BALASKAS & STRATOS

Case •

[2021] FCCA 100

•

28 January 2021

FEDERAL CIRCUIT COURT OF AUSTRALIA

BALASKAS & STRATOS [2021] FCCA 100
Catchwords:
FAMILY LAW – Interim Property — litigation funding — significant financial disparity between parties — large property pool — whether Applicant’s application “arguable” — whether litigation funding order “just and equitable” — capacity of a party properly or adequately to fund litigation — highly contested litigation—Family Law Act 1975 (Cth), s.117(2A).

Legislation:

Family Law Act 1975 (Cth), ss.79, 80(1), 117(2A)

Cases cited:

AON Risk Services Limited v Australian National University (2009) 239 CLR 175

Atkins v Hunt (2018) 57 Fam LR 128

Bondelmonte v Bondelmonte (2017) 259 CLR 662

Elei & Dodt (2018) FLC 93-841

Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd (2013) 250 CLR 303

Garston & Yeo (No.2) [2019] FamCAFC 139

Hall v Hall (2016) 257 CLR 490

K v P (2008) 216 FLR 445

Maroney & Maroney [2009] FamCAFC 45

Rankin & Rankin (2017) FLC 93-766

Salvage & Fosse (2020) 352 FLR 421

Strahan v Strahan (Interim Property Orders) (2010) 241 FLR 1; (2010) 42 Fam LR 203
Applicant: MR BALASKAS
Respondent: MS STRATOS
File Number: CAC 735 of 2020
Judgment of: Judge W J Neville
Hearing date: 26 October 2020
Date of Last Submission: 7 December 2020
Delivered at: Canberra
Delivered on: 28 January 2021

REPRESENTATION

Counsel for the Applicant: Mr I Coleman SC
Ms R Curran
Solicitors for the Applicant: Hijazi Curran Cameron
Counsel for the Respondent: Ms M-A Clifford
Solicitors for the Respondent: Irene Capar

ORDERS

  1. A litigation funding Order be made in the Applicant’s favour in the sum of $110,000 pursuant to s117 of the Family Law Act1975 (Cth).

  2. Arrangements are to be made for the sum in Order 1 to be paid to the Applicant’s legal representatives within 28 days.

  3. The costs of both parties in relation to the litigation funding Order Application be reserved.

  4. Within 21 days of the date of these Orders, being by 17 February 2021, the parties are to advise the Court via email to [email protected] of the following:

    (a)Whether the matter (including all interim Applications) might proceed to arbitration, and if so, time-frames; and any other agreed procedural Orders; or

    (b)Whether the matter (including all interim Applications) should otherwise proceed to a private mediation, and if so, time-frames; and any other agreed procedural Orders; or

    (c)Whether the matter should be listed for further mention or directions on a date to be advised in April.

  5. In the light of Order 4 above, and subject to the information provided pursuant to it or any other consent Order, all outstanding Applications be stood over to a date and time to be advised by the Court.

IT IS NOTED that publication of this judgment under the pseudonym Balaskas & Stratos is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT CANBERRA

CAC 735 of 2020

MR BALASKAS

Applicant

And

MS STRATOS

Respondent

REASONS FOR JUDGMENT

Introduction

  1. It is well and long-settled that the Court has jurisdiction to make an Order for the provision of funds to cover a party’s legal costs.  Such Orders seem increasingly to be referred to as “litigation funding orders”.  Relevant sections of the Family Law Act 1975 (Cth) (“the Act”) that may be used in this regard, and the relevant decisions that discuss them, are referred to, or set out, later in these reasons.

  2. In very general terms, such Orders are unexceptionable, absent the Application being determined by the Court to be “weak, fanciful or misguided.”  According to the current state of the jurisprudence, it is sufficient that the case presented to the Court be “arguable.”  It is a requirement that such an Order be “just” in all of the circumstances.[1]

    [1] See, among other places, Salvage & Fosse (2020) 352 FLR 421 at [14] (Ryan and Aldridge JJ).

  3. The only issue to be immediately determined in the present matter relates to a “litigation funding order” (perhaps otherwise referred to as a “LFO”) sought by the Applicant.  Other matters, such as spousal maintenance, are not immediately pressed for reasons explained in detail later, such as financial support has been agreed and provided now for some time by the Respondent to the Applicant.[2]

    [2] See, for example, the Applicant’s Submissions in Reply, dated 7th December 2020, par.15.

  4. For reasons set out below, because the principles are not in dispute, and the Respondent seems to acknowledge that perhaps even a de minimis payment is possible (or likely), the only issue really is what amount should be provided to the Applicant by way of a LFO.  Parenthetically, as is so often the case, if the current matter were treated in strictly commercial terms or as a commercial case, it would almost certainly have been resolved by now and so much needless, extra expense would have been saved by all, not to mention what will be saved in future, and ongoing, legal fees.  But commercial realities invariably take a back-seat in family law litigation – more’s the pity! 

  5. In my view, the Applicant’s case is at least arguable, essentially on the basis of the length of the relationship (which is largely not disputed), even if ultimately only a very modest sum is awarded at trial (or via the arbitration route).  It is not the likely or possible amount per se that may be awarded in a party’s favour that is determinative; it is whether the case presented is “arguable.” 

  6. The matter was conducted both by earlier oral argument and written submissions; the latter are set out later in these reasons. Although other sections of the Act were referred to in submissions, including those relevant to alternative bases for making a LFO, because the matter was conducted primarily by reference to s.117(2) and (2A) of the Act, for convenience I set out that section later in these reasons.

  7. For the reasons set out below, the LFO sought (but not in the amount sought) will be made under s.117(2) of the Act.

Overview

  1. Summarily, I note the following.

  2. It is not disputed that the parties in the current proceeding were in a de facto relationship for approximately 10 years.  There is some dispute about various aspects of the relationship, which is detailed at some length in the not insubstantial Affidavit material currently filed with the Court, with the prospect of much more to come – absent an early resolution of the matter.  For current purposes, I need not outline this detail.

  3. Subject to what is said later in these reasons, in general terms, it seems that the following matters are not (and cannot be) in dispute:

    (a)The parties are aged respectively 45 (the Applicant) and 55 (the Respondent) years;

    (b)The Respondent is a significantly wealthy woman.  According to her Financial Statement, filed 6th May 2020,  the Respondent’s assets total in excess of $34 million, plus superannuation in excess of $2 million, with liabilities in excess of $12 million;

    (c)The Applicant’s Financial Statement, filed 23rd April 2020, shows the value of property owned by him as $10,987, superannuation of $4,142, and liabilities of $47,932.

  4. To state the obvious: there is a very significant disparity in the financial resources between the parties.  This is very much at the heart of the current Application.

  5. Thus far, again in very general terms given the somewhat competing details set out in the multiple Affidavits filed, the Respondent has assisted the Applicant financially by (a) paying some of his legal fees, (b) providing what might be called a “financial allowance” (usually a weekly amount, but which has included monthly lump sum payments), and (c) providing accommodation in a serviced apartment.  A car has also been provided for his use, but which, I understand, has recently become yet another needless source of discord.  The Applicant’s lawyers have also “chipped in”, to speak colloquially, by paying for a report from a psychologist who attests to the poor psychological health of the Applicant.

  6. There are, unsurprisingly, what may be described as a number of the usual complaints and “sticking points” regularly found in property matters.  For example, (again in general terms) such matters include the Respondent’s alleged failure to properly and fully disclose assets (and their value – on an ongoing basis), and the Applicant’s alleged inflated and highly exaggerated contentions regarding his contributions to the Respondent’s real estate business ventures during the relationship.  The Respondent goes so far in submissions (pars.8 – 11) as to contend that the Applicant’s final Order to seek 25% of the net asset pool (which would result in a payment to him of some $6 million) is “weak, fanciful or misguided.”

