Berrell & Tily
[2021] FedCFamC1F 329
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Berrell & Tily [2021] FedCFamC1F 329
File number(s): SYC 3428 of 2018 Judgment of: CHRISTIE J Date of judgment: 21 December 2021 Catchwords: FAMILY LAW – INTERIM PROPERTY PROCEEDINGS – De facto threshold test – Family Law Act 1975 (Cth) s 90RD – Resolution of threshold issue remains outstanding – INJUNCTIONS – Mareva – Whether funds held should be released – COSTS – Bases for interim release of under Family Law Act 1975 (Cth) ss 90SM and 117.
Legislation: Family Law Act 1975 (Cth) ss 90RD, 90SM, 117, 117(1) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 5.07 and 5.08 Cases cited: Fitzgerald (As Child Representative for A (Legal Aid Commissioner of Tasmania) v Fish and Anor (2005) 33 Fam LR 123, Norton & Locke [2013] FamCAFC 202, Salvage & Fosse [2020] FamCAFC 144. Division: Division 1 First Instance Number of paragraphs: 41 Date of hearing: 10 December 2021 Place: Sydney Solicitor for the Applicant: Hall Partners Counsel for the Respondent: Mr Kearney SC Solicitor for the Respondent: Lander & Rogers ORDERS
SYC 3428 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR BERRELL
Applicant
AND: MR TILY
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
21 DECEMBER 2021
THE COURT ORDERS THAT:
1.The application in a case filed by the applicant on 12 July 2021 is dismissed.
2.The application pursuant to s 90RD of the Family Law Act 1975 (Cth) be listed for final determination for five days commencing 5 September 2022.
3.The applicant pay the respondent’s costs and incidental to the application filed 12 July 2021 as agreed or in the absence of agreement as taxed.
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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Berrell & Tily is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
These are interlocutory proceedings between Mr Berrell (the applicant) and Mr Tily (the respondent). There are no other parties to the interlocutory proceedings named on the application. There was no application or response filed by any third party and no evidence from any third party.
This case has had a protracted history commencing in the Supreme Court of New South Wales on application by Summons filed on behalf of the plaintiff Mr Tily on 18 December 2014. The application named Mr Berrell and his parents Mr B Berrell and Ms C Berrell (“Mr and Mrs Berrell senior”) as respondents (formally in the Supreme Court proceedings they were the second and third defendants). M Pty Ltd is the second named plaintiff and both Mr Berrell and Mr Tily (“the parties”) have an equal shareholding in M Pty Ltd. Mr Tily filed a Statement of Claim seeking relief against Mr Berrell and his parents on 13 April 2015.
Mr Berrell filed a cross-claim seeking a declaration that a de facto relationship existed between him and Mr Tily between mid-2007 and September 2014. Mr Tily filed a Defence denying the existence of a relationship on 31 August 2015.
On 27 October 2017 his Honour Justice Slattery ordered that Mr Berrell be permitted to draw $50,000 from funds in court for payment to his lawyers.
On 29 November 2017 Justice Slattery ordered that the Supreme Court proceedings be transferred to the Family Court of Australia (stayed until receipt of a referee’s report).
On 16 May 2018 Justice Lindsay made an order adopting a referee’s report which concluded:
(a)M Pty Ltd owed Mr Tily $1,700,218.53;
(b)M Pty Ltd owed Mr & Mrs Berrell senior $273,961.20;[1]
(c)M Pty Ltd is owed $179,946.80 by Mr Berrell.
[1] This is set out at page 9 of the referee’s report attached to Mr Tily’s affidavit. The Respondent’s submissions record this amount as owing to M Pty Ltd. No submission was made about this anomaly.
On 10 September 2018 Mr Berrell filed an application in this court, in effect repeating the relief in his cross-claim (namely seeking a declaration as to the existence of a de facto relationship).
No application or response seeking final relief has been filed in this court by Mr and Mrs Berrell senior.
