Bing & Bing - [2007] FamCA 418

FAMILY COURT OF AUSTRALIA

BING & BING

[2007] FamCA 418

FAMILY LAW - APPEAL – Leave to appeal – Barro order – Interim spousal maintenance – Husband sought leave to appeal orders that he pay to the Wife the sum of $230,000, comprising of $200,000 for security for costs and $30,000 for interim spousal maintenance – Husband asserted that he and the Wife had net assets of $8,424,400 of which he is now in control – Although maintenance order exceeded Wife’s apparent needs, the potential overpayment of interim spousal maintenance could not be viewed as substantial to merit an appellate hearing as the admitted asset pool is over $8 million – Any overpayment could be corrected at trial – Husband’s asserted inability to raise capital sum was a matter relevant to any subsequent enforcement order rather than as to whether it was appropriate to make the order in the first place

Family Law Act 1975 (Cth)

Aarons v Knowles (1995) FLC 92-627; (1995) 19 Fam LR 462
Rutherford and Rutherford (1991) FLC 92-255; (1991) 15 Fam LR 1

APPLICANT:

MR BING

RESPONDENT:

MS BING

FILE NUMBER:

MLF

1745

2006

APPEAL NUMBER:

2007

DATE DELIVERED:

4 May 2007

PLACE DELIVERED:

Melbourne

JUDGMENT OF:

KAY, COLEMAN & CRONIN JJ

HEARING DATE:

BY WAY OF WRITTEN SUBMISSIONS

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

9 FEBRUARY 2007

LOWER COURT MNC:

[2007] FamCA 192

REPRESENTATION

SOLICITORS FOR THE APPLICANT:

TRUMBLE SZANTO LAWYERS

SOLICITORS FOR THE RESPONDENT:

ROCKMAN & ROCKMAN

Orders

(i)The application for leave to appeal orders made by Justice Mushin on 9 February 2007 be dismissed
(ii)The applicant pay the respondent’s costs of and incidental to the application as agreed or in default of agreement as assessed.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Bing and Bing.

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 19 of 2007
File Number: MLF 1745 of 2006

MR BING

Applicant

And

MS BING

Respondent

REASONS FOR JUDGMENT

The husband seeks leave to appeal against orders made by Mushin J on 9 February 2007 that were in the following terms:
1.That within 14 days the husband pay to the wife's solicitor on behalf of the wife the sum of $230,000 as follows:
(a)as to $200,000, by way of security for costs of these proceedings; and
(b)as to $30,000, by way of urgent spousal maintenance.
2.That liberty be reserved to both parties to argue the ultimate disposition of the moneys referred to in paragraph 1 hereof at the final trial of all applications for alteration of property interests.
It was conceded on behalf of the husband that these are interlocutory orders and that an appeal does not lie to the Full Court except by leave of the Full Court (s 94AA(1)).
It is further conceded that the applicant must demonstrate an error of principle and/or a substantial injustice before leave can be granted (see Rutherford and Rutherford (1991) FLC 92-255; (1991) 15 Fam LR 1). Alternatively it was suggested that it was sufficient for the applicant to show that the issue was one of general importance (see Aarons v Knowles (1995) FLC 92-627; (1995) 19 Fam LR 462).