  7. Properly in my view, (a) the Respondent has not [thus far] pressed a summary dismissal Application, and (b) in more recent times the Applicant has eschewed any claim arising from direct financial contribution to the acquisition of real estate assets which, on the Respondents’ account, were all acquired either by her family and or by her.  In her Affidavit, filed 12th May 2020 (par.7), the Respondent simply said: “My wealth devolved to me through the generosity of my family.”   Indeed, the Applicant has confirmed that he makes no formal [legal] claim in relation to any of the real estate in the property pool.  The inference – little more at this stage – is that perhaps there is or will be some equitable claim.  Presumably, if the matter progresses, such matters will be crystallised and clarified. 

  8. For example, in his Affidavit, filed 23rd April 2020, the Applicant deposed (emphasis added):

    84. For the past 10 years my role in the businesses has been substantial.  I acknowledge that I have no legal interest in Ms Stratos’s businesses. I say I made substantial direct contributions to the operating of all her business interests

  9. A more nuanced position was set out in the Applicant’s Submissions in Reply, filed 7th December 2020, par.16:

    While the Applicant has no registered legal interest in the businesses and property in the name of the Respondent and various companies, the assertion that there is no dispute that the Applicant has “no interest” in the context of the submission is misconstrued.

  10. Otherwise, the competing positions of the parties are relatively neatly summarised in the following paragraphs in the respective submissions.  The Applicant said, for example, at pars.6 and 7 of his primary submissions (filed 16th November 2020), thus (footnotes omitted):

    6. There is no doubt the Applicant has virtually no financial resources (other than a second hand boat). He is unemployed and received Jobseeker. He has no capacity to borrow. His evidence and that of his GP and psychologist is that he is unable to work due to health issues. His most recent employment was terminated by the Respondent.

    7. The Respondent admits that she has property interests worth in excess of (net) 24 million dollars. There are no current valuations of the majority of the assets. She has complete control over all of the relevant assets, income, bank accounts, commercial properties and residential properties. She is living in Greece. Her homes in Australia are presumably vacant.

  11. The Respondent said in her submissions, filed 30th November 2020, at pars.13 – 15 and 19 – 20:

    13.   There are no direct or indirect financial contributions asserted by the Applicant.   

    14.    There is no dispute that the Applicant has “no interest” in the Respondent’s businesses or property which were inherited by the Respondent and continue to form the vast majority of the net asset pool, having been the only source of income for the parties during their cohabitation.

    15.    On the evidence, the Applicant received payments from the Respondent throughout the relationship including by way of unpaid loans up to $76,000 (paragraph 31 Affidavit of Respondent sworn 5/5/20), payments through his company or wages (paragraph 43, Affidavit of Respondent 5/5/20).  He asserts no other sources of income or resources were available to him.

    …

    19.  Since separation, the Applicant has continued to be financially supported by the Respondent who has funded his accommodation, paid some legal costs, provided a car and made ongoing weekly payments.  As at 23 October 2020 the Respondent has paid to or on behalf of the Applicant the sum of $88,267.67. Since that date, the Respondent has also paid the amount of $3,500 representing 5 interim weekly maintenance payments of $700 pending the listing and determination of the Applicant’s application for spousal maintenance. Accordingly the Respondent has paid to the Applicant or on his behalf $91,767.67 (schedule as at 23 October 2020 provided to Court on 30 October 2020 – annexed and marked “A”).

    20.    It is submitted that the payments already made to the Applicant, along with the assets and “resources” available to the Applicant would prevent the Court from being satisfied that there should be any order compelling the Respondent to pay any more of the Applicant’s legal expenses, given that he would have already received the benefit of a “de minimus award”

Legislative provisions

  1. As indicated earlier, the issue under consideration was conducted primarily by reference to s.117(2) and (2A) of the Act, which is in the following terms:

    (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.

    (2A)  In considering what order (if any) should be made under  subsection (2), the court shall have regard to:

    (a)  the financial circumstances of each of the parties to the proceedings;

    (b)  whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

    (c)  the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

    (d)  whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

    (e)  whether any party to the proceedings has been wholly unsuccessful in the proceedings;

    (f)  whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

    (g)  such other matters as the court considers relevant.

Applicant’s Orders Sought:

  1. The Applicant’s Minute of Orders sought, provided to Chambers via email on 26th October 2020 and filed 16th November 2020, was as follows (emphasis in original):

    1. That the sum of $150,000.00 be advanced to the Applicant towards his legal costs and expenses, which will be brought into account by the Court as a partial property settlement upon the final resolution of these proceedings, or in the alternative;

    2. That the sum of $150,000.00 be advanced to the Applicant towards his legal costs and expenses pursuant to s117 of the Family Law Act.

    3. That pursuant to Section 90SE of the Family Law Act, until further order, the Respondent pay maintenance to the Applicant in the sum $5,000 each month, with first payment to be made 3 days from the date of this Order.

    4. That in the event that the parties are unable to agree on valuations for the purposes of a final hearing and at an agreed time no later than 4 months prior to the hearing date, they shall do all acts necessary to jointly engage, at the expense of the Respondent, a valuer/s to prepare valuations for the following:

    (a) B Street, Suburb C, ACT;

    (b) D Street, Suburb E;

    (c) F Street, Suburb G NSW (Business Premises);

    (d) H Street, Suburb J, ACT (retail premises);

    (e) K Street, Suburb L (Business Premises), ACT;

    (f) M Street, Suburb N, ACT (Business Premises).

    5. That in relation to Order 4, should valuations be required the parties have liberty to relist the matter at short notice with respect to any issues that may arise with respect to the timing of valuations and the appointment of the expert valuer/s.

    6. That the parties provide any further requested disclosure documents to the other party within 14 days of receiving that request.

    7. That in relation to Order 4, the Respondent’s payment of valuation fees shall be characterised at the final hearing of this matter by the trial Judge, or as agreed between the parties.

Respondent’s Orders Sought

  1. In the Respondent’s Summary of Argument filed 21st October 2020 it was indicated that at the interim hearing, she would seek Orders as contained in the Response filed on 6th May 2020.  The Orders there sought were that Orders 1, 2, 4, and 5 set out in the Initiating Application filed 23rd April 2020 be dismissed.  Other Orders sought by the Respondent were to adjourn certain other aspects of the matter, together with

    …a comprehensive written statement of all facts and matters of principle he relies upon to contend that the Court should find, pursuant to s.90SM(3) Family Law Act (Cth) [sic] that it would be just and equitable to make a property adjustment order against the Respondent on his Application.

  2. The “usual” costs Order against the Applicant was also sought.

  3. Given that as at the date of filing of the Response, the Applicant had already filed (on 23rd April 2020) an Affidavit in excess of 90 paragraphs and, with annexures, in excess of 60 pages, and accepting that there were no statements of legal principle in the Affidavit (properly so), it is perhaps a tad surprising to have such a bald prayer for relief in the Response that the Applicant file “a comprehensive written statement of all facts and matters of principle he relies upon …”  Perhaps little more than exercise of enthusiastic supererogation.

Applicant’s Affidavits relied upon:

  1. Affidavit of Mr Balaskas affirmed 11th November 2020

    Affidavit of Mr Balaskas affirmed 23rd October 2020

    Affidavit of Mr O affirmed 23rd October 2020

    Affidavit of Ms P affirmed 23rd October 2020

    Affidavit of Mr Balaskas affirmed 23rd April 2020

Respondent’s Affidavits relied upon:

  1. Affidavit of Ms Q affirmed 11th November 2020

    Affidavit of Mr R affirmed 10th November 2020

    Affidavit of Ms Stratos affirmed 30th October 2020

    Affidavit of Mr S affirmed 30th October 2020

    Affidavit Ms T dated 30th October 2020

    Affidavit of Ms Stratos affirmed 21st October 2020

    Affidavits of Ms Stratos affirmed 12th May 2020 (filed at 12.16pm and 12.17pm)

    Affidavit of Ms U affirmed 6th May 2020

    Affidavit of Mr V affirmed 6th May 2020

The Applicant’s Submissions

  1. The Applicant’s Submissions, filed 16th November 2020, were as follows (footnotes omitted; emphasis in original):

    1.  By Application filed 23 April 2020, the Applicant prays for a number of interlocutory orders, including litigation funding.  The single issue of litigation funding is addressed in these Submissions following direction by Judge Neville on Monday, 2 November 2020, after the listing for oral argument was unable to proceed.

