Burt and Merrill

[2018] FamCA 162

FAMILY COURT OF AUSTRALIA

BURT & MERRILL [2018] FamCA 162

FAMILY LAW – PROPERTY – SPOUSAL MAINTENANCE – Interim – whether the wife has the capacity to continue the maintenance of the husband – Where consideration is given to the wife’s limited income – Where the wife does not have available income to make spousal maintenance payments – Consideration of whether wife could maintain husband from capital.

FAMILY LAW – PROPERTY – INTERIM DISTRIBUTION – Where the husband seeks monies be released to him for litigation funding –Where the litigation funding is to pursue further Applications – Consideration of Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 – Where the interests of the parties and the interests of justice would not be served by further interlocutory proceedings in relation to an interim distribution.

Family Law Act 1975 (Cth) ss 75(2), 79, 80(1)(h), 90SM, 117, 117(2A)

Harris and Harris (1993) FLC 92-378
Klearchos & Klearchos & Ors [2015] FamCAFC 217
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466

APPLICANT: Mr Burt

RESPONDENT: Ms Merrill

FILE NUMBER: MLC 9912 of 2013

DATE DELIVERED: 16 March 2018

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 1 March 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Walmsley QC

SOLICITOR FOR THE APPLICANT: Efron & Associates

COUNSEL FOR THE RESPONDENT: Litigant in Person

SOLICITOR FOR THE RESPONDENT:

Orders

1. That the Applications in a Case filed 21 September 2017 and 12 February 2018 be dismissed.

2. That the wife do all things necessary to cause the total sum of FIFTY THREE THOUSAND FIVE HUNDRED AND SIXTY THREE DOLLARS AND SIXTY FOUR CENTS ($53,563.64) to be forthwith withdrawn from funds held by her former solicitors in an investment trust account and disbursed as follows:-

   (a)To ASIC on behalf of KK Pty Ltd in the sum of NINE HUNDRED AND SIXTY FIVE DOLLARS ($965);

   (b)To ASIC on behalf of S Pty Ltd in the sum of SIX HUNDRED AND FORTY TWO DOLLARS ($642);

   (c)To State Government of Victoria for Land Tax in the sum of FIVE HUNDRED AND FORTY FIVE DOLLARS ($545);

   (d)To LL Water in relation to L Street, Suburb E in the sum of SEVEN HUNDRED AND ELEVEN DOLLARS AND EIGHTY FIVE CENTS ($711.85)

   (e)To the Child Support Agency for FF in the sum of TEN THOUSAND SEVEN HUNDRED AND THIRTY THREE DOLLARS ($10,733); and

   (f)To MM School for FF the sum of THIRTY NINE THOUSAND NINE HUNDRED AND SIXTY SIX DOLLARS AND SEVENTY NINE CENTS ($39,966.79).

3. The balance of the Application in a Case filed 13 December 2017 is listed for hearing on 6 April 2018 at 9.30am (ACST) (2 hours allowed).

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 Burt & Merrill 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 ADELAIDE

FILE NUMBER: MLC 9912  of 2013

Mr Burt

Applicant

And

Ms Merrill

Respondent

REASONS FOR JUDGMENT

introduction 

1. Ms Merrill (“the wife”) is the applicant de facto wife and Mr Burt (“the husband”) is the respondent de facto husband in the substantive proceedings between the parties for settlement of property.

2. The final hearing commenced on 22 August 2016. The evidence was concluded on 13 April 2017.

3. Following final written and oral submissions being received judgment was reserved on 26 October 2017 but has not yet been delivered.

4. On 1 May 2017 orders were made that the  wife do pay interim spousal maintenance to the husband at the rate of $1,024 per week for 17 weeks up to a maximum sum of $17,408.

5. It was anticipated that the period would be sufficient for final submissions to be made and judgment delivered.

6. On 21 September 2017 the husband filed an Application in a Case seeking orders by way of urgent or interim spousal maintenance that the wife pay to him $1,204 per week as and from 12 August 2017.