On 10 March 2020 the parties attended a judicial mediation. Orders were made confirming final hearing dates for 1 June 2020 to 5 June 2020. On 26 May 2020, the hearing was vacated. The matter was re listed for 28 September 2020 then again for 25, 27, 28 and 29 January 2021. The hearing was adjourned as her Honour Justice Stevenson was concerned that five days would not be long enough and it could not be part heard. I am listing the s 90RD of the Family Law Act 1975 (Cth) (“the Act”), threshold issue on the first five days available in my calendar.
On 9 December 2020 her Honour Justice Stevenson, having heard a similar application (for interim release of funds), made orders and Mr Berrell received $25,000.
There was some confusion about the date of filing of this interim application. It seems plain (and was ultimately agreed) that the relevant application while marked as filed on 9 July 2021 was sealed by the Court at 12.57 pm on 12 July 2021.
That application sought a number of different orders as follows:
1.That the Court permit a drawing by the [Berrell] parties on the trust account of [D Solicitors], in respect of funds held by that firm under injunction, as to 150 per cent of the amount or sum as the First Respondent to these proceedings, ([Mr Tily]), by a memorandum of costs from his solicitors (attached), [Solicitor N of O Solicitors], as to the costs of taking this matter to trial, plus an additional 50 per cent of that amount, being the amount of $199,050.
2.Order that upon the hearing of this Application, all extant applications presently before the Supreme Court of New South Wales filed by Mr [Tily] (refer notice of motion filed 17 June 2021), be heard and determined in this Court, as if they were applications filed in this Court.
3.Order that upon the hearing of such extant applications as have been filed before the Supreme Court of New South Wales by [Mr Tily], that in the event that the notice of motion filed by Mr [Tily] on 17 June 2021 is granted and / or in any event, that the balance of funds referable to the joint venture referred to in Mr [Tily’s] motion, (50 per cent), be paid to the [Mr B Berrell] and to [Ms C Berrell].
4.That this Court remit the whole of the matters arising in these proceedings to hearing, and by consequence of its accrued jurisdiction, (in which it has capacity to determine all matters arising out of a common substratum of facts), to determine the whole of the matter, being and including:
a)the existence of a close personal relationship as between the Applicant and the First Respondent;
b)the existence of a joint venture between the Applicant and the First Respondent and if so, the terms of that joint venture;
c)the claims in respect of the Second and Third Respondents, and the competing claims of the parties in the corporation known as [M] Pty Ltd.
5.That the parties submit timetables for trial for the whole of the matter, for hearing.
6.That trial directions be made.
7.Alternatively, that for the purposes of the Jurisdictions of Courts Cross Vesting Act, these proceedings be transferred from the Family Court of Australia, (being a superior court of record in the Commonwealth hierarchy of Courts), to the Supreme Court of New South Wales, and where by consequence it will travel to that Court with the jurisdiction of this Court, as is necessary to determine the whole of the matter.
Application/Response
At the commencement of the hearing on 10 December 2021 the solicitor for Mr Berrell indicated he was not pressing proposed Orders 2 and 3.
During the hearing on 10 December 2021 Mr Berrell abandoned the relief sought at proposed Order 7.
Accordingly I understood that Mr Berrell was seeking proposed Orders 1, 4, 5 and 6.
Mr Berrell sought to rely on more than one affidavit. I declined to grant leave. Each party is entitled to rely on one affidavit only without leave: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) r 5.08. Leave should be granted if Mr Berrell is able to demonstrate a legitimate reason for departure from the Rules such as a relevant change of circumstances but none was advanced. I allowed Mr Berrell to rely on a costs notice (even though he had not complied with the Rules for its filing) and so to the extent that Mr Berrell argued the additional material he sought to rely on supported the costs sought, there was no prejudice to him. In addition, giving notice of the intention to rely on material within the two days prior to the listing falls foul of the requirement that a party’s evidence be filed and served with sufficient time to allow the other party to understand the case they are meeting: r 5.07 of the Rules.
