BURT & MERRILL

[2015] FamCA 155

FAMILY COURT OF AUSTRALIA

BURT & MERRILL [2015] FamCA 155

FAMILY LAW – PROPERTY – partial distribution – Evidence not clear – Not just and equitable to make order.

Family Law Act 1975 (Cth)

Bevan and Bevan (2013) FLC 93-545
Chapman and Chapman [2014] FamCAFC 91
Lucki v Lucki (1989) FLC 92-036
Mushinski v Dodds (1985) 160 CLR 583
Spano and Spano (1979) FLC 90-707
Stanford and Stanford (2012) FLC 93-518
Strahan and Strahan (interim property orders) (2011) FLC 93-466
Wilson and Wilson (1989) FLC 92-033
Zschokke and Zschokke (2996) FLC 92-693

APPLICANT: Mr Burt

RESPONDENT: Ms Merrill

INDEPENDENT CHILDREN’S LAWYER:

FILE NUMBER: MLC 9912 of 2013

DATE DELIVERED: 8 January 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 22 December 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Isles

SOLICITOR FOR THE APPLICANT: Eron & Associates

COUNSEL FOR THE RESPONDENT: Mr Bartfeld QC

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Mr Eidelson

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Victoria Legal Aid

Orders

1. The parts of the application filed 15 December 2014 for an interim distribution or alteration of property interests are dismissed.

2. All outstanding applications are otherwise adjourned to 12 March 2015 at 10.00am.

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).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9912  of 2013

Mr Burt

Applicant

And

Ms Merrill

Respondent

Independent Children’s Lawyer

REASONS FOR JUDGMENT

1. These reasons concern discreet financial issues.  In an application in a case filed 15 December 2014 Mr Burt (“the applicant”) sought that his former de facto partner Ms Merrill (“the respondent”) do everything required to distribute $400,000 to him by a partial property settlement from:

   term deposits and accounts held with the Commonwealth Bank of Australia and the National Australia Bank of which the De Facto Wife has control or access.

2. Other orders he sought were:

   (a)That within three days, each of the parties open a bank account and instruct managing agents to deposit therein rental from various named real properties;

   (b)That if MLC made a payment under his income protection policy, it should also be paid into the rental account (I understood that was what he sought but that is not grammatically how it was portrayed);

   (c)Each party be “permitted” to withdraw a maximum of $2000 per week or in the alternative, the respondent pay him $2000 per week as maintenance;

   (d)That the respondent provide $150,000 to his solicitors from the term deposits and accounts.

3. The applicant also sought other orders that can be determined in March 2015 at a hearing that has been set aside specifically for interlocutory issues.

4. The respondent sought a dismissal of the applicant’s application but also a raft of discovery orders.

5. The asserted premise behind the applicant’s application was that the respondent and her lawyers were involved in a pattern of vilification and the lawyers were exacerbating the parties’ litigation. If indeed that is the respondent’s intention, it was not apparent from her documents. It is readily obvious that this litigation is hotly disputed. The lawyers must remain objective to fulfil the purposes set out in Rule 1.08 of the Family Law Rules 2004. That seems not to have occurred here from the applicant’s lawyers’ perspective.

6. Considerable time was spent before this discrete hearing began trawling through the affidavit of the applicant’s solicitor Mr G.  Most of the affidavit was struck out as argumentative, commentary and irrelevant.  Despite a valiant attempt by Mr Isles of counsel for the applicant to defend the material as relevant because, as he said, it was important for the Court to know “what legal matters” lay ahead, the history of these proceedings tells the Court that not much is agreed upon or likely to be agreed upon in the future.

7. The level of the dispute can also be concluded from the fact that the applicant had sought money from the respondent at a hearing before Thornton J on 6 August 2014.  At that time, according to both parties, the pertinent application was withdrawn to enable the applicant to file further material before the Court.  Thornton J then made what was described as an urgent spousal maintenance order of $600 per week.  The parties appear to have been content with the fact that her Honour delivered ex tempore reasons as reflected in the transcript.  Her Honour said:

   Paragraph 22, which is the application for spousal maintenance, I proposer (sic) just to make an order at this stage which is an order on the record, which is an order on the record (sic) that the wife has made for the wife to pay $600 to the husband by way of spousal maintenance, on the basis of an urgent application that has been made before me, without really having the capacity to determine it finally.  And of course, that does not prevent the husband from making a formal application at a later stage that he might bring before the registrar with appropriate material and it also takes into account that the wife is making the other payments, including providing a rent-free property to the husband.