7. The application provided for the interim spousal maintenance to be paid by the wife directly from rental collected by the managing property agents for various commercial properties, but in particular C Pty Ltd (“CPL”) which owns property that produces net rental income of $3,290. The balance of the orders seek to put in place the mechanics of the payment to the husband.

8. On 13 December 2017 the husband filed an Application in a Case seeking that extensive orders be made prior to the delivery of the final judgment. Of necessity the orders would result in significant delay.

9. Following a hearing on 22 February 2018 it was ordered that the outstanding applications be listed for argument on 1 March 2018 as follows:-

   (1)The husband’s Application in a Case for interim spousal maintenance filed 21 September 2017.

   (2)Paragraphs 1(a), 1(b), 2 and 4 of the Application in a Case filed 13 December 2017.

   (3)Husband’s further application for interim spousal maintenance filed 12 February 2018.

INTERIM SPOUSAL MAINTENANCE

1. Documents relied upon by the husband:-

   (1)Application in a Case filed 21 September 2017.

   (2)Husband’s Affidavit filed 21 September 2017.

   (3)Application in a Case filed 12 February 2018.

   (4)Husband’s Affidavit filed 12 February 2018.

   (5)Husband’s Affidavit filed 20 February 2018.

   (6)Husband’s Affidavit filed 28 February 2018.

2. The wife relies upon her Response and Affidavit filed 20 February 2018.

3. In the judgment delivered 1 May 2017, at [42] I found that the husband had “little or no capacity to support himself between now and the  final determination of the proceedings”.

4. Whilst not the subject of challenge, there is nothing raised in the husband’s affidavit material filed in support of the application that suggests his financial circumstances have improved. The husband contends that his expenses have increased as a result of the deteriorating state of his home and personal expenses despite a recent reassessment of child support for FF born in 2000 (“FF”) in the sum of $1,706.50 per calendar month. The husband contends that notwithstanding the assessment the wife has not paid child support. Child Support arrears have accumulated. The Child Support Assessment is the subject of enforcement by the husband and challenge by the wife.

5. It is reasonable to find that the husband is unable to support himself adequately having regard to the relevant matters in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

6. The husband did not file a further financial statement and whilst I accept that his financial position would not have improved, there is no basis to find that the sum representing the husband’s reasonable requirements should be increased from $1,024 as was determined on 1 May 2017 to $1,204 as sought in the Application in a Case filed 21 September 2017.

7. The wife relies on her Affidavit filed 20 February 2018. She disputes the husband’s assertion that she is employed. She denies that she has purchased, nor that she owns any “Bitcoin” and says that her financial position is now exacerbated by a liability of $16,570.33 owed to her boyfriend.

8. She summarises her income as follows:-

   6.My income has not changed since I last filed a Financial Statement. It is $3920 per week. My expenses have increased as an assessment of child support in relation to [FF] issued against me. My expenses excluding child support are the same as when I last filed a Financial Statement. I am assessed to pay $1706.50 per month in child support. I am in the process of seeking a review of that decision. I have been unable to pay that or my other debts.

9. She sets out a range of liabilities at paragraph 7 totalling $1,400,317.75. She agrees with the husband that there are outstanding school fees for FF to MM School in the total sum of $86,527.

10. It appears that her rent may have increased following the expiration of her lease on 1 February 2018.

11. The balance of the proceeds of the sale of 5 M Street, Suburb D together with the proceeds of settlement from the VCAT proceedings as at 31 January 2018 is $215,216.64.

12. In considering the financial position of the wife, I had regard to her Financial Statement filed 17 February 2017. Other than the Child Support Assessment of $1,706.50 for FF, the wife’s financial position remains unchanged. In the 1 May 2017 judgment I found that the wife did not have the capacity to pay the husband’s shortfall of $1,024 from her income.

13. Consideration was given in the 1 May 2017 judgment as to whether the capital that remains in the trust account of the wife’s former solicitors can be utilised to satisfy the husband’s application for interim spousal maintenance.

14. Whilst not the subject of final determination, I found in the 1 May 2017 judgment that it was reasonable to bring to account a potential tax liability in relation to O Pty Ltd as trustee for the 6 M Street Trust at $161,653 leaving a balance of $75,817.I find that it is reasonable to continue to account for that potential tax liability this Application, leaving a balance of $53,563.

