Batey-Elton and Elton and Anor (No. 2)

[2007] FamCA 682

FAMILY COURT OF AUSTRALIA

BATEY-ELTON & ELTON AND ANOR
(NO. 2) [2007] FamCA 682

FAMILY LAW – PROPERTY – Interim lump sum payments – Capacity to pay

APPLICANT: MRS BATEY ELTON

RESPONDENT: MR ELTON

INTERVENER: THE TRUSTEE IN BANKRUPTCY

FILE NUMBER: TVF 2250 of 2004

DATE DELIVERED: 11 July 2007

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: The Honourable Justice Jordan

HEARING DATE: 25 May 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Baston of Counsel

COUNSEL FOR THE RESPONDENT: Mr Page of Senior Counsel

SOLICITOR FOR THE RESPONDENT: Rod Madsen

SOLICITOR FOR THE INTERVENER: Mr Rodgers, from Tressox Lawyers

Orders

IT IS ORDERED

1. That the wife’s amended application for periodic and lump sum payments be dismissed.

IT IS DIRECTED

1. That, to the extent that the husband has not complied with paragraphs 2A, 2B, 3A, 3B and 5A of the Orders of the Court made on 13 December 2006, he do so on or before 26 July 2007.

2. That the husband file and serve a List of Documents upon which he intends to rely at the trial on or before 26 July 2007.

3. That the wife file and serve a List of Documents upon which she intends to rely at the trial on or before 26 July 2007.

4. That the husband file and serve a List of Witnesses intended to be called at the trial on or before 26 July 2007.

5. That the wife file and serve a List of Witnesses intended to be called at the trial on or before 26 July 2007.

6. That the wife file and serve a short Summary of Argument identifying the matters currently in issue and the Orders to be sought by her in relation to the children’s aspect of the case on or before 26 July 2007.

   IT IS NOTED

   (a)It is the intention of the Court to proceed firstly with the children’s issues at the final hearing commencing on 27 August 2007, with the intention of excusing the Independent Children’s Lawyer from further attendance during the property component of the hearing.

   (b)It is the intention of the Court to proceed secondly with the property issues at the final hearing commencing on 27 August 2007, with the intention of excusing the Official Trustee in Bankruptcy from attendance during the hearing of the children’s component of the trial.

IT IS FURTHER DIRECTED

1. That the matter be listed for a Pre-Trial Conference at 11.00 am on 27 July 2007 before Justice Jordan and a Registrar in Court 12, Level 2, Family Court of Australia, Brisbane.

2. That each of the parties prepare and have available to hand-up at the Pre-Trial Conference:

   (i)a list of assets with the value contended for and a list of liabilities -

   (a)     as at 10 September 2004;

   (b)    as at 27 July 2007;

   (ii)a calculation as to the percentage distribution each party contends was affected by the orders of 10 September 2004.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Jordan delivered this day will for all publication and reporting purposes be referred to as Batey-Elton & Elton & The Trustee in Bankruptcy

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: TVF 2250  of 2004

MRS BATEY-ELTON

Applicant

And

MR ELTON

Respondent

And

THE TRUSTEE IN BANKRUPTCY

Intervener

REASONS FOR JUDGMENT

1. This matter was last before me on 25 May 2007.

2. I had previously been allocated management of this complex matter and have been appointed the trial Judge to hear and determine outstanding substantive applications in relation to children’s matters and property settlement, which have now been listed for ten days commencing 27 August 2007.

3. Amongst the outstanding matters before me on 25 May 2007 was a long-standing application by the wife for an interim costs order in the guise of a Hogan application.  That matter was the subject of earlier material placed before the Court by the wife, including an affidavit filed on 12 February 2007.

4. The wife has been without legal representation for some time and she had previously been medically assessed as being emotionally incapable of representing herself in the legal proceedings.

5. The wife’s application for interim costs was further complicated by the fact that she remains an undischarged bankrupt and the Official Trustee in Bankruptcy is a party to these proceedings.

6. Submissions were made both by the Official Trustee and by counsel for the husband to the effect that there may be legal and practical impediments to an order for a lump sum payment on account of costs as a result of the wife’s bankruptcy and the potential consequences that the objective of having the fruits of any such order designed to be paid to the wife and paid by her in turn to her appointed legal representatives may be frustrated by the application of bankruptcy laws vesting such payments instead with the Trustee to apply in discharge of his obligations.

7. When the potential impasse of the wife’s inability to represent herself and her potential incapacity to access the fruits of any Hogan order were canvassed on a previous occasion, the prospect of approaching the President of the Bar Association was raised, with a view of ascertaining whether the Bar might arrange some pro bono representation for the wife, at least for the purposes of addressing these interlocutory issues.

8. As an apparent consequence of representations made to the Bar Association and in turn made by the Association to Mr Baston of Counsel, Mr Baston appeared pro bono before me for the wife on 25 May.  He indicated at that time that he had only recently been “engaged” and had only limited opportunity to have access to the wife and, more importantly, access to the vast array of issues and substantial body of material in this case.  He indicated to the Court that he felt unable to properly argue the interlocutory issues before the Court at that time and sought the indulgence of the Court to deliver written submissions.  He did make oral application to amend his client’s application to seek financial relief by way of urgent orders for interim spousal maintenance.  No objection was taken and leave was granted.

