Pty Ltd (formerly Company K Pty Ltd);
(ii)Company E2 Pty Ltd (formerly Company E Pty Ltd);
(iii)Company F Trust;
(iv)Company G Pty Ltd;
(v)Armington Pty Ltd;
(vi)Company H2 Pty Ltd (formerly Company H Pty Ltd;
(vii)Company J Pty Ltd;
(viii)Company K Pty Ltd as trustee for the Company F Trust;
(ix)Armington Pty Ltd as trustee for the Mr Armington Family Trust;
(x)Company L Pty Ltd as trustee for the Company L Trust;
(xi)Company D3 Pty Ltd (formerly Company D Group Pty Ltd);
(xii)Company K2 Pty Ltd (formerly Company K Pty Ltd);
(xiii)Company M Pty Ltd;
(xiv)Company N Pty Ltd;
(xv)MM Pty Ltd;
(xvi)Company P Pty Ltd;
(“Armington Group”)
including any liability personally guaranteed by the Wife and including all unpaid taxation assessed or hereinafter assessed against the Wife in relation to income derived or deemed to have been derived by her from any entity in the Armington Group and from all costs, claims, demands, proceedings, interest, penalties of and in relation thereto.
(b)all personal taxation, including penalties and interest in the Wife’s name up to the year ended 30 June 2021
2020; and(c)the amount owing to Z Limited in relation to the production of documents pursuant to subpoena in these proceedings.
Superannuation
14.That paragraphs 15 to 31 (inclusive) of these Orders are binding on the Trustee of the Armington Superannuation (“the Fund”).
15.That in accordance with section 90XT(4) of the Family Law Act 1975 (“Act”) the base amount equivalent to X in the following equation be allocated to the Wife out of the Husband’s interest in the Fund
X= [50 %(A+B)] – B
Where:
A = all of the Husband’s superannuation entitlements as at the date of the Orders (“Split Date”)
B =all of the Wife’s superannuation entitlements as at the Split Date.
16.That pursuant to section 90XT(1)(a) of the Act whenever a splittable payment becomes payable in respect of the Husband’s interest in the Fund, the Wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the Husband.
17.To give effect to the superannuation split effected pursuant to the provisions by order 16, the parties do all things and sign all documents to cause the following:
(a)to roll over the Wife’s entitlement together with the split provided for in order 16, into a new fund of the Wife’s choosing (“New Fund”);
(b)the roll over be in cash if elected by the wife.
18.That until the happening of any of the following:
(a)the transfer or rolling over into the New Fund the payment split created by order 16 of these Orders; or
(b)the Wife exercises a waiver of her rights within the meaning of Section 90XZA of the Act in relation to the payment split created by order 16 of these Orders,
the Husband be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund "not splittable payment" within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 (Cth).
19.Upon the Wife rolling out her entitlement in accordance with order 18(a):
(a)the Wife, at the Husband’s expense
(i)resign as a director of the Trustee;
(ii)transfer her shares in Trustee to the Husband;
(iii)resign as a member of the Fund; and
(iv)otherwise relinquish any and all claims in respect of the Fund.
(b)the Husband be responsible for and indemnify the Wife from any and all liability in relation to the Fund.
20.That Order 16 has effect from the operative time.
21.The operative time for the purposes of Order 20 is four (4) business days from the date of these Orders.
IN THE ALTERNATIVE TO ORDERS 2 TO 3 AND 14 TO 21 HEREIN
22.Within sixty (60) days the husband do all such acts and things and sign all such documents as maybe required to pay Taussig Cherrie Fildes on behalf of the Wife such lump sum or payment by way of weekly instalments as the court deems appropriate to effect a just and equitable division of the net non-superannuation assets of the husband and wife.
23.That paragraphs 24 to 30 (inclusive) of these Orders are binding on the Trustee of the Armington Superannuation (“the Fund”).
