Barre & Barre
[2018] FCCA 97
•19 January 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| BARRE & BARRE & ANOR | [2018] FCCA 97 |
| Catchwords: FAMILY LAW – Binding financial agreement – spousal maintenance – Injunctive relief – costs – lump sum costs – jurisdiction of the Court. |
| Legislation: Family Law Act 1975, ss.90B, 90K, 72, 74, 75, 79, 80, 90E, 90F, 114, 117 |
| Cases cited: Abati & Cole [2015] FamCA 185 In the marriage of Bevan (1995) FLC 92-600 N & N (1997) FLC 92-782 |
| Applicant: | MS BARRE |
| First Respondent: | MR BARRE |
| Second Respondent: | COMPANY A |
| File Number: | SYC 6149 of 2016 |
| Judgment of: | Judge Kemp |
| Hearing date: | 7 December 2017 |
| Date of Last Submission: | 7 December 2017 |
| Delivered at: | Sydney |
| Delivered on: | 19 January 2018 |
REPRESENTATION
| Counsel for the Applicant: | Mr Blackah |
| Solicitors for the Applicant: | Swaab Attorneys |
| Counsel for the Respondents: | Mr Lethbridge SC |
| Solicitors for the Respondents: | Searle & Associates Lawyers |
THE COURT ORDERS, PENDING FURTHER ORDER, THAT:
The applicant wife be given leave to file a Further Further Amended Initiating Application within 7 days of today’s date, seeking, inter alia, an order that the respondent husband pay her maintenance.
Upon compliance with order 1 above, the respondent husband pay the applicant wife maintenance in the sum of $381.00 per week, with such first payment to be made on 26 January 2018 and thereafter, weekly.
If there is non-compliance with order 1 above, then order 2 is discharged.
The interim injunctive orders 1(a), 1(b), 2(a), 2(b) and 3 made on 28 July 2017 stand.
The husband, in his capacity as a director of Company A, do all acts and things and sign all documents necessary to cause to be lodged on behalf of Company A a company tax return for the 2017 financial year, as soon as practicable.
The husband cause to be served upon the solicitor for the wife a copy of the assessment notice in respect of the GST liability payable to the Australian Taxation Office (“ATO”) by Company A, consequent upon the sale of Property B.
Subject to the husband's compliance with orders 5 and 6, above, that the husband and the wife do all acts and things and sign all documents necessary to cause to be paid to the husband from the Controlled Monies Account in the name of Swaab Attorneys in trust for the husband and the wife (account number …78) the sum of $102,500.00 and that the husband cause to be paid, forthwith, such sum to the ATO, such debt being in the name of Company A and such sum representing GST payable upon the sale of the Property B.
By consent, the proceedings be transferred to the Family Court of Australia on 14 March 2018 at 10:30am.
THE COURT NOTES THAT:
It accepts the undertaking of the husband to pay, as and when due, all mortgage repayments, rates, taxes and charges due in respect of Property C.
IT IS NOTED that publication of this judgment under the pseudonym Barre & Barre & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6149 of 2016
| MS BARRE |
Applicant
And
| MR BARRE |
First Respondent
| COMPANY A |
Second Respondent
REASONS FOR JUDGMENT
Introduction
The applicant wife (“the wife”) seeks orders, pending further order, as set out in her Application in a Case filed on 22 November 2017, to the following effect:
(1) That the injunctions granted by the Court on 28 July 2017 numbered l(a) and (b), 2(a) and (b) and 3, enumerated below, continue in operation.
1. That the second respondent Company A by its officeholders, servants and agents and/or the husband in his capacity as director of Company A, or Company D or Company E or Company F or Company G or in his capacity as director of any company (“the companies”) be restrained:
a. from causing any of the companies to trade, other than in the ordinary course of business; and
b. from causing the payment of any revenue generated in respect of any or all of the companies to the husband or to any other employee, officeholder, shareholder or any other person or entity, other than for the payment of salary and/or wages and/or other employment entitlements or otherwise in the ordinary course of business.
2. That Company A or the companies by their officeholders, servants and agents and/or the husband do all acts and things and sign all documents necessary to:
A. cause to be delivered to the wife monthly management accounts in respect of each of the companies on or before the fifth day of each calendar month; and
B. cause to be delivered to the wife all bank account statements in respect of each of the companies on a monthly basis on the fifth day of each calendar month.
3. That the husband and the wife do all acts and things and sign all documents necessary to instruct J Accountants to prepare outstanding tax returns and financial accounts for the parties' self-managed superannuation fund known as Superannuation Fund H.
(2) That the husband do all acts and things necessary to promptly produce to J Accountants, or any other accountant instructed by the trustees of the Super Fund, any or all documents that they may request, which would enable them to prepare financial accounts, tax returns and/or to conduct an audit in respect of the Super Fund.
(3) That pending settlement of the sale of real property situate at and known as Property C, the husband do all acts and things to cause to be paid as and when same shall fall due all mortgage repayments, rates, taxes and charges due in respect of Property C.
(4) Further, or in the alternative, that the husband and the wife do all acts and things and sign all documents necessary to sell Property C and in particular to:
(a) instruct Swaab Attorneys to prepare a Contract for Sale of Land for Property C;
(b) list Property C with a real estate agent (“the agent”) for the sale of Property C by public auction at the earliest possible date;
(c) execute all documents requested by the agent for the sale of Property C;
(d) request the agent to recommend a reserve price to be placed on Property C for the purposes of the auction sale and to accept such recommended reserve price;
(e) request the agent to appoint an auctioneer to auction Property C;
(f) attend the auction sale and negotiate with the highest bidder in the event the reserve price is not reached;
(g) execute a Contract for Sale of Land in respect of Property C;
(h) cooperate in every way with the agent in relation to the auction and the sale of Property C;
(i) execute all other documents necessary to complete the sale of Property C; and
(j) maintain the interior and exterior of Property C in good condition, fair wear and tear excepted.
(5) That from the proceeds of sale of Property C, the husband and wife do all acts and things and sign all documents necessary to cause the proceeds of sale to be paid in the following manner and priority:
(a) in payment of the agent's commission, advertising and auction fees (if any) due on sale;
(b) in payment of the legal costs and disbursements of the sale;
(c) in payment of the usual adjustments as between vendor and purchaser in accordance with the sale contract;
(d) in payment of the amount required to discharge any mortgage registered on the title to Property C;
(e) in payment of $300,000.00 to Ms K and to pay the costs of registration of the withdrawal of the caveat registered dealing number …00; and
(f) in payment of the balance into the controlled monies account held in name of Swaab Attorneys in trust for the husband and wife bearing account number …78 (“the CMA”).