9. The Court received written submissions from the Trustee in Bankruptcy in relation to some of the legal issues on 25 May 2007.

10. It was agreed between counsel for the parties that Mr Page, Senior Counsel for the husband, would provide written submissions in reply and that this matter would be determined on the papers and that the Court should deliver judgment in Chambers and publish such judgment to the parties.

11. On 25 May, Mr Baston indicated to the Court that he hoped to be in a position to deliver his submissions during the course of the following week concluding the 1st of June and Mr Page indicated that, in that circumstance, he would hope to be in a position to deliver his submissions in reply either at the end of that week or early in the following week.  In turn, I indicated to counsel that I would be in a position to, and intend to, deliver judgment at some stage during the week concluding Friday, 8 June.

12. When submissions were not provided within the above time-frames, my Associate made some enquiries on behalf of the Court.

13. In a case which has been bedevilled with complications and delays, my Associate was advised that Mr Baston was experiencing some health difficulties, which were in turn interfering with his capacity to provide written submissions in the timely manner anticipated.

14. In the end result, I did not receive Mr Baston’s written submissions until 27 June 2007 and Mr Page’s written submissions in reply were not received until 4 July 2007.

15. In delivering judgment this day, the parties have lost some four or five further weeks in the context of a complicated trial set to commence in just over six weeks.  This is a most regrettable turn of events.

16. The orders sought by the wife in accordance with the written submissions of Mr Baston are as follows (and I proceed on the basis that the orders sought represent the particulars of those orders to be sought on behalf of the wife pursuant to the oral application for leave made on 25 May last).

    “1.That by way of urgent maintenance for the Wife the Husband forthwith pay or cause to be paid to [F Pty Ltd] the sum of $15,105.00, being the arrears owing in respect of the mortgage repayments in respect of the Wife’s residence.

    2.That further by way of urgent maintenance for the Wife the Husband pay or cause to be paid to [F Pty Ltd] the sum of $1,507.84 on or before the 1st of each month commencing 1 August 2007 being the monthly mortgage repayments in respect of the Wife’s residence.

    3.That on or before Friday 21 July 2007 by way of maintenance for the Wife the Husband pay or cause to be paid to the trust account of Nita Stratten-Funk Lawyers on account of the Wife’s legal fees the sum SIXTY THOUSAND DOLLARS ($60,000.00).”

17. I have earlier referred to issues relating to the viability of an order for payment of a lump sum in the context of the outstanding bankruptcy and note that the only submission made on that point by Mr Baston appears in paragraph 12 of his written submission, to the effect that:

    “It is conceded by the Husband and the Trustee in Bankruptcy that provided a Hogan type order is made for the maintenance of the Wife it is not subject to attack by the Trustee.”

18. I remain uncertain about that proposition at a number of levels.  Firstly, it is not clear to me that counsel for the husband and the solicitor for the Official Trustee have, in fact, formally or otherwise made such a concession.  Even if they have, I am not necessarily satisfied that the Court has power to make such an order bypassing the bankruptcy legislation and the obligations it creates upon the Trustee.  Finally, even if the Court does have the requisite power, I am not satisfied that to exercise any such power in the way suggested by

    
    

    Mr Baston is appropriate.  However, for present purposes, I am prepared to accept the effect of Mr Baston’s contention to firstly consider the question of whether there is any prima facie merit in the application and consider issues relating to jurisdiction and power only if I am satisfied that a claim is properly made out on behalf of the wife.

19. Notwithstanding the submissions of counsel for the husband, I am satisfied on the totality of the evidence before me in these continuing proceedings, including in particular the wife’s affidavit evidence filed on 12 February 2007, that she is unable to secure legal representation through the Legal Aid Office and that she is unable to secure funding privately or through any further litigation loan.  The evidence establishes to my satisfaction that, save for the receipt of periodic payments for property settlement, which funds have been applied to discharge debt and towards the acquisition of a home, the wife has effectively been impecunious since May 2004 and currently remains dependent upon social security and is an undischarged bankrupt who is in arrears in meeting her mortgage repayments.

20. In the context of either a maintenance application or an interim costs application, the wife must establish that the husband has the capacity to make the payments sought.

21. In his written submissions, Mr Baston correctly anticipated the submissions of counsel for the husband, to the effect that the husband does not have any apparent capacity to meet a periodic or lump sum order.  The husband’s affidavits and Form 13 Financial Statement filed on 25 May, at face value, suggest that no such capacity exists.  The husband declares his income at $777.00 per week, his expenses at $1,120.00 per week, his property at $54,505.00 and his liability at $660,853.00.  It appears from Mr Baston’s submissions that he was drawing upon previous evidence, indicating that, as at 5 January 2006, there was a borrowing facility of $600,000.00 secured against the property at “[DB]” and that, as at that date, only some $350,000.00 had been drawn down.  However, the affidavit evidence filed on 25 May indicates that the full amount of that facility has now been drawn down and the husband has sought to account for those monies.

