CELESTIN & CELESTIN

[2011] FamCA 74

FAMILY COURT OF AUSTRALIA

CELESTIN & CELESTIN [2011] FamCA 74

FAMILY LAW – SPOUSAL MAINTENANCE – Urgent

APPLICANT: Ms Celestin

RESPONDENT: Mr Celestin

FILE NUMBER: SYC 1822 of 2009

DATE DELIVERED: 21 February 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Cohen

HEARING DATE: 3 May 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gould

SOLICITOR FOR THE APPLICANT: Karras Partners Lawyers

COUNSEL FOR THE RESPONDENT: Mr Dwyer

SOLICITOR FOR THE RESPONDENT: Mullane & Lindsay

Orders

1. That within one month the husband shall pursuant to section 77 of the Family Law Act 1975 pay to the wife urgent spousal maintenance in a lump sum of $179,250, $100,000 of which is to be used by the wife to meet so far as that sum allows such accounts as she has received from her legal advisers for their costs and disbursements and has not paid or receives from them for their costs and disbursements, and $79,250 of which is to be used by the wife so far as that sum allows to meet her immediately payable debts and future living expenses.

2. In the event that the husband fails to comply for his part with order 1. the wife is hereby entitled forthwith to sell by such means and for such price as she sees fit all her right title and interest at law and in Equity in the real property known as Lots 12 and 13 situated at G and to deal with the proceeds of sale as she sees fit.

3. That for the purpose of allowing the wife to comply with order 2 the husband shall forthwith on his failure to comply with order 1 herein do all acts and things necessary to remove from the real property subject of order 2 all cattle and other livestock and otherwise ensure the wife has vacant possession of the said land.

IT IS NOTED that publication of this judgment under the pseudonym Celestin & Celestin is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1822 of 2009

MS CELESTIN

Applicant

And

MR CELESTIN

Respondent

REASONS FOR JUDGMENT

1. Before the Court is an application by the wife for payment of what is commonly known as interim costs in the sum of $165,750 and a further payment of $79,250.00 by way of what is often called an interim partial property settlement. In fact, both sums are correctly sought in the wife’s application as urgent spousal maintenance pursuant to s 77 of the Family Law Act. The wife seeks the first mentioned payment because that is the amount her legal advisors estimate she will need to meet her legal costs and disbursements to completion of the final hearing. She seeks the so called partial property settlement because she owes about $53,500 to credit providers and needs, she says, a small additional amount of cash to fund her ordinary living costs which exceed her income.

2. The evidence does not satisfy me that the wife’s chosen legal advisers will refuse to continue to act for her if she fails to pay them on receipt of their accounts but cannot pay them until she receives her property entitlement. I am satisfied that, eventually, she will have more than sufficient funds pursuant   and to an order under s 79 of the Act to meet all her legal costs including any interest on unpaid fees.

3. The husband, in his response filed 17 July 2009, appears to concede that the wife should, by s 79, receive more than $6m net in value of property if the most up to date balance sheet is relied on. By it the parties hold property including superannuation worth more than $25m and have debts of a little more than $9.4m, so their property and superannuation has a likely net value of about $15.6m. Of this, the husband says he holds property and superannuation worth more than $13m, has debts of about $8.97m and therefore holds net property and superannuation worth more than $4.1m. However, some $3.49m of his alleged liabilities are said to be for tax on disposal of companies in the parties’ group of companies. There is nothing before me which will mean they will have to be sold. At worst, some assets may have to be sold to meet any necessary s 79 order in favour of the wife. Thus, it is safe to say that the husband holds net assets of not less than $7.59m. Of the wife’s holdings, $7.721m is said by the husband to be her interest in the parties group of companies which the husband operates and controls to the virtual exclusion of the wife.

4. The wife’s income is $2,014 per week. $528 comes from full-time employment as a nurse. The balance comes from income received from the group of companies and from $48 in superannuation contributions made on the wife’s behalf. Her outgoings are $740 per week, including credit card payments of $240 per week plus monies she does not specify which are needed for her ordinary day to day living. She estimates she pays $240 on all credit cards, but her liability to pay is greater. Of course, if she succeeds in the interim property aspect of her claim these payments will not be needed.

5. She has no cash or immediately liquidatable assets of substance. One does not need to be very astute to conclude that she will be not be able to save sufficient to meet the sum she says she needs to pay her lawyers. In fact, she has very little capacity for saving. In any event, one cannot expect her to live on her current net income in the light of the parties’ net assets, irrespective of who holds them and how.

6. The parties were married in 1985. They separated in 2003 after raising four children and living together for at least 2 years before that. The wife is aged 50 years. The wife has paid, from her savings, a little less than $17,000 to her solicitors and counsel. She has entered into a costs agreement with her solicitors which I regard as fair and as involving very modest fees considering the level of skill and experience of the principal of the firm of solicitors which acts for her. She has saved the funds paid from her income since separation. She has engaged Mr Richardson SC as her counsel. It is appropriate that he be involved considering the value of the property and the valuation and related issues which seem to be emerging. Mr Richardson’s fees are set by his retainer agreement and are by no means excessive. His status in Family Law certainly warrants them.