    The Applicant seeks interim relief as set out in the Minute forwarded to chambers on 25 October 2020, and relies on the Summary of Argument filed on 23 October 2020 as well as the two Tender Bundles forwarded to chambers on 26 October and 30 October 2020.

    Costs order pursuant to section 117

    3.  The reference to interlocutory in s117(2) leaves no scope for doubt that s117 empowers the court to make a litigation funding order, notwithstanding that the Court will rarely be able to make findings of fact. The critical question is whether the Applicant has “any real prospects of obtaining justice unless the order sought is made” and in applying s117(2), whether in all of the circumstances the costs order is just.

    4.  To the extent that the general policy objective revealed by section 117(1) is asserted to create any impediment to the granting of the relief sought by the Applicant, the evidence in this matter comfortable overcomes any obstacle.  In consideration of whether to make an interim order for the provision of litigation funding the court must be satisfied that it is just to do so in the interests of justice or in the administration of justice.

    5.  The Applicant contends that the conduct of the Respondent at the early stage of the proceedings (detailed further below) together with the overwhelming financial imbalance in the parties’ capacity to engage lawyers and prosecute their case, supports a costs order being made pursuant to s117(2).  To do otherwise would be unjust and inimical to the interests of justice.

    6. There is no doubt the Applicant has virtually no financial resources (other than a second hand boat).  He is unemployed and receives Jobseeker.  He has no capacity to borrow.  His evidence and that of his GP and psychologist is that he is unable to work due to health issues.  His most recent employment was terminated by the Respondent.

    7.  The Respondent admits that she has property interests worth in excess of (net) 24 million dollars.  There are no current valuations of the majority of the assets. She has complete control over all of the relevant assets, income, bank accounts, commercial properties and residential properties.  She is living in Greece.  Her homes in Australia are presumably vacant.

    8.  The Respondent has failed to make proper and timely disclosure and failed to inform the Applicant, and the court, of transfers of significant sums of money.  On 5 May 2020, prior to affirming her Financial Statement and the day prior to the interim listing, the Respondent transferred $200,000 in reduction of the mortgage on the B Street, Suburb C property and $180,000 in reduction of the mortgage on her daughter’s Suburb W property.  The Respondent did not disclose these substantial transfers in either her Affidavit or Financial Statements (which was affirmed that day). Additionally, after separation the Respondent transferred funds (presumably to her daughter) to purchase land in Greece. This transfer was also not disclosed in either of the Affidavits affirmed (in May and October 2020).  The Respondent deposes in her Financial Statement to “250,000” “given to my Daughter to facilitate the purchase of land (Land X) together with funds expended on construction on that property”  As detailed further below, it was eventually revealed that the sum of 250,000 was, in fact, Euros.  Further examples of multiple post separation opaque transactions are provided below.

    9.  In consideration of s117(2A)(g) other relevant matters include “at least an arguable case for substantive relief which deserves to be heard” and is supported by the conscious decision of the Respondent not to pursue her summary dismissal application, thereby acknowledging that the Applicant’s claim does not lack reasonable prospects of success.

    10.  Evidence of likely costs of litigation are provided by the Applicant.

    11.  The Applicant contends that the issue of “irreversibility” or capacity to repay if the matter were wholly unsuccessful, whilst a relevant consideration, should not be “elevated to the status of an essential pre-condition to the making of an order.”

    12.  The amount of costs sought is $150,000. The Applicant contends that the sum is “logical, fair and reasonable,” it is a sum that is “certain and ascertainable” and by comparison to the $191,390 (not including future costs) the Respondent has incurred to date, the sum sought for funding the litigation, including costs to date, must on its face be reasonable. 

    13.  The Applicant contends that the figure of $150,000 makes provision for litigation expenses at a rate that “appears reasonable in all of the circumstances.”  It is not necessary to provide an itemised bill of costs and it is appropriate that the order sought is in respect of costs already incurred as well as of future costs.  If ordered, it will provide a means to continue the conduct of the litigation and “even the playing field”.  The Applicant contends that the sum sought is not excessive and will make further interim applications for litigation expenses unlikely. Without litigation funding orders, the Court would be deprived in many cases of the ability to discharge its obligations to give proper, genuine and realistic consideration to the merits of the case.

    In the alternative; Partial Property Distribution

    14.  In the alternative, the Applicant seeks the sum of $150,000 by partial property order and submits it is in the interests of justice for such an order to be made with such  distribution being just and equitable having regard to the matters set out in s90SM.

    15.  The court has power to make an order for interim property pursuant to s90SM and s90SS(1)(h) & (k).

    16. The Full Court articulates the relevant tests to be applied in exercising of the power of the court to make orders for litigation funding in Salvage and Fosse [2020] FamCAFC 144.  The Applicant relies upon this authority.

    17.  As set out in Selena & Montez and Ors [2017] FamCA583 at 127 four steps in consideration of an interim property are identified.

    18.  In circumstances where the Respondent has not sought summary dismissal the Court can find that even a de-minimis award is likely to be made.  Further the admission by the Respondent of a de-facto relationship from October 2010 and of commencing “a relationship in October 2009” is capable of enlivening jurisdiction.  The Respondent deposes to matters as being issues for determination in the “substantive proceedings” 

    19.  In respect of the “interests of justice” the fact that one party of a lengthy relationship has control of all of the assets is precisely the circumstance a partial property order often contemplates to even the playing field.

    20.  The impact of the order sought on the Respondent would be insignificant, a reality confirmed by the ease with which the Respondent has been able to move large sums of money as detailed elsewhere in these submissions.  Without litigation funding the Applicant will almost certainly be denied representation or will have to pursue justice “on the cheap” in an unfairly uneven contest.

    The key factual issues in this case

    A. Conscious decision of the Respondent not to prosecute a Summary Dismissal

    21.  By Response filed 6 May 2020 the Respondent sought dismissal of both the final orders and a number of interim orders sought.  The Respondent sought an order for the filing of a “comprehensive written statement of facts and matters of principle he relies upon” to contend that the Court should find it just and equitable to make property adjustment orders, despite the Applicant’s affidavit setting out evidence of the relationship, the asserted contributions and his circumstances and needs. No order in those terms was made.

    22.  On 15 September 2020 His Honour Judge Neville directed the Respondent to file “the basic argument for the Respondent’s Summary Dismissal Application.”  On 21 September 2020, the Respondent expressly declined to pursue summary dismissal and is estopped by conduct or representation from submitting otherwise.

    B.  Alienation of assets by the Respondent

    a.  Legal Costs

    23.  By affidavit affirmed by the Respondent on 24 October 2020 the evidence before the court is that she has incurred $191,390.65 in legal fees of which approximately $150,000 have been paid.  The source of the payment is not apparent from disclosure received to date.

    b.  Transfers of funds to mortgages on residential properties

    $470,000 credits to B Street, Suburb C home loan 5 May 2020 and 12 October 2020

    24.  The first return for this Application was listed on 6 May 2020.  On 5 May 2020 the Respondent made a substantial loan repayment of $200,000 (by two transactions of $80,000 and $120,000).  On 5 May 2020 the Respondent affirmed her Financial Statement and did not refer to the transactions.  On 5 May 2020 the Respondent’s accountant Ms U affirmed an Affidavit identifying “the business entity...have been significantly impacted” .  The Respondent and her accountant were at that time deposing that “the financial circumstances of the trusts have been severely adversely affected by the economic consequences of the Covid-19 pandemic.” Her evidence concluded that she did not “presently have the capacity to support him”.