22. On the face of the papers, at the present time, there is no clear capacity beyond contention that the husband has the capacity to pay, or to borrow to pay, all or any part of the funds sought by the wife in her amended application.

23. In the substantive proceedings, there are many vexed questions to be determined relating to the legal and beneficial ownership of “[DB]”, the status of the Family Trust and the legitimacy of the liabilities incurred by the husband.

24. Further, those highly contentious matters must be viewed in the context of acknowledging that the wife’s application is not one pursuant to s 79 of the Family Law Act, but rather is an application pursuant to s 79A of that Act, being one arising after final orders for property settlement have been made. It is the clear intent of the husband to argue vigorously at trial that the earlier orders should not be set aside and that the wife should have no further claim against him or against any interest he does have in the “[DB]” property.

25. I am concerned about my capacity to go beyond the papers and, in particular, go beyond the affidavits filed recently by the husband.  My concern is not only because counsel agreed that this matter should be determined on its papers, but, more fundamentally, because to do so would be to draw the Court into an exercise which may have the effect of pre-empting the very complicated trial process which has been listed before me for ten days commencing 27 August 2007.  It appears to me that the issues I would need to address to determine that the husband does, in fact, have the capacity to meet these interlocutory orders are very much the same as those issues at the substantive trial.  Such a process would result in the Court being drawn into engaging in some pre-emptive strike upon the husband’s assets or resources, without determining those matters and, in a sense, without giving the husband the opportunity to be heard properly on such matters.

26. In s 79 applications, one can be much more robust, comforted by the knowledge that there will inevitably be some distribution to the wife and that appropriate adjustments can be made in the terms of the final orders.

27. In this case, I must proceed on the basis that the wife may be entirely unsuccessful and, given the wife’s impecunious circumstances, I may be being led into making an unjust order which, in those circumstances, could not be redressed at trial.

28. I have concluded that, on the evidence as it presently stands, the wife has not discharged the onus which falls upon her to demonstrate that the husband has the capacity to make the payments sought.

29. There is much to be uncomfortable about this outcome.  As I trust will be apparent by the efforts I have made on a number of occasions to explore every avenue to have this matter progress fairly on behalf of the wife, I cannot allow my sympathy for her plight to be the basis for any decision to be made on the applications before the Court.  I must decide all matters according to proper legal principle, doing fairness to each of the parties, and I regret to conclude that I am unable to accommodate the wife’s application for the reasons set out above.

30. In the circumstances, the wife’s amended application for periodic and lump sum payments is dismissed.

31. Mr Baston indicated to the Court that, in the event that the wife’s application for funding was unsuccessful, he regarded himself as being obliged to continue with the matter on behalf of the wife.  Whilst that assurance formed absolutely no part of my deliberations in relation to the substantive interlocutory application, it is the only comfort I can take from the outcome arising as a result of my dismissal of the above application.

32. In anticipation of Mr Baston’s continuing representation in this matter, I propose to make the following further directions in relation to the trial:

DIRECTIONS

1That, to the extent that the husband has not complied with paragraphs 2A, 2B, 3A, 3B and 5A of the Orders of the Court made on 13 December 2006, he do so on or before 26 July 2007.

2That the husband file and serve a List of Documents upon which he intends to rely at the trial on or before 26 July 2007.

3That the wife file and serve a List of Documents upon which she intends to rely at the trial on or before 26 July 2007.

4That the husband file and serve a List of Witnesses intended to be called at the trial on or before 26 July 2007.

5That the wife file and serve a List of Witnesses intended to be called at the trial on or before 26 July 2007.

6That the wife file and serve a short Summary of Argument identifying the matters currently in issue and the Orders to be sought by her in relation to the children’s aspect of the case on or before 26 July 2007.

IT IS NOTED

(a)It is the intention of the Court to proceed, firstly, with the children’s issues at the final hearing commencing on 27 August 2007, with the intention of excusing the Independent Children’s Lawyer from further attendance during the property component of the hearing.

(b)It is the intention of the Court to proceed, secondly, with the property issues at the final hearing commencing on 27 August 2007, with the intention of excusing the Official Trustee in Bankruptcy from attendance during the hearing of the children’s component of the trial.

IT IS FURTHER DIRECTED

7That the matter be listed for a Pre-Trial Conference at 11.00 am on 27 July 2007 before Justice Jordan and a Registrar in Court 12, Level 2, Family Court of Australia, Brisbane.

8That each of the parties prepare and have available to hand-up at the Pre-Trial Conference:

(i)a list of assets with the value contended for and a list of  liabilities -

(a)      as at 10 September 2004;

(b)      as at 27 July 2007

(ii)a calculation as to the percentage distribution each party contends was affected by the orders of 10 September 2004.

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Jordan

Associate: 

Date: