Betro & Grima (No 4)
[2023] FedCFamC1F 831
•28 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Betro & Grima (No 4) [2023] FedCFamC1F 831
File number(s): SYC 1826 of 2021 Judgment of: SCHONELL J Date of judgment: 28 September 2023 Catchwords: FAMILY LAW – INJUNCTIONS – Where the wife sought for the husband to pay the insurance on the former matrimonial home – Where the Court has the power to grant an injunction compelling a party to do certain things for preservation of a property – Where the husband had previously requested that the wife get a cheaper quote and then changed his position – Where the Court finds that the husband has capacity to make the insurance payment.
FAMILY LAW – LITIGATION FUNDING – Where the wife sought funds in the sum of $100,000 for her legal costs – Consideration of factors in s 117(2A) of the Family Law Act 1975 (Cth) – Where the Court is satisfied that the wife has a need for the funds but not in the amount sought by her – Ordered that the husband pay the wife $50,000.
Legislation: Family Law Act 1975 (Cth) ss 114, 117 Cases cited: Betro & Grima (No 3) [2023] FedCFamC1F 727
PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123; [2005] FamCA 158
Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 44
Sieling & Sieling (1979) FLC 90-627; [1979] FamCA 23
Tsiang & Wu and Ors (2019) FLC 93-911; [2019] FamCAFC 128
Division: Division 1 First Instance Number of paragraphs: 46 Date of last submissions: 30 August 2023 Date of hearing: 17 August 2023 Place: Sydney Counsel for the Applicant: Mr Ford Solicitor for the Applicant: Lionheart Lawyers Pty Ltd Counsel for the Respondent: Mr Richardson Counsel for the Respondent: Holmes Donnelly & Co Solicitors Solicitor for the Independent Children's Lawyer: Phillip A Wilkins & Associates (did not participate) ORDERS
SYC 1826 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GRIMA
Applicant
AND: MR BETRO
Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
28 SEPTEMBER 2023
THE COURT ORDERS THAT:
1.Within 7 days, the respondent husband shall do all acts and things and take all necessary steps to renew the insurance policy securing the L Street Property with MM Insurance and provide the applicant wife with all documentation evidencing payment of the insurance policy.
2.If the husband fails to comply with Order 1 and the wife is put to the expense of renewing the insurance policy, then the parties shall do all acts and things and take all necessary steps to reimburse the wife the full amount of the insurance policy from the NN Investment Account.
3.Pursuant to s 117(2) of the Family Law Act 1975 (Cth), the husband pay to the wife the sum of $50,000, with such amount to be paid in three equal successive monthly instalments; the first instalment to be paid within 14 days.
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 pseudonym Betro & Grima has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 17 August 2023, the Court heard the applicant wife’s (“the wife’s”) application for joinder of various putative respondents. Given the breadth of that issue, the balance of the wife’s application could not be completed, and consent orders were made that included directions that each of the parties file such further evidence on which they intended to rely as well as written submissions. The orders provided that the remaining matters would be determined on the papers.
The issues that remained were:
(1)That the respondent husband (“the husband”) pay for the home insurance over a property at L Street, Suburb N; and
(2)That the husband pay to the wife’s solicitors the sum of $100,000 by way of litigation funding pursuant to s 117(2) of the Family Law Act 1975 (Cth) (“the Act”).
What follows are my reasons in relation to these issues. These reasons need to be read in conjunction with the reasons delivered in Betro & Grima (No 3) [2023] FedCFamC1F 727.
The wife relied upon the following documents:
(1)Application in a Proceeding filed 22 June 2023;
(2)Affidavit of wife filed 22 June 2023;
(3)Affidavit of wife filed 30 August 2023;
(4)Financial Statement filed 16 August 2023;
(5)Case Outline filed 11 August 2023; and
(6)Written submissions filed 30 August 2023.
The husband relied upon the following documents:
(1)Response to Application in a Proceeding filed 31 July 2023
(2)Affidavit of husband filed 31 July 2023;
(3)Affidavit of husband filed 25 August 2023.
(4)Financial Statement filed 25 August 2023;
(5)Case Outline document filed 9 August 2023; and
(6)Written submissions filed 24 August 2023.
OVERVIEW OF THE PARTIES’ RESPECTIVE FINANCIAL POSITION
Each of the parties contended their financial position is dire. Both parties contended that the other has failed in their obligations of disclosure.
These are complicated financial proceedings. There are issues as to the identity and value of property. There is not yet expert evidence as to the value of their property. A final hearing is to take place on 12 February 2024.
These are interim proceedings and there has been no cross examination. Accordingly, I am unable to make findings of fact. The resolution to the two issues I am asked to determine will therefore turn on the objective non-contentious facts as ascertained from the documents that the parties have filed.
