Bennison and Bennison (Formerly Bronson and Bronson)

[2013] FamCA 11

FAMILY COURT OF AUSTRALIA

BENNISON & BENNISON (FORMERLY BRONSON & BRONSON) [2013] FamCA 11

FAMILY LAW - PROPERTY - Where the Applicant Wife seeks $116,000 to fund litigation expense – Where the lowest estimate of the net value of the property “pool” is $4,700,000.00 – Order sought pursuant to power to make an order as to costs or alternatively as an interim property order

Family Law Act 1975 (Cth)

Penfold v Penfold (1980) 144 CLR 311
Strahan & Strahan(interim property orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT: Ms J Bennison

RESPONDENT: Mr P Bennison

FILE NUMBER: BRC 338 of 2011

DATE DELIVERED: 25 January 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Kent J

HEARING DATE: 8 and 23 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wilson SC

SOLICITOR FOR THE APPLICANT: Murdoch Lawyers

COUNSEL FOR THE RESPONDENT: Mr Hackett

SOLICITOR FOR THE RESPONDENT: Hirst & Co

Orders

1. That within forty-five (45) days of the date of these Orders the Husband cause to be paid to the trust account of the solicitors for the Wife the sum equal to the total of the amounts of legal costs and outlays paid to the Husband’s solicitor on his account for legal costs and outlays in respect of these proceedings since 23 May 2012;

2. On and from the date of these Orders the Husband shall cause to be paid to the trust account of the solicitors for the Wife the same amount or amounts, on a dollar for dollar basis, that is paid to the Husband’s solicitors from time to time on his account in respect of legal costs and outlays of these proceedings.

3. The obligation of the Husband under Orders (1) and (2) of these Orders shall cease upon the total of the amounts paid reaching $116,000.00.

4. The Wife be entitled to access any such funds paid to the trust account of her solicitors pursuant to these Orders solely for the purpose of meeting her legal costs and outlays of these proceedings and not otherwise.

5. No later than three (3) days prior to the commencement of the final trial of these proceedings the Wife shall file and serve an affidavit detailing the amounts, use and expenditure of the funds paid to her solicitors’ trust account pursuant to these Orders.

6. The amounts paid to the trust account of the solicitors for the Wife pursuant to these Orders shall be taken into account in the final trial of these proceedings.

7. Each party’s costs of and incidental to this application be reserved to trial.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Bennison & Bennison (formerly Bronson & Bronson) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 338 of 2011

Ms J Bennison

Applicant

And

Mr P Bennison

Respondent

REASONS FOR JUDGMENT

1. At the outset I record my sincere apology to the parties for my inordinate delay in providing these reasons and Orders.

2. Ms J Bennison (“the Wife”) and Mr P Bennison (“the Husband”) are engaged in substantive property settlement proceedings pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”).

3. On 22 November 2011, a Federal Magistrate determined that the substantive proceedings were of sufficient substance and complexity as to warrant a transfer of those proceedings from the Federal Magistrates Court to this Court.

4. By an amended Application in a Case filed 28 April 2012, the Wife sought, amongst a variety of other orders, an Order for interim provision for her litigation expenses of the substantive proceedings for property adjustment.

5. That application was initially heard on 8 May 2012; however, in the course of that hearing, the issues narrowed as a consequence of some concessions and agreement leaving in issue the payment to the Wife of $116,000.00, or alternatively what is known as a “dollar for dollar” Order, to enable the Wife to meet her legal costs of the substantive proceedings. The Husband maintained opposition to that part of the application, and it was adjourned to be heard on 23 May 2012.

6. The Wife sought, in her amended Application, payment of the sum of $116,000.00, her estimated future legal costs, either as part of a “dollar for dollar” Order or, in the alternative, as a lump sum in the form of what is known in Queensland as a Hogan Order. However, in oral submissions before me, Counsel for the Wife, Mr Wilson SC, outlined that the reverse was in fact being sought; namely, that the Wife was primarily seeking a lump sum Hogan Order and, in the alternative, was seeking a dollar for dollar Order. Throughout the hearing, it became apparent that the Wife was primarily relying upon s 117(2) of the Act as the source of power upon which this Court could make either of the Orders sought, but that the Wife, in the alternative, did not oppose the provision being ordered as a partial property settlement pursuant to s 79 and s 80(1)(h).

7. The Husband opposed the making of either a Hogan or a dollar for dollar Order on the basis of contentions to the effect that the Husband is not in a position of relative financial strength as compared to the financial position of the Wife; that the Husband does not have the capacity to meet both his own and the Wife’s legal costs; that the Wife has a sufficient asset base she could use to fund her legal costs; and that the Wife has not established an arguable case for substantive relief in the sense that, taking into account the property she already has received or already has had the benefit of, the Wife does not establish a likelihood to obtain final relief in an overall entitlement encompassing the additional amount sought.

Background

1. The Wife was born in 1971, and is now 41 years of age. The Husband was born in 1956, and is now 56 years of age. The parties commenced cohabitation in 1996, married in November 1998 and separated in March 2010, ending a cohabitation of some fourteen years.

2. Two children were produced of the marriage; B, born in October 2001, who is now aged 11 years; and C, born in April 2005, who is now aged 7 years. Both boys currently attend D School in Brisbane and spend equal time with each parent on a “week about” and half school holidays arrangement. The Wife also has two children, Mr N Pearce and Mr O Pearce, from a former marriage who resided with the parties during the period of their cohabitation. Both Mr N Pearce and Mr O Pearce are now adults. The Husband also has an adult child from a previous relationship, Ms K Bennison.

3. Throughout the period of the parties’ relationship, they have built up a substantial pool of assets, although a substantive issue for the final trial will be the Husband’s case concerning disparity of initial capital contributions made by him. Although the parties are in dispute as to the value of the property pool overall, the parties’ respective submissions place its value at somewhere between $4,700,000, on the Husband’s estimate, and $6,750,000, on the estimate of the Wife. That pool includes the parties’ individual or collective interests in the companies and trusts conveniently described as “the Bennison Group”.

4. For the purposes of this application, the Husband adopted the values placed on the components of the Bennison Group by an expert accountant, Mr E, in his “Indicative” report dated 19 March 2012. On that basis, the Husband’s contentions as to the items comprising the pool of assets and their values is as set out in paragraph 16 of his affidavit.

5. As is apparent, the Bennison Superannuation Fund is a self-managed superannuation fund in which both parties are members and trustees.

6. The Bennison Group includes the interests or share of ownership of the following entities at the values ascribed by the Husband to those shares or interests for the purpose of this application at paragraph 16 of his affidavit filed 16 May 2012:-

Entity	Value
F Pty Ltd	$112,584.00
G Pty Ltd	($59,079.00)
H Pty Ltd	Nil
I Unit Trust	($571,463.00)
L Pty Ltd	$982,482.00
Bennison Superannuation Fund	$1,874,878.00

1. Since the parties’ separation in March 2010 a number of relevant events and relevant financial transactions have occurred.

2. Some of the financial transactions are to be understood in the context of the amount each party has spent in legal costs and outlays in these proceedings. In her affidavit filed 24 April 2012 the Wife deposes to having paid $142,448.14 in legal fees and a further $42,075.30 in outlays related to the proceedings, a total of $184,523.44.

3. In his affidavit filed 16 May 2012 the Husband deposes to having paid $196,489.32 in legal costs to date, including the costs of attending mediation.

4. The Wife deposes to having met her paid legal expenses from the sum of $66,000 she retained after separation and the further sum of $111,284.03 she received from the proceeds of sale of a property at Suburb M in about August 2011. Each party received a share of those proceeds pursuant to an Order of the Federal Magistrates Court as and by way of a partial property distribution.

5. In addition the Wife has sold shares worth approximately $28,000 and an item of jewellery for $45,000 used in part to fund her legal expenses to date.

6. Prior to the parties’ separation, the Wife was paid $2,000 per week via the Bennison Group.[1] Although the Wife worked full-time in the business until 2001, she deposes that she reduced her hours when the child B was born; reduced them further upon the birth of the parties’ second child and then ceased working in the business altogether in 2008. However, it appears that the Wife continued to receive a weekly amount of “wages” from the business until the parties’ separation.

   [1] Paragraph 12 of Wife’s affidavit filed 24 April 2012.

7. Since the end of the parties’ relationship, the Wife has re-partnered with one Mr Townsend to whom she has had two children; R, born in March 2011; and S, born in April 2012. Due to the recent birth of the child S, who was born fourteen weeks premature, the Wife was not, as at the date of the 23 May 2012 hearing, in paid employment nor was she then expected to return to employment in the short or medium term. 

8. The Wife continues to reside in the former matrimonial home with her new partner, Mr Townsend, whom she deposes earns approximately $104,000 per annum as a self-employed tradesman. The Wife further deposes that between 10 October 2011 and 11 April 2012, she worked ten hours per week on the accounts of Mr Townsend’s business and was paid $550.00 per week gross for so doing. The Wife does not anticipate being able to recommence that level of work until her youngest child, S, is approximately six to twelve months of age, thus some point between October 2012 and April 2013. The Wife deposed that she does not receive any child support or spousal maintenance from the Husband and is instead relying on any savings to fund her family’s living costs (with the assistance of $500 per week contribution from Mr Townsend to her present family’s living expenses).

9. As noted, the Wife continues to reside in the former matrimonial home, and the Husband deposes that, apart from the children B and C residing with him on a week about basis, the Husband also meets via the Bennison Group the boys’ private school fees and associated expenses for such things as books, uniforms and extra-curricular activities.

10. The Husband has a history of significant health issues. He deposes to having experienced heart attacks in 2004 and 2006. In 2009 he was diagnosed with leukaemia but deposes to that condition being in remission albeit that the condition has weakened his immune system, requiring ongoing treatment.

11. The Husband deposes[2] that shortly before his fifty-fifth birthday on 28 March 2011 he decided to retire for a number of reasons including the fact that he was eligible to retire and thereby access his superannuation. On the material the Husband remained eligible to $1,462,404.00 of the total of $1,874,878.00 in the Bennison Superannuation Fund.

    [2] Paragraphs 25 and 26 of the Husband’s affidavit filed 16 May 2012.

12. On 28 March 2011, being the Husband’s fifty-fifth birthday, he withdrew $200,000 from his superannuation entitlement and applied it to purchase his present home at Suburb Q included in the property pool at an agreed value of $1,200,000.

13. The Husband also deposes[3] to applying the proceeds of sale of shares he owned of $48,207 and the proceeds of sale of a motorcycle of $31,628 to the Suburb Q property otherwise funded by a $960,000 mortgage.

    [3] Paragraph 42 of the Husband’s affidavit filed 16 May 2012.

14. In May 2011 the Husband also sold a boat for $117,466. As already noted, similarly to the Wife, the Husband received $111,284 by way of a partial property distribution from the sale of the Suburb M property.

15. Notwithstanding his retirement, the Husband continued to receive $2,250.00 per week (net) as a fully franked dividend from the Bennison Family Trust and weekly dividends of $1,500.00 from L Pty Ltd which the Husband deposes is paid directly to a mortgage account in respect of the Suburb Q property. In addition to these payments the Husband deposes to receiving irregular additional profit distributions from L Pty Ltd.

16. It is self evident from the material, and was not in issue in the proceedings before me, that the Husband continues to exercise control over the Bennison Group including the parties’ interest in L Pty Ltd, discussed further below. 

17. In that respect another post-separation transaction of relevance is the purchase by the Husband of a house property at Suburb T included in the property pool at $200,000.

18. Commencing at paragraph 49 of his affidavit filed 16 May 2012 the Husband deposes to the circumstances of the subject purchase. At paragraphs 37 and 38 of her affidavit filed 24 April 2012 the Wife addresses this topic.

19. In summary, the Wife is apparently estranged from her adult son Mr O Pearce but the Husband has continued to have what he describes as a close relationship with him.

20. During the marriage the parties purchased a rental house property at Suburb T which they later sold to Mr O Pearce at a reduced price with the Husband guaranteeing the mortgage obtained by Mr O Pearce to facilitate the purchase.

21. Subsequent to the parties’ separation the Husband says he became aware of Mr O Pearce having difficulties with depression and drug use and says that Mr O Pearce told him he was suicidal and could not handle the ownership of the Suburb T property anymore because the rent being received was insufficient to cover the mortgage payments.

22. The Husband says that in order to assist Mr O Pearce he purchased the Suburb T property from Mr O Pearce for $200,000 with an agreement to sell it back to him for that price. The Husband does not depose to any other details concerning the arrangement beyond deposing that “part of the agreement I have with [Mr O Pearce] is that I will re-sell the property to him at the same price in the future if he wishes to purchase it once his mental health improves.” He does not depose to any other part or parts of any agreement with Mr O Pearce.

23. The first knowledge the Wife had of the transaction was when her solicitors received a letter from the Husband’s solicitors on 18 April 2012 informing that the transaction was completed “last week”.

24. To facilitate the purchase the Husband withdrew $33,000 from his superannuation interest in the Bennison Superannuation Fund and withdrew $100,000 from L Pty Ltd as a profits/dividend share. He was able to supply the balance of $67,000 (plus stamp duty) from his savings.

25. The Wife had no prior notice of the proposed purchase; she was not made aware of any proposed drawing of profits or dividends from L Pty Ltd and was not consulted about that or the withdrawal by the Husband of funds from the self-managed superannuation fund.

26. Nor was the Wife consulted, it seems, with the decision of the Husband to set up a bank account in the name of Ms U Bennison, the Husband’s granddaughter and daughter of Ms K Bennison, for rental monies to be deposited into that account.

27. Whilst the Husband deposes[4] that he was not aware at the time of purchasing the Suburb T property from Mr O Pearce that the Wife was seeking that he pay her legal costs, and was not so aware until receiving a letter from the Wife’s solicitors dated 20 April 2012, what may be termed the conventional approach of giving advance notice to an opposing party in substantive proceedings would no doubt have yielded that information. After all, there is abundant evidence in the material before me that the Wife has been agitating for a significant period as to her inability to meet her financial needs and the need to pay litigation expenses including in correspondence exchanged between the respective legal representatives from the latter part of 2011. Indeed it is clear that the Wife gave advance notice to the Husband of her need to sell shares and jewellery and the like for these purposes.

    [4] Paragraph 60 of the Husband’s affidavit filed 16 May 2012.

28. The Husband was obviously aware of the level of costs he was expending on his own case and I find his deposition in paragraph 62 that he thought the proceeds of sale of the property there referred to would be sufficient for the Wife to meet her costs, difficult to accept.

Applicable Law

1. Although the written submissions on behalf of the Wife appeared to indicate that the Wife contended for the orders sought to be made on the basis of the power in s 117(2) of the Act, the oral submissions made by Mr Wilson of Senior Counsel on behalf of the Wife indicated that although that was the primary contention on behalf of the Wife, it was also submitted in the alternative that an order could be made under s 79 of the Act as part of an interim partial property settlement.

2. Section 117(2) of the Act relevantly provides that in proceedings under the Act, if the Court is satisfied that there are circumstances that justify it in doing so, the Court may, subject to s 117(2A) of the Act, make such order as to costs as the Court thinks just.

3. In Penfold v Penfold (1980) 144 CLR 311 (“Penfold”), the High Court held that s 117(1) is not paramount to s 117(2) and that as s 117(1) is expressed to be subject to s 117(2), the former must yield whenever a Judge determines in a particular case that there are circumstances that justify the making of an order.[5]

   [5] See, also, Mallet v Mallett (1984) 156 CLR 605 (Wilson J).

4. It is clear from the decision of the High Court in Penfold, and indeed, in other decisions of this Court, including of the Full Court, that s 117(2) requires a finding of justifying circumstances as an essential preliminary to the making of an order.