    25.  The Respondent however had the capacity to reduce her home loan by $200,000 the day immediately prior to the first return date of the Application, being the day prior to affirming her Financial Statement and her accountant affirming her Affidavit.  Despite providing evidence of alleged tenuous financial circumstances she did not depose to this, and other substantial transfers, made on 5 May 2020 (detailed further below).  She did however give evidence that “I have access to a re-draw facility on my mortgage account”. She omitted this significant fact in her evidence. 

    26.  On 7 May 2020, the Respondent filed a Notice of Objection to the Subpoena issued to her bank (NAB), accordingly the Applicant was not then in a position to know of the actual financial circumstances of the Respondent. The Respondent deposed that she was aware of her obligation to provide disclosure. She failed to provide such disclosure at an early stage.

    27.  On 12 October 2020 the Respondent made a loan repayment of $270,000.  This was by way of two transfers of $120,000 and $150,000.

    28. The Respondent filed a second Affidavit on 21 October 2020.  She fails again to depose to the significant transactions but deposes generally to “the impact of Covid-19.”

    29.  The Applicant contends that the court should find that the Respondent had the capacity and did elect to reduce the B Street, Suburb C mortgage by $470,000 between May and October and had the capacity to and did pay significant legal costs of approximately $150,000.

    $180,000 credits to daughter’s Suburb W home loan  - 5 May 2020

    30.  On 5 May 2020 in addition to the substantial loan repayments of $200,000 credited to B Street, Suburb C, the Respondent also transferred $180,000 to the Suburb W property (recently purchased by the Respondent and held on trust for her 16 year old daughter Y.)  The effect of this was to move equity to her daughter of $180,000.  On 5 May 2020 the Respondent affirmed her Financial Statement and did not refer to either transaction.

    31.  The Financial Statement affirmed by the Respondent did refer at part M to “250,000” as “money given to my daughter to facilitate the purchase of land (Land X) together with funds expended on construction on that property.”  Despite all other funds being referred to in AUD, the Applicant was advised on 25 October 2020 that the sum was, in fact, 250,000 Euros (or around AUD$410,000). 

    32.  At page 17 of the Respondent’s Financial Statement affirmed 5 May 2020 she states: “By a deed dated 4/9/2017 I caused a trust to be established for the benefit solely of my daughter Y...The approximate amount of the mortgage debt is $425,071.75….  I am not a beneficiary of the trust and do not regard it as being a financial resource.”  The Respondent does not depose to the deposit of $180,000 that same day, which had the effect of reducing the “mortgage debt” from $605,071.05.

    33.  In an email from the Respondent to her then lawyers, filed in support of her Application for an FVO, she asks: “Is it true that it could drag on even up to three years? If that’s the case, my daughter will be 18 in two and a half years. Could I put everything in her name then? Jaunt (sic) asking the question.”

    34.  It is submitted that it is open to the Court to infer that the Respondent’s conduct, by transferring funds to her daughter without disclosing these transactions, in circumstances where the application before the court is for litigation funding and spouse maintenance, is consistent with the Respondent attempting to create a false picture in order to defeat the application.

    c.  $150,000 cash transfers January 2020 from account #...70

    35.  Transfers totally $150,000 were received into account #...17 on 16 January 2020 ($30,000), 17 January 2020 ($50,000) and 28 January 2020 ($70,000).  Each is described as “redraw proceeds from account ...70.”  The Respondent through her solicitors denies having an account #...70.

    d.  $278,694.06 transfer 15 April 2020 from account #...74

    36. A transfer of $278,694.06 occurred on 15 April 2020 from #...74 to account #...17.

    37. This transaction was not referred to in evidence. 

    e. Purchase of a property in Greece

    38.  The Respondent’s only evidence of funds used to pay for this purchase is reference to “250,000” as a sum given to her daughter to fund the land purchase in her Financial Statement.

    39.  The Respondent’s Summary of Argument filed on 21 October 2020 at Paragraph 8 identifies that the Applicant “must establish on the evidence” a number of elements including “b. There are sufficient assets available for the interim distribution sought, having taken into account the Respondent’s legal costs, noting she seeks dismissal of the application.” Further at Paragraph 12 the Respondent’s case is that the Court “cannot be satisfied that the Respondent is “reasonably” able to meet the ongoing maintenance sought by the Applicant from her income by reason of inter alia her COVID affected capacity to meet the current and likely future commitments and her own reasonable needs: section 90SF(a.)”. Her instructions as to capacity are at odds with the substantial unexplained transfers of funds.

    40.  Given the opacity of the Respondent’s financial transactions, the obvious and clumsy intention to make the Applicant’s path to success as problematic as possible, and the persistent lack of frank and timely disclosure, the Court would have little confidence in the capacity of the Applicant to reasonably pursue his application without legal representation.

    C.  Alleged impact of Covid-19 on commercial properties

    41.  The Respondent filed evidence in May 2020 and deposed that she anticipated a serious decline in income from the four commercial properties as a consequence of Covid-19. A comparison of income from August 2019 to August 2020 shows no evidence of a decrease in income from rent receipts. By way of example, the rent received from the two businesses (M Street, Suburb N and F Street, Suburb G), as evidenced in bank statements, show that on 1 August 2019 the business received $33,353.85 and $44,117.76 respectively from the two businesses, and on 3 August 2020 the business received $34,688.01 and $44,955.99.

    42.  The Respondent deposes that her accountant has been unwell but files no updated evidence of any reduction of income consistent with the forecast opined in May 2020.  It is open to draw the first, and more significant inference, as articulated by Campbell J (as Campbell JA then was) in Manly Council v Byrne [2004] NSWCA 123.

    Conclusion

    43.  The existing circumstances establish an “uneven playing field.” The overarching intention with respect to litigation funding is that the interests of justice are met. It is respectfully submitted that granting the relief sought in the Application achieves that outcome.

Respondent’s Submissions

  1. The Respondent’s written submissions, filed 30th November 2020 were as follows (emphasis in original):

    1.  These submissions are prepared in response to the interlocutory application for “litigation funding” of $150,000 filed by the Applicant.

    2.   The relevant sources of power to make the orders sought by the Applicant can only be found in section 117 or section 90SM.

    3.  The principles that apply in determining applications relying upon either of those sources of power are well established, summarised recently by the Full Court in Salvage & Fosse [2020] FamCAFC 144 (12 June 2020).

    Section 117

    4.   Pursuant to section 117(1) the usual order in these proceedings would be that each party shall bear their own costs. 

    5.  Only if the Applicant can establish that there are “justifying circumstances” and the order sought is “just” is the Court empowered to make any order pursuant to section 117.

    6.    When assessing the “justifying circumstances” alleged by the Applicant, the Court must assess the “strength of the Applicant’s case” Salvage & Fosse, paragraph 14.

    7.    The Applicant’s submissions are almost silent on this fundamental consideration being contained in paragraph 18.  Namely, by reason of a cohabitation and a summary dismissal application which is yet to be determined, it is submitted that a “de mimimus award is likely to be made”.

    8.    However, by his Initiating Application, the Applicant seeks orders that he shall “retain by way of property adjustment, 25% of the entire net pool”.  At paragraph 7 of the submissions, the Applicant notes that the Respondent’s property interests are worth “in excess of (net) 24 million dollars”. 

    9.  On his case, the Applicant contends that an order in his favour of approximately $6,000,000 would be “just and equitable” and that the costs of his prosecution of this application should be solely borne by the Respondent.

    10.    It is submitted that this application falls within the category described by the Full Court in Savage in which it “would not be just…for the respondent to have to pay the legal expenses of the application, where the case to be taken was weak, fanciful or misguided…” (paragraph 15).