The wife contended that her business operates on a month to month lease and that she has no financial security. She said that in the period to 30 June 2022, she earnt an income of approximately $60,000 per annum. Her Financial Statement disclosed that her current income exceeds her expenses by about $700 per week.
In the wife’s affidavit filed 30 August 2023, she disclosed that she has a credit card with a balance available of approximately $2,000; an account in her name with approximately $12,500, an account in her name on behalf of the parties’ child with approximately $23,600; and two company accounts with approximately $140,000. She said that she has been advised by her accountant that her tax liability for the financial year ended 30 June 2023 is about $55,000. She also indicated in her affidavit that she intends to engage additional employees to assist in her business. Otherwise, her Financial Statement disclosed a personal loan to MM Pty Ltd of which she is a part borrower with other members of her extended family.
The wife is the primary carer of the parties’ child. The husband pays no child support and only spends supervised time for three hours on the fourth Saturday afternoon of each four week period. She is therefore entirely responsible for the financial care of the parties’ child.
The wife identified that she has paid approximately $201,000 in legal fees to date, which has been funded from her earnings and a payment of $75,000 pursuant to orders made on 2 September 2022.
According to the Costs Notice filed by her lawyers on 30 August 2023, her estimated costs to the conclusion of the proceedings are approximately $151,000. The wife contended that she is unable to meet her ongoing legal fees.
The wife in her affidavit filed 22 June 2023 identified that documents produced under subpoena revealed that the husband uses his credit card to gamble, identifying two payments in January and February 2023 to various lottery organisations in excess of $3,000. She also identified various payments on the husband’s credit card statements and in other accounts for the period between August 2021 and February 2023 exceeding $37,000, which related to what he describes as adult entertainment venues, and that the husband has not disclosed how he funded the costs of a recent holiday in Europe.
The husband in his affidavit filed 31 July 2022 stated that in addition to the $2,000 per week he draws from the company. He said:
74. I did not believe that Justice Harper’s Judgment or Reasons preclude [B Pty Ltd] from making payments for me, as it has always done since its inception in 2009 for my expenses. The enterprise is my only source of income, and the annual accounts of the company each year reflect monies that were paid to me.
In the same affidavit he said that he has been required to make various lump sum payments under the mortgages for properties and that the source of funding to make those payments has been the sale of real estate as his “construction company has had no income” (at paragraph 60). In relation to the various expenditure of monies at what he described as adult entertainment venues, he said:
81. [Ms Grima] makes a number of allegations against me with respect to purchases at [adult entertainment venues]. I operate [in the construction industry]. I am required to ensure both staff and my network, who assist in the provision of work to me, and finance and funding, all remain on good terms with me. This is done by undertaking regular outings for clients, customers, referrers and lenders. This occurs by way of taking them out, including on a recent [outing]. I did not attend on that date as I was working, however, I paid for it.
82. I do not deny the expenses that [Ms Grima] has asserted to me, however, I do deny that they were for my personal use.
Why he would need to spend that money when his construction company has no income is not apparent.
In his affidavit filed 25 August 2023, he said:
9. My expenses of recent time have been met by way of my credit card. This includes expenses such as legal fees, attending psychologists, drug testing and paid supervision. Previously, when [B Pty Ltd] has had insufficient funds to meet its expenditure, I have been forced to borrow money, including but not limited to from [Mr DD]. These funds are detailed in the [B Pty Ltd] bank statements and exceed approximately $1,780,000.00. I have deposed to that in my earlier Affidavit.
10. I do not have the funds available from [B Pty Ltd], nor my personal capacity to assist [Ms Grima] in funding this litigation.
11. [Ms Grima] has to date, managed to meet her legal fees from personal borrowings which is what I have been required to do beyond the limited funding I receive when [B Pty Ltd] holds sufficient monies.
…
21. At this stage, I am unaware how I will meet expense for [B Pty Ltd] moving forward. Historically, I would obtain funds from [Mr DD] to assist in these circumstances. As a result in his involvement in these proceedings, [Mr DD] has indicated to me that he is not prepared to further fund any [B Pty Ltd] projects without sufficient security. I am making enquiries of a number of other contacts I have who may be able to assist with funding, however, to date, none of this has been successful.
Considering paragraph 74 of his affidavit filed 31 July 2022 and paragraph 9 of his affidavit filed 25 August 2023, the husband has failed to comply with his obligations of disclosure as required by Part F of his Financial Statement.
The husband’s Financial Statement identifies that his only expenses are a credit card payment of $2,467 and other expenditure totalling $260 per week. He identified that the balance owing on the credit card is approximately $27,000 and that his outstanding legal fees total approximately $37,000.