5. However, it is to be noted that for the purpose of justifying circumstances, it is not necessary that a party establish what might be termed extraordinary or exceptional circumstances. There merely needs to be the existence of circumstances which justify an order in favour of the party seeking an order for costs.

6. It follows from the review of authority undertaken by the Full Court in Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”), and more recently, by the Full Court in Strahan & Strahan(interim property orders) (2011) FLC 93-466 (“Strahan”), that if s 117(2) is relied upon as the source of power to make an order for interim provision for litigation expenses, then, apart from addressing the matters contained in s 117(2A) (albeit, with the acknowledgment that a number of them may not have relevance to an interim application of this type), three matters would 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;

   c)An inability on the part of the Applicant to meet his or her litigation costs.[6]

   [6] Zschokke at 83,217; Strahan at 85,633.

1. Whilst complexity in the financial affairs of the Respondent and a need for an expert investigation into those affairs are not necessary pre-conditions for the making of an order, it is recognised that these are factors, the existence of which would add considerable weight to the case for an order of the type in question.[7]

   [7] Zschokke at 83,218; Strahan at 85,633.

2. If an order under s 117(2) is made, it is desirable in most cases in the interests of according justice to each party that an order or direction be made to the effect that, “The sums paid pursuant to the order could be taken into account, or least had regard to, in the determination of the property proceedings between the parties.” However, whilst uncertainty of the amount of the Applicant’s eventual property settlement award may be fatal to an application under s 79 and s 80(1)(h), it is not necessarily so to an application under s 117(2). In the latter case, it is one of the matters to be balanced in the exercise of the discretion.[8]

   [8] Zschokke at 83,217 and 83,221; Strahan at 85,634-5.

3. The requirement of justice expressed in s 117(2) remains a “basic” condition in the making of an order of this type under s 117(2).[9]

   [9] Zschokke at 83,217; Strahan at 85,642.

4. As a reflection of the need for “justifying circumstances”, and the requirement that an order be “just”, it may also be accepted that an applicant should have at least an arguable case for substantive relief which deserves to be heard.[10]

   [10] Strahan at 85,635, citing Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578, [30] –[31].

Issues, Findings and Resolution

1. No issue was taken by the Husband as to the reasonableness of the quantum of the Wife’s anticipated legal expenses sought at $116,000.00. Indeed, he deposed to concerns that the Wife’s legal costs may be greater.[11] 

   [11] Paragraph 3 of the Husband’s affidavit filed 16 May 2012.

2. It follows that the Husband does not contend it would not be just to make an order on the basis that the claim is unreasonable. It would also seem to follow that the Husband anticipates meeting at least a similar level of further expenditure on legal costs on his own behalf.

3. In circumstances where the Husband confirms he has now retired, it follows that the Husband does not propose to meet his own legal expenses from personal exertion income. Rather, the Husband will be reliant upon passive receipt of income from the sources he identifies, which come from the capital contained within the pool of assets. In terms of a level playing field as between the parties with respect to legal costs, the Husband essentially contends that he ought be able to access capital and the income from capital to which both parties have notionally contributed via the business assets, but the Wife should not have that opportunity.

4. True it is that the Husband deposes to some continuing involvement in the business affairs, but his essential contention is that he is retired so as to access his superannuation, given his health difficulties.

5. Against that background, the Husband criticises the Wife for providing no material as to any attempt by her to mortgage her interest in the property in which she has a half-interest with her parents, and in which her parents live, or attempts by her to access her own superannuation interests under the “hardship” provisions of the relevant legislation.

6. Before dealing with the substance of these propositions, it can be seen that the Husband does not take issue with the Wife resorting to sources of capital otherwise available to the parties in the property proceedings to fund her litigation expenses; rather, his issue is the source used. Put another way, the Husband accepts that capital from some source must be utilised, but his issue is that the Wife should access capital in her name rather than from any other source.

