Brunton and Brunton

[2017] FamCA 1161

FAMILY COURT OF AUSTRALIA

BRUNTON & BRUNTON [2017] FamCA 1161

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife sought orders for periodic interim spousal maintenance, interim property adjustment or interim costs, and litigation funding – Where the husband sought a dismissal of the wife's application – Court finds that the wife did not establish that she is unable to support herself adequately for the purposes of section 72(1) – Application for periodic spousal maintenance dismissed – Court finds that the husband has available assets, being shares and bank savings to meet an order for payment of a lump sum to the wife on account of interim costs – Orders made for the husband pay to the wife a sum of $25,000 by way of interim costs.

Family Law Act 1975 (Cth), 72(1), 117(2)

Strahan and Strahan [2009] FamCAFC 166

APPLICANT: Ms Brunton

RESPONDENT: Mr Brunton

FILE NUMBER: SYC 4578 of 2016

DATE DELIVERED: 28 July 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 7 July 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: Mills Oakley

COUNSEL FOR THE RESPONDENT: Mr Gardiner

SOLICITOR FOR THE RESPONDENT: Coleman Grieg

Orders

1. The husband will pay to the wife, by way of interim costs, a sum of $25,000 within 14 days of the date of these Orders.

2. Otherwise, the wife's Further Amended Application in a Case is dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4578  of 2016

Ms Brunton

Applicant

And

Mr Brunton

Respondent

REASONS FOR JUDGMENT

The proceedings

1. Ms Roberts and Mr Brunton are parties to litigation concerning financial issues.  By a Further Amended Application in a Case filed on 20 June 2017 the applicant wife sought the following orders:

   1.That within 14 days of the date of these Orders the Husband pay to the Wife by way of interim property adjustment or in the alternative by way of interim costs the sum of $75,000.

   2.That the Husband pay to the Wife the sum of $900 per week by way of periodic interim spousal maintenance in to a bank account nominated by the Wife with such sum to be back dated to 30 May 2017.

   3.That within 7 days of the date of these Orders the Husband do all acts and things necessary to cause:

   a.the [Brunton] Family Trust to provide any and all documents which account for and evidence drawings recorded in the financial statements as paid to the Wife in the sum of $53,986 but not received by her; or

   b.In the alternative pay to the Wife $53,986 by way of interim property settlement.

   4.That in the alternative to Order 1 hereof, within 7 days of any payment by or on behalf of the Husband in relation to his solicitor's fees, including all expenses in association with the preparation of his case, the Husband pay or cause to be paid an amount equivalent to two dollars for every one dollar to the solicitors for the Wife.

   5.That in the event the Wife obtains full time employment:

   a.as soon as reasonably practicable the Wife shall cause her legal representative to notify the legal representative for the Husband of:

   i.the commencement date of said full time employment ("the commencement date"); and

   ii.the terms of said full time employment; and

   iii.thereafter any other full time employment obtained until such time that substantive Application is finalised; and

   b.The husband shall cause to make the payments referred to at Order 2 hereof no earlier than 28 days following the commencement date.

   6.Costs."

2. At the interim hearing on 7 July 2017 the wife sought the following orders in lieu of paragraph 4 of her Further Amended Application in a Case:

   Expanded Interim "dollar for dollar" litigation funding order as sought by the wife

   1.That within 7 days after payment by or on behalf of the husband of any monies in payment of accounts rendered by lawyers for the husband, the husband pay or cause to be paid twice that amount of money into the trust account for the solicitors for the Wife.

   2.That the sums paid or caused to be paid by the husband to the solicitors for the Wife pursuant to the preceding Order be applied by the lawyers for the Wife in payment of the costs and disbursements incurred or to be incurred by the Wife in the conduct of these proceedings.

   3.That the determination as to whether the sums referred to in the preceding two Orders are to be treated as part of the Wife's entitlement to property settlement or in payment by the husband of the Wife's costs be adjourned to the final hearing of these proceedings."

3. By a Response to an Amended Application in a Case filed on 4 July 2017 the husband sought a dismissal of the wife's application.  He also sought an order that the wife pay his costs.