8. Notwithstanding the indication from the transcript that formal reasons were not required, I note that the husband has appealed against the determination.  The notice seeking leave to appeal asserts that the applicant was denied an opportunity to present “material information and submissions” before her Honour determined what she ordered.  Despite that, nothing in the material before me indicated that the Court had to hear more than a financial issue.  Indeed, that is the application before me filed by the applicant on 1 December 2014 and which was ultimately amended by the application filed on 15 December 2014.

Background

1. It was difficult to get any sense of the background leading up to this hearing from the affidavit material filed.  The parties had lived in a de facto relationship which came to an end in 2013.  Proceedings were then issued in this Court.  Contrary to the rules of this Court, in the opening sentence of his affidavit filed 1 December 2014, the applicant relied upon affidavits filed 17 December 2013, 2 April 2014, 17 June 2014, 2 July 2014 and 11 July 2014.  An affidavit may only be relied upon for the purpose of the application for which it was filed.  Notwithstanding the opening stanza of the affidavit, the argument of the applicant’s counsel revolved around the material set out in two affidavits and it is to that material that I have turned for this determination.

2. It is also significant that the applicant is the respondent in the substantive property proceedings.  There are also extant parenting disputes.  In the context of an application for interim relief relating to property settlement and lump sum spousal maintenance, it was noticeable that the applicant filed an amended application in June 2014 failing to set out with any precision the orders that he was seeking.  Whilst that is permissible under the rules in circumstances where there is a lack of understanding of a party’s entitlement pending discovery, it was the submission of counsel for the applicant that the assets in this case were clear and totalled over $10 million.  I have difficulty relying on any evidence about that for the reasons that follow.  Thus, in endeavouring to work out what is a just and equitable determination even on an interim basis, the applicant did not assist his cause by the imprecise nature of his application for final relief.

The evidence

1. Each counsel provide a written outline to which I shall return.  To the extent that the applicant’s affidavit was not argumentative or commentary, his evidence, along with that of the respondent, is now summarised in the following paragraphs.

2. The applicant began by saying that he had lost all control of all family finances to the respondent.  The parties have disagreed as to why that occurred.  The applicant’s position was that it was due to his health as a consequence of which he was unable to fulfil his corporate duties but the respondent’s position was that it was all associated with bankruptcy and the loss of his right to practice as a lawyer.  This appears to be a very controversial issue and one about which on the untested facts, I am not in a position to make any finding.

3. The applicant said that in either late 2006 or early 2007, he became ill and he then set out in great detail the problems that he had had and the professionals he consulted.  Whilst the respondent agreed with some of those matters, she referred to proceedings commenced in 2008 by the Legal Services Commission (Victoria) against the applicant for misconduct.  She then set out that there were a series of appeals including a special leave application to the High Court which was unsuccessful.  Those proceedings culminated in the fact that the applicant was struck off the role of legal practitioners.

4. In the context of his understanding of the problems he was having, the applicant maintained that the respondent had been concerned with the future “financial viability of the family unit” and as a consequence, and with advice, he transferred all “financial authorities” to her.  The respondent replied agreeing with that but said that it was not only on the advice of the parties’ accountant but also on the applicant’s insistence.  Consequently, she became the sole director of the various entities.  It was this action that underpins the submission of the respondent that there was no basis for an alteration of property interests because the parties had constructed their legal and equitable interests in the way that now subsists.

5. The applicant however went on to say that there were creditors pressing him at the time and he was not in the condition to deal with them.  Rather than go through costly litigation, the respondent felt that it was better that the applicant become bankrupt.  He said that with reluctance, he agreed.  That evidence was not disputed.

6. In about 2010, the family home in Suburb B which had been transferred from a corporate entity into the respondent’s name was sold and the home in which the applicant now lives, was purchased in the name of the respondent.  I have presumed from that statement that the applicant was bankrupt at that stage.  Those facts were not controversial save that the respondent denied this action was undertaken at her insistence.