24.That in accordance with section 90XT(4) of the Family Law Act 1975 (“Act”) the base amount equivalent to X in the following equation be allocated to the Wife out of the Husband’s interest in the Fund
X= [100 %(A+B)] – B
Where:
A =all of the Husband’s superannuation entitlements as at the date of the Orders (“Split Date”)
B =all of the Wife’s superannuation entitlements as at the Split Date.
25.That pursuant to section 90XT(1)(a) of the Act whenever a splittable payment becomes payable in respect of the Husband’s interest in the Fund, the Wife shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (“Regulations”) using the base amount and there be a corresponding reduction in the entitlement of the Husband.
26.To give effect to the superannuation split effected pursuant to the provisions by order 25, the parties do all things and sign all documents to cause the following:
(a)to roll over the Wife’s entitlement together with the split provided for in order 25, into a new fund of the Wife’s choosing (“New Fund”);
(b)the rollover be in cash if elected by the wife.
27.That until the happening of any of the following:
(a)the transfer or rolling over into the New Fund the payment split created by order 25 of these Orders; or
(b)the Wife exercises a waiver of her rights within the meaning of Section 90XZA of the Act in relation to the payment split created by order 25 of these Orders,
the Husband be and is hereby restrained by himself, his servants or agents from executing a death benefit nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund "not splittable payment" within the meaning of Regulation 12 or 13 of the Family Law (Superannuation) Regulations 2001 (Cth).
28.Upon the Wife rolling out her entitlement in accordance with order 26(a):
(a)the Wife, at the Husband’s expense
(i)resign as a director of the Trustee;
(ii)transfer her shares in Trustee to the Husband;
(iii)resign as a member of the Fund; and
(iv)otherwise relinquish any and all claims in respect of the Fund.
(b)the Husband be responsible for and indemnify the Wife from any and all liability in relation to the Fund.
29.That Order 25 has effect from the operative time.
30.The operative time for the purposes of Order 29 is four (4) business days from the date of these Orders.
Other Orders
31.Unless otherwise specified in these Orders and save for the purpose of enforcing any monies due under these or any subsequent Orders:
(a)each party be solely entitled to the exclusion of the other to all property (including chooses in action) in the possession of such party as at the date of these Orders;
(b)monies standing to the credit of the parties in any joint bank account be divided equally between the parties;
(c)insurance policies remain the sole property of the owner thereof; and
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
32.Within fourteen (14) days the husband pay the wife’s costs of counsel and instructing solicitor appearing on 4 March 2019, 5 March 2019, 6 March 2019 and 12 April 2019 fixed the sum of $24,093.40
33.The Husband pay the Wife’s costs of, and incidental to these proceedings.
34.Such further order, consequential order or direction as this Honourable Court deems appropriate in all of the circumstances.
The Armington Group and the entities that made it up were described in paragraphs 13 of annexure A. The second respondent is mentioned in paragraph 10 of annexure A as is the third respondent. The fourth respondent is mentioned in paragraph 12(b) of annexure A. The seventh respondent is mentioned in paragraph 13(a)(i) of annexure A.
There being no statement of claim, it is impossible to tell how the applicant casts her case against each respondent to say nothing of the factual substratum and legal propositions she advances pursuant to which she seeks relief against the second to seventh respondents.
The wife submitted that when the litigation funding orders were made, Mr Ashton’s financial circumstances were disclosed in his financial statement. That revealed his annual salary at that time of $300,000 or thereabouts, income of $71,884 during the 2018 financial year that was distributed to Armington Pty Ltd from the Company G Unit Trust and income from Airbnb activities of $25,012. In total, those sums aggregated over $396,000.