7. I have already noted what the Husband deposes to receiving by way of income from the Bennison Group, but it is clearly more likely than not that the Husband will also have to resort to capital to fully fund his legal fees. I reiterate that it would not, prima facie, be just to permit the Husband to so fund his legal fees but to deny the Wife the same opportunity, particularly given that she, like the Husband, is presently unemployed.

8. In relation to the Husband’s contention that the Wife withdraw some of her superannuation entitlements prior to retirement age under the severe financial hardship provisions, I note that this submission was not foreshadowed in the Husband’s written material in advance of the hearing, and no evidence to support such a submission was provided to the Court. That is, the Husband did not demonstrate that there would be no impediment to the Wife utilising the relevant provisions. Counsel for the Wife, not having had advance notice of such a submission, likewise could not provide any evidence to the Court, save for submissions from the bar table to the effect that hurried investigations revealed that such early access to superannuation by the Wife would not be possible or permissible.

9. There is no evidence before me from which I can conclude that the Wife’s superannuation, or part of it, is readily accessible to her in compliance with superannuation legislation that generally requires the preservation of superannuation interests until retirement at normal retirement age.

10. In any event, to the extent that the Husband would contend that the Wife bears the onus of proof upon this, I am not satisfied that it would be just for the Wife to be placed in the position where she must resort to limited capital in her own name, vis-à-vis the overall capital of the parties in the pool of assets, in meeting her legal costs, even if that were possible. That is, having regard to the overall composition of the pool of assets and the proportion to that pool of the Wife’s superannuation, it does not seem to me to be reasonable that a measure so extreme should be taken if there are alternatives.

11. As to the other alternative regarding the Wife’s interest in the property owned with her parents, whilst it is true that the Wife did not offer evidence demonstrating an incapacity to mortgage her interest, practicalities and common knowledge would indicate that such security would not be particularly attractive to a bank, but, moreover, the Wife in her present circumstances is unlikely to demonstrate a capacity to repay a loan from income. She is currently unemployed.

12. As already noted, the Wife appears to have exhausted, from the sale of assets to date, her capacity to otherwise meet her legal expenses. I note that the complexity of this matter has resulted in the Wife having expended some $30,000 on expert accounting reports to the date of her application with more expenditure of this kind likely.

Position of Relative Financial Strength of the Respondent

1. I find that the Husband’s continued exertion of control over the Bennison Group; the continued receipt by him of distributions from the Bennison Family Trust; dividends from L Pty Ltd; additional profit distributions from L Pty Ltd and his eligibility to access, and the access that he has had, to his superannuation place the Husband in a significantly superior financial position to that of the Wife.

2. I find that the events post-separation referred to demonstrate that superiority including as examples the Husband’s ability to purchase the Suburb Q property in the manner in which that purchase was funded as well as the purchase of the Suburb T property.

Respondent’s capacity to meet his legal expenses and those of the Wife

1. In addition to the above observations I find that the Husband has not explained, as least satisfactorily, in circumstances where he retired on 28 March 2011, that his access to his superannuation entitlement ($1.46 million of $1.874 million in the Bennison Superannuation Fund) is limited or restricted in the manner he asserts.

2. The extent of the Husband’s evidence on this appears in paragraph 69 of his affidavit filed 16 May 2012 as follows:-

   “69. My accountant has advised me that I am only able to draw $50,000 per year from my superannuation interest.”

3. No legal or other basis is provided for the advice from the accountant referred to. Indeed it is not explained whether that is advice based on prudential considerations of the need to maintain superannuation or some other reason. In argument Counsel for the Husband suggested that the limitation of withdrawing only $50K per year from the superannuation may be related to the amounts otherwise received by the Husband from the Bennison Group as already referred to. If that is so that would seem to point to possible taxation benefits or taxation treatment, rather than some legal restriction within the legislative framework governing superannuation interests.

4. In my judgment, in circumstances where at least an evidentiary onus falls to the Husband to support his contention of an incapacity to meet the payment sought by the Wife, that onus is not discharged by the bare and equivocal assertion in paragraph 69. The Husband’s own evidence establishes that he withdrew $200,000 (and not $50,000) upon his retirement in March 2011. The evidence also establishes that the superannuation fund holds shares of greater value than the total amount sought by the Wife.