7. The evidence is that the solicitors are entitled to refuse to continue to act for the wife or to terminate the agreement on various grounds including failure to pay fees within 30 days and disbursements within 7 days. The terms of Mr Richardson’s retainer are not disclosed.

8. I am far from satisfied that either Mr Richardson or the solicitors will refuse to act for the wife up to completion of the proceedings if, in the interim, she is unable to pay them or either of them.

9. Nevertheless, there is no restriction on the husband’s ability to pay his lawyers as they and he see fit. The wife, by being unable to do the same, despite my view that her lawyers will wait to be paid, is likely to unfairly inhibited in the decisions she might make for the preparation and conduct of her case because of her embarrassment created by her inability to pay as she should by comparison to the situation the husband is in. In the circumstances, the playing field should be levelled.

10. I am quite unimpressed by the husband’s defences to this claim which really consist of three essential elements. One is that he has extremely complex and interdependent dealings with a variety of partners and the like and is in no position to obtain the funds needed to meet the wife’s claim because all his activities are something undertaken with others and to obtain funds he must have the cooperation of his business partners.

11. The second is that he is being pressed by creditors in difficult economic circumstances and is having difficulty paying these as required so cannot provide the funds for the wife.

12. The final defence is to the wife’s proposition that she sell certain rural property if the husband is not required to pay her because he really cannot reasonably do so. He says that this property is at the heart of his rural enterprise and integral to it and that sale will have a negative impact on the whole rural operation.

13. The husband ignores the reality that the wife will receive a sizeable proportion of the property in any event. Something will have to be withdrawn from partnerships or joint ventures, transferred to her or simply sold or borrowed to meet her entitlements. I cannot accept that there is any warrant to delay the inevitable to the wife’s very significant disadvantage in these proceedings.

14. Nevertheless, I am not satisfied she needs the whole $165,750 now. I am sure her lawyers would be satisfied to be paid their fees for the hearing within a month or two of the hearing taking place. I estimate that, of the $165,750 estimate of her likely costs, a little less than two thirds would be needed up to trial and the balance would be incurred at the trial. If the wife had $100,000 to pay her lawyers that would be appropriate for her to hold at this stage to meet their fees and disbursements as they fall due.

15. As to the other claim; that to enable her to pay her debts to credit providers and hold a little in reserve, it is ridiculous and a grossly unfair imposition on the wife to be unable to do this because the husband has virtually absolute control of most of the parties’ funds and assets, a good proportion of which will eventually become the property of the wife. This is the case, irrespective of the income the husband claims to provide for the wife. His income has averaged $890,571 per annum for the five years from 2000/01 to 2005/06. His income in the 2007/08 financial year is estimated to be a little less, $747,442, and in 2008/9 to be more than $750,000.

16. In the circumstances, the husband should be free to choose how he pays the wife $100,000 toward her legal costs and the $79,250 in addition which she seeks. In the event that he fails to pay these sums within one month of these orders the wife should be free to sell her property at G by such means as she sees fit and for such amount as she chooses.

17. The characterisation of these payments is of some significance. The concept of a partial property settlement is to me, somewhat illogical because at the final hearing the Court is required to divide what the parties have at that time. Although it is possible to regard what a party might have received from the other party or used of his or her own property as an advance on ultimate entitlement up to the hearing, to do so to allow living costs to be available or met is quite contrary to the principle that parties are entitled to spend reasonable sums on living without regarding such spending as a notional expenditure of advanced capital. If what a party has done; as is prima facie the case here, is spend reasonably on living from borrowed funds because the other party controls the other funds of the parties, it should not be regarded as an advance on capital entitlement when funds of the parties are made available to discharge the debts incurred. This, together with a modest provision for reasonable future living costs in excess of the wife’s modest earnings, is what the wife seeks by payment of the $79,250.

18. In my assessment, what she has sought is really urgent spousal maintenance pursuant to s 77 of the Act. It is not practicable, in view of the convoluted and complex financial affairs of the parties and the very large sums involved, to determine what order should be made for spousal maintenance where the wife has significant debts to financial institutions which are quite small in comparison to the assets of the parties which she cannot meet without a lump sum maintenance payment. She also immediately needs a relatively small additional sum to have the security and flexibility she is entitled to in view of the likely settlement she will be granted. I shall make an order for payment to her of $79,250 by the husband as urgent spousal maintenance pursuant to s 77 of the Act.

19. As for the interim costs, I regard her as entitled to have these. They are really funds needed urgently for her maintenance and should be paid to her on the same basis as the $79,250. As the money will be used for legal costs it will eventually be regarded as an advance on her capital entitlement and become notional capital. To do otherwise would risk the husband bearing, from what would otherwise be his share of capital, all or part of the wife’s legal costs without s 117 of the Act having been applied in the decision to grant such capital to her.

20. If the husband fails to make back payments I should and shall permit the wife to sell her property at G and deal with it as she pleases. She will then have the opportunity at the final hearing to justify her use of the funds received from sale and the husband will have the opportunity to test her justification.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cohen delivered on 21 February 2011.

Associate: 

Date:              21 February 2011