On the hearing of this application, Ms Mariole of counsel for the wife relied on concessions made by Mr Armington when cross-examined before her Honour Judge Kirton. Ms Mariole said those concessions amounted to the following –
a)Mr Armington was in receipt of a further amount of $71,884 distributed to the fourth respondent (Company C Pty Ltd) from the Company G Unit Trust during the 2018 financial year[7];
b)Mr Armington made no reference to the distribution from Company C Pty Ltd in his financial statement dated 5 April 2019;
c)the husband’s receipt from Company C Pty Ltd first began in July 2012 pursuant to the terms of the Company G Distribution Agreements dated 22 February 2012 and 15 March 2012 made between the husband, his mother, his father and Company C Pty Ltd; and
d)the husband first disclosed the receipt of that income in his financial statement filed 4 April 2018.
[7]Armington & Armington (No.2) [2019] FCCA 1232 (at [145]).
Ms Mariole submitted that at trial one of the more important facts in issue will be whether the post-separation acquisition by Company C Pty Ltd of a 20% interest in the Company G Unit Trust from Armington Pty Ltd was a sham within the contemplation of cases such as Snook v London and West Riding Investments Ltd.[8] To that may be added Sharrment Pty Ltd v Official Trustee in Bankruptcy[9] and Raftland Pty Ltd v Federal Commissioner of Taxation.[10]
[8] [1967] 2 QB 786.
[9] (1988) 18 FCR 449.
[10] (2008) 238 CLR 516.
Ms Mariole’s written submissions dated 18 August 2020 contained paragraph 7. It stated as follows –
7.Since the making of the litigation funding orders and to the Wife’s knowledge, the Husband has not paid any monies to a legal practitioner acting on his behalf which would require the payment of an identical amount to the Wife for her legal fees.
The wife made two affidavits subsequent to the making of the litigation funding orders. Her first was sworn 24 February 2020 and her second was sworn 17 August 2020. In her submissions dated 18 August 2020, Ms Mariole drew together some of the more important factual matters to which the wife swore in her two affidavits. Among them were the following –
a)in January 2020 the husband and the three children travelled to and holidayed for three weeks in the USA, visiting various locations;
b)while overseas they dined at exclusive restaurants and the husband provided to each of the children the sum of $1,000 in spending money;
c)on 19 August 2019 the husband sent the wife a text message disclosing that Mr V had provided the husband with $60,000 for the purposes of that holiday; and
d)in February 2020 the husband holidayed in Northern NSW during which he spent significant sums on discretionary items.
Ms Mariole undertook a comparison between financial information on the husband’s financial statements under consideration by her Honour Judge Kirton when the litigation funding order was made and the financial statement filed thereafter on 18 August 2020. Ms Mariole submitted that the following information emerged –
(a)the introduction of life and TPD insurance at $341 per week, that is $17,732 per year;
(b)entertainment and travel related expenses for the Husband and the children totalling $22,021 per year are no longer being incurred since January 2020;
(c)increased expenditure of $55 per week for the luxury vehicle driven by the Husband which he purports not to own;
(d)increased expenditure of $74 per week for medical and insurance related expenses;
(e)decreased payments since January 2020 of $162 per week for Ms Q and her accommodation;
(f)decreased payment since January 2020 from $272 per week to $80 per week for the children’s medical expenses. The wife denies that the husband incurs $80 per week and to date in 2020 the husband has reimbursed the wife for the total amount of $138 for the entire year;
(g)decreased payment since January 2020 of $20,816 per year for school fees;
(h)an allowance by the Husband for “other” for the children at $9,464 per year; and
(i)proposed expenditure of $5,408 per year for travel for the children.
On 2 July 2020 the husband filed an application in a case in which he sought orders discharging the litigation funding orders that her Honour Judge Kirton had ordered. That application was heard by Johns J and dismissed. Johns J delivered ex tempore reasons recording how the husband put before the court no evidence to support the discharge of the orders of her Honour Judge Kirton.
The husband’s 7 August 2020 affidavit
With my leave the husband filed an affidavit affirmed on 7 August 2020.
It must be kept steadily in mind that this proceeding has been fixed for trial on a three day estimated duration commencing on 30 November 2020. He again applied to discharge the litigation funding orders made by her Honour Judge Kirton despite Johns J dismissing a similar application to discharge those orders.