Background

1. The wife was born in 1987 and is presently 29 years of age.  The husband was born in 1980 and is currently aged 36 years.  The parties began to live together in March 2011 and married in 2015.  They separated on 1 March 2016.  There are no children of the marriage.

2. The husband continues to live at B Town, where he operates a business in conjunction with a partner.  The wife is studying for a degree, which she expects to complete in October 2017.  She deposed "I will apply for any and all full-time positions after my exams have finished for this semester."

3. During the parties' cohabitation the wife worked as an administrator.  She worked also at a retail outlet during the 2015 taxation year.  The wife was offered employment in January 2016 in a business at C Town (annexure "R" to the husband's affidavit).

4. After the separation the wife obtained an internship in 2016, for which she was paid $26,000.  Between February 2017 and April 2017 she earned $300 per week for employment which she secured through her university.  The wife also earned $150 per day working for her parents for a period after the separation.

5. The wife lived with her parents on a rent-free basis for an unspecified period after the parties' separation.  In May 2017 she moved to Queensland, where she lives with a "boyfriend".  The wife disclosed nothing in relation to the financial circumstances of this arrangement, other than a brief indication that she pays no rent or board for their accommodation.

6. On 10 October 2016 the parties consented to orders to the effect that the husband cause the Brunton Family Trust ("the Trust") to pay to the wife the sum of $1,960 for each month between October 2016 and January 2017.  These payments were not expressed to be by way of interim spouse maintenance.

7. The husband deposed that the wife received a sum of $490 per week for 14 months after the separation, with the last such payment being in April 2017.  He deposed further that he paid a sum of $490 to the wife during the marriage, while she invested her income in superannuation contributions.

8. Banking records and credit card statements annexed to the husband's affidavit of 4 July 2017 and tendered at the interim hearing (Exhibit 5) show that the wife has expended considerable sums on travel and cosmetic surgery since the separation.  In July 2016 she paid a total of $13,406 to a cosmetic surgeon, an anaesthetist and a private hospital.  She paid $5,450 to a cosmetic dentist between May 2016 and January 2017.  The wife also expended a total of about $3,000 on air tickets for interstate flights and purchases in Queensland, Melbourne and D Town.

9. At the commencement of cohabitation the husband owned a home unit at Suburb E, which he purchased in 2007 for $350,000 with a mortgage advance of $330,000. The husband deposed that he had savings of approximately $45,000, a superannuation fund of $20,000 and a 50 per cent interest in a business.  He deposed he paid $175,000 for this interest in 2008, with a loan balance of approximately $140,000 at the commencement of cohabitation.  The wife deposed that she owned no significant assets at the commencement of the parties' cohabitation.

10. From about July 2013 the husband began to acquire shares in mining companies.  He traded in shares from that point and, as at 28 February 2016, his portfolio stood at $369,185 (annexure "C" to the husband's affidavit).

11. Both parties worked during their cohabitation, with the husband's income being substantially greater than that of the wife.  They engaged in income splitting via the trust in order to minimise tax liabilities.

12. In the course of this financial strategy, the wife accrued a loan account with the trust.  The single expert, Mr F, noted that the financial statements of the Trust recorded the balance of the wife's loan account at $53,986 in 2015.  This balance does not appear in the 2016 Trust financial statements, apparently having been cancelled by a journal entry.

13. During the parties' cohabitation they were involved in a media production.  The business received a total gross amount of $464,516 for this production.  The husband deposed that the commitments required of himself and his partner for this program impacted adversely on the growth and performance of the business.  This view appeared to be shared by the single expert Mr F in his report (Exhibit 2).

14. On behalf of the wife, considerable reliance was placed on the husband's "inconsistent" positions in relation to a property at G Street, Suburb H.  In a Financial Statement of 2 September 2016 the husband stated that he held a 50 per cent interest in that property.  The husband maintains now that he holds no beneficial interest in this property.  For his part, the husband complained that the wife has not made proper disclosure.

Consideration

Interim spouse maintenance

1. As a threshold matter, the wife must establish that she is unable to support herself adequately by reason of care of a child of the marriage, age or physical incapacity for appropriate gainful employment or any other adequate reason (section 72(1)).