(6) That the husband and the wife do all acts and things and sign all documents necessary to instruct Swaab Attorneys to pay the following amounts from the CMA:
(a) in payment of $120,000.00 to be applied towards accounts rendered by the wife's solicitor, including in relation to expenses associated with the present proceedings (“interim costs”);
(b) in payment of lump sum spouse maintenance to the wife in the sum of $48,000.00;
(c) in payment of $3,188.33 to the wife to discharge the arrears due by the husband to the wife as at 20 November 2017 in respect of child support; and
(d) in payment of the cost of improvements to Property C to enhance its presentation pending its sale as may be agreed between the parties, such sum to be characterised by the Trial Judge.
(7) That the husband, in his capacity as a director of Company A, do all acts and things and sign all documents necessary to cause to be lodged on behalf of Company A a company tax return for the 2017 financial year, as soon as practicable.
(8) That the husband cause to be served upon the solicitor for the wife a copy of the assessment notice in respect of the GST liability payable to the Australian Taxation Office (“ATO”) by Company A, consequent upon the sale of Property B.
(9) That subject to the husband's compliance with orders 7 and 8 above, that the husband and the wife do all acts and things and sign all documents necessary to cause to be paid to the husband from the CMA the sum of $102,500.00 and that the husband cause to be paid, forthwith, such sum to the ATO, such debt being in the name of Company A and such sum representing GST payable upon the sale of the Property B.
(10) That the proceedings be transferred from the Federal Circuit Court of Australia to the Sydney Registry of the Family Court of Australia.
(11) That if the husband or the wife refuse or neglect to sign any document that he, she or they are required to execute pursuant to these orders, the Registrar of the Court be appointed pursuant to s.106A of the Family Law Act 1975 (“the Act”) to execute such document in the name of the defaulting party and to do all acts and things necessary to give validity to the operation of the document.
(12) That the husband pay the wife’s costs of and incidental to these proceedings.
The respondent husband (“the husband”), on the other hand, seeks orders, as set out in his Response filed on 5 December 2017, to the following effect:
(1) That the wife’s Application in a Case filed on 22 November 2017 be dismissed.
(2) That order 2(d) made on 3 May 2017 be discharged.
(3) That the monies presently held on behalf of the parties by Swaab Attorneys in the CMA be paid to Company A’s bank account held with the Commonwealth Bank of Australia (“CBA”) (account no. …27).
Order 2 made on 3 May 2017 was to the following effect:
(2) That from the proceeds of sale of the Property B, the husband and/or Company A do all acts and things and sign all documents necessary to cause the proceeds of sale to be paid in the following manner and priority, pending further order:
(a) in payment of the agent’s commission and auction expenses (if any) due on the sale;
(b) in payment of the reasonable legal costs and disbursements of the sale;
(c) in payment of the amount required to discharge any mortgage registered against the title of the Property B; and
(d) the balance to be retained in the CMA in the name of Swaab Attorneys, held in trust for the husband and the wife, pending further order of the Court or the written agreement of the husband and the wife.
The husband did not seek to disturb orders entered into by consent, which saw Company A and himself, in effect, do all things necessary to complete the sale of the Property B, contracts for the sale of which were exchanged on or about 23 March 2017.
The husband seeks the discontinuation of the injunctions made on 28 July 2017, which the wife seeks to have continued. Those injunctions were made without prejudice to the parties’ rights to argue that the orders were made without jurisdiction and were to the following effect:
(1) That Company A by its officeholders, servants and agents and/or the husband, in his capacity as director of Company A or the companies, be restrained:
(a) from causing any of the companies to trade, other than in the ordinary course of business; and
(b) from causing the payment of any revenue generated in respect of any or all of the companies to the husband or to any other employee, officeholder, shareholder or any other person or entity, other than for the payment of salary and/or wages and/or other employment entitlements or otherwise in the ordinary course of business.
(2) That Company A by its officeholders, servants and agents and/or the husband, in his capacity as director of Company A or the companies, do all acts and things and sign all documents necessary to:
(a) cause to be delivered to the wife monthly management accounts in respect of each of the companies on or before the 5th day of each calendar month; and
(b) cause to be delivered to the wife all bank account statements in respect of each of the companies on a monthly basis on the 5th day of each calendar month.
(3) That the husband and the wife do all acts and things and sign all documents necessary to instruct J Accountants to prepare outstanding tax returns and financial accounts for the parties’ self-managed superannuation fund, being the Super Fund.
The husband did not argue that orders 2 and 3, as set out in paragraph 5 above, should not continue.
On 31 August 2005, the parties entered into a purported Binding Financial Agreement (“the subject agreement”), pursuant to s.90B of the Act.
The wife, in her Further Amended Initiating Application filed on 11 April 2017, seeks an order, inter alia, that the subject agreement be set aside with leave to seek further/other orders within 28 days of the husband providing full financial disclosure. In the alternative, she also seeks that if the subject agreement is not set aside, then orders be made to enforce the terms of that agreement, including orders for the sale of Property C, the Property B, superannuation splitting orders and orders by way of child support departure under s.117 and s.124 of the Child Support (Assessment) Act 1989.
The basis of the wife’s application to set aside the subject agreement appears to be under s.90K(1)(d) of the Act, which states that:
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
…
(d) since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside…
The wife says that the subject agreement should be set aside for material changes in circumstances, due to her care responsibilities for the children (as noted by the Court on 28 July 2017).
The husband says that, for his part, the proposition that either the children or the wife would suffer hardship if the subject agreement is not set aside is without merit and bound to fail. The husband says that, in accordance with the subject agreement, the wife would, then, be liable to him for all of his legal costs on a solicitor/client basis for defending the subject agreement and that that would, necessarily, significantly reduce the wife’s claim against the parties’ shared or separate property, pursuant to the terms of the subject agreement.
The matter was listed on 7 December 2017 for interim hearing in relation to further injunctive relief, any lump sum spousal maintenance and/or legal cost sums to be released.
At the hearing, the wife was represented by Mr Blackah of Counsel and the husband was represented by Mr Lethbridge of Senior Counsel.
The wife relied on the following:
a)Her Affidavit sworn and filed on 22 November 2017;
b)Her Financial Statement sworn and filed on 3 April 2017; and
c)Her written electronic submissions filed on 24 November 2017 and 6 December 2017 (in reply).