15. The wife sets out the following liabilities which she has apparently incurred since the filing of her financial statement and the orders made on 1 May 2017:-

1.	KK Pty Ltd debt	965.00
2.	PAYG Withholding Tax for period October 2017 to December 2017	1,836.00
3.	Land Tax 6 M Street Trust	545.00
4.	ASIC debt for S Pty Ltd	642.00
5.	Debt to II Lawyers	926,702.00
6.	Debt to Mr NN (counsel)	215,000.00
7.	Debt to EE Accountants	97,107.02
8.	Debt to Child Support Agency	10,733.24
9.	Debt to RR Group for OO’s fees 2017 Financial Year	9,250.00
10.	Debt to RR Group for OO’s fees for Term 1 2018	1,500.00
11.	Debt to PP Group for JJ’s fees 2018	33,146.00
12.	Debt to LL Water in relation to L Street, Suburb E	711.85
13.	Debt to LL Water in relation to previous rental property	3,643.85
14.	Debt to QQ Group	12,008.01
15.	Debt to MM School for FF’s school fees	86,527.80
Total	$1,400,317.77

1. The husband acknowledges that his precarious financial circumstance has had a deleterious effect on FF. Whilst in emotive terms the husband describes his predicament as “financial oppression”, the parties agree that there is a significant outstanding debt to MM School for FF’s school fees. In reasons delivered 8 June 2017, I found that it was appropriate to order the sum of $32,500 to be paid to V School in relation to the outstanding fees for JJ, now an adult child of the parties, for the 2016 academic year.

2. There is merit in consideration being given to a lump sum being made available for FF’s outstanding school fees.

3. The wife acknowledges that she has a debt to the Child Support Agency of $10,733 which also relates to FF. There is no other source from which the child support arrears are capable of being paid and accordingly I propose to order that the child support amount be deducted from the remaining funds held in the investment trust account.

4. It is also reasonable that outstanding amounts in relation to KK Pty Ltd, 6 M Street Trust and S Pty Ltd be paid. The outstanding debt to LL water in relation to L Street, Suburb E should also be paid.

5. From the balance of $53,563.64 remaining the following should be paid and deducted:-

1.	KK Pty Ltd to ASIC	965
2.	6 M Street Trust – Land Tax	545
3.	S PTY Ltd to ASIC	642
4.	Debt to LL Water in relation to L Street, Suburb E	711.85
Total	2,863.85
Balance	50,699.79
Less amount paid to Child Support Agency	10,733
Balance	$39,966.79

1. The funds remaining should be directed to MM School as part payment for the outstanding school fees.

ANTICIPATED COUNSEL FEES FOR APPEAL AND APPLICATION FOR ACTUAL AND APPREHENDED BIAS

1. Paragraph 1(a) of the Application filed 13 December 2017 seeks that the Court list for hearing the husband’s application that I should recuse myself on the basis of actual and apprehended bias.

2. The husband relies upon his Affidavit filed 28 February 2018 in lieu of the Affidavit filed on 13 December 2017.

3. It is not intended that the application is to be determined at this time. Queen’s Counsel for the husband pressed paragraph 4 of the Application as a necessary precursor to the substantive argument.

4. Following orders made on 10 August 2017, the husband lodged appeal SOA64/2017 on 25 August 2017. The appeal has not yet been heard and counsel advised that there had been some delay in the filing of appeal documents but it was anticipated that the appeal may be listed in June 2018.

5. The husband seeks to instruct Mr Glick QC to represent him at the hearing of the appeal.

6. The husband also seeks to brief Mr Richter QC to act on his behalf in respect of the application that I recuse myself from the proceedings and therefore from delivering judgment in the substantive trial.

7. Annexure “IAB1” to the husband’s affidavit comprises a quote totalling $30,000 for Mr Richter QC to appear for the husband on the application. I accept the submissions of Queen’s Counsel that Mr Glick QC is likely to charge a similar amount.

8. The effect of paragraph 4 is that the husband seeks the sum of $60,000 to instruct counsel for both the appeal and the recusal application.

