Benham & Benham
[2021] FamCA 199
•16 April 2021
FAMILY COURT OF AUSTRALIA
Benham & Benham [2021] FamCA 199
File number(s): SYC 8266 of 2020 Judgment of: REES J Date of judgment: 16 April 2021 Catchwords: FAMILY LAW – SPOUSAL MAINTENANCE – Application by the wife for periodic spousal maintenance – Where the husband asserts the wife hasn’t satisfied the threshold test – Where the court found the wife was unable to support herself – Orders for the wife to receive periodic maintenance of $1,190 per week.
FAMILY LAW – INTERIM PROPERTY SETTLEMENT – Application by the wife for litigation funding – Where the husband disputes the quantum of funding – Where the court determines the parties should pay legal expenses out of income and not property – Orders made for the husband to pay the wife lump sum spousal maintenance.
FAMILY LAW – JURISDICTION – Application by the wife to transfer current Local Court proceedings to the Family Court – Where the Family Court did not rely on the associated jurisdiction of the Family Law Act 1975 (Cth) s 33 – Where the Local Court issues did not form part of the ‘single justiciable controversy’ in the Family Court proceedings – Application dismissed.
FAMILY LAW – COSTS – Application by the second to fifth respondents for costs against the wife – Where the wife has not demonstrated any necessity to join the second to fifth respondents as parties to the proceedings – Where the court determined the fourth respondent, as a legal practitioner acting for himself, could not recover professional costs in accordance with Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 – Orders for the wife to pay the second, third and fifth respondents costs only – Orders removing the second to fifth respondents from the proceedings.
FAMILY LAW – INJUNCTIVE RELIEF – Applications by the wife for injunctive relief – Where the court held it would not make an injunctive order in the absence of clear evidence as to a need to protect the assets to the proceedings – Applications dismissed.
Legislation: Family Law Act 1975 (Cth) ss 33, 72, 117(2A)
Family Law Rules 2004 (Cth) rr 15.42, 15.52, 19.04(2)
Cases cited: Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29
Stein & Stein (2000) FLC 93-004
Warby & Warby (2002) FLC 93-091
Waugh & Waugh (2000) FLC 93-052
Number of paragraphs: 92 Date of hearing: 13 April 2021 Place: Sydney Counsel for the Applicant: Ms Druitt Solicitor for the Applicant: Wallbanks Counsel for the 1st Respondent: Mr Sansom SC with Mr Levick Solicitor for the 1st Respondent: Tonkin Drysdale Partners Solicitor for the 2nd, 3rd, 4th, & 5th Respondents: Mr Chapple, P Legal ORDERS
SYC 8266 of 2020 BETWEEN: MS BENHAM
Applicant
AND: MR BENHAM
First Respondent
M PTY LIMITED
Second Respondent
L PTY LTD (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
16 APRIL 2021
THE COURT ORDERS:
1.That, pending further order, the husband continue to pay the mortgage, rates and taxes, home building and contents insurance and the maintenance and repair of the property at D Street, Suburb E in the state of New South Wales; to pay the lease payments and insurance for the motor vehicle 1 and to pay the family’s Health and Critical Illness/TPD Insurance.
2.That, pending further order, the husband pay to the wife by way of spousal maintenance the sum of $1,190 per week.
3.That the husband pay to the wife, by way of lump sum spousal maintenance the following amounts:
(a)The sum of $30,000 not later than 16 May 2021.
(b)The sum of $30,000 not later than 16 August 2021.
(c)The sum of $30,000 not later than 16 November 2021.
4.That the applications of the wife for injunctive orders against the husband are dismissed.
5.That the application of the wife for the transfer of proceedings from the Local Court at Suburb F to the Family Court of Australia is dismissed.
6.That the applications of the wife for injunctive orders against the second, fourth and fifth respondents are dismissed.
7.That the second, third, fourth and fifth respondents are removed as parties to these proceedings.
8.That from any funds to be paid to the wife by virtue of the determination of the substantive applications for property settlement, the wife pay the costs of the second, third and fifth respondents fixed in the sum of $10,000.
9.That all other applications of the wife set out in the Case Outline Document dated 12 April 2021 and in the Amended Application in a Case (2) filed 3 March 2021 are dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Benham & Benham has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Rees J:
There are proceedings in relation to financial matters between Ms Benham (“the wife”) and Mr Benham (“the husband”) in the Sydney Registry of the Family Court of Australia.
The wife and the husband are members of a self-managed superannuation fund known as the BC Super Fund. The other members are Mr and Ms Chapple. M Pty Limited is the trustee of the fund. All four members are directors of M Pty Limited.
In the substantive proceedings, the wife seeks a splitting order in relation to the superannuation interests of the husband and the wife in the BC Super Fund and to roll out her resulting entitlement.
The G Street owns property at G Street, H Town. The J Trust owns property at J Street, Suburb K. The trustee of both trusts is L Pty Ltd.
In the proceedings between the wife and the husband, M Pty Limited, L Pty Ltd and Mr and Ms Chapple have been joined as the second to fifth respondents.
The applications before the Court for determination today are as follows:
·The wife’s application for spousal maintenance.
·The wife’s application for litigation funding.
·The wife’s applications for injunctive relief against the husband.
·The wife’s applications for injunctive relief against the second, fourth and fifth respondents.
·The wife’s application for orders relating to the valuation of the superannuation fund and the assets of the trusts.
·The wife’s application to transfer proceedings currently on foot in the Local Court at Suburb F to the Family Court.
·The application of the third parties (the second to fifth respondents) to be discharged as parties.
·The application of the second to fifth respondents for costs against the wife.
A further matter arose in the course of the proceedings when objection was taken to the wife’s relying on an affidavit of Mr C. I indicated then that I would not permit the wife to rely on the affidavit and I will set out here the reasons for that ruling.
Mr C is an acknowledged expert in matters relating to superannuation and the interrelationship of superannuation and family law.
Mr C swore an affidavit in the wife’s case dealing with aspects of the valuation of the self-managed superannuation fund.
The Family Law Rules provide a scheme whereby expert evidence is to be given by a single expert to whom instructions are provided by both parties.
Rule 15.42 provides:
15.42 Purpose of Part 15.5
The purpose of this Part is:
(a)to ensure that parties obtain expert evidence only in relation to a significant issue in dispute;
(b) to restrict expert evidence to that which is necessary to resolve or determine a case;
(c)to ensure that, if practicable and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness;
(d)to avoid unnecessary costs arising from the appointment of more than one expert witness; and
(e)to enable a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, if necessary in the interests of justice.
Rule 15.52 sets out the procedure to be followed where a party seeks to tender a report or adduce expert evidence, other than from a single expert. A party make seek permission by filing an Application in a Case supported by an affidavit addressing specified matters.
No attempt was made on behalf of the wife to comply with those rules.
Accordingly, she was not permitted to rely on the affidavit.
The wife's application for spousal maintenance.
There is no dispute that the husband will continue to pay the outgoings on the home where the wife and their child live; its maintenance and repair; the lease payments and insurance on the wife’s car and the family’s health and Critical Illness/TPD Insurance. Those costs amount to $2,909 per week.
In addition to those payments, the wife claims periodic spousal maintenance of $3,731 per week.
The husband does not dispute his ability to pay but asserts that the wife has not satisfied the threshold test set out in s 72 of the Family Law Act 1975 (Cth) (“the Act”) and disputes the reasonableness of her claimed expenses.
The wife holds a bachelor’s degree. The wife worked throughout the relationship until June 2018. In 2013 she commenced to work in the legal practice then operated by the husband and his father as a secretary and office manager. When the husband and Mr Chapple opened P Legal, the wife was employed by the business as an office manager.
She stopped working for P Legal in June 2018.
In January 2018 she commenced to study for a degree and has applied to do a Masters of Research. She hopes to finish her bachelor’s degree in 2021 or 2022. She does not explain why she might not complete the degree in 2021. She then proposes further, post graduate study culminating in a PhD by 2032.
This application is an application for interim maintenance. At the latest, it will be discharged upon the determination of the substantive applications.
The issue is whether the wife has demonstrated that she is unable to support herself until the proceedings are determined.
I accept that she has not demonstrated any effort on her part to obtain any sort of employment and that she wants to complete her studies. However, she has only worked for the husband and Mr Chapple since 2013. Mr Chapple in his affidavit is critical of the wife’s work performance and it seems unlikely that he would provide her with a reference that would be likely to assist her in obtaining employment.
I am satisfied that, in the short term, the wife is unable to support herself.
The wife’s claimed expenses are set out in a Financial Statement sworn 13 April 2021. She claims Part N expenses of $3,731. Those expenses include $2,000 per week for legal fees. As is explained later in these reasons, I propose to order that the husband pay $90,000 on account of the wife’s legal fees and therefore it is not necessary that she receive, in addition, $2,000 per week.
The wife, in circumstances where there has been a child support assessment made, also claims the expenses of their child as part of her expenses. As was made clear by the Full Court in Stein & Stein (2000) FLC 93-004, that claim is impermissible and those expenses of $541 will also be disregarded.
I therefore find that the wife’s reasonable expenses are $1,190 per week and an order will be made requiring the husband to pay that amount.
The wife's application for litigation funding.
It is common ground that, to date, the husband has paid his costs from income and the wife’s costs have been paid using funds she borrowed from her parents.
The wife seeks payment of a total of $120,000 in three tranches, each of $40,000. In the form of orders contained in her Case Outline, the wife, in relation to each payment states that the funds are to be applied:
…to the legal costs and disbursements incurred by the wife in these proceedings or in repayment of the Applicant Wife’s debt to her parents in respect of the legal costs and disbursements of these proceedings.
In submissions, counsel for the wife stated that the wife intends to use the funds to repay loans to her parents.
There is no evidence that she is required to do so at this time. In a letter dated 29 January 2021, the wife’s solicitor stated, in relation to the funds borrowed from her parents:
The loan agreement between our client and her parents is an oral agreement providing for a no interest loan repayable by her on receipt of her net share of the property of the marriage as a result of the completion of these proceedings.
I do not accept that there is any imperative for the wife to repay her parents until the litigation has been determined.
However, it is not disputed that she needs funds to pay her ongoing legal fees.
The husband proposes that he should pay a total of $50,000 by way of interim property settlement in two tranches, $30,000 within two months and a further $20,000 within two months thereafter.
Senior counsel for the husband conceded that any order for the payment of funds for litigation costs could be made either by way of partial property settlement or by way of spousal maintenance or pursuant to s 117 of the Act.
If the payment were made as a partial property settlement, it would be added back to the pool of available assets in the final hearing with the effect that the wife would have paid her costs out of her property and the husband’s costs would have been paid from income.
I do not consider that to be a just result.
I propose to order that the amount payable to the wife be paid by way of lump sum spousal maintenance with the effect that, to the extent of this order, both parties will be paying their costs out of income.
The husband has a share portfolio valued at $31,189 which he proposes to sell to fund the first payment. He does not explain why it would take two months to sell publicly listed shares.
He also has $31,157 in his bank account.
He has an excess of income over expenditure of more than $4,000 per week, after payment of the spousal maintenance and, from that fund, he can accumulate a further lump sum.
The orders will require the husband to make three payments, each of $30,000, the first within one month and then at intervals of three months.
The wife’s applications for injunctive relief against the husband.
The wife seeks orders restraining the husband from admitting or replacing new members of the BC Super Fund, appointing or replacing the trustee of the BC Super Fund or appointing or replacing the trustee of the G Street or the J Street Trust.
It is settled law (see for example the decision of the Full Court in Waugh & Waugh (2000) FLC 93-052) that the Court will not make an order by way of injunction in the absence of clear evidence that there is some need to do so in order to protect the assets which are the subject of the proceedings.
The wife adduces no evidence that there is any intention on the part of the husband or any likelihood that he will do the acts from which she seeks to enjoin him.
That application will be dismissed.
The wife also seeks to restrain the husband from altering his death benefit nomination in relation to his superannuation interest in the BC Super Fund.
After separation, the husband changed the death benefit beneficiary from the wife to their child.
There is no evidence that the husband proposes any further nomination.
That application will be dismissed.
For the same reason, the wife’s application to restrain the husband from altering his death benefit nomination in the N Super Fund will be dismissed.
The wife's application to transfer proceedings currently on foot in the Local Court at Suburb F to the Family Court.
The wife was previously employed by P Legal.
P Legal is not a party to the family law proceedings.