Background

The parties had lived together from 1991 to June 2005. There are two children of the marriage. The wife filed an application seeking parenting orders, property settlement and spousal maintenance. She asserted that the parties had interests in a number of businesses throughout Australia as well as investments in China. She deposed to the existence of a complex web of corporate entities.
In a Statement of Financial Circumstances filed on 1 June 2006 she indicated that she had virtually no income. She estimated weekly expenses incurred on her own behalf at $1436, on behalf of the children at $2292. She filed an amended Application in a Case on 11 July 2006 in which she sought spousal maintenance in the sum of $1250 per week and the payment of a number of outgoings relating to the former matrimonial home, health insurance, motor vehicle and telephone expenses. Additionally she sought payments of child support of $500 per week per child, plus educational and other expenses.
On 12 September 2006 the wife’s solicitor filed an affidavit in which he estimated the costs of bringing the matter to trial would be between $100-150,000 for solicitors’ fees and $100,000 for counsel’s fees.
In July 2006 orders were made restraining the husband (inter alia) from selling, disposing of or further encumbering any capital asset of the husband and/or the wife or any capital assets controlled by any corporate entity or trust of which the husband is a director or shareholder or has a direct or indirect interest in, and alienating any monies standing to his credit, including any monies in loan accounts, save and accept for the purposes of meeting his financial obligations to the wife and children of the marriage and for his reasonable living expenses. Those orders were continued in full force and effect by a further order made 10 August 2006.
A number of other claims for interlocutory relief were fixed for hearing in the interim hearing list on 10 November 2006. The hearing came on before Mushin J and lasted all day and was then adjourned part-heard until 9 February 2007. The husband was ordered to pay the wife the sum of $15,000:
for her maintenance, reserving to each party the right to argue at either the resumed adjourned hearing or the final trial of this matter the significance of any such payment.
The part-heard hearing was resumed before Mushin J on 9 February 2007 at the conclusion of which his Honour made orders, the first two or which are the subject of this application for leave to appeal.
In an affidavit that the husband sought to rely upon before Mushin J sworn 8 February 2007 the husband deposed that his best estimate of the net value of himself and the wife was that they had net assets of $8,424,400. He also asserted that he had no surplus cash available to make a payment to the wife nor could he readily realise any of his assets as they stood as security for loans advanced by a number of institutional and private lenders.
When the matter came on again before Mushin J his Honour indicated that a trial date might become available as early as May 2007, some 13 weeks after the interlocutory hearing. Mr Ackman QC on behalf of the wife then turned to interim arrangements that would be necessary to bring the matter to trial, including litigation funding and spousal maintenance. He said:
The husband confronts us with an offer of nothing. If we could get – and I am plucking figures out of the air. If we could get a couple of hundred thousand dollars on the basis that a trial is going to happen in May to be left to the characterisation of the trial judge, that would cover us.
We’ve got no money, we’ve got no income…
After the matter was stood down for some unfruitful negotiations Mr North SC on behalf of the husband said that his client could pay from further borrowings, in addition to what he provides for the household at the moment, $1200 per week.
His Honour appeared to be unsympathetic towards submissions being made on behalf of the husband that he would have difficulty providing any monies to the wife pending trial. His Honour said:
He swears to 8.4mil net and can’t find $200,000, and I’m having trouble with that basic proposition. That’s the bottom line.
In the course of further discussion attention moved away from the provision of some litigation funding (a Barro order) and moved towards the question of some interim spousal maintenance. Mr Ackman said:
Your Honour last time, albeit on a section 77 basis, made an order that in fact calculates at about $1150 a week. I got 1150, perhaps my maths has fallen down. It’s 13 weeks I calculated, but be that as it may, it doesn’t matter because it’s been overtaken by my learned friend’s offer of 1200. So there’s a concession that she alone needs 1200
…
…There is a form 13 that indicates the wife’s needs. She has sort (sic) a departure. My learned friend’s client puts your Honour in the position where---
HIS HONOUR: You’re saying you want a Barro of $200,000.
MR ACKMAN: Yes, and we want an amount, your Honour, but I can do the calculation myself. We say it should be 2000 a week…
It was then agreed that there would be 15 weeks to the date in which the matter could be listed for trial and Mr Ackman then indicated that his claim had grown in total to $230,000.

Reasons for judgment

His Honour delivered a short judgment. He indicated the extent of the husband’s financial position was very contentious but that:
…the fact that the husband has sworn to a net asset position of $8.4 million is sufficient in the difficult circumstances of this case for me to make appropriate orders, pending the trial of the proceedings.
He went on to say that it was appropriate to make an order for $30,000 in favour of the wife pursuant to the provisions of s 77 of the Family Law Act 1975 (Cth) (“the Act”) as spousal maintenance. As far as the Barro order was concerned he noted that a practice had developed of making an order without specifying the relevant power but relying on either the maintenance power, the alteration of property interest power under s 79 or the power granted by s 117 of the Act to make an order for costs. He said:
13.In my view, if it is necessary to make such a specification, it would be appropriate for the money to be provided as security for costs, pursuant to section 117 of the act (sic), but in any event it is appropriate that I provide liberty to the parties to argue the ultimate disposition of those moneys at the final trial and for the judge to make that decision then. I will accordingly be making a costs order to enable the wife to prepare her case in the sum of $200,000, and in that respect I rely on the affidavits of the wife's solicitor and find that the quantum is sufficiently established.