The husband relied on the following:
a)His Affidavit sworn on 4 December 2017 and filed on 5 December 2017;
b)His Financial Statement sworn on 1 May 2017 and filed on 3 May 2017;
c)The wife’s Further Amended Initiating Application filed on 11 April 2017; and
d)His written electronic submissions filed on 30 November 2017.
The following documents were tendered as exhibits at the hearing:
Exhibit No
Document
Tendered by
A
Letter addressed to the wife from Bank L regarding the home loan of the parties dated 4 December 2017
The wife
B
Letter addressed to the wife from the Child Support Agency regarding the change of assessment dated 16 November 2017 and attached documents dated 15 November 2017
The wife
C
CBA statements for entities in the control of the husband
The wife
Further, both parties agreed (as also noted by the Court on 28 July 2017) that these proceedings should be transferred to the Family Court of Australia following determination of this interim application. Both parties say that this matter is in the category of the most complex financial cases that come before the Courts exercising jurisdiction under the Act. An order will be made, by consent, to that effect.
The limitations of an interim hearing
The Court, as stated, hears this matter on an interim hearing basis, as the parties have confirmed there is urgency in obtaining relief.
The Court’s determination, therefore, is based only on a study of the documents before it, including affidavits read, documents tendered and the submissions of the parties’ legal representatives. There is no provision, at the interim hearing stage, for a more extensive hearing where evidence can be tested in cross-examination and where the Court can make findings of fact, after testing credibility and truthfulness.
Background facts
The following background facts are relevant to the current application:
a)The husband was born 1972 and he is, currently, aged 45 years.
b)The wife was born 1974 and she is, currently, aged 43 years.
c)On 31 August 2005, the parties entered into the subject agreement.
d)In 2005, the parties married.
e)In 2007, the child, [X] was born and he is, currently, aged 11 years.
f)In 2012, the child, [Y] was born and he is, currently, aged 5 years. [X] and [Y] are collectively referred to as “the children”.
g)The wife, herself, owns a property at Property M which she values at $850,000.00, with a mortgage of $500,000.00.
h)On about 8 May 2015, the wife says that she had a discreet agreement with the husband, whereby she refinanced Property M and borrowed $500,000.00 from N Mortgagee. The wife says that this agreement could possibly, but not necessarily, be characterised as “collateral” to the subject agreement, but may not be governed by it.
i)The husband and the wife jointly own Property C, which the wife says is valued at $2,000,000.00, with a mortgage of $569,820.00.
j)On 29 October 2015, the parties separated, when the wife and the children vacated Property C, being the parties’ then matrimonial home.
k)On 14 March 2016, the husband was convicted of assaulting the wife on 20 November 2015 and placed on a good behaviour bond for a period of 12 months.
l)On 22 March 2016, following a defended hearing, a final Apprehended Domestic Violence Order (“ADVO”) was made against the husband for the wife’s protection, for a period of 6 months.
m)On 23 September 2016, the wife commenced these proceedings, initially, seeking only parenting orders in respect of the children and then, subsequently, amended to include property and financial orders.
n)On 30 November 2016, orders were made, which provided, inter alia, that the husband’s time with the children was conditional upon him undergoing random drug testing and a hair follicle drug test. The wife says that he has not undertaken these tests.
o)The husband is the sole director and secretary of Company A. Company A has 2 ordinary issued shares, held by Company F. The husband is the sole director, secretary and shareholder of Company F.
p)Company A owned Property B.
q)On 23 March 2017, Property B was sold at auction. The wife says this was done without prior notice to her. The net proceeds of sale, being $779,190.47, were paid into the CMA. The CMA had a balance, as at 21 November 2017, of $658,435.51, with a potential liability of $102,500.00, being a tax on the sale price of Property B due to the ATO.
r)On 6 April 2017, Company A was joined as the second respondent to these proceedings. Further, on that date, the Court noted that the husband had agreed to pay child support for the children of $400.00 per week. The wife said that he has not done so.
s)The wife is expecting a child, due in January 2018 from her relationship with a Mr O.
t)The husband says that the wife and Mr O are living in a de facto relationship. The wife disputes that.
u)The husband has an adult child, Ms P, living in his household and he claims to expend money on her part in his financial statement, totalling $570.00 per week.
v)On 28 July 2017, orders were made, by consent and “without prejudice” to the parties’ rights pursuant to the injunctive orders made on 3 May 2017, restraining Company A from trading other than in the ordinary course of business, requiring the furnishing of monthly accounts and bank statements in respect of the companies to the wife, for J Accountants to provide tax returns for the Super Fund and for the release of monies from the CMA to pay certain debts.
w)At the time of the hearing, the wife was employed as a recruitment consultant.
x)At the time of the hearing, the wife was living with her mother, Ms K at Location Q.
y)At the time of the hearing, the husband was employed as a director.
z)At the time of the hearing, the husband was living at Property C with his adult daughter, Ms P.
The law
The Court must consider the spousal maintenance claim in accordance with the assessment process identified by the Full Court of the Family Court of Australia in In the marriage of Bevan (1995) FLC 92-600,
which requires:a)first, a threshold finding under s.72 of the Act;
b)secondly, a consideration of the factors in s.74 and s.75(2) of the Act;
c)thirdly, without the application of a fettering principle that any pre-separation standard of living must automatically be awarded where the respondent’s means permit; and
d)finally, subject to the Court’s general discretion, to be exercised in accordance with provisions of s.74 of the Act with “reasonableness in the circumstances” as the guiding principle.
The threshold requirement as set out in s.72 of the Act provides that a party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support himself or herself adequately, whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in s. 75(2).
Goldstein J in Evans & Evans (1978) FLC 90-435 noted that:
Section 72, for all that it is a threshold provision in the maintenance Part must not be read alone and it must firstly be read in the light of sec. 74. Section 72 cannot restrict the Court's duty to make such order “as it thinks proper”.
Further, Mullane J in N & N (1997) FLC 92-782 stated that:
[T]the interpretation of the expression “unable to support herself or himself adequately” is subject to the words “having regard to any relevant matter referred to in subsection 75(2)”.
Consideration of sections 74 and 75(2)
Section 74(1) of the Act provides that:
In proceedings with respect to the maintenance of a party to a marriage, the Court may make such order as it considers proper for the provision of maintenance in accordance with this part.