7. The applicant then set out his medical problems over the ensuing years none of which was disputed by the respondent.

8. In that context, the applicant said that at the time the parties separated, the “liquid balance in bank accounts and term deposits” was approximately $2.3 million.  He said that this money included $893,000 that he received from a disability insurance policy and upon receipt of the payment, the money was deposited by the respondent in a company named C Pty Ltd.  In submissions, Mr Isles of counsel for the applicant indicated that there had been an assignment of the entitlement by the applicant to the respondent.  The applicant then referred to the fact that his office building was sold and he received net proceeds of $1.4 million and that money also was deposited in C Pty Ltd.  He then said that he had ascertained from credit card statements and limited discovery that the respondent had spent in the vicinity of $1 million subsequent to the separation on 17 October 2013.  He said he was unable to be precise because discovery had not been provided.  He said he did not have funds to engage a forensic accountant but what he could say was that looking at the credit card statements, the respondent was spending between $32,000 and $62,000 per month.  She had also purchased a new European car and paid her rent of $120,000 for a year in advance.  He then said:

   My calculation is that there should be somewhere between $1 million and $1.3 million left in the account in liquid funds.

9. In relation to the allegation just mentioned, the respondent replied that her accounts contain the disability payment and the proceeds of the office building had been received.  The payment of MLC Income Protection payments from 2009 onwards was approximately $4,600 per week and those funds were used to meet the family’s day to day living.

10. Since separation (October 2013) the respondent said that she had paid accommodation expenses, new furniture, personal items for the children, paid utility bills and rate notices, made several payments of a lump sum nature to the applicant including $60,000 to G and Associates, his lawyers.  She had also paid children’s school fees and other children’s expenses together with the $600 per week pursuant to the orders of Thornton J.  The respondent also made reference to her own litigation expenses, the new motor car and the rent in advance.  She disputed lack of discovery.

11. What can readily be seen is the stark contrast between the applicant’s view that there should be somewhere between $1 million and $1.3 million left in liquid funds and the lack of particularity by the respondent concerning what money is left.  The parties had plenty of time to prepare for this hearing and all practitioners including the applicant had considerable experience so it was perplexing to hear complaints about lack of discovery.

12. In discussion with both counsel, I inquired just who owned this money if it existed, only to be informed that there are two corporate entities which act as trustees of trusts.  One of the complaints of the respondent is that discovery by the applicant is lacking and she does not even have the trust deeds.  Counsel for the applicant indicated that this money in the various trusts could simply be distributed because the respondent (if not the applicant) was an income and capital beneficiary of the trust.  Senior counsel for the respondent indicated that he was not in a position to say one way or the other because the documents had not been provided by the applicant.  It was a glaring omission on the part of the applicant not to set out in any detail the structure of the assets.  Mr Isles of counsel for the applicant indicated that counsel before Thornton J had indicated that the assets were under the control of the respondent.  Even if that was so, Mr Bartfeld of QC on behalf of the respondent disputed just what assets the parties have.  I shall turn to his submissions below.

13. Mr Isles pointed to paragraph 18 of the respondent’s affidavit in which she set out the history of the relationship.  It included an acknowledgement by the respondent that in 1987 when the parties commenced cohabitation, the applicant owned various properties which were (as she understood) subject to mortgages.  There were hotels and apartments along with a restaurant in Suburb D.  Just what equity was involved, was hard to know.  The applicant had filed an affidavit on 22 December 2014 as the hearing began but a lot of these issues were not addressed.  I am therefore not able to draw any conclusion from the statement that at the commencement of the relationship in 1987, the applicant had significant assets.

14. The respondent went on to say that during the relationship, a variety of properties were purchased including the property at Suburb E which is registered in her name but in which the applicant lives.  It seems that as a result of the breakdown of the relationship, the respondent and one of the children have moved out leaving the applicant and another of the parties’ children there.  I am unclear as to the present value of the home although estimates were given.  There is a property in Suburb D which is registered to a company and three properties registered in the name of C Pty Ltd.  The respondent referred to a variety of companies some of which she was the sole director and others that had been deregistered.  In detail, the respondent set out the role that she played during the relationship.  What appeared on the face of the evidence of the respondent was an affluent and successful business lifestyle yet culminating in December 2010 with the applicant becoming bankrupt.