2. There are no children of the marriage and the wife is 29 years of age and in good health.  Since 2014 the wife has been able to sustain gainful employment, while undertaking her studies.  Since the separation she has held gainful employment in various capacities.  In these circumstances, I consider that the wife has difficulties in establishing that she is unable to support herself adequately for the purposes of section 72(1).

3. In my view, an additional difficulty for the wife in meeting the threshold test pursuant to section 72(1) is the lack of evidence concerning the financial circumstances of her cohabitation with her "boyfriend".  The wife elected to provide no such information, other than the fact that she makes no financial contribution by way of rent or board.

4. For these reasons, I find that the wife did not establish that she is unable to support herself adequately for the purposes of section 72(1).  Accordingly, I will dismiss her application for periodic interim spouse maintenance.

Interim or partial property settlement

1. In March 2017 the parties submitted a draft balance sheet in the following terms:

ASSETS
Ownership		Description	Wife/de facto partner's value	Husband/ de facto partner's value
1	H	J Street, Suburb E	E 740,000	E 740,000
2	H	50 per cent equitable interest in G Street, Suburb H	NK	E 750,000
3	H	36,500 51,300 shares in K Inc	E 191,260	172,183
4	H	190,000 88,000 shares in L Ltd	E 224,200	114,400
5	H	80,000 50,000 shares in M Ltd	E 249,600	123,000
6	H	Brunton Family Trust	See Note 6	See item 39
7	W	ANZ Account No:           1.       …27           2.       …57	Neg	121 NK
8	W	U Bank linked Accounts:           1.       …95           2.       …15	Neg	0 0
9	H	Westpac Account No: …19	41,272
10	H	Westpac Account No: …05 (working account)	Varies
11	H	T Bank Account No …51	7
12	H	1,400,000 shares in N Ltd	7,000
13	H	140,000 shares in O NL	9,800
14	H	Shares in P Ltd	E 3,500
15	H	Shares in Q Ltd	E9,000
16	H	Shares in R Ltd	E1,000
17	W	Y shares	Disposed of
18	W	L Ltd shares	Disposed of
19	W	310,000 shares in N Ltd	1,550
20	W	Parcel of shares in public listed company	E 1,000	NK
21	H	Husband's wedding ring	NK	300
22	W	Wife's wedding ring	E 5,000	20,000
23	W	2 x horses	NK	E 40,000
24	W	Horse equipment	E 10,000	E 10,000
25	W	Motor Vehicle	E 8,850	E10,000
26	W	Tax Refund	17,554
Total		$1,429,915	$2,090,687

ADDBACKS
Ownership		Description	Wife/de facto partner's value	Husband/ de facto partner's value
27
28
Total		$0	$0

LIABILITIES
Ownership		Description	Wife/de facto partner's value	Husband/ de facto partner's value
29	H	S Bank Mortgage (secured against J Street, Suburb E)	330,000	330,000
30	H	Personal loan from husband's father re: G Street, Suburb H	753,133
31	H	S Bank Rollover Loan (re: purchase of business)	E 142,477
32	W	ANZ credit card	E 300	NK
33	W	Loan from parents	17,000	NK
34	H	Tax liability	108,578
Total		$347,300	$1,191,711

SUPERANNUATION
Member		Name of Fund	Type of Interest	Wife/ de facto partner's value	Husband/ de facto partner's value
35	H	V Super (as at 30.06.2015)	Accumulation	55,158	51,909
36	W	U Bank	Accumulation	33,353	34,212
Total		$88,511	$86,121

FINANCIAL RESOURCES
Ownership		Description	Wife/de facto partner's value	Husband/ de facto partner's value
37	H	Brunton Family Trust	435,459	83,020
38
Total		$435,459	$83,020

NETT TOTAL ASSETS (including Superannuation)
$1,606,585
$1,068,117

Notes

In relation to any disputed items and all disputed values for items a party should state, using the item number as a heading:

1.     Why an item should not be on the balance sheet.

2.     Whether expert evidence is required to resolve a dispute as to value and what steps have been taken to agree upon and appoint a single expert.

