CHAFFIN & CHAFFIN

[2017] FamCA 1179

FAMILY COURT OF AUSTRALIA

CHAFFIN & CHAFFIN [2017] FamCA 1179

FAMILY LAW – PROPERTY – SPOUSAL MAINTENANCE – Where the asserted Binding Financial Agreement does not oust the court’s jurisdiction as to Spousal Maintenance – Where the wife is unemployed – Where the wife’s only income is that provided by the husband – Where the wife has the care of the parties’ three young children – Where all three children are under the age of seven – Where the wife is unable to support herself – Where the husband controls a vast array of assets – Where the husband has significant financial resources – Where the husband’s claimed capacity to liquidate those resources is not relevant to his capacity to pay maintenance – Where the husband has capacity to pay – Where the wife’s stated needs are not reasonable – Where the husband is currently paying child support – Orders made for the husband to pay spousal maintenance to the wife. 

FAMILY LAW – COSTS – LITIGATION FUNDING – Where the wife’s application is made under section 117 of the Family Law Act – Where the husband has control of the vast majority of the potential matrimonial asset pool – Where the husband has significant financial resources – Where the wife is unemployed – Where the wife has the care of the parties’ three young children – Where there is not a level financial playing field between the parties – Orders made for the husband to pay lump sum litigation costs to the wife.

FAMILY LAW – PROPERTY – INJUNCTIONS – Where there is no evidence that the husband will dispose of his assets – Orders not made.

Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 80, 114, 117

Bing & Bing (2007) FLC 93-318
Brown and Brown (2007) FLC 93-316
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Clauson and Clauson (1995) FLC 92-595
Curnow and Curnow (Unreported, Family Court of Australia, 28 April 1997)
Eliades and Eliades (1981) FLC 91-022
Glover v Walters (1950) CLR 172
In the Marriage ofBevan (1995) FLC 92-600; (1993) 19 Fam LR 35
In the Marriage of J U and T Poletti (1990) 15 FamLR 794
In the Marriage of BA and RS Waugh (1999) 27 FamLR 63
Jackson v Sterling Industries Ltd (1987) 162 CLR 612; 71 ALR 457
Lesley & Lesley [2015] FamCA 894
N & N (1997) FLC 92-782
Nutting and Nutting (1978) FLC 90-410
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Penfold v Penfold (1980) 144 CLR 311
Poletti & Poletti  (Unreported, Family Court of Australia, 2 March 1990)
Robinson and Willis (1982) FLC 91-215
Strahan & Strahan [2009] FamCAFC 166
Wilson & Wilson (1989) FLC 92-033
Yeh & Jyu [2014] FamCA 162
Zschokke & Zschokke (1996) FLC 92-693

APPLICANT: Ms Chaffin

RESPONDENT: Mr Chaffin

FILE NUMBER: PAC 4341 of 2017

DATE DELIVERED: 6 December 2017

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Hannam J

HEARING DATE: 13 November 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: Dignan and Hanrahan Solicitors and Attorneys

COUNSEL FOR THE RESPONDENT: Mr Gould

SOLICITOR FOR THE RESPONDENT: Newnhams Solicitors

Orders

1. The Respondent Husband pay to the Applicant Wife the sum $1,000 per week by way of periodic spousal maintenance, the first payment to be made within seven (7) days from the date of these Orders.

2. That within 28 days from the date of these Orders the Respondent Husband pay or cause to be paid to the trust account of the solicitors for the Respondent Wife the sum of $130,000.

3. That the sum referred to in Order (2) above be applied by the solicitors for the Applicant Wife in payment of the costs and disbursements incurred or to be incurred by the wife in the conduct of these proceedings including but not limited to the reasonable costs and disbursements:

   (a)       Rendered by the solicitors for the Applicant Wife pursuant to their costs agreement;

   (b)       Rendered by Counsel engaged by the solicitor for the Applicant Wife pursuant to his/her fee disclosure;

   (c)       Rendered by Counsel engaged by the Applicant Wife or the solicitors for the Applicant Wife to report on and value the real and personal property of the parties and any company, partnership or trust in which they have an interest.