    11.    It is submitted that the merits of this case, at the very least, are “weak” if not “fanciful”.  The necessary assessment of the merits cannot be avoided by arguments of “estoppel by conduct” particularly given the express terms of order 3 of the Response filed 5 May 2020 and paragraph 2 of the Submissions filed on 22 September 2020.

    12.    The Respondent disputes that there is any entitlement to any order pursuant to section 90SM or 90SE.

    13.    There are no direct or indirect financial contributions asserted by the Applicant.   

    14.    There is no dispute that the Applicant has “no interest” in the Respondent’s businesses or property which were inherited by the Respondent and continue to form the vast majority of the net asset pool, having been the only source of income for the parties during their cohabitation.

    15.    On the evidence, the Applicant received payments from the Respondent throughout the relationship including by way of unpaid loans up to $76,000 (paragraph 31 Affidavit of Respondent sworn 5/5/20), payments through his company or wages (paragraph 43, Affidavit of Respondent 5/5/20).  He asserts no other sources of income or resources were available to him.

    16.    Despite having these funds available to him, the Applicant makes no assertion of any contribution to the living expenses of the parties, all such expenses being funded solely by the Respondent, including a nanny and cleaner: paragraph 38, Affidavit of Respondent 5/5/20)

    17.    During the cohabitation, it would appear now conceded that the Applicant purchased, from funds yet unidentified, “the boat, trailer, tools and fishing equipment” which he seeks to retain by way of final relief.  He has also travelled to Greece and enjoyed competing as a sportsman.

    18.    There is significant issue between the parties in relation to the contributions alleged by the Applicant in relation to the Respondent’s daughter.

    19.    Since separation, the Applicant has continued to be financially supported by the Respondent who has funded his accommodation, paid some legal costs, provided a car and made ongoing weekly payments.  As at 23 October 2020 the Respondent has paid to or on behalf of the Applicant the sum of $88,267.67. Since that date, the Respondent has also paid the amount of $3,500 representing 5 interim weekly maintenance payments of $700 pending the listing and determination of the Applicant’s application for spousal maintenance. Accordingly the Respondent has paid to the Applicant or on his behalf $91,767.67 (schedule as at 23 October 2020 provided to Court on 30 October 2020 – annexed and marked “A”).

    20.    It is submitted that the payments already made to the Applicant, along with the assets and “resources” available to the Applicant would prevent the Court from being satisfied that there should be any order compelling the Respondent to pay any more of the Applicant’s legal expenses, given that he would have already received the benefit of a “de minimus award”

    21.  The Applicant must establish that there are no “real prospects of obtaining justice unless the order sought is made”: Salvage & Fosse (supra), para 14.

    22.    It is submitted that the Applicant has not discharged this onus.

    23.  The Respondent has proposed, and will consent to an order, that the Applicant sell the “boat, trailer, tools and fishing equipment” referred to in order 2 of his Application, as well as the engagement ring, and use the net proceeds for his legal expenses.

    24.   At paragraph 43 of his Financial Statement sworn 23/4/20, the Husband only discloses the “boat” and asserts a value of “E10,000” yet at paragraph 7 of his affidavit filed 11 November 2020, the Applicant states that he “purchased the boat second-hand on 31 May 2018…I paid $29,000…”.  The Applicant has not taken any steps to value the boat.  The Respondent submits that the Court can be satisfied that there is an asset worth not less than $29,000 available to the Applicant to fund his legal expenses.

    25.   Nowhere in his material does the Applicant identify nor value the trailer, tools or any other equipment which is of sufficient value for him to seek orders about them.

    26.    By correspondence dated 5 November 2020 the Respondent sought disclosure, including asserted values, for various items retained by the Applicant.  No response was received to that correspondence.  Annexed and marked “B“ is a copy of the said correspondence forwarded by the Respondent’s solicitor to the Applicant’s solicitor.

    27.   The Respondent submits that, in these circumstances, there are still further items or “resources” available to the Applicant from which to meet his legal expenses if he cannot otherwise find or fund alternate legal representation.

    28.   The issue of the sale of items and use of the sale proceeds for the Applicant’s legal costs was raised by the Court on the last occasion.  At that time, the engagement ring included in the Applicant’s material was specifically raised.

    29.   Since then, the Respondent has caused a valuation of the ring to be prepared and provided a copy to the Applicant. Annexed and marked ‘C1’ is a copy of correspondence dated 30 October 2020 enclosing a Certificate of Authenticity and Valuation and annexed and marked ‘C2’ is further correspondence dated 5 November 2020 both forwarded by the respondent’s solicitor to the applicant’s solicitor.

    30.  Based on that valuation, the Respondent submits that the Court would be satisfied that the ring is worth not less than $7,990.00 and is available to fund the Applicant’s legal expenses.

    31.  To date, the Applicant has chosen not to use any of those assets or resources to fund part or all of his legal expenses.

    32.   However, the Respondent submits that she should not bear the consequence of the Applicant’s choices. When there are resources available to the Applicant to fund his legal fees it is ”just” that they should be used by him prior to any order being made for the Respondent to fund any more of his legal expenses. 

    33.    Further, there is no evidence from the Applicant that he has made any application for litigation funding nor sought the assistance from any other legal practitioners to represent him pending the outcome of his “$6 million” application.

    34.   When assessing whether to make an order pursuant to section 117, it is necessary for the Court to consider all of the matters pursuant to section 117(2A), not just section 117(2A)(a), particularly where the merits are weak.

    35.   In this matter, the Court cannot yet make findings pursuant to sections 117(2A) (c),(e) of (f).

    36.  This highlights the caution with which the Court must approach interlocutory applications in matters such as this where there is no prospect of the Respondent being able to recover any funds or have such funds being “taken into account”: Fletcher & Sager [2016] FamCA (24 June 2016); Selena & Montez [2017] FamCA 583

    37.   In so far as the “conduct” of the Respondent is criticised, the Court would note that, at its highest, the Respondent is criticised for continuing to use her funds to repay moneys borrowed to secure the purchase of real estate post separation. 

    38.   Each of the transactions raised in the submissions relate to transactions moving between accounts in the Respondent’s name are detailed within the bank records of the Respondent’s bankers including her mortgage account which includes a “redraw” facility and which has included a recent change in the account number #...70 to #...74.   Given the asset pool as contended by the Applicant and his claim for entitlement, there can be no prospect that any of these transactions represent any risk of “defeating” the Applicant’s claim.

    39.   The Court must be satisfied that any order made is “just” and “reasonable”.

    40.   The Applicant seeks an order for the payment of $150,000 by way of litigation funding.  He has previously sought an order for $200,000.

    41.   On any view of the evidence, such a sum would represent an indemnity costs order paid in advance and in a sum greater than the estimate provided.

    42.   It is submitted that there is nothing in this matter that would warrant a costs order on an indemnity basis: In the marriage of Munday and Bowman (1997) 22 FamLR 321

    43.   At paragraphs 47-50 of the Applicant’s affidavit sworn 23 October 2020, the Applicant sets out the evidence he relies upon as to the quantum of the order sought.

    44.   According to that evidence, he has $48,013 outstanding in legal fees and disbursements and has been advised of the “estimated further legal fees could be in excess of $50,000” being a total of $98,013.  There is no evidence for the additional $51,987 that is being sought.

    Section 90SM

    45.   The Respondent disputes that the Applicant is entitled to any award pursuant to section 90SM and relies on the submissions earlier made on merit. 

    46.   Fatal to an application for interim property distribution is the inability, on the evidence, to reverse the order without resorting to “79A”, which is the case here: Strahan & Strahan (interim Property Orders) [2009] FamCAFC 166

Applicant’s Submissions in reply

  1. The Applicant’s written submissions, filed 7th December 2020 were as follows (footnotes omitted; emphasis in original):

    1.  These submissions are in reply to the Respondent’s Written Submission dated 30 November 2020. The Applicant agrees with Paragraphs 1-6 therein.