Proceedings have been instituted against the wife in the Local Court at Suburb F by P Legal in relation to a mobile phone which the wife retained after she left her employment. P Legal pleads against the wife that she failed to return the mobile phone when asked to do so after her employment terminated.
Those proceedings are listed for hearing in August 2021 in the Local Court.
In her case outline document, counsel for the wife identifies the issues in the Local Court proceedings as:
Was she employed by P Legal on the date of provision of the phone…
Was the phone a gift from the husband?
Was the provision of the phone part of the employment contract?
The wife relies on s 33 of the Act.
Whilst I accept that s 33 provides the basis upon which proceedings could be instituted in the Family Court relying on the associated jurisdiction of the Family Court, I do not accept that it authorises a judge of the Family Court to remove proceedings from the Local Court.
Counsel for the wife was unable to identify any section of any legislation which confers such a power.
If I am mistaken in my view that the power does not exist to order the removal of a matter from the Local Court in these circumstances, I would none the less, refuse to make such an order.
The test which was enunciated by the Full Court in Warby & Warby (2002) FLC 93-091 includes, relevantly:
•whether the claims are part of a single justiciable controversy and in determining that question whether the claims are “attached” and not “severable” or “disparate”;
•whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of facts; and
•whether the court has power to grant appropriate remedies of the “attached” claims.
I do not consider that the issues which arise in the Local Court proceedings, are part of the single justiciable controversy which is the identification and division of the property of the marriage.
If that were not sufficiently demonstrated by the wife’s characterisation of the issues, then the fact that it would be necessary to join P Legal as a party to the family law proceedings makes it tolerably clear that the issue arising out of the wife’s employment is severable.
I further note that P Legal has not been given notice of this application or the opportunity to be heard.
I do not accept that the fact that the husband and Mr Chapple are parties to the proceedings constitutes proper notice to P Legal or affords them the required procedural fairness.
The application to transfer the proceedings from the Local Court will be dismissed.
In the alternate to the transfer of the Local Court proceedings, the wife seeks an order that the husband indemnify her in relation to the claim and any legal costs arising from it.
There is insufficient evidence to make a determination of the merits of the wife’s position in relation to the Local Court proceedings and I do not propose to make such an order.
That is an application she can pursue in the substantive proceedings if she is so advised.
The application of the third parties (the second to fifth respondents) to be discharged as parties.
Although L Pty Ltd has been joined as a party to the proceedings, no orders are sought against that entity.
In relation to M Pty Limited, the wife seeks the following orders at Clause 46 of her application for interim orders filed 18 November 2020 and repeated in her subsequent amended applications and in the Case Outline document relied upon before me:
The Respondent and the Second, Fourth and Fifth Respondents shall do all things as may be necessary, including but not limited to:
(a) voting in favour of a Trustee resolution; and
(b) directing any other person or corporation;
to obtain a market value (as that term is defined in s.10 of the Superannuation Industry (Supervision) Act 1993) prepared by a registered commercial valuer for the following real properties (named)…
with the costs associated in obtaining such market values for the SMSF Real Properties to be paid by the Trustee in the ordinary course of management and administration of the BC Super Fund.
Thus the wife seeks to burden the trustee, M Pty Limited, with the cost of preparing valuations of three parcels of commercial real estate, such valuations being for the purpose of the family law litigation.
M Pty Limited opposes that order which would diminish the value of the assets of the fund, and thus the entitlements of other members, for the benefit of the wife.
There is no evidence that M Pty Limited has failed to co-operate with the wife’s request that the assets of the superannuation fund be valued. Indeed, there is no evidence that any request was ever made for the Trustee to facilitate such a valuation.
On behalf of M Pty Limited, it is submitted:
…the Wife offers no explanation as to why the Court would displace the legislative regime contained in the… Family Law (Superannuation Regulations) 2001 (Cth) (FLSR), Superannuation Industry (Supervision) Act 1993 (Cth) and Superannuation Industry (Supervision) Regulations 1994 (Cth) which provides the appropriate mechanisms for the provision of information, the valuation of entitlements and the payment of reasonable associated fees/expenses charged by the trustee by the enquiring party (see, for example, regulation 59 of the FLSR) in favour of her orders for the Fourth Respondent and Fifth Respondent to bear part of such costs.