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 Chaffin & Chaffin 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 PARRAMATTA

FILE NUMBER: PAC 4341 of 2017

Ms Chaffin

Applicant

And

Mr Chaffin

Respondent

REASONS FOR JUDGMENT

Introduction

1. The Applicant wife, in proceedings with her former husband for a property settlement under s 79 of the Family Law Act 1975 (Cth) (“the Act”), seeks interim orders for spousal maintenance, injunctions and litigation funding.

2. The Respondent husband opposes the orders sought by the wife and seeks that her application be dismissed and she pay his costs.

3. Following interim hearing on 13 November 2017 judgment was reserved.

Background

1. The husband who is 39 and the wife who is 29 commenced their relationship in 2009.

2. At the commencement of the relationship the parties substantially agree that the wife owned a motor vehicle and the husband owned a property at Region K (“the Region K property”) which was subject to a mortgage, interests in Company L and two family trusts and some savings in the bank.

3. The husband’s business interests are closely connected with business interests of his family, including his parents.

4. Both parties were employed at the time they commenced living together at the Region K property in April 2009.

5. Both parties agree that on 13 August 2010 they signed and executed a document described as a Binding Financial Agreement (“BFA”) although the circumstances leading up to the signing of that agreement are disputed. The parties married just over a week later. The wife was then aged 21 and pregnant with the parties’ first child.    

6. The parties’ first child was born in 2011 and is now six. The parties’ second child was born in 2012 and is currently five. The parties’ third child was born in 2014 and is three.

7. The wife did not work throughout the relationship, ceasing her employment after the parties began living together, and fulfilled the role of homemaker and primary carer for the children.   

8. The husband was employed at all times during the parties’ relationship and outgoings and expenses were paid out of his income.

9. In 2013 the parties sold the property at Region K and used a portion of the proceeds of the sale to purchase a second property which was later sold.

10. Following the birth of the parties’ third child in mid-2014 the parties purchased and commenced living in a property on acreage in the outskirts of Sydney (“the former family home”).

11. The circumstances surrounding separation are contentious however it is agreed that the parties separated on 15 December 2016 but both remained living in the former family home.

12. The husband moved out of the former family home in January 2017. The children remained living with the wife and spend some regular  time with the husband.  

13. Each of the parents has re-partnered and the husband lives with his partner who is pregnant with their first child.

14. The wife commenced proceedings in this Court on 30 August 2017 seeking various interim and final parenting and property settlement orders.  

15. On 11 October 2017 the husband filed a Response to the wife’s Initiating Application seeking orders that the wife’s Initiating Application be dismissed and that she pay his costs of the proceedings.

16. The husband raised the BFA as a bar to the wife bringing an application for property settlement orders. The wife had referred to the BFA, and the circumstances leading up to her signing the document in her affidavit filed 30 August 2017 but makes no reference to the BFA in her Initiating Application filed contemporaneously with her affidavit. 

17. On 13 November 2017 the matter came before me for interim hearing. Counsel for the husband sought an adjournment to prepare submissions as to “the threshold issue” of the alleged BFA. The application was refused and I delivered my reasons for that decision ex tempore.

18. On that date I also made orders for the parents to attend on a Family Consultant for the purposes of a Children and Parents Issues Assessment and interim orders for the children to live with the wife and spend time with the husband on alternate weekends and for one week in December and that the wife have leave to travel to Fiji with the children for a holiday in January 2018.

19. I reserved my judgment in relation to the interim issues noting that the husband agrees to continue to pay the wife $5,000 per month in periodic child support and the children’s school and preschool fees.

The Application

1. The wife’s application is for orders in three categories. First she seeks orders that the husband pay her $7,000 per week in spousal maintenance. She also seeks an order that he be restrained from dealing with his shareholdings in any company, his interests in any trust and his interests in any other real property.

2. The wife also seeks an order that the husband pay $130,000 in a lump sum into the trust account of her solicitors to be used in payment of legal fees or, in the alternative, that the court make a “dollar for dollar” order that on each occasion that the husband makes a payment to his legal representatives he pay the same amount to the solicitors for the wife.