Section 75(1) of the Act provides that:
In exercising jurisdiction under section 74, the Court shall take into account only the matters referred to in subsection (2). [emphasis added]
The matters to be so taken into account under s.75(2) of the Act are as follows:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia,
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person, the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties; and
(q) the terms of any Part VIIAB financial agreement that is binding on a party to the marriage.
The test for taking into account a matter under s.75(2) of the Act, is also its relevance to a “just and equitable order”: Waters & Jurek (1995) FLC 92-635. Consideration, however, can be limited to the most relevant matters rather than all which have some relevance: Collins & Collins (1990) FLC 92-149.
The Full Court of the Family Court of Australia In the marriage of Bevan (1995) FLC 92-600 held that, while the Court should pay proper regard to the factors set out in s.75(2) of the Act, an award of maintenance should not be at a subsistence level.
The wife submits that in Budding [2009] FamCAFC 165, the Full Court of the Family Court of Australia said:
The question then arises as to what is a standard of living which is reasonable. The answer obviously depends on the circumstances of each case. However, some general matters are well established. Where possible both spouses should continue to live after separation at the level which they had previously enjoyed if this is reasonable: Patterson and Patterson (1979) FLC 90-705 at 78,759. However, this may be unreasonable. It may be that the term adequately requires a lower standard of living than that enjoyed during cohabitation because after separation the financial resources are not sufficient to enable the parties to each maintain the same standard of living they enjoyed when they lived together: Nutting and Nutting (1978) FLC 90-410. In such a situation it is not reasonable that one party should enjoy a higher standard of living than the other. On the other hand there may be circumstances where the term adequately imports that it is reasonable that the parties live at a higher standard of living than previously enjoyed: Groutsch and Groutsch (1978) FLC 90-461 at 77,360. However, there is no general rule that the pre-separation standard of living should be maintained simply because the other spouse can afford to do so: Bevan and Bevan (1995) FLC 92-600 (supra).
Importantly, s.75(3) of the Act provides that when a Court exercises jurisdiction under s.74 of the Act, the Court “shall disregard any entitlement of the party whose maintenance is under consideration to an income tested pension, allowance or benefit”. Government pensions, allowances or benefits are defined in regulation 12A of the Family Law Regulations 1984.
With respect to the general powers of the Court in financial proceedings, s.80(1) of the Act is of relevance and s.80(1)(b) allows the Court to order payment of a weekly, monthly, yearly or periodic sum. Section 80(1)(h) allows the Court, inter alia, to make an order pending the disposal of the proceedings.
The subject agreement
In terms of the wife’s application for spousal maintenance, the Court must determine whether its jurisdiction is excluded, in terms of the parties’ entry into the subject agreement.
The husband says that the subject agreement evidences the intention of both the husband and the wife, at Clause D:
“…to exclude the power of the Court to make any decision in respect of their property, liability and financial resources of one another in accordance with [the Act]”.
The Court’s jurisdiction would, then, be limited to implementing the parties’ intention at Clause G, that the subject agreement be given effect by this Court.
The Court accepts that while the subject agreement refers, at Clause F, to the fact that the parties intended that the subject agreement have “full effect”, irrespective of whether or not there were children born of the marriage, the subject agreement goes on to state that:
“the parties acknowledge that [this agreement] does not relate or in any way negate any right either party may have in making a claim for child maintenance”.
The Court, therefore, does not accept the husband’s written submission that the subject agreement, therefore, excludes the parties’ financial rights, with respect to any children that they have.
Further, the Court does not accept that the subject agreement excludes either party’s right to make an application for spousal maintenance.
The husband says that, while the actual words “spousal maintenance” are not referred to as excluded, inferentially they were, as they were not, specifically, included within the terms of the subject agreement as being an excluded item, similar to the child support, as referred to in paragraph 35, above. Further, the husband says that a party’s income, once received, is “property” and, therefore, included in the terminology in Clause D of the subject agreement and, accordingly, excluded and unable to be dealt with by the Court under either s.79 or s.74 of the Act.
The husband, further, says that such an outcome, being no ability to apply for spousal maintenance, would be consistent with the fact that the subject agreement was entered into in circumstances where both parties were in employment, apparently able to adequately support themselves, at that time, and intended to continue to do so in the future. The Court does not accept that submission. While the subject agreement contemplated the parties having children, it was silent as to the impact of having children on each of their earning capacities.
The husband, further, says that if the Court is satisfied that the wife is not precluded from making an application for spousal maintenance, then the Court would be satisfied that any such application is likely, in any event, to fail, for the reasons set forth further below.
The wife submits that since the birth of the children and the parties’ separation, her ability to maintain herself has been, substantially, altered, given her asserted ongoing childcare responsibilities for the children, who have special needs, based on their health considerations.
The wife also relies on s.90E of the Act, which states that:
A provision of a financial agreement that relates to the maintenance of a spouse party to the agreement or a child or children is void unless the provision specifies:
(a) the party, or the child or children, for whose maintenance provision is made; and
(b) the amount provided for, or the value of the portion of the relevant property attributable to, the maintenance of the party, or of the child or each child, as the case may be.
The wife further refers to s.90F of the Act, which states that:
(1) No provision of a financial agreement excludes or limits the power of a court to make an order in relation to the maintenance of a party to a marriage if subsection (1A) applies.
(1A) This subsection applies if the court is satisfied that, when the agreement came into effect, the circumstances of the party were such that, taking into account the terms and effect of the agreement, the party was unable to support himself or herself without an income tested pension, allowance or benefit.
(2) To avoid doubt, a provision in an agreement made as mentioned in subsection 90B(1), 90C(1) or 90D(1) that provides for property or financial resources owned by a spouse party to the agreement to continue in the ownership of that party is taken, for the purposes of that section, to be a provision with respect to how the property or financial resources are to be dealt with.
Further, in the decision in Boyd & Boyd [2012] FMCAfam 439, Brown FM (as His Honour then was) considered the history and proper construction of s.90E and stated:
Essentially, the Legislature requires that any consent order or financial agreement specify which portions of any lump sum or property order conferred thereunder are for either spousal or child maintenance, so that the social security implications of such an order or agreement is apparent.
The wife referred to that decision and submitted that, as the subject agreement did not comply with s.90E of the Act, then that was “the end of the matter” and the wife’s spousal maintenance rights were, clearly, preserved.