It is submitted that the Wife also offers no evidence or explanation as to why the procedural orders sought by her with respect to actions she seeks to be undertaken by the Third Party Respondents could not be carried out simply, as noted above, by compliance with the procedures set forth in the abovementioned suite of legislation without an order having to be made by the court.
I accept those submissions.
It is sufficient to say that the application for an order requiring M Pty Limited to pay for the costs of the formal valuations of the real property is misconceived and likely to place M Pty Limited in breach of its fiduciary duties to the members of the fund.
There is no evidence that M Pty Limited obstructed the valuation process or failed to facilitate it and, in those circumstances, no basis upon which M Pty Limited should have been joined as a party to the proceedings or required to incur costs.
In relation to the fourth and fifth respondents, in addition to Clause 46 of the wife’s application for interim orders, further orders are sought by way of injunction. Specifically at Clause 49 of the application for interim orders where the wife seeks, as against them, orders that they be restrained from exercising power to:
a)Admit or replace any new members into the BC Super Fund;
b)Appoint a new or replacement trustee for the BC Super Fund; or
c)Appoint a new or replacement trustee for the G Street and the J Street Trust.
In the present application, the wife adduces no evidence to suggest that either the fourth or fifth respondent is likely to act in such a way.
Accordingly her applications for orders enjoining the fourth and fifth respondents will be dismissed.
The wife has not demonstrated any necessity to join the second to fifth respondents as parties to the proceedings and they will be removed.
The application of the second to fifth respondents for costs against the wife.
I accept that the second to fifth respondents have incurred costs as a result of being joined as parties to the proceedings, however, I do not accept that all of those costs have been reasonably incurred. The evidence of the second to fourth respondents is contained in an affidavit of Mr Chapple sworn 31 March 2021. The fifth respondent, Ms Chapple, swore a short affidavit on 23 March 2021.
In the case of L Pty Ltd, since no orders were sought against the company, it was conceded that a submitting appearance could have been filed and no further action was required.
In the case of M Pty Limited, I accept that it was necessary to oppose the orders sought by the wife. The evidence in relation to that issue is found at Paragraphs 7 to 17 of the affidavit.
I note that paragraphs 43 to 110 of Mr Chapple’s affidavit deal with matters that are not relevant to the position of the second to fourth respondents and appear to be in support of the husband’s position, in particular, Mr Chapple’s criticisms of the wife in her role of employee.
I accept that it was necessary for Mr Chapple to appear before the Court and to file the Case Outline document.
The position is complicated, in relation to Mr Chapple, by the decision of the High Court in Bell Lawyers Pty Ltd v Pentelow [2019] HCA 29 that legal practitioners who act for themselves cannot recover professional costs.
This application is governed by the provisions of s 117(2A) of the Act. Of the considerations mandated in the section, I give greatest weight to the following matters:
·The conduct of the wife in instituting proceedings making L Pty Ltd a party to the proceedings but seeking no order against the company.
·The conduct of the wife in instituting proceedings against M Pty Limited and the fourth and fifth respondents without first making an enquiry as to their willingness to co-operate with the valuation process.
·The conduct of the wife in seeking orders against M Pty Limited which did not accord with the scheme of valuation laid down in the suite of legislative provisions governing the valuation of superannuation interests.
·The conduct of the wife in seeking orders enjoining the fourth and fifth respondents where she adduced no evidence to warrant the making of those orders.
Accordingly, the wife should pay the costs of the third parties, other than Mr Chapple.
The estimate of costs for the second to fifth respondents, contained in a notice pursuant to Rule 19.04(2), is $19,925.70. The notice does not indicate whether those costs are calculated a scale or on some other basis. Neither is it possible to glean from the notice what costs are referable to Mr Chapple’s acting for himself.
The amount involved is small. The costs of assessment are not inconsiderable. In order to save further costs and time, I assess the reasonable costs of the second, third and fifth respondents at $10,000 and the orders will provide for that sum to be paid from any funds judged to be payable to the wife in the substantive proceedings.
I certify that the preceding ninety-two (92) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 16 April 2021
SCHEDULE OF PARTIES
SYC 8266 of 2020 Respondents
Fourth Respondent:
Mr Chapple
Fifth Respondent:
Ms Chapple
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Injunction
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Jurisdiction
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Remedies
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