3. The wife does not press the remainder of her interim application.  

4. The husband opposes the orders sought by the wife and seeks that her application for interim orders be dismissed.     

The financial agreement

1. A preliminary issue in dispute is the nature of the financial agreement signed by the parties on 13 August 2010 just prior to the parties’ marriage. The husband asserts that this agreement is a BFA under Part VIIIA of the Act. The wife disputes the husband’s contention that the agreement is binding and in the alternative asserts that even if the agreement is binding it is unenforceable.

2. While the purported existence of a BFA is usually a threshold issue to be considered by the Court prior to consideration of any application for interim property orders, counsel for the wife contends that the financial agreement is not an impediment to the wife’s application for interim spousal maintenance as the financial agreement so far as it relates to spousal maintenance is void under section 90E of the Act. That section provides that any provision as to spousal maintenance of a financial agreement is void unless it specifies the party to be maintained and the amount or value of the maintenance of that party.

3. There is no dispute between the parties that the financial agreement makes no provision for spousal maintenance in the circumstance of there being children of the relationship. Specifically, clause 58 of the agreement states that the provisions for spousal maintenance under the agreement “have no effect if there are children of the marriage at separation”.

4. On this basis I accept the submission made by counsel for the wife that the existence of the financial agreement does not oust this application for spousal maintenance.     

5. Further, it is conceded by counsel for the husband that the court has jurisdiction to deal with the wife’s interim application for spousal maintenance. 

6. Counsel for the wife contends that the power of the court to order costs under section 117 of the Act (which is the head of power relied upon by the wife in respect of the order she seeks for litigation funding) is also not affected by the purported binding financial agreement.

7. While counsel for the husband sought an adjournment at the interim hearing to prepare submissions as to the jurisdiction of the Court to determine the wife’s interim application for lump sum costs given the existence of the financial agreement that application was refused for the reasons given at the time. Subsequently, the husband’s counsel did not seek to press an objection to the application of the wife for costs on the basis that the financial agreement needed to be first considered. Rather he sought to oppose the application on its merits.   

8. It is further contended on behalf of the wife that once the Court’s jurisdiction is enlivened to deal with a matter, as it has been in this case, the court also has jurisdiction under section 114 of the Act to preserve property. Therefore, it is contended, there is no need for the court to make a determination as to the validity of the alleged binding financial agreement before making either the costs order or an order under section 114.

9. I am satisfied that the existence of the financial agreement does not oust the jurisdiction of this court to determine the application for the three types of orders sought by the wife.

10. The validity of the financial agreement is therefore not the subject of this judgment and will be dealt with as a threshold issue at a later stage in these proceedings.

11. Against this background I now consider the particular orders sought by the wife.

Spousal maintenance

1. In her Initiating Application filed 30 August 2017 the wife sought orders that the husband pay her $144,000 in lump sum spousal maintenance or in the alternative $12,000 by way of periodic spousal maintenance. At the interim hearing the wife orally amended the orders she sought. She now seeks orders that the husband pay her $7,000 per week by way of spousal maintenance. The husband opposes the wife’s application and seeks orders that her application be dismissed.  

2. The purpose of spousal maintenance is to provide for the future financial needs of the claimant. The payment of such a claim depends upon two matters: the needs of the applicant and the capacity of the respondent to pay. This two stage process remains the same regardless of whether maintenance is sought on an interim or final basis.    

The threshold requirement – Applicant unable to support self

1. The first of these matters, the inability of the applicant to support herself, arises from section 72 of the Act and has been described as “the threshold requirement”.

2. Section 72 of the Act provides as follows:

   (1) A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   (a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b) by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c) for any other adequate reason;

   having regard to any relevant matter referred to in subsection 75(2).

3. The test of ability to support one’s self in s 72(1) was interpreted in Eliades and Eliades[1] as:

   “[N]ot identical to the test of whether one is in need but means whether the applicant is in a position to finance himself or herself from his or her own resources. That is to say, the test is whether by reason of earning capacity, by reason of capital or other sources of income which have accrued independently to the applicant, the applicant is in a position to look after herself …”

   [1] (1981) FLC 91-022 at 76,232. See also Clauson and Clauson (1995) FLC 92-595.