3.     Whether documents in the possession of the other party need to be provided before the value of an item can be agreed.

4.     Any other comment a party wishes to make in relation to the dispute item.

Item No

1

Mid point Per W Appraisal dated 27 October 2016.

2

This property is registered in the name of Brunton Pty Ltd and to the best of the Wife's knowledge, it is an underlying asset of a self managed super fund in which the Husband's father is a member.  The Husband concedes he has a 50 per cent equitable interest in the property.  It was acquired in or about May 2010 for $1,500,000.  The wife does not concede that the property has not appreciated since that time.

6

W: Valuation has been prepared by X Valuers, appointed as Single Expert.  As the wife understands the valuation, the total goodwill ascribed to Brunton Pty Ltd is $550,000.  The Husband's half share is therefore $275,000.  This has been attributed to the Brunton Family Trust.
The Brunton Family Trust has been valued at $83,020 excluding goodwill.  The Wife notes:

○     She is recorded in the Trust as being owed $53,986 she holds this as an asset.

○     the Husband is recorded as being owed $23,453.

7&8

W: as at 31/1/2017, the Wife had a combined total of approximately $60 in her bank accounts.

17&18

W:    In May 2016, the Wife caused the Y shares ($8,000) and L Ltd shares ($37,000) to be sold and she applied the proceeds of sale to fund her day to day expenses, including for payment of legal fees.

25

W:    Per redbook dated 19 September 2016

26

W:    To be updated by husband.  Agreed on the basis of provision of updated statement.

Husband's comments
NA	Wife removed virtually all household furniture and contents at separation.
7	a.     Balance as at 17.2.17 for account …27 b.     No statements have been provided for account …25
8	Balance as at 31.12.16
10	This account is held by the trustee for Brunton Family Trust and is accounted for in the value given for the trust at item 39.
11	Balance as at 26.11.16
3	Based on share price of $3,356, current as at 21.3.17
4	Based on share price of $1.30, current as at 29.3.17
5	Based on share price of $2.46, current as at 29.3.17
12	Based on share price of $0.005, current as at 29.3.17
13	Based on share price of $0.014, current as at 29.3.17
14	Estimate only.  Husband to confirm number of shares held.
15	Estimate only.  Husband to confirm number of shares held.
16	Estimate only.  Husband to confirm number of shares held.
19	Based on share price of $0.005, current as at 29.3.17
20	The husband is not aware of what shares these relate to.
26	According to information provided by wife, she is to be paid a tax refund from her 2016 ITR.
30	This is a loan belonging to the Brunton Family Trust.  The net value of the trust is accounted for at item 39.
33	No particulars have been provided by way of disclosure
34	Representing tax payable by husband on 2016 ITR
35	Balance as at 30.06.16
36	Balance as at 02.03.2017
37	Based on valuation report prepared by single expert.

1. In an Amended Initiating Application filed on 24 May 2017 the wife sought orders to the effect that the husband pay to her a sum of $750,000 by way of alteration of property interests.  By a Response filed on 4 July 2017 the husband sought a dismissal of the wife's application.

2. The wife contended that she should receive a sum of $53,986 from the Trust by way of interim property settlement.  The 2016 financial statements for the Trust (annexure "H" to the husband's affidavit) do not show any asset from which such payment could be made to the wife.  The balance sheet indicates that the principal asset of the Trust is the intangible item of goodwill at $192,000.

3. At the interim hearing the submissions for the wife in support of an order for interim property settlement were cast in terms of payment to her of the sum of $53,986, which was her loan account balance with the Trust.  I am satisfied that the wife failed to identify a fund within the Trust from which this sum could be paid to her.  Accordingly, I consider that the wife cannot succeed in this part of her Further Amended Application in a Case.  Her Further Amended Application in a Case sought a payment of $75,000 "by way of interim property adjustment or in the alternative by way of interim costs".