5. Even on the contention of some $50K limit per financial year, another financial year commenced on 1 July 2012.

6. Relevant evidence to the Husband’s capacity includes the evidence of multiple overseas trips taken by the Husband post-separation; capital sums applied to the Suburb Q property; and payments made for the benefit of the Husband’s daughter Ms K Bennison and others (including the purchase of a vehicle for Ms K Bennison and a $16,000 loan to an unnamed friend on 22 September 2011).

7. Whilst the Wife also raises issues which can only be determined at the trial as to alleged cash receipts in businesses within the Bennison Group and further raises queries as to banking/account transactions of the Husband it is not without significance that having sought, on 21 February 2012, explanation of identified transactions (exhibit JB10 to the Wife’s affidavit) the explanation was not forthcoming until that provided in the Husband’s affidavit filed 16 May 2012 and that explanation is then somewhat incomplete or less than detailed.[12] For example, the explanation provided for the $40,000 withdrawal on 21 September 2011 is that this amount was used for “expenses” not actually identified or otherwise particularised.

   [12] See, for example, paragraph 44(a) of the Husband’s affidavit.

8. Of course, as noted, the Husband has sold some assets and also received his partial property settlement from the Suburb M property but the evidence overall does not, in my view, provide persuasive evidence in support of the Husband’s contention as to lack of capacity. Rather, in my view it points in the opposite direction.

9. Notably, from paragraphs 35 to 41 of his affidavit filed 16 May 2012 the Husband deals with the likely future of L Pty Ltd. He deposes to the entity no longer writing new loans (and thereby not incurring the business expenses so doing) with the “loan book” either being sold on or after 30 June 2012 (when the business is wound up) or the loans being thereafter collected.

10. The value of the half interest in L Pty Ltd on this application was accepted by the Husband as being $982,000.

11. At paragraph 38 the Husband deposes to the “loan book” standing at $2.6 million with liabilities at $700,000 with those loans being payable “over the next three years” albeit that the Husband expresses, without particularising why, that not all of the loans might be recovered.

12. In this context the Husband’s deposition in paragraph 41 of his affidavit about difficulties of drawing upon L Pty Ltd is difficult to reconcile and again provides little detail as to the substance of the advice given for the contention.

13. The April 2012 acquisition by the Husband of the Suburb T property, and the manner in which that was achieved in terms of the sources of funds accessed by the Husband, highlights that the Husband was then able to raise $200K notwithstanding his other financial commitments, including paying his own legal expenses in these proceedings.

14. What is said by the Husband himself about L Pty Ltd as noted above is not, to my mind, reconcilable with his deposition in paragraph 58 that if the Suburb T property was sold $100,000 of the proceeds would need to be returned to L Pty Ltd “to give it funds to keep operating”.

15. As earlier noted, the Husband determined to direct the rental from the Suburb T property from the time of his acquisition of it (from resources to which both parties have made at least notional contribution) to an account in the name of his granddaughter. Leaving aside that this occurred without reference to or approval of the Wife it resonates in contradiction to the contention of lack of capacity.

16. Whilst the Husband says (paragraph 64) that sale of the Suburb T property would be “a breach of the agreement I have [Mr O Pearce]” and the Husband expresses concern with “the effect that may have on his ([Mr O Pearce’s]) mental health…” the facts are:-

    a)there is no apparent benefit to Mr O Pearce of the Husband’s continuing ownership of the Suburb T property;

    b)there is no evidence of any likelihood of Mr O Pearce ever being able to repurchase the Suburb T property or his desire or willingness to so do;

    c)there is no reason to conclude that acquisition of the Suburb T property by Mr O Pearce, as opposed to acquisition of some property, at some indeterminate time in the future, is instrumental in Mr O Pearce’s wellbeing, mental or otherwise.

17. In any event, in the circumstances and given the sources of fund for acquisition of it, sale of the Suburb T property, or borrowing upon it, to facilitate the parties or either of them funding this litigation ought be prioritised ahead of any commitment of the Husband, real or perceived by him, to Mr O Pearce.