4. The claimant for maintenance must establish that he or she is unable to support herself or himself adequately. The word ‘adequately’ was interpreted by Lindenmayer J in Nutting and Nutting[2] as:

   A standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.

   [2] (1978) FLC 90-410 at 77,094.

5. The Full Court agreed with this interpretation in In the Marriage ofBevan[3]. In that case the Full Court also said that a court is not bound by a principle that an applicant is entitled to the same standard of living as was enjoyed prior to separation whenever the respondent is able to pay.

   [3] (1995) FLC 92-600; (1993) 19 Fam LR 35.

6. Section 72 sets out two of the specific matters that may affect a person’s ability to support herself or himself adequately being having the care and control of a child or children and having no capacity for employment. The section also refers to an inability to support oneself “for any other adequate reason”.

7. The wife is not currently working and has not been in paid employment since the parties married seven years ago. Her sole source of income is that which is given to her by the husband in various ways, including “child support” payments and lump sum deposits made into her personal bank account. In her Financial Statement filed 30 August 2017 the wife claims that her only income is approximately $3,560 per week, currently paid by the husband by way of child support and maintenance. This amount is in conflict with the amount the husband claims he provides to the wife in his Financial Statement.   

8. The wife also previously received other financial support by having access to two joint bank accounts and paying for various expenses utilising a credit card funded by the husband. However, in her affidavit filed 30 August 2017 the wife deposes to the husband reducing the amount he paid off her credit card following separation and subsequently cancelling that credit card in June 2017. The wife further deposes to the husband preventing her access to the parties’ joint ANZ and Bank HH accounts after June 2017. The wife says she received lump sum deposits into her personal bank account totalling just over $17,000 in July and August 2017 from the husband but has received no access to the parties’ joint accounts or a new credit card. It was in these circumstances that the wife initiated these proceedings.

9. The husband in his affidavit filed 11 October 2017 deposes to reducing the amount of money he paid toward the wife’s credit card due to concerns about her excessive expenditure. He further deposes to cancelling the parties’ credit cards for the joint ANZ and Bank HH accounts after being informed some of his accounts had undergone fraudulent activity. He does not suggest that this fraudulent activity is in any way associated with the wife.

10. The husband, in his Financial Statement filed 11 October 2017, claims he is currently paying $5,000 per month to the wife in child support.

11. The husband claims that the wife is receiving further financial support from her current partner which she has not disclosed, though there is no evidence to support this contention.

12. In these circumstances, where there seems to be some dispute about the wife’s income which is unable to be tested I accept the wife’s evidence that her sole income is approximately an average of $3,500 each week provided to her by the husband.  

13. Mullane J in N & N[4] stated that:

    [T]he interpretation of the expression “unable to support herself or himself adequately” is subject to the words “having regard to any relevant matter referred to in subsection 75(2).

    [4] (1997) FLC 92-782 at 84643.

14. The following s75(2) factors are relevant to the question of the claimant being unable to support herself adequately.

15. The wife is 29 years of age and the husband is 38 years of age. Both parties appear to be in good health.

16. The husband is currently the managing director of the company Company C.

17. The wife last worked prior to the birth of the parties’ first child and is currently unemployed. It is submitted on behalf of the husband that she has not provided any reason as to why she is not capable of working or any evidence of attempts to obtain employment.        

1. The wife currently has the care and control of the parties’ three young children all under the age of seven, one of whom has special needs. Two of the children are not currently attending school and the husband does not currently spend much time with them leaving the substantial majority of their care to the wife. In such circumstances it is unreasonable in my view to expect the wife to find work particularly when it was the choice of the parties prior to separation to arrange their duties so that the wife was primarily a homemaker and carer for the children.

2. The husband is currently supporting himself and his new partner who is pregnant with the husband’s child.

3. In all the circumstances, particularly given the age of the three children currently living with the wife, I accept that the wife is unable to support herself.

Respondent’s ability to pay

1. Even after a claimant has established an inability to support herself adequately a respondent’s liability to pay also depends upon being “reasonably able” to pay. 

2. The respondent’s capacity to pay is considered on income, property, financial resources and earning capacity. Capacity to pay is assessed by determining the respondent’s “surplus” after paying his necessary commitments.