15. Subsequent to the parties’ separation in October 2013, the applicant consulted an accountant Ms F for forensic advice.  Ms F sought documents to assist her and the respondent’s complaint in her affidavit was that the applicant had not produced any of the documents sought.  Ms F’s evidence is of some assistance.  She said that she had contacted the family accountant but he told her that he did not have copies of the financial statements, tax returns or documents upon which the tax returns were prepared.

16. Ms F said that she had found that business activity statements for the entity which appears responsible for the goods and services tax on the business premises sale remained outstanding.  She then set out a list of documents she needed.  Ms F’s affidavit was affirmed on 5 August 2014 and filed two days later but according to senior counsel for the respondent, nothing has been provided by the applicant.  The dilemma is that the respondent asserts that there are potential tax liabilities of some unspecified magnitude.  Counsel for the applicant was unable to assist me as to the nature of those liabilities.  He simply dismissed their relevance.  I am not convinced I can do that.  If indeed a payment was to be made out of the bank accounts of the trusts, counsel was unable to indicate how the tax liability (if any) would be met other than the fact that he said that the recipient of the payment would be responsible.  The whole issue is very unsatisfactory.

17. The applicant set out in his affidavit a long list of facts under the heading of why he needed a partial property settlement.  He said that he needed it to meet his living expenses for himself and his son complaining that he had been restricted to payments of $600 per week and his credit card had disappeared.  That issue too appears controversial.  The respondent noted that there is a police investigation under way.  Mr Bartfeld QC said that questions were being asked about how the credit card was used and it included payments that had been made to the applicant’s solicitors.

18. The applicant set out a long list of things that had been paid including legal fees, ballet school expenses and various utilities.  There was a dispute over the children’s telephone account and various expenses for swimming pool maintenance, security remotes and even the CityLink account.  It was noticeable from what I have mentioned earlier in the transcript of the ex tempore reasons of Thornton J, that her Honour was of the view that other expenses would be paid by the respondent over and above the $600 per week.  Part of the applicant’s case was that the respondent had not made the payments.  Senior counsel for the respondent replied that the applicant had been sending accounts to an old email address that he knew was not correct but the respondent had paid all accounts as and when she had received them.  He asserted that there was no basis upon which the respondent could be criticised for not making the payments.  I am left in the dilemma of having a dispute over such issues and am not able to determine the matter on the untested evidence.  It is clear however, that Thornton J made an assessment that the applicant was in need of funds and an order for spousal maintenance on an urgency basis followed.  Her Honour clearly however took into account that there were other expenses being paid and on the basis of the disputed evidence, it appears that most of them have been.  That becomes relevant on the question of the lump sum payment which counsel for the applicant described as lump sum maintenance.

1. In her responding material, the respondent replied that there were no such problems as indicated by the applicant.  She said she could not comment on how the applicant had spent money provided to him nor indeed in relation to his assertion that he had borrowed money from his family.

2. Throughout her affidavit, the respondent maintained an inability to be precise about many of the allegations that were being made on the basis that she had not had adequate disclosure given to her.  I do not understand why, particularly having regard to the affidavit of Ms F filed in August 2014, that issue subsists.

3. To the extent that any of it was relevant, bearing in mind the nature of the current application, the applicant went on to say that he purchased special meat and products which was more expensive that normal food, his car was old and very expensive to run particularly relating to petrol and he had to borrow money to secure the reregistration of his motor vehicle.  As I understand his position however, he was maintaining that he had not been able to live within his means in the sense of the $600 per week plus accounts being paid by the respondent.

4. In relation to lifestyle, the respondent denied the problems asserted by the applicant and she based that upon what the children had told her.  Again without this evidence being tested and bearing in mind the applications before me is for lump sum payment, much of the evidence of the applicant was unhelpful.  The applicant complained that he had to do the gardening whereas the respondent engaged a gardener but that too was disputed by the respondent.  Most of these matters seem to have been in issue before Thornton J and having read the Notice of Appeal against her Honour’s orders, I am perplexed as to what it is that the appellant is seeking because there is no application for periodic payments before me and the Notice of Appeal maintains the ground of appeal will be that there was an inability of the applicant to file material that he wanted.