    2.  The Respondent’s submission attaches evidence not before the court and is inadmissible. In any event, if accepted, at its highest, the evidence shows that the Respondent has in her possession a ring that may be currently valued at $7,990. What this second-hand ring may be sold for by the Respondent is unknown and submitted to be irrelevant in any event.

    3.  The Respondent’s submissions do not raise dispute about the uncontroversial facts identified in the Applicant’s submission and fail to identify evidence before this court in support of the application for dismissal. The Respondent submits that the Applicant is “almost silent” on the fundamental consideration. This is demonstrably not so, as a reading of the evidence referred to in the Applicant’s primary submission is submitted to prove.

    4. The Applicant identifies in addition to many other considerations, the overwhelming financial imbalance between the parties; the Respondent’s conduct in respect of her obligations regarding disclosure, and transactions not disclosed. This evidence provides compelling grounds to satisfy the court that the costs order sought is just5.

    5.  The submission of the Respondent at Paragraph 7 is incorrect- there is no summary dismissal application “which is yet to be determined.” When directed to file “the basic argument” in support of a summary dismissal application the Respondent expressly declined to pursue the application. The court can readily infer that had the Respondent considered that such an application had any prospect of success, it would have been pursued with alacrity.

    6.  The assertions about the quantum of the claim are misconceived. The Respondent does not include the full submission made by the Applicant. The submission at Paragraph 18 on behalf of the Applicant was: “In circumstances where the Respondent has not sought summary dismissal, the Court can find that even a de-minimus award is likely to be made.” This goes to the minimum finding available to the Court, not to the merit of the Application. It remains the Applicant’s case that after a trial, there will be an adjustment of property that will translate, in this case, with this pool after consideration of the relevant statutory factors, to a substantial sum. The, perhaps unintended, concession inherent in the Respondent’s contention advances rather than impedes the Applicant’s claim.

    7.  The Respondent submits that this case falls within a category of cases that is “weak..if not fanciful.” Why that is said to be so is unexplained and ignores the affidavit evidence setting out evidence of the relationship, the asserted contributions and the Applicant’s circumstances and needs.

    8.  To submit that “there are no direct or indirect contributions asserted by the Applicant” is wrong. The affidavits of the Applicant filed in support of his interim applications, asserts precisely such contributions. Criticism is made “that the Applicant makes no assertion of any contribution to the living expenses…” and the fact of “significant issue between the parties in relation to contributions” in respect of the Respondent’s daughter. These are matters in contest for determination. For that contest to be played out on a grossly uneven playing field cannot, the Applicant submits, be in the interests of justice.

    9.  The submission by the Respondent that “payments” were “received…throughout the relationship” and the characterisation of them as “unpaid loans,” and “payments through his company or wages” are matters in contest, but do serve to highlight the reality that there exists a justiciable controversy, the determination of which looms as involving factually and legally complex issues.

    10.  That factual matters are in contest and require judicial determination, do not make a case weak or fanciful. Kirby J’s comments in Lindon v The Commonwealth are apposite in that context. That evidence filed in support of interim matters does not detail all of the relevant evidence is not surprising when the court rules impose limits on the extent of material to be filed in interim proceedings.

    11.  That there are factual findings of matters in dispute that the Court is yet to determine further supports the merit of this application and the need to test the evidence.

    12.  To assert that previously agreed payments of maintenance, payments toward rent and the use of a motor vehicle should be characterised as part of a property adjustment pursuant to s90SM, and should be considered by the court as a benefit “already received” as part of property application, is contrary to intention of the legislation and conflates the consideration of the rights in issue. The amount asserted to have been received by the Applicant in any event is in dispute. The Applicant’s evidence is that he has received considerably less than asserted by the Respondent by way of spouse maintenance payment since the parties separated.

    13.  The rights in issue in property and spouse maintenance proceedings are statutory rights to seek orders under s90SM and s90SE respectively. The right in issue in property settlement proceedings is the right conferred on the Applicant by s90SM. That right is to obtain in the “wide” though not “unlimited” discretion of the court, an order altering the interests of the parties in all property to which either or both of them are entitled if that Court is satisfied in all of the circumstances it is just and equitable to make the order under s90SM(3) taking into account the matters referred to in s90SM. Those matters extend beyond any financial or other contribution that either of them may have made to include, amongst other things, contributions made to the welfare of the family as well as matters referred to in s90SF so far as they are relevant.

    14.  The right in issue in the spouse maintenance proceedings is the right conferred on the Applicant by s90SE. That right is to obtain at the discretion of the Court such order for the provision of maintenance by the Applicant as the court considers proper having regard to the matters referred to in s90SF.

    15 . That the Respondent disputes that there is any entitlement to any order pursuant to s90SM, for alteration of property interests, or s90SE, for orders in relation to maintenance, is a contest for a final trial (and the pending interim spouse maintenance application).

    16. While the Applicant has no registered legal interest in the businesses and property in the name of the Respondent and various companies, the assertion that there is no dispute that the Applicant has “no interest” in the context of the submission is misconstrued.

    17.  The onus is on the Applicant to establish that there are no real prospects of obtaining justice unless the order sought is made. It is submitted by the Respondent that this onus has not been discharged. The conduct of the Respondent to date supports a finding that there are no real prospects of obtaining justice unless the order sought is made.

    18.  There has been no substantive response to the issues arising due to the conduct of the Respondent as set out by the Applicant other than to submit that “at its highest the Respondent is criticised for continuing to use her funds to repay moneys borrowed to secure the purchase of real estate post separation.” It is not asserted by the Applicant that the transactions at this point are at risk of defeating the Applicant’s claim. It is that without funding to secure legal representation Mr Balaskas will have no prospect of obtaining justice and the conduct is obviously relevant in that respect.

    19.  The Respondent fails to address the issues of her conduct relevant to this application. Her failure to provide information about the multiple transfers, instructing her lawyers to file an objection to the subpoena to the NAB (later withdrawn); the failure to make full disclosure, the failure to provide details of transactions in sworn evidence; the alienation of cash assets and the timing and amounts of the multiple transfers of substantial amounts of cash overseas and to her daughter that could satisfy the application. This conduct coupled with the assertion of an incapacity to pay, contrary to the evidence which clearly establishes a capacity, and evidence of an anticipated serious decline in income, which did not transpire, then a failure to call further evidence from an accountant, raises questions as to the bona fides of the Respondent.

    20.  The detail of the conduct of the Respondent and the evidence in support has been identified in detail in the Applicant’s submissions. The inference available is that the conduct that has occurred has been a real attempt to obfuscate and delay causing the Applicant additional expense in prosecuting his Application.

    21.  To submit that the sum sought of $150,000 “represents an indemnity costs order” in circumstances where every matter to be determined in the trial is in contest (as identified in the Respondent’s submissions), and where the Respondent has already incurred costs of $191,000, is disingenuous, particularly as there is no suggestion that such expenditure encompasses anticipated costs to the completion of the proceedings. The estimate of legal costs of further fees in excess of $50,000 does not include counsel’s fees. The Respondent has not provided an estimate of her anticipated further fees. Notably, the Respondent previously agreed to pay the Applicant’s legal fees up to the amount of $50,000, and that was prior to any court proceedings.

    22.  It is open to the court to make whatever orders will enable a just outcome – and a lump sum to pay outstanding and anticipated costs together with a dollar for dollar order may address this concern. Following Selena, the Applicant submits that the Court would, in the present circumstances, fall into appealable error if it failed to “grasp the nettle” and fix the Applicant’s entitlement in a lump sum which, the evidence establishes, will do no more than give him his day in court on as even a footing as is reasonably possible. To maintain an uneven playing field by providing a sum that is inadequate would risk the need for a further application.