18. On the evidence as a whole I am satisfied that the Husband, via the Bennison Group (including his superannuation) has the capacity to meet the lump sum payment sought by the Wife for her litigation expenses in addition to his own.

Applicant’s incapacity

1. I am satisfied that the Applicant has exhausted the capacity she had to meet litigation expenses.

2. I do not consider it would be reasonable, in all the circumstances, to expect the Wife to attempt to enliven the “hardship” provisions under the superannuation legislation in an attempt to access her superannuation to fund her litigation expenses. Nor do I consider it reasonable that in circumstances where the parties, during marriage, decided upon the Wife having co-ownership with her parents in the home in which the parents live the Wife ought be expected to attempt to borrow on such an unsatisfactory security or that her lawyers be expected to take security at all, rather than payment, let alone unsatisfactory security of that nature.

Arguable Case for Substantive Relief

1. The Wife contends for an entitlement of 45 per cent of a pool worth, on her contention, an estimated $6.75 million. The Husband contends that the Wife’s entitlement is no more than 20 per cent of a pool estimated at $4.7 million.

2. On the basis of the Husband’s contention and pointing to what the Wife already holds or has received or has the benefit of the Husband maintains that a likely outcome is that the Wife will not achieve an adjustment of property that accommodates what she already has received let alone the additional sum now sought.

3. Obviously on an interim application the Court cannot and should not reach conclusions on the competing contentions. Moreover, the only relevant consideration is whether there is an arguable claim for relief and undoubtedly the Wife has at least an arguable claim for property adjustment.

4. In any event, the Husband’s contention to the effect that it raises potential issues of “claw back” in the sense that ultimately the Wife would retain more than that to which she is entitled, her own interest in the Bennison Superannuation Fund is valued at $393,724.00. That provides ample scope by way of a splitting order to address the concern of the Husband if it is ultimately made out at final trial.

Justifying circumstances and s117(2A)

1. These considerations are largely already addressed in the foregoing.

2. The Husband has had, and continues to have, resort to the Bennison Group and his superannuation to meet his litigation expenses. Fairness dictates the Wife having similar opportunity.

3. The Wife has at least an arguable case for substantive relief which deserves to be heard and the complexity of financial affairs of the parties necessitates the expenditure of legal fees and outlays including forensic accounting expenses.

4. When the financial circumstances of the Bennison Group controlled by the Husband are taken into account, together with the Husband’s eligibility for his superannuation interest, his financial circumstances are superior to those of the Wife.

5. The Husband recognises the reasonableness of the Wife’s estimated litigation expenses and recognises the need for them to be funded from resorting to the available pool of assets in some form.

6. Recognising the Husband’s continued control of relevant assets I am satisfied that there are circumstances that justify the making of a costs order sought by the Wife.

Orders

1. The Husband is an experienced businessman with access to expert accounting advice and legal advice.

2. That feature, combined with the relative complexity of financial affairs of the parties and the Husband’s control of those dictates that the Husband ought have the opportunity of determining how he is to fund the payments rather than the Court imposing a particular course of action for the source of funds to be made available.

3. On that basis the orders need do no more than oblige the Husband to cause the payment to be made.

4. I am satisfied that it is just to make a dollar for dollar Order and that the Husband ought pay as a lump sum the equivalent of the total paid on account of his costs and outlays since the application was heard on 23 May 2012.

5. Given the desirability that proper accounting be done of the funds utilised as part of the final trial process given that classification of the payments will be determined then the Wife ought be obliged to utilise the funds only for litigation expenses and to provide a proper account of that use by the time of final trial.

6. Given the relationship between the current application, particularly as originally formulated, and the substantive proceedings for trial; and the disputed issues of fact common to both; the costs of each party in relation to this application ought be reserved to determination at trial.

7. For these reasons I make the Orders set out at the commencement of these reasons.

I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 25 January 2013.

Associate: 

Date:  25 January 2013