5. Having set out his living expenses problem, the applicant then turned his attention to the question of legal expenses.  He said that the respondent had spent something like $300,000 on legal fees.  He had spent something like $100,000 but he had drawn from “family funds”.

6. I have no doubt that the applicant has incurred significant legal fees and anticipates more having regard to the nature of the dispute that is now pending.  To that end, I turn to the affidavit of Mr G which was filed by leave on 22 December 2014.  As I have indicated, much of it was struck out.  Insofar as the matters were not struck out, the affidavit said that up until August 2014, the applicant had incurred legal fees in the vicinity of $70,000 to $80,000 and there are now a number of hearings foreshadowed.  Mr G said that as a result of the applicant’s lack of funds, his client had appeared on his own behalf on three occasions.  He anticipated that fees between now and March 2015 “given the need for the involvement of Senior Counsel” would be “no less than a further $75,000.  Mr G did not take the position much further.  It is quite clear on the evidence of the applicant and Mr G that there are very expensive legal fees ahead.

7. It is sufficient for me to say that notwithstanding the apparent wealth of the parties (in the general sense if the corporate veil was lifted) I have no real sense of the structure or extent of that wealth when I come to determine whether it is just and equitable to make an order at all.  To try and get a better sense of the financial position because of the paucity of the narrative evidence, I turned to the financial statement filed by the applicant on 19 December 2014.  He said that the property (by which I presumed he meant all of their property) was worth between $7 million and $10 million.  He estimated all of these figures.  In respect of financial resources, which seemed to be part of the property he described in the financial statement as a “claim of interest in Financial Trusts-Family Trust and/or Constructive Trusts disputed by wife” and “interest in bank account balances and Term Deposits disputed by wife”.  In respect of liabilities, he saw no income tax due or unpaid.  It is sufficient for me to say that the vagueness of the financial statement was not such as to fill in my knowledge gaps from the paucity of the other affidavit evidence.

The submissions

1. Counsel for the applicant sought that upon the proposed opening of the bank account for the rental, there should be an injunction in relation to the drawing of $2000 per week.  I am not clear what power the Court was being asked to exercise nor, if the real property assets which were producing income were placed into the account, whose money it was and what were the tax consequences if indeed the money belonged to a family discretionary trust.  In my view, as the applicant has the responsibility of establishing the case, the facts to not support at an interim level, an alteration of the existing arrangements.  It is not satisfactory to simply say that this is the property of the parties when on any view of the evidence, there are corporate trustees and trusts involved in circumstances where documents such as a trust deed would have clarified the legal position.  The applicant has remained silent on the existence of those documents.  It is equally unsatisfactory for his counsel to simply say that money could be drawn or distributed by the trustees because either of the parties was a capital beneficiary when no such trust document was produced and the respondent was not making any concession.  No balance sheets or profit and loss statements were produced.  I have no idea whether, if indeed the proposed order was of an injunctive nature as it seemed to be so described, such an injunction was proper.  To the extent that it was a maintenance order, it flies in the face of the fact that there is extant, a current spousal maintenance order.

2. Counsel for the applicant anticipated the argument raised by the respondent so that that extent, I shall deal with the respondent’s argument first.

3. Senior counsel for the respondent began by noting that there were significant factual omissions from the evidence of the applicant.  Those related to his former role as a legal practitioner and his bankruptcy and why there had been no reference to that.  Whilst that may be so, it has not affected the determination in this case because of the legal issues that I am required to determine to which I shall turn.

4. Mr Bartfeld QC began by referring to the High Court decision in Stanford and Stanford (2012) FLC 93-518. It is not necessary for me to set out in any detail what their Honours there said. As I earlier indicated, the thrust of the argument was that if the parties had put into place an agreement as to the legal and equitable ownership of their property, it was a fact that the Court could take into account as to whether or not it was just and equitable to make an order altering those interests. Counsel for the applicant disputed the interpretation of what the High Court said. He distinguished Stanford on the basis that it was a case associated with a marriage that had not ended but where there had been a physical separation of the parties by reason of ill health, hospitalisation or nursing home care.  Whilst a strict reading of Stanford might give rise to an argument about its distinguishability, it would be a very bold lawyer who argued that it was not a very persuasive statement.  There is little doubt that their Honours were referring to the fact that a very significant feature of any alteration of property interests case revolves around the fact that the determination must be just and equitable.  Their Honours referred to the fact that the Court must determine the legal and equitable ownership of property as the parties portrayed it.  They certainly then indicated that one reason to alter those interests arose if one of the parties, as a result of the ending of the relationship, had lost the use of those assets.  In my view, the Court still has to make a determination that it is just and equitable to make any order at all.  That becomes relevant to the determination in respect of the authority of Strahan and Strahan (interim property orders) (2011) FLC 93-466. I shall return to that in a moment.