    23.  In consideration of whether to make an interim order for the provision of litigation funding the court must be satisfied that it is just to do so in the interests of justice or in the administration of justice. The suggestion that the Applicant who has virtually no financial resources, is unemployed, and is unable to work due to health issues could and should sell a trailer, second hand tools and a boat he wishes to retain; or that the Respondent will sell a ring (she has had valued) and provide the funds to him is trite.

    24 . In respect of the submission that the inability to reverse the order without resorting to s79A is fatal, the Applicant addresses this issue at Paragraph 11 of the Applicant’s Written Submissions filed on 16 November 2020.

Outline of principle

  1. There are two cases that relevantly outline the principles that should be applied to the current Application.  Those Full Court decisions are Strahan v Strahan (Interim Property Orders) and more recently Salvage & Fosse.[3]

    [3] Strahan v Strahan (Interim Property Orders) (2010) 241 FLR 1; (2010) 42 Fam LR 203 and Salvage & Fosse (2020) 352 FLR 421.

  2. The Full Court in Strahan v Strahan set out relevant principle regarding interim property Orders.[4] The primary focus in that case was on the operation of ss.79 and 80(1) of the Act. From the extensive discussion by the Full Court, at [114] – [141] (Boland and O’Ryan JJ) and at [208] – [228] (Thackray J), I need only record the comments that “relative financial strength” of a party, and the capacity of a party properly or adequately to fund her or his litigation, are among the factors in the exercise of the Court’s discretion. In my view, such matters are critical in the present case and patently on display.

    [4] Strahan v Strahan (Interim Property Orders) (2010) 241 FLR 1; (2010) 42 Fam LR 203 at [79] – [113] (Boland & O’Ryan JJ); [208] – [228] (Thackray J).

  3. In particular, I note two comments by Thackray J, at [227] and [228]:

    [227] I accept the submission of senior counsel for the Wife that in applications designed to secure funds for legal costs it is appropriate for the Court to give consideration to whether the claim for costs is “genuine” – i.e. that a party is not bringing an interim application on a pretext. However, once the Court is satisfied the claim is genuine, it should not “take a narrow view of the costs budget”….

    [228] Finally, I accept the submission of senior counsel for the Wife that it is not appropriate to seek to control the extraordinary level of costs incurred in this litigation by denying only one of the parties access to funds. In this regard it is important to keep in mind that the wife is proposing to spend funds that the husband acknowledges are hers. In my view, that is her prerogative – and a matter between her and her legal advisors.

  4. I would only note somewhat parenthetically that his Honour’s comments were made within a matter of months after, and without any reference to, the High Court’s comments about the efficient use of Court (and other) resources in AON v ANU.  They were also made well before more recent comments by the Full Court (and others) about the dangers for parties incurring excessive legal fees arising from protracted litigation.

  5. In Salvage & Fosse, I simply note the following, with particular reference to the following paragraphs of the majority’s (Ryan and Aldridge JJ) reasons – [15] – [16], [24] – [25], [29]. From the dissenting judgment of Watts J (as to the result not as to principle, I note the following paragraphs from his Honour’s typically detailed analysis: [56] – [71] and [130] – [131]. The Headnote reads (in part):

    In determining whether a litigation funding Order should be made pursuant to s.117(2) of the Act, the consideration should be whether the case to be raised by the Applicant is sufficient as to its nature and prospects to justify an interim Order for costs in all of the circumstances …

  6. Because it is the central focus of the current Application, I note the following matters primarily from the majority’s reasons in Salvage & Fosse.

  7. First, at [2], the majority said:

    [2] The central matters for consideration are the nature of the power to make interim costs orders, or as senior counsel for the respondent put it, litigation funding orders, and what considerations must be undertaken when making them…

  8. Secondly, at [13] – [15], their Honours said:

    [13] … the notion of orders being “reversed or adjusted” does not easily apply to costs orders made in the exercise of the costs power, especially if the applicant fails. The very nature of a litigation funding order is that the funds will be spent on the costs of the proceedings, which may or may not be successful. There is a real risk that the funds can never be recovered or otherwise taken into account.

    [14] The critical question therefore is whether the applicant has “any real prospects of obtaining justice unless the order sought is made” (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant’s case and the effect of the order upon the respondent.

    [15] It would not be just, for example, for the respondent to have to pay the legal expenses of the applicant, where the case to be taken was weak, fanciful or misguided or where the effect on the respondent of such an order would work an injustice. We do not consider it helpful, however, for there to be a need to identify the applicant’s case as strong, persuasive or such like to justify an order. That invites a descent into semantics and an artificial characterisation of the strength of the proposed proceedings. The consideration should be whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs….

  9. Then at [21], the majority said:

    [21] … the Court is an expert tribunal and provided there is sufficient evidence before the Court, it can form a view as to the likely outcome of the property settlement proceedings. It would be astute to look past any optimistic ambit claim sought in the application or made by the respondent’s lawyers.

  10. I interpose here to confirm that it would be presumptuous to claim the expertise referred to by the Full Court in Salvage & Fosse.  I simply note that, to speak generally, as a matter of record, this Court has more than passing experience in most kinds of family law litigation, at least to the tune of 90% of such litigation.

  11. Still at [21], the Full Court simply said that it was sufficient if the Applicant had an “arguable” case.

  12. At [33], the majority said:[5]

    [33] As Kent J has persuasively reasoned, the fact that an interim costs order may never be repaid is not a bar to one being made. As the history of such orders demonstrates, it is not a determinative matter (Rakete v Rakete (2012) 48 Fam LR 325 at [55]).

    [5] A similar comment, by reference to the same authority, was made by Watts J at [69]

  13. As helpful as it would otherwise be, save for one matter, I need only note but not outline Watts J’s erudite and detailed consideration of principle in Salvage & Fosse at [56] – [71]. At [63] and [64] his Honour said:

    [63] In relation to s 117(2A)(a), apart from the general financial circumstances of each of the parties to the proceedings, the Full Court in Zschokke identified the following particular considerations:

    a)   a position of relative financial strength on the part of the respondent;

    b)   a capacity on the part of the respondent to meet his or her own litigation costs; and

    c)    an ability on the part of the applicant to meet his or her litigation costs.

    [64] As to such other relevant matters, under s 117(2A)(g), the plurality in Strahan at [96] and [141] specifically adopted the following considerations referred to in Paris King Investments at

    [30]:

    a)   the applicant should have “at least an arguable case for substantive relief which deserves to be heard”;

    b)   there should be evidence of the applicant’s “likely costs of litigation” (see also Wilson and Wilson (1989) FLC 92-033 at 77,453); and

    c)    it is not “an essential pre-condition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.

  14. One further decision warrants brief mention.

  15. Submissions on behalf of both parties make somewhat oblique reference, but for different reasons it would seem, to the first instance decision of McClelland J in Selena & Montez.[6]  I simply note that in Atkins v Hunt,[7] Watts J, also sitting at first instance, in a wide-ranging consideration of authority dealing with an Application for interlocutory costs Orders like the present matter (and which also included an Application for a “dollar for dollar” Order), on very specific matters noted at [33] and [47], disagreed with McClelland J in Selena & Montez.  It would also seem (but with less certitude) that the Full Court in Salvage & Fosse, at [33] and [69], may also have cast some doubt upon the accuracy and/or reliability of Selena & Montez, if the Respondent was arguing (at par.36, relying upon Selena) of the need for caution in making a costs funding Order because of the risk of it never being able to be re-paid.

    [6] Selena & Montez [2017] FamCA 583. See Applicant’s Primary Submissions, at par.2, footnote 2; and Respondent’s Submissions at par.36. The Respondent’s submissions give no paragraph reference thereby making it more difficult to contextualise and comprehend the specific submission made by reference to the decision in Selena.

    [7] Atkins v Hunt (2018) 57 Fam LR 128.

  16. Such matters may detain us no longer.

Consideration & Disposition

  1. In Salvage & Fosse, at [14], the majority said:

    The critical question therefore[under s.79 (or 90SM)] is whether the applicant has “any real prospects of obtaining justice unless the order sought is made” (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just.  That question raises, at least, consideration of the strength of the applicant’s case and the effect of the order upon the respondent.