As has already been stated, the husband told me his revenue has been severely impacted by the pandemic besetting the globe. He also told me the wife’s affluent brother was funding her legal expenses. In addition, Mr V told me he was providing no financial assistance to the husband. The following is a distillation of the matters to which the husband deposed in his 7 August 2020 affidavit, some of which was factual but a lot of which was in the nature of submissions –
a)no evidence existed that the wife had seriously attempted to obtain employment since the litigation funding orders were made;
b)from April 2020 he said his salary had reduced by 25% from $300,000 to $225,000;
c)his salary is unlikely to increase;
d)since the commencement of the June 2020 quarter the “sales pipeline had completely dried up” and contractor numbers were reduced by 36%[11];
[11] He did not say what he meant by the “sales pipeline”. However I am writing to assume he was referring to revenue being reduced.
e)no new projects were set to commence;
f)he anticipates his profits from Company G for the financial year ending 30 June 2020 will be $48,000, being 40% less than in the previous financial year;
g)he anticipates his income for the next six months will drop by 50%;
h)he has no rental income derived from an Airbnb;
i)he is in debt, although he did not give details;
j)he has $5,000 in cash reserves in the bank;
k)when the litigation funding orders were made her Honour Judge Kirton relied on a financial statement that is now out of date;
l)the wife and the children live with a man called Mr W in his five bedroom Suburb S home;
m)the husband has no capacity to borrow;
n)he does not have legal representation; and
o)while he would enjoy having legal representation at trial, he does not have the financial capacity to do so.
When this proceeding was before me on 19 August 2020, I discussed with the parties whether the trial date of 30 November 2020 was realistic. Mr Armington sought a new date, after 30 November 2020. The wife opposed that suggestion. No doubt she did so having regard to the fact that this proceeding has been on foot since 2016.
Consideration
It seems readily apparent from the husband’s latest affidavit and from his submissions that he asserts he is unable to meet the litigation funding order presently in operation which Johns J refused to set aside or alter. It is also readily apparent that the husband is given to making unsubstantiated assertions about the wife’s financial circumstances. Two points bear that out, namely –
a)the husband’s conclusion that the wife and children are currently living in Mr W’s five bedroom Suburb S home, that they have enjoyed considerable support from Mr W and that “looks like continuing”; and
b)the wife’s legal expenses were being paid by her wealthy brother.
When pressed the husband was unable to verify his assertion about the wife’s legal fees being paid by her brother.
When subjected to scrutiny, the husband’s assertions about the wife enjoying “considerable support” from Mr W were equally unsubstantiated. I was left with no better elucidation about whether such support was emotional or financial and if the latter the nature and extent of any such support.
The husband was given to similar imprecision of expression when he referred to his current income. While I am willing to proceed, as a matter of judicial notice, that most businesses have been adversely impacted by the global pandemic, the husband spoke in general terms about his revenue being affected. He offered little by way of persuasive evidence that his discretionary spending had altered and if so to what extent. Taken in overview I formed the view that the husband was asserting that Mr W was meeting certain expenses the wife would ordinarily have had to bear, housing in particular, that the husband’s revenue had dropped and so the husband was somehow relieved of his litigation funding obligations. His evidence did not persuade me that he was entitled to the relief he sought.