5. Counsel for the applicant referred me to the decision of the High Court in Mushinski v Dodds (1985) 160 CLR 583. That decision however was not in relation to a statutory determination but rather looking at the question of a de facto relationship where the courts had to grapple with the altering of interests prior to the amendments to the Family Law Act 1975 (Cth) (“the Act”).

6. Counsel for the applicant also drew my attention to Bevan and Bevan (2013) FLC 93-545 and Chapman and Chapman [2014] FamCAFC 91. In Chapman, the issue was whether or not s 79(2) forms a threshold issue.  As their Honours pointed out, s 79 demanded a consideration, separately, of all of its requirements without conflation.  As their Honours observed, the s 79(2) issue will usually be answered by the very fact that the parties are seeking alteration of interests.  In this case, I am not entirely sure what the respondent’s ultimate position will be.  Suffice to say in this interim application she sought a dismissal on the basis that, at trial, the applicant will fail to satisfy the Court it is just and equitable to make an order under s 90SM(3) such as to enliven the power.

7. The nub of the respondent’s case was as follows as articulated by Mr Bartfeld QC:

   It follows that it is necessary to prepare the whole case and for that purpose, discovery and the ascertainment of each party’s property are a critical primary step.  In order for the respondent to discharge her obligation to properly prepare her case (including the issue of “just and equitable”) she requires access to documents under the control of the applicant, which he has promised to provide but has failed to live up to his promise.

   Therefore, it was submitted by the respondent that before any further step was taken, the applicant should provide the necessary information to determine the interests in the assets particularly as there may be tax issues which arise and which will deplete the funds available to the respondent.  I accept the submission of the respondent. 

8. In his outline of argument, Mr Isles of counsel said that his client “contends” that there was $10 million in the pool made up or a variety of assets.  He went on to make reference to liquid funds that were available in bank accounts and term deposits at the time of separation.  He pointed to the fact that the wife did not dispute these assertions.  Whilst all of that may very well be true, I am not at all sure that I understand what the parties’ financial position is and I am certainly not in a position to adopt what the applicant said was the “pool”.  Whilst that may very well turn out to be true, the financial statement suggested that the assets were estimates, the control remains unclear and the liabilities, just from a taxation point of view, remain a problem.  There is little doubt as observed by the applicant that a large sum of money was paid under an insurance policy and received by one of the companies but its whereabouts thereafter remains unknown to me.  It was observed by Mr Bartfeld QC that there is now a dispute with MLC and money is being sought to be returned.  This is in the context of considerable evidence of monies flowing backwards and forwards over the last 12 months and assertions by the applicant that the respondent has spent over $1 million in that time.  It is all very well for counsel for the applicant to point the finger at the respondent at the conclusion of his submissions to say that she should tell the Court what the financial position is, but none of this was addressed in the affidavit material and the outline of case did not seem to me to be supported by any of the evidence in any coherent fashion.

9. Mr Bartfeld drew attention to the Full Court decision in Strahan and Strahan to which I have referred. There the Full Court made it clear that the preference in the exercise of the alteration of property power is generally to be perceived as a once only process but that if the circumstances arise, there is no reason why in an appropriate case, the Court cannot continue to alter property until such time as the alteration of property power is exhausted. If the Court proposes to exercise the power, it must be satisfied that it is just and equitable to make an order and the various factors then must be considered as set out in the Act. As counsel for the applicant observed, the respondent is in control of virtually all of the assets to the exclusion of the applicant in circumstances where he had made significant contributions in 1987. However, as I hope I have demonstrated, I am not at all sure what equity the applicant contributed nor to what use it was put. He ultimately became a bankrupt and in anticipation of that, transferred assets to the respondent. It was submitted by counsel for the applicant that there was nothing wrong with that and the trustee was not seeking a “claw back”. Even so, I consider it prudent to be cautious where there is a live argument about the effect in law of such a transfer of assets.