The Court is satisfied that the subject agreement is silent as to any provision for the payment (or exclusion of payment) of spousal maintenance. If one is to be inferred, in terms of Mr Lethbridge SC’s submission, if would, potentially, be void for uncertainty (Abati & Cole [2015] FamCA 185) or further, void in terms of the application of s.90E and s.90F of the Act. No provision of the subject agreement provides for the specification of any amount to be so provided by way of maintenance provision, in any event.
The Court finds that the subject agreement does not make specific reference to spousal maintenance and that such a reference cannot reasonably be inferred. In failing to adequately contemplate the provision of spousal maintenance, the subject agreement cannot be said to preclude the wife from making such an application or to oust the Court’s jurisdiction to make orders in relation to the same.
Injunctive relief
The injunctive relief sought by the wife is intended to preserve her inchoate right to a settlement of property (whether pursuant to or upon a setting aside of the subject agreement) and to prevent the frustration of her claim.
The wife submits that the conduct of the husband, as appears from her Affidavit, has the capacity to diminish the pool of assets and prejudice her position. The wife says that the husband has failed to comply with the Court’s orders, caused entities controlled by him, including a self-managed superannuation fund, to trade otherwise than in the ordinary course of business, failed to pay the housing loan in respect of the parties’ jointly owned property, being Property C, failed to submit to Court ordered drug testing and appears to have a significant gambling problem. The wife submits that all of these matters speak to the risk of dissipation of the monies in the CMA, if they were to be put into the husband’s hands. Further, she submits that, unless the injunctions continue, there will be a risk of the disposal of assets held by Company A and the companies, given that the husband, in effect, controls them.
The husband concedes that these proceedings constitute a matrimonial cause and, therefore, enable the Court to make such injunctions under s.114 of the Act.
The subject agreement provides that the separate property of the husband is his absolute property. The husband says, therefore, that his interest in any shareholding in Company A is his and until the subject agreement is set aside, there is no right or entitlement, pursuant to Part VIII of the Act, vested in the wife to protect. The subject agreement appears to divide the parties’ property between them on the basis that the parties had certain separate existing property, as disclosed in Annexures “A” and “B”, at the time of the subject agreement and, thereafter, would either acquire property shared or separately. The separate property acquired under the subject agreement would be dealt with as such, subject to any adjustments allowed for under the subject agreement. The husband maintains that the real estate acquired by Company A, including the Property B and, by extension, the proceeds of its sale, would fall within his separate property.
The principles grounding the wife’s application for injunctive relief are set out in the Full Court of the Family Court of Australia’s decision Waugh (2000) FLC 93-052 and, essentially, require her to establish that:
A) The injunction is necessary; and
B) The injunction goes no further than is necessary in order to prevent abuse or frustration of the Court’s process.
The husband says that:
a)As to whether the Court’s jurisdiction should be exercised to maintain the injunctions, that on the wife’s own evidence (and accepting her interpretation of the subject agreement, which is not conceded by the husband), there is sufficient equity in her assessment of the husband’s entitlement Property M, Property C and the Super Fund to meet his obligations to the wife and that, therefore, there is no utility in maintaining the injunction restraining Company A and the companies and those injunctions should, therefore, be discharged. On her own evidence, the wife would be entitled to recover, by way of certain agreed adjustments, about $634,019.93, together with 50% of the remaining value of Property C, being $598,080.03, totalling $1,232,099.96 (of which she says $300,000.00 is to be repaid to Ms K). The wife, however, maintains that there may not be sufficient equity in the above mentioned properties to enable the Court to do equity and justice between the parties (if the subject agreement is set aside) without recourse to the funds in the CMA belonging, nominally, to Company A, which the parties agree is the “alter ego” of the husband. It is not possible, at this time, to make any finding as to those competing assertions.
b)The wife, at this point in time, has no entitlement in the capital of Company A.
c)Further, the capital of Company A should not be used to meet costs or an order for spousal maintenance.
d)The imposition of the present injunctive relief, severely, hampers the ability of Company A and the companies to continue to trade in the ordinary course of business. However, apart from the husband’s assertion, the Court notes there is no independent and objective evidence to support that position.
e)The Court cannot be satisfied on the evidence that there is a risk of disposal of property in order to defeat the wife’s claim.
On the husband’s own evidence, the mortgage over Property C fell into arrears. The husband paid $6,500.00 on 4 December 2017, but Exhibit “A” shows that the arrears then outstanding were some $10,494.67. The failure to pay arrears does not, however, in itself, evidence an intent to dispose of property in order to defeat a potential claim by the wife. The Court notes the husband’s proffering of an undertaking, referred to in paragraph 93, below.
The funds used by the husband to pay the abovementioned arrears came from an account shown as “Personal [Mr Barre] $ Account”, being account number …69 (see Annexure “F”). This account, however, is not disclosed in the husband’s Financial Statement. In fact, in that Financial Statement, there is no reference to any bank account and at Item 37, in terms of funds in banks or other financial institutions, the husband has stated: “Nil”. This is of particular concern when the husband comes to the Court with obligations of candour and seeks to have injunctions discharged. This weighs against his application.
The wife submits that it is not apparent from the husband’s Financial Statement how he will continue to service the mortgage on Property C, given that his weekly expenditure of $4,190.00 exceeds his weekly income of $1,500.00 by $2,690.00. The Court accepts that submission, noting the matters below.
The husband appears to have received some $110,480.01 in the period 1 July 2017 to 18 November 2017 (see Annexure “E” to the husband’s Affidavit, being copies of CBA bank statements for Company D, Company A and Company E), which for a period of approximately 15 and a half weeks equates to some $7,127.00 per week by way of income, well in excess of the $1,500.00 per week claimed by the husband. This has not been explained by the husband and weighs against him.
From an analysis of the above accounts, referred to in Annexure “E”, some $105,518.94 also appears to have been transferred to an account number ending …59 for the benefit of “Ms R”. The evidence before the Court does not enable it to determine whether the husband has breached the injunctions in terms of the payments to himself and Ms R, above. The Court is concerned, however, that those payments could, on their face, be considered as payments made other than in the ordinary course of business. The lack of any explanation by the husband weighs heavily against his application.
The husband describes Ms R as his daughter, who is also known as “Ms R” and says she has worked for the Chief Financial Officer (“CFO”) of Company A and the companies, Mr S. Mr S left that employment in mid-2017 and now lives in Country T. The husband thought that his daughter could continue to do the administration and financials for Company A and the companies, until he could afford to employ a new CFO. The Court is concerned that, following Mr S’s departure, the husband would have placed the financial control responsibilities for Company A and the companies onto Ms R, who appears, on the husband’s own evidence, to be inadequately trained or professionally competent to undertake that task. This matter also grounds the making of proposed orders 7, 8 and 9, as referred to in paragraph 1, above.
The husband has, himself, conceded that he has not complied with Court orders made on 28 July 2017 in relation to the production of documents. The documents produced by him were not those which were required to be produced, being management accounts. The husband says that he apologises to the Court and to the wife for not doing so. The husband says that he thought that Ms R was producing those documents for the wife’s solicitor, but now knows that this did not happen. Further, the husband says that Ms R had printed out financials, but that she has since told him that she has no idea whether they were accurate or not. The husband says that Ms R was having her own health problems, at the time and could not cope with the work and expectations he had put on her. The husband says that Ms R had been diagnosed with severe depression and prescribed medication. The husband, given his concession as to non-compliance with Court orders, does not come to the Court with “clean hands” and this weighs, significantly, against his application for the discharge of the injunctive orders.
The husband says that Company A and the companies require the capital in the CMA, being the proceeds of sale of the Property B and the subject of the injunction, for their current business operations. No independent and objective evidence has been filed dealing, specifically, with that assertion or the assertion that such funds are required to meet inter-company debts. This is of particular concern, given Mr Lethbridge SC’s submission that “as happens in family companies, there is an intermingling of funds held by the proprietors”. Without independent control of the companies, the Court could not be satisfied that their assets would not be dissipated. This is, particularly, the case when the only persons who appear to be in control of Company A and the companies are the husband and, at his direction, his daughter, Ms R. Both appear to have serious health concerns. It would, potentially, be different if there was an independent management structure, shareholders and directors, which could give the Court some confidence that Company A and the companies would continue to trade, without the risk of dissipation. The husband, himself, deposes in his Affidavit filed on 5 December 2017 to selling $100,000.00 worth of stock, which would appear to be the stock in trade of Company D, required to enable it to operate. This gives the Court considerable concern. Further, the Court is concerned that the husband says that he bought “some” of the stock for $15,000.00, so that he, himself, could do small (omitted) jobs. This would appear to be taking business away from the companies and, potentially, placing him in some conflict. Given his assertion of no bank accounts, it is unclear how he would receive payment for such jobs, other than by way of cash and how he could provide a proper financial disclosure, thereof. The husband does not specify what part of the stock was actually purchased by him and whether proper valuations had been obtained prior to that purchase. On its face, the sale does not appear at arm’s length. The injunctions are framed so as to enable the companies to trade in the ordinary course. In that regard, they should be able to pay employees and contractors in the ordinary course of business. The failure of the husband to comply with orders for the provision of management accounts weighs against his application.
The Court accepts the wife’s submission that the proposition that the injunction severely hampers the ability of Company A to trade in the ordinary course (emphasis added) must fail in the circumstances in which the orders made on 28 July 2017, and in particular the order for provision of management reports, has not been complied with.
As a result of a review for periodic child support to be paid to the wife, there was a reassessment by the Child Support Agency of the amount required to be paid by the husband, which created arrears. The husband deposes that all child support was up to date as at 4 December 2017. That position was disputed by the wife. Given that the reassessment created arrears of some $10,200.18, the husband’s payment of $7,029.67 on 15 November 2017 meant that there was still outstanding a sum of $3,170.51. Mr Lethbridge SC appropriately conceded that position, in terms of a correction to his submissions.
The husband conceded an alcohol and drug problem, which has impacted upon his ability to run his business, Company A, and the companies properly. The husband says that he stopped drinking and taking drugs in early September 2017, but later relapsed. The husband admitted himself as an in-patient to a mental health clinic between 25 October 2017 and 14 November 2017. The husband, in his hospital admission notes, confirmed that he consumes 2 bottles of whiskey and $600.00 worth of cocaine per day. The husband also confirmed that he had a girlfriend with 3 children. The husband says that he has been diagnosed with bipolar disorder and prescribed medication for that diagnosis and his addictions. The husband has, further, conceded to having a gambling problem, stating that he has “cut back” (not stopped) his gambling. In submission, Mr Blackah stated that the wife was encouraged by the steps the husband had taken to deal with his alcohol and drug issues, but stated that she did not accept that he had been “cured”.
The Court finds that, contrary to the husband’s submissions, there is considerable utility in continuing the injunctions, which go no further than is necessary, in the circumstances of this matter, at this time. As such, they will not be discharged.
Spousal maintenance
The Court must determine:
a)to what extent the wife is unable to support herself, adequately, because of the matters set out in the relevant law; and
b)an amount that is reasonably required to provide adequate support for the wife, by an examination of the wife’s reasonable needs.
According to her most recent Affidavit filed on 22 November 2017, the wife’s weekly income is $1,465.00, which includes government benefits of $173.00 per week and child support of $266.00 per week. Her weekly expenditure is $2,676.00. She, therefore, has a shortfall of $1,211.00 per week. The wife claims expenses for the children of some $750.00 per week. The wife says that her personal shortfall is $461.00 per week, being her spousal maintenance claim. Her expenses appear somewhat high, including $100.00 per week for entertainment and hobbies and $58.00 per week for gifts. These total $158.00 per week. The Court would reduce that sum by 50%, equating to approximately $80.00 per week on those items. Accordingly, the Court accepts that the wife has a need of some $381.00 per week.
The wife’s expenses to meet reasonable needs were not substantially the subject of challenge and subject to the matters referred to above, the Court finds them, otherwise, reasonable.
The wife says that she is, currently, living with her mother, Ms K, as she cannot afford to pay the costs of her own separate accommodation.
The husband submits that the wife’s recent disclosure of her pregnancy must have a substantial bearing upon her application. He says that she was in some type of relationship with Mr O in about April 2016, but only disclosed her pregnancy in her Affidavit filed on 22 November 2017, despite the fact that she is expecting the child’s birth in January 2018. The husband says that this disclosure was made at a time when the nearness of the hearing date precluded any proper investigation of her evidence and that, but for the fact that the wife’s pregnancy would have been observable at Court, the Court may infer that the disclosure might not have been made, at all. The husband submits that the effect of the wife’s pregnancy on her ability to support herself has nothing to do with him. He says that, rather, the obligation to support the wife now falls to Mr O as a matter of public policy and pursuant to s.75(2)(o) of the Act.