The application for leave to appeal

It was submitted that there was an error of principle in making an order for the payment of $200,000 as “security for costs” where there was no evidence of a fund readily available to meet the wife’s claim. It was asserted that the unchallenged evidence was that the husband could not borrow against the assets because of the existing injunctive orders and that the more substantive assets were cross-collateralised and would not be a ready source of liquid funds with which to meet the orders sought. It was further submitted that in so far as the payment of $200,000 was categorised as “security for costs” it purported to be an exercise of the costs power and that the matters under
s 117(2A) of the Act had not been properly addressed.
It was further submitted that the making of the spousal maintenance order demonstrated an error of principle and a substantial injustice.
Given the concession to pay interim maintenance at $1200 per week and the order that was made for $2000 per week, the extent of the injustice could not be seen to be more than $800 per week and then only for a period of 13 weeks. The total quantum of the asserted injustice in the circumstances was an overpayment of $10,400 which, although perhaps not justified, could not in our view be properly categorised as being “substantial” in the milieu of a case where there was an admitted pool of wealth of not less than $8,400,000. Any injustice caused by an order that had been made in error would not in our view be sufficient to merit an appellate hearing with its attendant costs both to the parties and to the community.
Counsel for the husband is correct in his submission that it is not apparent as to why his Honour considered that the sum of $2000 was appropriate when the wife’s statement of financial circumstances indicated that she only required $1436 per week for her own support. Be that as it may, the extent to which the order made exceeds what would have been an order that could appropriately be made on the material before the Court is a maximum of $7332 which, in the context of the size of the pool of assets available for ultimate division between these parties is not a sum that would justify the issue being ventilated before the Full Court. There is a safeguard built into the orders of Justice Mushin namely the right of the parties to argue the ultimate disposition of the monies at the final trial of all applications for alteration of property interests.
We are not persuaded that the order demonstrates an error of principle sufficient to justify the grant of leave to appeal. The order was made under the provisions of s 77 which provides:
Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, that it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.
We would see it that within the confines of that order it remains open for the parties to urge the Court hearing the property case to treat part of the monies received by the wife pursuant to the order for urgent spousal maintenance as monies ultimately treated as an advance of capital in relation to her property entitlements.
Similarly, notwithstanding the description that the $200,000 was provided “by way of security for costs” the reservation by the trial judge of the ability to recategorise that payment militates against granting leave to appeal the making of the order.
The duty judge is often in an impossible position in cases of this nature. The very issues that need to be fully investigated namely the extent of the asset pool and the financial resources of the parties cannot be adequately investigated without the provision of appropriate funds. The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot simply be accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with litigation. As the Court said in Zschokke and Zschokke (1996) FLC 92-693 at 83,215:
…where property settlement proceedings under s 79 are pending, the Court may pursuant to the provisions of s 80(1)(h) (and independently of the power in s 117(2) to make a costs order) require the party who controls most of the assets of the parties to provide the other party with funds to conduct his or her case, with the provision of such funds then being a matter to be taken into account in the final settlement of property between the parties.
There can be no question of the existence of a power to make the order.
In Zschokke the Court went on to discuss five criteria that had been identified by the trial judge as being appropriate to consider making an order for litigation funding. They were:
1.        Complexity in the respondent’s financial affairs.
2.        The need for expert investigation into those affairs.
3.        A position of financial strength on the part of the respondent.
4.A capacity on the part of the respondent to meet his own costs; and
5.        An inability on the part of the applicant to meet her costs.
The Full Court seemingly accepted each of those matters as being appropriate matters for a trial judge to give consideration to in determining whether or not to make an appropriate order. We do not understand that there is a challenge in the matter before us to the identification of each of those matters as being relevant to the exercise of the discretion. In the matter before Mushin J it was clear that at least criteria 1, 3 and 5 were met. The second criteria became unnecessary for further consideration because of the appointment of a joint single expert. The only remaining issue was the capacity on behalf of the respondent to meet his own costs to which he had indicated that he was able to do so by borrowing from friends and relatives.
Whilst Mr North asserted there was no inability on behalf of the applicant to meet her own costs by reason of her own ability to borrow, the trial judge was appropriately sceptical of that approach in light of the quantum of assets available in the husband’s control. We see nothing wrong with that approach that would justify us granting leave to interfere with this interlocutory order.
Finally it has been asserted that the husband was and remains unable to raise the capital sum sought by the wife. This is a matter which may become relevant if and when the husband defaults in the order and an enforcement application is brought. However, the question of enforcement of the order remains a separate question from the propriety of granting the order in the first place.
In the circumstances, whilst there are some matters of concern arising out of the manner in which the orders were expressed and in the extent of quantum of the urgent maintenance order, these matters are in our view not sufficient to justify the grant of leave to appeal.
Accordingly, we would order that the application for leave to appeal be dismissed.

Costs

The respondent sought costs if the application was dismissed. The applicant made no submission in response. We think there are circumstances that make it appropriate for costs to follow the event.

I certify that the preceding Thirty (30) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court

Associate:

Date: 4 May 2007