9. The proposed order targets the money held in the investment trust with the wife’s former solicitors. There is no other source other than by the sale or further encumbrance of the L Street property or the commercial properties.

10. As has been considered in the earlier judgment, the money remaining on investment is a rapidly diminishing resource.

11. Previous orders have provided for the husband’s spousal maintenance in the sum of $17,408 to be funded from the invested money. By order on 8 June 2017 I ordered that the wife do all things necessary to pay $32,500 to V School to discharge outstanding tuition fees and other expenses for the 2016 academic year. I am uncertain whether that sum has been paid.

12. In any event, I propose to make orders that will result in the sum invested to be significantly reduced with the balance to be set aside pending final judgment.

13. The husband’s affidavit is of little assistance in the Court’s determination of the factors necessary to decide whether the orders should be made.

14. The husband does not explain the basis upon which the sum of $60,000 is sought.

15. As discussed in the earlier judgment delivered on 8 June 2017, the Full Court in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 considered the appropriate principles to apply in relation to applications for interim property settlement.

16. Section 80(1)(h) of the Act is to be used to allow an interim property settlement under s 90SM.

17. The test is not now confined to circumstances which are “compelling”; Strahan (supra).

18. In Strahan (supra) the Full Court said at 85,645:-

    132.In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.

19. Accordingly, whilst the Full Court considered that the power to make an interim property order is to be determined by whether it would be “appropriate” to make an order, the Full Court in Harris and Harris (1993) FLC 92-378 at 79,930 and Strahan (supra) considered there should be as few interim property applications pursuant to s 79 (or s 90SM) as possible.

20. The wife considers that there should be no order made by way of property settlement in favour of the husband on the basis that it would not be just and equitable for the Court to exercise its jurisdiction. The husband contends that whilst the Court should make an order for property settlement, the outcome should be the husband effectively retaining the former matrimonial home and a transfer to him of the wife’s shareholding and interest in the following:-

    ·C Pty Ltd;

    ·S Pty Ltd;

    ·O Pty Ltd;

    ·T Pty Ltd; and

    ·U Pty Ltd.

21. If the husband’s application is pursuant to costs power then I am required to consider the provisions of s 117 of the Act and in particular (2A) in considering such an application (see Klearchos & Klearchos & Ors [2015] FamCAFC 217).

The financial circumstances of each of the parties to the proceedings.

1. The husband provides no assistance as to the extent of the pool available between the parties. By necessary implication, the money currently held on trust for the wife would in any event fall to the husband pursuant to his orders.

2. It would not be in the interests of justice that there be any attempt to determine the respective financial circumstances of the parties in terms of any final determination. It is the husband’s application that seeks to delay delivery of judgment pending the outcome of the appeal and the outstanding application for recusal. Counsel’s assessment in respect of the appeal is not before June 2018.

3. I have already given close regard to the financial circumstances of each of the parties. I accept that the husband does not have the ready ability to pay counsel fees of $60,000.

4. The husband does not set out his current arrangements with his solicitors other than to note that his costs are likely to be substantial and probably similar to the wife’s costs.

Such other matters as the Court considers relevant.

1. I have previously found that it is reasonable to bring to account the potential for tax assessment in respect of O Pty Ltd in the sum of $161,653.

2. Any surplus funds are therefore exhausted.

3. It is not suggested by the husband that in some way the L Street property be either sold or the subject of mortgage in order to raise the funds, or that the commercial properties should be sold in order to do so.

4. The parties’ interests are likely to be served by the expeditious resolution of the proceedings. Whether the husband’s application is pursuant to the costs power or by way of interim distribution of property pending final hearing, I consider that a point has been reached in the proceedings where the administration of justice and the interests of the parties would not be served by further interlocutory proceedings in relation to an interim distribution.

5. I am not able to divine the future effect on the proceedings of the orders that the husband currently seeks.

6. In any event, there is no source available for the lump sum payment to be made to the husband.

7. I propose to list the actual and apprehended bias application and the balance of the application to a date to be fixed.

8. I make orders as appear at the commencement of these reasons.

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 16 March 2018.

Associate:

Date: 16 March 2018