Interim costs or litigation funding of $75,000

1. In Strahan and Strahan [2009] FamCAFC 166 at [96] the Full Court said as follows:

   96.      In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:

   ·an applicant should have "at least an arguable case for substantive relief which deserves to be heard":  Chester v Chester (1995)
   FLC 92-612 ("Chester") at 82,107 per Moss J;

   ·there should be evidence of the applicant's "likely costs of the litigation":  see Wilson and Chester;

   ·"it is not an essential precondition" that the applicant's legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis:  Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987);  see however Coomes and Coomes [1995] FamCA 103; (1995)
   FLC 92-558 per Cohen J;

   ·an order may "make a provision for litigation expenses at a rate that appears reasonable in all the circumstances";

   ·an order can be made "in respect of costs already incurred as well as of future costs";

   ·"whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant's lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its' quantum";

   ·"any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended" and this may be done "by requiring that the funds be administered solely by the applicant's solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs":  Breen

   We observe that Brereton J at [33] also said that "many of the foregoing considerations [he described] are less important, though not necessarily irrelevant, where what is relied on as a source of power" is an interim property order under s 79 and s 80(1)(h)."

1. The parties cohabited for approximately four years, during which the wife engaged in gainful employment and attended to their domestic needs.  During the relationship, the husband acquired a share portfolio which presently has a value of about $369,185.  Obviously, it is impossible on the present state of the evidence to predict the outcome of the wife's final application with any certainty.  I am satisfied, however, that she has an arguable case for an order for alteration of property interests.

2. The wife deposed that her solicitor has informed her that her total costs will be approximately $55,000, if the matter proceeds to trial.  The wife's costs agreement with her solicitors (annexure N to her affidavit of 21 June 2016) provides that the firm may cease to act for her if she allows an account to remain unpaid for more than 30 days.

3. Applications for costs are to be determined within the framework of section 117(2), which provides as follows:

   …

(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:

(a)the financial circumstances of each of the parties to the proceedings;

(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

(g)such other matters as the court considers relevant."

1. It is clear that the husband's financial position is significantly superior to that of the wife.  In his Financial Statement of 30 May 2017 the husband deposed to a gross weekly income of $5,736 and total expenditure of $6,804.  The latter figure includes $692 per week for credit card repayments but the Financial Statement showed a "Nil" balance for credit card debts.  The discretionary weekly expenses in Part N of the husband's Financial Statement included $75 for cleaning, $100 for entertainment and $50 for holidays.  It may be that some of the husband's expenses are tax deductible, for example, rates of $78, income protection insurance of $48 and car hire purchase of $185 per week.

2. The husband's Financial Statement indicated that he holds shares to the value of $442,911 and a Westpac Bank account with a balance of $73,137.  It seems to me to be unlikely that the husband would have been able to maintain these assets if, in fact, his expenditure exceeds his income on a weekly basis.

3. The wife's income has been lower than that of the husband throughout their cohabitation.  As noted above, she has spent considerable amounts of money on cosmetic surgery and travel since the separation.  At this time, the wife has approximately $600 in a bank account.

4. Neither party is in receipt of a grant of legal aid.  I do not consider that either party has engaged in conduct which is relevant for present purposes.  The proceedings were not necessitated by the failure of a party to comply with previous court orders.  There was no evidence of any offers of settlement.

5. The husband has available assets, being shares and bank savings, from which he could meet an order for payment of a lump sum to the wife on account of interim costs.  It seems to me that there is justification for an order which permits the wife to continue her litigation, by way of a payment from the husband.

6. I will not make an order that the husband pay to the wife a sum of $75,000 by way of interim costs as this amount exceeds by $20,000 the estimate of her solicitor of the amount required to fund the proceedings to finality.  I do not accept the contention of the wife to the effect that the husband has engaged in dubious conduct in relation to the Suburb H property.  It seems to me that the parties would be well advised to focus on achieving a resolution of the proceedings.

7. At this stage, I will not make an order that the husband pay to the wife a sum of $55,000 by way of interim costs.  It may be that the proceedings will be finalised prior to the trial and that amount will not be required to put an end to the matter.  In the exercise of my discretion, I will order that the husband pay to the wife a sum of $25,000 by way of interim costs.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 28 July 2017.

Associate: 

Date:  28 July 2017