  2. In all of the circumstances of this matter, as they are presently but imperfectly known, and without being able to make any relevant findings, in my view it is “just [and equitable]” for a “legal funding Order” to be made, for the following summarily stated reasons:

    (a)The existence, and length of the relationship, are not disputed.[8]  The fact that there are contests regarding the nature and extent of contributions, notably by the Applicant, does not per se go to the question of making the costs Order here sought.  In fact, the nature and extent of the contest in this regard, with such findings only being possible at a final hearing, only adds some strength to the Application for a litigation funding Order;

    (b)Leaving aside questions as to the timing and duration of them, there are not insignificant expressions of affection and devotion in writing (in English and Greek) in correspondence between the parties attached to the Applicant’s Affidavit material, thereby indicating if not confirming the existence of the relationship and the seriousness of it, at least at certain points in time;

    (c)It is not disputed that arrangements had been made for the parties to marry on the Respondent’s favourite Greek island of Land X (which also happens to be the island where the Respondent’s daughter has purchased a property, funded by her Mother).  The wedding was to take place in 2019.  On the Respondent’s evidence, she was left to pay expenses associated with the wedding of $100,000 (the amount may actually be in Euros but this is not immediately clear);[9]

    (d)An engagement ring, recently valued at just under $8000 was purchased and was the subject of some excited messages between the parties, which are attached to the Applicant’s Affidavit.  There are copies of further correspondence relating to the ring in the Respondent’s material.  Where the funds came from for the purchase remains curiously unclear and otherwise opaque at this stage, although the Respondent has urged the Applicant to sell the ring (which seems to be in her possession) to assist in payment of his outstanding and ongoing legal fees.  Respectfully, given the prodigious legal fees paid by the Respondent thus far, something in the staggering order of $191,000, such a suggestion borders on the crass and offensive, or “trite”, as set out in the Applicant’s Submissions in Reply (par.23).[10]  In my respectful view, this is a relatively straight-forward property matter, which happens to have a relatively large property pool.  Otherwise, it is unexceptional.  There are standard contests over contributions, and presumably in time, over future needs.  As an observation only, it is almost inconceivable how an amount of $191,000 in legal fees has been incurred at this stage of the proceedings – or at any other time;

    (e)Although reserving her position on the matter, as set out in the submissions of Senior Counsel then acting for the Respondent, filed 21st September 2020 (pars.2 & 3), there has been more than ample time for the Respondent to bring the foreshadowed summary dismissal Application.  This has not occurred for reasons unexplained but which the Court may, at this juncture, reasonably infer, namely that it would not likely enjoy relevant prospects of success;

    (f)As noted in the Respondent’s Affidavit, affirmed 24th October 2020, she deposed to having spent or incurred legal fees in excess of $190,000 (and apparently having paid perhaps $150,000, the source of which being not immediately apparent).  In submissions, and/or in later filed Affidavits but not otherwise previously disclosed in her Financial Statement, the Respondent has outlined a range of business transactions involving significant disposition and or transfer of funds for business purposes.  She has also latterly advised of funds provided to her daughter for the purchase of property on Land X, originally indicated to be $250,000, but which was in fact €250,000, which equates to approximately $410,000.  As set out in the Applicant’s submissions (and by reference to documents in a Tender Bundle), previously indicated concerns by the Respondent about shortfalls in income from, for example, the businesses, has not materialised.  Nor have the sources for these disposition of funds been readily or clearly identified;

    (g)“Conduct”, of course, is a factor in litigation funding Applications under s.117(2A)(c). Among other things, it is also relevant in outlining (without making findings) income and/or assets out of which funds may be obtained for the purposes of a LFO. Regrettably, if the “gaming” in the litigation would cease by one or both sides, the sooner some genuine attention could and should be given to resolving it so that the parties can get on with their lives;

    (h)Not to provide funds to the Applicant, whatever the relative strength of his case, would only perpetuate the inequity (and thereby a certain iniquity) in trying to ensure that any Order made is truly “just and equitable” in all of the circumstances;

    (i)The Applicant is embroiled in litigation in which there is currently no litigiously level playing field.  While the Court is not, and cannot, engage in social engineering in any relevant respect, it must ensure, so far as is possible as a matter of justice (if not procedural fairness) in accordance with principle, that both parties are justly able to have their property dispute resolved either by mediation, or by arbitration, or by the Court.  The litigation funding Order sought by the Applicant seeks to ensure that this occurs.

    [8] The Respondent contends that the relationship was of approximately 9 years rather than 10 years as asserted by the Applicant.  See Respondent’s 12th May 2020 Affidavit, par.11.  It is unlikely that one year either way is likely to be a determinative matter in the final result.

    [9] See the Respondent’s Affidavit, filed 12th May 2020, par.12.

    [10] I note that at [46] in Salvage & Fosse, the majority, not for the first time by the Full Court (and others) in recent years, expressed their “anxious concern about escalating legal expenses.”

  3. While not directly relevant to the matters to be considered, I note the following matter in passing.

  4. The Applicant has provided evidence from a psychologist and his general practitioner as to his difficult psychological state and health more generally, and that he is otherwise only in receipt of Centrelink benefits, one likely issue to be addressed at any trial relates to his capacity to work.  This would likely be a very lively discussion – I do not put it any higher – perhaps especially in both the contributions and future needs sections of the hearing.  This is particularly so given, on the one hand, the Applicant’s contentions of his major contribution(s) to the management of the Respondent’s real estate portfolio (including repair work), and on the other hand, what seems to be a somewhat sudden demise or at least deterioration in his well-being and effective incapacity to engage in paid employment.  It is also, apparently, undisputed that the Applicant was once (not so long ago) an active participant in sports.  I mention these matters solely by way of observation and they should not be taken as any assessment or view of them.

  5. I am satisfied that the circumstances warrant a litigation funding Order be made in the Applicant’s favour in the sum of $110,000.  Arrangements are to be made for this sum to be paid to the Applicant’s legal representatives within 28 days.

  6. Because I have determined the matter by reference to s.117 of the Act, it is unnecessary to consider the Applicant’s submissions regarding alternative provisions of the Act in support of the LFO Application.

  7. Given the not infrequent, needless squabbling that has occurred already far too often (e.g. regarding disclosure, financial and other support agreed then [apparently] unilaterally changed), for more abundant caution, I will reserve the costs of both parties in relation to the LFO Application.  As a cautionary comment only, directed to all, accepting some slightly unusual but not uncommon aspects of the matter, including the Respondent being “isolated” but perhaps not totally forlorn in the Greek Isles for some time and apparently still in residence there; the range and size of assets; and the financial and “in kind” support already provided by the Respondent to the Applicant, the Court will likely look very dimly on any continuing issues regarding, for example, complete, frank, and ongoing disclosure – on all sides.

  8. Finally, for procedural purposes, within 21 days, the parties are to advise the Court of the following:

    (a)Whether the matter might proceed to arbitration (which will ensure a much quicker determination of the matter than if it remains, in either Court, for final hearing);

    (b)If in the affirmative, time-frames and any other agreed procedural Orders should also be specified; and/or

    (c)Whether the matter should otherwise proceed to private mediation (details regarding same are also to be provided); or

    (d)Whether the matter should be listed for further mention or direction on a date to be advised in April.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Judge W J Neville

Associate: 

Date: 28 January 2021


Key Legal Topics

Areas of Law

  • Family Law

  • Civil Procedure

Legal Concepts

  • Costs

  • Jurisdiction

  • Remedies

  • Standing

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0

Cases Cited

3

Statutory Material Cited

2

Manly Council v Byrne [2004] NSWCA 123
Salvage & Fosse [2020] FamCAFC 144
Selena & Montez and Ors [2017] FamCA 583