10. This is a long relationship with different contributions culminating in the applicant’s very serious illness.  That apparently left the whole responsibility of not only family and finances to the respondent but his entry into bankruptcy to avoid significant debts. 

11. Thus, the only conclusion I can draw is that I do not know the extent of the parties’ assets nor am I in a position to say that the argument put by the respondent might not succeed.  Even on an interim basis, I have to be satisfied that it is just and equitable to exercise the power and I am not at all comfortable that I know what I am altering.

12. I am not therefore prepared to say that the applicant would receive the sum he seeks in a final property settlement on the basis of the evidence presented. 

13. In the alternative to the exercise of the property alteration power, the applicant also sought an order for lump sum spousal maintenance. 

14. There is little doubt that the Court has power to make an order for a lump sum payment for the purposes of covering legal fees including those anticipated using the maintenance power.  In Zschokke and Zschokke (2996) FLC 92-693, the Full Court said that the question of such an order being supported under s 74 of the Act remained an open one. In Wilson and Wilson (1989) FLC 92-033, Kay J said that a court could not make an order for the payment of costs under the guise of the maintenance power but reference should be made to the provisions of s 117 of the Act. Strauss J said (at 77,453):

    In my opinion, provision for the wife’s legal costs, and associated expenses such as accountant’s fees for the purposes of the litigation between the parties is not maintenance.

15. It is important to observe that the power to make a maintenance order lies in s 90SE of the Act. That section provides that for an order to be made, it must be proper. Proper obviously means appropriate to the circumstances of the particular case. Thornton J was satisfied that it was appropriate to make an order in August 2014 but this does not seem to be what the applicant is seeking because there is little dispute that the payment continues to be made at the rate of $600 per week. The authorities in relation to lump sum maintenance have generally been in relation to a recalcitrant payer who is unlikely to fulfil a periodic obligation or there is substantial doubt about the payer’s likelihood of continuing to pay. (See Spano and Spano (1979) FLC 90-707 and Lucki v Lucki (1989) FLC 92-036). Bearing in mind the Full Court determinations to which I have referred, the general view about the use of the lump sum payment for maintenance particularly in circumstances where there is a periodic payment order in existence, is that the Court should be cautious about using the power for the purposes of setting aside money for legal costs in circumstances where the litigation is contentious. There is no doubt that other provisions such as s 80 provide a power but that was not argued here.

16. If I return to the financial statement of the applicant again, there is clearly a shortfall in his expenses if all he is receiving is $600 per week.  That depends however on whether or not I accept that the various accounts for utilities are paid by the respondent.  That seems to be the position here despite the applicant’s complaint so it is difficult to know exactly what it is that the applicant is incurring each week.  I am unable to find therefore that he cannot adequately support himself on a periodic basis bearing in mind the current level of maintenance pursuant to the August 2014 orders.  Notwithstanding the concession by Mr Bartfeld QC that there is a power to make a payment associated with costs (as per Zschokke) one would still have to point to the source of the funds and for the same reasons that I have set out in relation to the partial property settlement, I am not at all clear what the source is.  No application was made by the applicant for the sale of the home in which he is living and which is owned by the respondent.  He says it is in excess of $3 million in value.  No evidence was provided by Mr G that he was not prepared to continue to act for the applicant without payment.  No evidence was presented to the Court about the capacity of the parties to borrow against capital assets for the purposes of funding their litigation.  No evidence was presented by either party to the Court in relation to the current financial position of the entities nor the control that the wife has over those sums.  No evidence was presented by the applicant as to what he thinks his entitlement is notwithstanding he asserted that there were assets of between $7 million and $10 million.  In my view, bearing in mind the onus falls on the applicant to establish his case, he has failed to do so.

17. The applicant did not dispute the question of the orders for discovery and accordingly I shall make orders in those terms. 

18. The other issues associated with interlocutory matters are adjourned to March.

I certify that the preceding Fifty Three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 8 January 2015.

Associate: 

Date:  8 January 2015