The Court is of the view that if the wife was in financial need, irrespective of the issue of her pregnancy, then that would not, otherwise, negate the husband’s obligation to so maintain her. Mr O would have a separate obligation to maintain any child born of his relationship with the wife. The Court accepts that no Affidavit has been provided by Mr O for this aspect of the proceedings (noting that Mr Blackah submitted that he had provided an Affidavit as to parenting matters), which would, potentially, have assisted the Court in assessing whether he and the wife are in a de facto relationship or not. Mr Lethbridge SC submits that an adverse inference can be made against the wife for failing to file such an Affidavit. The wife’s position is that she is not in such a relationship. It is not clear, at this stage, whether she would bear the onus of calling Mr O, in any event. The Court will not make an adverse inference, at this time.
The eligibility of the wife to an income-tested pension is irrelevant to the question of whether or not she is able to support herself adequately. For the purposes of the wife’s capacity, income from such a pension is mandated by the statute to be nil. The amount of that income may, however, be relevant to the question of the quantum of any maintenance sum to be ordered.
The wife has available a motor vehicle estimated to be worth $34,000.00, household contents at Property C of $20,000.00 and jewellery of $600.00. She has superannuation in her own name of some $66,627.00 and superannuation in the Super Fund of $135,000.00. The wife also has available to her a property, being Property M, which is valued by her at $850,000.00 and subject to a $500,000.00 mortgage. The wife maintains that, given that mortgage position, she needs to have that property tenanted in order to service its debt. The wife says that it would be unreasonable to require her to sell it, given that the subject agreement would provide that that property is her separate property.
The authorities are clear that an applicant for maintenance does not have to use up all assets and capital to satisfy the requirement that they are unable to support themselves adequately.
The authorities are also clear that an applicant for maintenance cannot create their own “incapacity of self-support” by spending monies otherwise available to improve their capital position. That capital position can be considered a resource available to the applicant: In the marriage ofBerta (1988) FLC 91-916.
The Court accepts that the wife’s property and financial resources cannot reasonably be utilised to meet her immediate needs. The Court also notes that the wife says that both parties have borrowed some $300,000.00 from Ms K, who also expended some $81,563.00 to renovate her own property to enable the wife and the children to live there. Ms K has also contributed to the wife’s legal fees in the sum of $32,379.00 as at 3 April 2017.
In terms of the wife’s capacity for gainful employment, the wife’s evidence was that since [X]’s birth in 2007, she has only ever worked 2 days per week. The wife says that, notwithstanding her current pregnancy, she is unable to return to full time employment for the foreseeable future, as she needs to be available before and after school for the children, given their special needs.
The husband says that, as matters stand, prior to the birth of the expected child, the wife will continue to work and earn an income of $517.00 per week. The husband, further, says that the wife leads no evidence to support a conclusion that she is unable to increase her work regime following the birth of that child. The children appear to be attending primary school and the husband says that [X]’s school reports suggest his progress is solid and consistent with his abilities. The husband submitted that, in addition to her income, the wife continues to receive investment monies and pays no rent to Ms K. The wife does not exclude the possibility of borrowing further monies from Ms K.
Given the wife’s current childcare responsibilities (noting that the wife says that the children have special needs), the Court accepts that, at this time, it would not be unreasonable for her to continue working 2 days per week, given that that has been the position since about 2007. That is so, given that there is a paucity of any evidence as to what the wife’s position now is and as to what steps the wife has taken or failed to take in seeking any further remunerative employment.
In weighing up the above considerations, the Court finds that the wife is unable to support herself adequately, particularly by reason of her commitments in the care of the children. Taking an overall approach to the expenses to which the wife has referred, the Court is satisfied that she reasonably requires a sum of not less than $381.00 per week to adequately support herself.
The Court must now determine whether the husband has the capacity to be able to reasonably contribute to the wife’s required level of support and, if so, to what extent.
The husband’s Financial Statement shows an income of $1,500.00 per week, with personal expenditure of some $4,190.00 per week. His expenses, therefore, exceed his income by $2,690.00 per week. The total of the husband’s “other expenditure” referred to in Item 32 includes $500.00 per week for entertainment/hobbies, $50.00 per week for books and magazines and $100.00 per week for education for other adults, presumably being his adult daughter, Ms P, who earns approximately $700 per week, herself. These expenses total $650.00 per week. The husband also includes $600.00 by way of child minding in his expenses, which may be the costs to him of providing for supervision of his time with the children.
The husband has a motor bike, which he says is worth some $15,000.00, house contents of $25,000.00, watches, jewellery and 2 horses, which he says are worth $30,000.00. The husband does not place any value on his businesses, including Company A and the companies, other than to refer to them at Item 41, stating that their current value is “not known”. The husband has superannuation of $13,573.00 with U Superannuation and $700,000.00 in the Super Fund. The husband, further, refers to a director’s loan of some $450,000.00 in Item 50. The creation of this has not been adequately explained. The husband refers, in Item 59, to the sale of Property V within 12 months of separation, whereby $230,000.00 was received, said to have been utilised to pay outstanding tax. The creation of these tax debts has also not been adequately explained. These matters, without the husband’s explanation, also heavily weigh against his application.
The Court accepts that the husband does have the capacity to pay the wife maintenance. The husband conducts his business affairs through a number of corporate entities in which he has a directorship, has had significant sums of money go through his hands (or those of his daughter, Ms R) in a relatively short period of time between July 2017 and November 2017 (see paragraphs 57 and 58, above) and appears able to borrow funds by way of director loans.
While the Court accepts that this obligation to the wife may require the husband to reduce discretionary personal expenditure, the Court is not satisfied that it will require the drawing on capital.
The Court has taken into account that there appears to be a level of informality about the transactions between the husband, Company A, the companies and his daughter, Ms R, and the Court notes that it cannot get to the bottom of those issues at this time. As said, this weighs in favour of the injunctive orders continuing.
In considering the reasonableness of any order by way of regard to s.75(2) of the Act, all of the factors support the award of maintenance in favour of the wife, to be paid by the husband in the sum of $381.00 per week until the matter can be dealt with on a final basis. The Court accepts that that is a proper provision of maintenance.
The Court accepts Mr Lethbridge SC’s submission that there will need to be an application made for spousal maintenance on a final basis and leave will be given to the wife to implement that. Provided she does so, an order will be made for interim spousal maintenance. If the wife does not do so, there will be no order for interim spousal maintenance.