FACTUAL BACKGROUND
In 2009, Mr Berrell and Mr Tily entered into a business partnership in respect of a property development in regional NSW.
The development site was purchased through the company M Pty Ltd. Each of the parties have an equal shareholding in the company.
M Pty Ltd assets include:
(a)$325,000 (and accrued interest) held by D Solicitors; and
(b)$175,000 held by Q Solicitors (solicitors previously retained by Mr and Mrs Berrell senior).
The issues in dispute are:
(a)Who is beneficially entitled to the funds of M Pty Ltd?; and
(b)Were Mr Tily and Mr Berrell in a relationship?; and
(c)If Mr Tily and Mr Berrell were in a relationship, should there be an adjustment of property?
It is in the above factual context that the issue of interim release of funds comes to be determined.
PRELIMINARY DISTRIBUTION OF FUNDS: THE LAW
The primary application of Mr Berrell is that the sum of $199,050 be released to him.
In order to determine whether or not such an order can be made, it is necessary to first understand the jurisdictional basis for the relief. The jurisdictional bases include: an adjustment of property pursuant to s 90SM of the Act. In the majority of cases caution will be exercised in making any order pursuant to the terms of s 90SM of the Act in circumstances where the determination of the issue under s 90RD remains outstanding: Norton & Locke [2013] FamCAFC 202 at [78].
Alternatively, a party may in appropriate circumstances move the court to make an order pursuant to s 117(1) of the Act. In order to make a costs order it is necessary to identify those “justifying circumstances’ which would persuade the court to depart from the usual rule.
In Salvage & Fosse [2020] FamCAFC 144 at [64], his Honour Justice Watts set out the matters to which the court would have regard to when making a cost order:
a)The financial positions of each of the parties; and
b)whether the Applicant had “at least an arguable case for substantive relief which deserves to be heard”; and
c)the evidence adduced as to the Applicant’s “likely costs of litigation”; and
d)the position of the Applicant’s legal representatives in continuing to act if funds were not forthcoming.
CONSIDERATION AND DETERMINATION
The applicant sought access to monies which had been the subjected of an injunction in the Supreme Court proceedings and were preserved in a solicitors controlled monies account.
The beneficial ownership of those funds is squarely in issue in the proceedings (whether those proceedings are the claim commenced in the Supreme Court relating to M Pty Ltd or the proceedings commenced by Cross-claim for property adjustment). It cannot be safely concluded at an interim stage that those monies are the “applicant’s funds” or indeed funds to which Mr Berrell will become entitled to in due course.
Somewhat curiously, at the hearing Mr Hall (solicitor advocate for Mr Berrell), purported to represent Mr Berrell and his parents (“the Berrell parties”), in circumstances where no person other than the applicant and respondent had filed any application, response, notice of address for service or affidavit.
When the matter came before the court for interim hearing, Mr Hall indicated that, contrary to Mr Tily’s characterisation of the relief sought by his client, it was not the position of Mr Berrell that the orders being sought were litigation funding orders but rather, as he developed in oral submissions, that they were monies belonging to Mr and Mrs Berrell senior. Mr Hall represented:
“these monies were the monies of Mr and Mrs [Berrell] who were both elderly, they were the proceeds of the sale of their house…”
and later sought to correct the position after having taken instructions and said:
“The money [Mr Kearney] seems to be talking about as being in the trust account is the proceeds of sale of Mr [Berrell’s] property as I understand it. It’s contrary to what I understood was the case before and it was contrary to the case I ran but where I receive the information I must pass it on [to her Honour].”
The difficulty with much of the position taken by Mr Berrell was that it was unsupported by any evidence. Significantly, not only was it unsupported by evidence, it was necessary for Mr Hall to withdraw the submission that the funds represented those of Mr and Mrs Berrell senior.