On behalf of the wife, Ms Mariole contended that the time had been reached to put an end to the interlocutory skirmishing in this case. The wife relied on the reasons of Harper J in Joubert & Verhoeven[12] where his Honour held as follows –
There is considerable authority to establish that a principle of finality applies to interlocutory decisions. In Tomlinson v Ramsey Food Processing Pty Limited (2015-16) 256 CLR 507 at [24] to [25] the High Court confirmed the doctrine of abuse of process is informed in part by considerations of finality and fairness similar to the doctrines of res judicata and issue estoppel, although it is inherently broader and more flexible than estoppel, and is capable of application in any circumstances in which the use of a Court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. In relation to interlocutory applications, this statement of principle has been echoed in numerous judgments of this, and other, Courts: in Malcher & Malcher (No. 2) [2012] FamCA 1115 at [15], Ryan J stated that the Family Court is “not a court of unrelenting interlocutory applications”; in Farina & Lofts and Ors [2018] FamCA 763 at [31] Carew J held attempts to re‐litigate matters already determined, even on an interlocutory basis, will be discouraged; in Jess & Garvey (2018) FLC 93-827 at [130]-[131] the Full Court followed the decision of McLelland J (as he then was) in Brimaud v Honeysett Instant Print (1988) 217 ALR 44 at 46 where he said:
It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order re-litigated at will.
[12] [2020] FamCA 53.
Of course, the concept of forbidding any attempt to re-litigate controversies already determined is not new. Here, Judge Kirton determined the litigation funding issues in careful reasons after giving the husband a very fair hearing. Thereafter Johns J dealt with the very same issue and, quite rightly, rejected the husband’s application, in the main for the simple reason that no evidence existed warranting the discharge of Judge Kirton’s orders. I take a similar view.
The High Court has pronounced on the subject of the principle of finality in Burrell v R.[13] There, the plurality held as follows –
It is that the principle of finality serves not only to protect parties to litigation from attempts to re-agitate what has been decided, but also has wider purposes. In particular, the principle of finality serves as the sharpest spur to all participants in the judicial process, judges, parties and lawyers alike, to get it right the first time. Later correction of error is not always possible. If it is possible, it is often difficult and time-consuming, and it is almost always costly.
[13] (2008) 238 CLR 218.
The wife submitted that this re-agitation of a point determined adversely to the husband from which a discharge order was refused amounted to an abuse of process. Ms Mariole’s submissions were as follows –
19.The Wife submits that the Husband’s application is an abuse of process in circumstances where he is sophisticated self-represented litigant, his recent and earlier application was heard and determined and that the re-litigating of this unrelenting application is oppressive to the Wife and a disregard for limited judicial resources. Such a proposition is egregious given that to date, Order 1 of Justice Johns’ Order dated 16 July 2020 has not been the subject of a Notice of Appeal by the Husband.
Whether or not it is correct to characterise the husband’s application as an abuse of the process of the court remains to be seen. However, the husband did not appeal the decision of Judge Kirton or of Johns J and instead chose to re-agitate a point twice previously determined against him and he did so on grounds that were not well-founded. Moreover, Ms Mariole identified several financial indicators that told against the making of the order the husband sought which in turn supported the wife’s contentions that this latest attempt by the husband was not only made in defiance of the principle of finality but the application should not have been made at all. In essence, Ms Mariole contended –
a)the husband’s earnings currently stand at over $245,000 per annum;
b)he continues to be employed as the managing director of Company A Pty Ltd, a company purportedly owned by Company C Pty Ltd;
c)the husband’s profit share in Company G Unit Trust is $48,000 for the 2020 financial year;
d)in his most recent financial statement the husband’s profit from the trust increased to $49,881 despite the global pandemic;
e)on that arithmetic the husband’s income is in excess of $295,000;
f)conversely the wife’s sole source of income is child support, annually of $22,152;
g)all assets and superannuation entitlements are to be determined at trial; and
h)the husband paid his parents $92,707 in January 2020.
There is considerable force in Ms Mariole’s submissions as recorded in the paragraph immediately above.
In my view, this application before me was opportunistic. It should not have been brought. I dismiss it.
The trial will remain listed for 30 November 2020. It will proceed as an electronic trial. An electronic court book must be filed. The task of preparing that court book is complex and time consuming so the parties need to be well advanced on that path.
I shall determine costs separately. Ms Mariole has applied for indemnity costs but the time for all parties to file submissions on costs has not yet elapsed.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 9 September 2020.
Associate:
Date: 9 September 2020
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