Notwithstanding his asserted limited financial means, his affidavit filed 25 August 2023 recorded that he “expects to meet [his] ongoing legal fees and personal expenditure by way of credit card or personal borrowings from either a friend or family member” (at paragraph 12).
No friend or family member is named but the husband would appear to be confident that such funds will be available. His lawyers estimate that his future legal fees will be approximately $214,000.
I am not satisfied that the husband has disclosed all his financial resources, nor has he complied with his obligation of disclosure in completing Part F of his Financial Statement. I am satisfied that the husband has the means to meet the wife’s needs.
PAYMENT OF THE HOME INSURANCE
Through her Application in a Proceeding filed 22 June 2023, the wife sought an order to the following effect:
16. Forthwith or within 48 hours of these orders, the Husband shall do all things and take all steps to renew the insurance policy securing the [L Street] Property with [MM Insurance], and provide the Wife with all documentation evidencing payment of the insurance policy.
17. In the event that the Husband fails to comply with order 16, and the Wife is put to the expense of renewing the insurance policy, then the parties shall do all things and take all steps to reimburse the Wife the full amount of the insurance policy from the CDIA Account.
The wife contended in her affidavit that the L Street property has been used as collateral for various borrowings made by the husband over the property. The L Street property is owned by the wife and was the former matrimonial home.
The wife’s evidence on this issue is limited to two paragraphs in her affidavit filed 22 June 2023, which is to the following effect:
10. Mortgages referable to the [Suburb M property] and [X] Buildings are cross‑collateralised against my home at [L Street, Suburb N] (“the L Street property”), in excess of $10,000,000 – well above the home’s value. This is a property that is in my sole name, and I owned prior to my relationship with [Mr Betro]. I am directly affected by the sale of these sites and concerned that if there are sales in which other mortgages are paid first that I will lose the home that [X] and I live in.
…
40.On 17 March 2023, I instructed my lawyer to send a letter to [Mr Betro’s] lawyer informing them that [Mr Betro] had not paid for the home and contents insurance policy on the family home (priced at $4,713.46). On 30 March 2023, [Mr Betro’s] lawyers sent a letter requesting that I provide “home and contents insurance with other insurers” because the quote for renewal was “exceptionally high in the current market”. I then personally made enquiries with alternative insurance providers. On 1 June 2023, my lawyers sent a further letter to [Mr Betro’s] lawyers providing them with a quote from [MM Insurance] (priced at $2,381) and requested confirmation that [Mr Betro] would agree to pay for the insurance policy. I have not received a response. To date and to my knowledge, [Mr Betro] has not paid for or obtained any insurance policy for the family home.
No part of the wife’s written submissions addressed the issue in relation to insurance.
The only reference in the wife’s Case Outline is an assertion to the following effect:
24.A further small example of the husband’s conduct is not paying the insurance on the [L Street] property – this being a condition of the loan and an obligation of the husband pursuant to orders, and providing an additional trigger for the lender to foreclose. The wife having no control over whether the insurance has been paid, due to the Insurance being an obligation of the husband’s loan arrangements, and she not being privy to terms. Conditions and any breach of them by the husband.
(As per the original)
Despite a submission that the husband was under an obligation by way of a loan and court order, I was not taken to any document or order that cast such an obligation upon him.
That said, the Court has power to grant an injunction compelling a party to do certain things for the purposes of preservation of property. Section 114 of the Act provides that the Court may make such order or grant such injunction as it considers proper, including an injunction in relation to the property of a party to the marriage.
The wife bears the onus of convincing the Court that it should exercise its discretion to make the orders she seeks. The purpose of an injunction is to preserve the status quo pending the final determination. The wife needs to establish that there is a serious issue to be tried, alternatively expressed as a prima facie case for relief. She must also establish that her claim for relief will be imperilled if the injunction is not granted. The question of prejudice to the respondent needs to be considered and the order made should be no more than is necessary. It is the applicant for the injunction who bears the onus of satisfying the Court that the circumstances justify the making of the order (see Tsiang & Wu and Ors (2019) FLC 93-911; Sieling & Sieling (1979) FLC 90-627 at 78,262).
The wife seeks to retain the L Street property as part of her final relief. If the property were uninsured and it were damaged, then her final relief would be imperilled. There could be no prejudice to the husband beyond him being compelled by order to pay the requested amount. It was not submitted that there was a prejudice to the husband by the making of the order other than his assertion in his affidavit that he cannot afford it.
He does not put in issue what the wife says at paragraph 40 of her affidavit that the husband requested she obtain cheaper quotes. The clear inference from that correspondence was that the husband was intending to pay the insurance, just not at the higher rate. The husband has not explained what changed between the position represented in that correspondence and now.