This was further confused by the submissions made on behalf of the Berrell parties that in order to release the funds restrained all that was required was to demonstrate that the entirety of Mr Berrell’s funds were frozen and he has no other source from which to meet his legal fees and/or application of the funds to legal fees does not amount to dissipation for the purpose of defeating a claim. I reject the submissions in circumstances where it is not plain on the evidence on whose behalf that submission was made given Mr Hall’s position that he acted for all of the Berrell parties and secondly on the basis that while I accept fully that Mareva relief is not intended to operate as de facto security, on the evidence in this case I could not be satisfied that the funds, currently the subject of restraint are funds which belong to Mr Berrell. This is one of the issues to be determined in the case. Finally, I am concerned that if further funds are released there is no certainty that such funds may be recovered by Mr Tily if he is ultimately successful in the proceedings (commercial or family law).
The lack of evidence before the Court on the interlocutory issue made it difficult to understand whether in fact the applicant had an arguable case and in particular whether the applicant would be entitled in due course to receive funds greater than, equal to, or less than those received to date ($75,000).
In order to exercise jurisdiction I would need to be comfortably satisfied that either Mr Berrell would in due course receive the funds he seeks be released to him now or otherwise, there would need to be evidence that he is in a position to meet any order that may be made requiring him to pay funds to M Pty Ltd or Mr Berrell. There was no evidence before me to support either proposition.
Those acting for Mr Tily had requested a copy of the retainer agreement between Mr Berrell and his lawyers through correspondence. It was not provided and not in evidence. There was no evidence that Mr Berrell would not be represented if further funds were not released.
In considering the alternate basis for jurisdiction, namely the making of a costs order, it would be necessary for me to find that there were justifying circumstances. Mr Hall contended that the justifying circumstances were the imbalance of the parties’ respective financial positions. I accept that an imbalance in the financial positions of parties to litigation may, in appropriate circumstances, amount to justifying circumstances. There is nothing to prevent one factor from being the sole basis upon which costs are ordered; Fitzgerald (As Child Representative for A (Legal Aid Commissioner of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123 at [41]. However, in this case where the court is yet to determine whether or not there was a de facto relationship between the parties, considerations of ensuring a level playing field in circumstances where it is plain that one party has access to all the patrimony of the relationship do not apply here. I find that there are no justifying circumstances so as to permit the court to depart from the usual rule and accordingly decline to make an order for the release of funds in reliance upon s 117 of the Act.
Insofar as the application sought an order that the whole of the matter be determined as opposed to determination of the s 90RD threshold issue alone, I decline the application. The Deputy Chief Justice set the matter down for determination in respect of the threshold issue for a period of five days, absent any reason to revisit that order, it is inappropriate for me on further application to effectively vary that order and I decline to do so.
I do however intend to allocate dates for final hearing of the threshold issue as requested by both parties and list the matter for case management at an appropriate time in order to ensure that the matter is ready to proceed.
When the matter was before the court I was advised that the parties have filed the material upon which they seek to rely in respect of the threshold issue and accordingly there should be no impediment to the matter proceeding on those dates.
COSTS
Both parties made submissions on costs. Mr Tily sought costs of the application if Mr Berrell was unsuccessful. Mr Berrell said whatever the outcome there should be no order as to costs.
I am satisfied that Mr Berrell abandoned some relief, was wholly unsuccessful in respect of his application for release of funds and his application to have all matters heard simultaneously. The evidence did not address important considerations. On the evidence available Mr Berrell appears to be impecunious. This fact alone is insufficient to prevent the making of an order for costs.
Mr Tily sought a specific sum, said to be calculated at scale. It was suggested by Mr Berrell that the matter may not have required senior counsel. I accept that submission, while acknowledging this is not a suggestion that I was not assisted by the helpful written and oral submissions of senior counsel who appeared. On balance Mr Tily should receive the benefit of a costs order on a party-party basis as agreed, or taxed.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 21 December 2021
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