The Court is not of the view that there should be any lump sum spousal maintenance, in terms of s.80(1)(a) of the Act. The Court accepts that long-established principles further caution the Court against the making of any order for “lump sum” spousal maintenance: Clauson v Clauson (1995) FLC 92-595; Spano v Spano (1979) FLC 90-707. The Court accepts that there is inadequate evidence to determine that an order for payment of periodic spousal maintenance would not likely be complied with.
The husband’s undertaking
The husband is, currently, living in Property C. As stated above, the mortgage on that property was in arrears at one point.
Mr Blackah submitted that the husband’s Financial Statement indicates an inability to continue to maintain that property’s outgoings and mortgage. Mr Blackah also submitted that other financial material indicates that the husband has access to monies out of which he could meet his maintenance obligations to the wife. The Court is of the view that, at this time, those same monies may be available to the husband to continue to meet the outgoings and mortgage of Property C.
The subject agreement provides a mechanism for the parties to value the property and financial resources to be divided pursuant to that agreement and also provides, in respect of any shared property, for the parties to use their best endeavours to reach an agreement as to the terms of the sale, including sale by one to the other. While Mr Blackah submitted that the husband had a reasonable time or within 2 months from the separation of the parties to implement a “buy out” and had failed to do so, that is a matter for determination in respect of a final hearing. The subject agreement also provides that, in the event of a dispute between the parties as to the terms or operation of the subject agreement, the parties will do all acts and things necessary to obtain an order for a private arbitration. The Court accepts Mr Lethbridge SC’s submission that until the subject agreement is set aside, it “covers the field”, in terms of the matters as contemplated by that agreement. Unless there was a consent position for the sale of Property C (and the Court notes the husband does not agree), then no order can be made for its sale, given the terms of the subject agreement. The Court is not minded to make an immediate order for sale, as sought by the wife.
The Court accepts that if the husband is to continue to reside in Property C, he should continue to pay its outgoings and maintain its mortgage. The Court accepts Mr Lethbridge SC’s submission that this would, potentially, involve the Court making an interim property or maintenance order. However, Mr Lethbridge SC confirmed that the husband would provide to the Court an undertaking that he would meet the outgoings and mortgage payments as and when they fall due. The Court will accept that undertaking.
The Court notes that if the husband fails to pay any maintenance due to the wife or fails to comply with his undertaking in respect of Property C’s outgoings and mortgage, then, given the funds in the CMA are ostensibly the funds of Company A, the only source of funds available to meet any outstanding maintenance and/or property outgoings/mortgage would come from the jointly owned property, being Property C and, potentially, that property could be exposed in an enforcement application.
Costs
The wife submits that in Zschokke (1996) FLC 92-693, the Full Court of the Family Court of Australia said that whether the matter was determined as an interim property settlement order under s.80(1)(h) of the Act, or as an interim costs (or security for costs) order under s.117(2) of the Act, or indeed as a maintenance order, three matters would all be relevant, namely:
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 inability on the part of the Applicant to meet his or her litigation costs.
Further, the wife submits that in Strahan [2009] FamCAFC 166, the Full Court of the Family Court of Australia cited, with approval, a passage from the judgment of Nygh J in Poletti & Poletti (unreported, Family Court of Australia, 2 March 1990) in which Nygh J, when describing an application for “interim costs”, referred to the Reasons of the Full Court of the Family Court of Australia in Wilson and Wilson (1989) FLC 92-033 and said it is a:
…situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case.
The wife says that that is exactly the situation here.
The wife says that she is unable to meet the cost of legal representation and that she would be, seriously, prejudiced if she was unable to afford the cost of ongoing legal representation. She says that the only possible source of funds, on an interim basis, is the CMA.
The Court accepts that the circumstances in which an order for interim costs may be made are well established: Strahan v Strahan (2010) 42 FamLR 203.
The Court, further, accepts that in making any order for interim financial provision, it must be satisfied that there exists, at the time the order is made, a power to do so and it must be able to identify the power to be exercised to make the order: Gabel v Yardley (2008) FLC 93-386.
The wife’s legal fees are as set out in her Affidavit (at paragraphs 115 to 122), which provide that she has received invoices for legal costs in relation to these proceedings and the ADVO proceedings of $148,403.07. The wife says that she will incur a further $10,000.00 to the conclusion of this interim hearing. The wife says that she has paid $48,850.74 towards her costs and disbursements, of which Ms K has leant her $32,379.00. The wife says that she anticipates that she will incur a further $77,000.00, including GST, to complete a 3-day hearing. It is unclear what the breakup of the wife’s costs is, in terms of the ADVO proceedings and these proceedings, to date.
Further, in terms of the subject agreement, given that the wife seeks to set it aside, the subject agreement states that if the wife is unsuccessful, she would be liable for all of the husband’s legal costs, on a solicitor/client basis, associated with defending such an application. If the wife refused to pay those costs, the Court would have jurisdiction (not under s.117 of the Act, but under s.90KA) to make such an order by way of implementation and enforcement of the subject agreement. The husband does not assert that his costs are not being met. The parties would be entitled, however, to make applications for costs orders in relation to matters outside the subject agreement, including the parenting aspects of the proceedings, which would be determined by an application under s.117 of the Act.
In the present circumstances, there is no power to make an order for interim property settlement, which is the power almost always exercised when making such orders. The husband submits that there is, similarly, no power to make any order for maintenance, but that if this is not the case, then the application of the appropriate provisions would not permit an order to facilitate the wife’s payment to her lawyers by way of the maintenance provisions pursuant to the Act. The Court does not accept that submission. The Court is of the view that, if the wife was to maintain a maintenance claim and was unable to conduct that claim without some further order to provide for her costs in so doing, then the Court would have jurisdiction to provide for such an order, even in terms of a “dollar for dollar” order, in terms of the parties’ expenditures on their legal fees on such an application.
However, the Court accepts the husband’s submission that an application of the appropriate provisions in s.117 of the Act does not justify an order for costs, in terms of a lump sum (being the $120,000.000 as claimed) to be paid out of the CMA, given the ownership of that account as being, on its face, in Company A. Accordingly, the Court is not of the view that any lump sum should be provided by way of provision for the wife’s legal fees.
Given the nature of the orders made, particularly those set out in orders 5, 6 and 7 at the commencement of these reasons, the Court is not minded to make an order in terms of the wife’s proposed order 11, as set out in paragraph 1, above, as the nature of any default would need to be considered carefully to determine a mechanism to remedy it.
I certify that the preceding one hundred and five (105) paragraphs are a true copy of the reasons for judgment of Judge Kemp
Date: 19 January 2018
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