I am satisfied for the reasons given above that the husband has the capacity to make the payment for the insurance. I am satisfied that the order as sought by the wife is proper and will so order.
LITIGATION FUNDING ORDER
The wife sought an order under s 117(2) of the Act for $100,000 by way of interim costs.
An application for costs is governed by the provisions of s 117, which provides a general rule that each party to proceedings should bear their own costs.
Section 117(2) reposes in the Court a discretion to make a costs order in circumstances where the Court determines that there are circumstances that justify it making an order and, if there are such circumstances, the Court may make such order as it considers just, having regard to the matters set out in s 117(2A).
It is well settled law that no one factor under s 117(2A) is determinative and the Court may give such weight as it considers relevant to any factor. In PBF as Child Representative for AF (Legal Aid Commission of Tasmania) & TRF & LKL (2005) 33 FamLR 123, the Full Court observed:
41. … Nowhere in subs (2A) or elsewhere in s 117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs
It is also said that it may involve a consideration of the strength of the applicant’s case and the effect of the order on the respondent (Salvage & Fosse (2020) FLC 93-966 (“Salvage & Fosse”) at [14]). Justice Watts in Salvage & Fosse observed as follows:
62.When considering whether it is just to make an interim order for the provision of litigation expenses pursuant to s 117(2), the court shall have regard to the matters set out in s 117(2A) of the Act. In Zschokke (at 83,217) the Full Court said:
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably paragraphs (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by paragraph (g)…
63.In relation to s 117(2A)(a), apart from the general financial circumstances of each of the parties to the proceedings, the Full Court in Zschokke identified the following particular considerations:
a) a position of relative financial strength on the part of the respondent;
b)a capacity on the part of the respondent to meet his or her own litigation costs; and
c) an ability on the part of the applicant to meet his or her litigation costs.
64.As to such other relevant matters, under s 117(2A)(g), the plurality in Strahan at [96] and [141] specifically adopted the following considerations referred to in Paris King Investments at [30]:
a)the applicant should have “at least an arguable case for substantive relief which deserves to be heard”;
b)there should be evidence of the applicant’s “likely costs of litigation” (see also Wilson and Wilson (1989) FLC 92-033 at 77,453); and
c)it is not “an essential pre-condition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
There is evidence before the Court of the parties’ future costs. The husband’s future costs estimate exceeds that of the wife. I have referred to the financial circumstances of the parties. On the limited material before me, I am satisfied that the wife has an arguable claim for relief. I am satisfied that the husband has the capacity to meet his own legal fees, but I am not satisfied the wife has the capacity to meet all of hers. Her bank account balances are such as to be able to meet part of her asserted need but not all, given her tax debt and other expenses.
Dealing with such of the matters under s 117(2) as are relevant, the financial position of the parties is not yet resolved. Neither party is in receipt of legal aid. Each party makes allegations against the other about a failure to disclose. Within the confines of the hearing, I am not able to resolve all the competing claims. The proceedings in and of themselves have not been necessitated by the failure of a party to comply with previous orders of the Court.
The wife’s estimated legal fees are $151,000. She seeks a payment of $100,000. Her affidavit discloses that her company controls bank accounts totalling approximately $140,000. The company provides the wife with funds, which she uses to meet her expenses including payment of her legal fees. As much is as apparent from her affidavit filed 22 June 2023, where she said:
180. I have funded my legal fees from the funds I earn from my small business, [F Company], which also funds my and [X’s] daily living expenses. Part of my legal fees have been met by $75,000 advanced to me by [B Pty Ltd], for legal costs and to be characterised at trial, pursuant to order 12(b)(ii) made 2 September 2022.
The wife has a tax liability of about $55,000, intends to employ further staff and has the sole responsibility for financially supporting the parties’ child.
The parties are involved in complicated litigation. They both seek to retain lawyers to assist them in the presentation of their cases. I am satisfied that it is just that the wife be provided with funds to enable her to retain lawyers just as the husband does.
I am not satisfied that the wife has demonstrated a need for $100,000 given the monies in her bank accounts. Considering her tax liability and other financial obligations as against the estimated legal fees of $151,000, I am satisfied that she has demonstrated a need for a lesser sum which I assess to be $50,000. A payment of that amount would enable her to retain solicitors and meet her other financial obligations.
I am satisfied that the husband has the capacity to meet a payment to the wife of $50,000. Accordingly, I will order the husband to pay to the wife the sum of $50,000, with such amount to be paid in three equal successive monthly instalments.
I am satisfied that such an order is just.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 28 September 2023