3. In Curnow and Curnow[5] Ellis J said:

   In my judgment, a party is only liable to maintain the other party to the extent that the first-mentioned party is reasonably able to do so. In determining whether a party is reasonably able to support or contribute to the support of another party, one should have regard to the income of the first-mentioned party and then the unavoidable, non-discretionary expenses of that party, including his or her reasonable living expenses. After that exercise, one can consider the amount, if any, from which the first party may be able to contribute to the maintenance of the other party.

   [5] Unreported, Family Court of Australia, Sydney, 28 April 1997.

4. According to his Financial Statement the husband earns $4,795 per week and has weekly personal expenses totalling $12,151, including just over $3,000 per week in mortgage repayments and $1,153 per week in child support payments.  

5. While there is significant dispute as to the husband’s current financial resources and assets, his counsel concedes that he has a net worth of at least $5 million. The wife alleges the husband’s net worth is two or three times that figure.

6. It is submitted on behalf of the wife that the husband has access to over $200,000 in loans from companies in which he has a controlling interest. It is also submitted on behalf of the wife that the husband receives dividends from his corporate entities and trusts in addition to his other income. Counsel for the wife made detailed submissions and tendered supporting documentation at the interim hearing as to the husband’s access to a portfolio loan and dividends from an entity “Company MM” which has a business loan with the company “Company C” in which the husband has a 100 per cent controlling interest.

7. Counsel for the husband submits that the husband is currently meeting the significant shortfall between his income and expenditure by way of borrowings on a portfolio loan and does not have access to liquid assets to pay spousal maintenance.

8. On this point, counsel for the wife made reference to the case of Lesley & Lesley[6] in which McClelland J made the following comments:

   … senior counsel for the wife relied on the decision of the Full Court in Bing & Bing[7] as authority for the proposition that where one party controls the vast pool of assets, as in this case, questions regarding the potential source of the funds to satisfy an interim property order is not an impediment to such an order being made. In Bing (supra), at 81,478, the Full Court said:

   …The mere assertion that there are no immediately available funds to provide to the applicant to enable him or her to continue on with the proceedings cannot simply be accepted at face value. If it is apparent that one of the parties controls a vast pool of assets (irrespective of whether those assets are readily capable of liquidation) then the Court has a broad enough discretion to enable an order to be made for the provision of funds by the holder of those assets to enable the other party to continue on with litigation.

   …

   Finally it has been asserted that the husband was and remains unable to raise the capital sum sought by the wife. This is a matter which may become relevant if and when the husband defaults in the order and an enforcement application is brought. However, the question of enforcement of the order remains a separate question from the propriety of granting the order in the first place.

   As noted by Cronin J, in Yeh & Jyu,[8] those principles are relevant irrespective of whether the partial property settlement is being used to fund litigation or for another appropriate purpose.  

   [6] [2015] FamCA 894.

   [7] (2007) FLC 93-318.

   [8] [2014] FamCA 162 at [17].

9. There is a substantial asset pool available to the husband in this matter. On the husband’s own evidence he is worth over $5 million and on the wife’s evidence could be worth $10 to $15 million. In light of the authorities and the evidence tendered at interim hearing I accept the submissions of counsel for the wife as to the husband’s access to funds and his capacity to pay spousal maintenance.

10. Having established that the respondent is capable of supporting the claimant, I now must consider the extent to which it is reasonable for him to do so.

11. Section 74 of the Act provides that in proceedings with respect to maintenance the court may make “such an order as it considers proper”. The meaning of “proper” was considered in Robinson and Willis[9] where Asche SJ said:

    An order which is either insufficient or excessive in the circumstances, is not “proper”. In the former case because the burden of support may be thrown on the public; in the latter because an excessive order will result in inability to pay the accumulation of impossible arrears and, again, ultimately a probably recourse to the public purse.

    [9] (1982) FLC 91-215 at 77,157.

12. The Full Court in Brown and Brown[10] considered the meaning of “proper” and “adequate”, at paragraphs [91]-[92] and [94]-[95]:

    Similarly, we think that what is meant by ‘proper’ in s 74 is circumscribed by the provisions of the Act relating to maintenance.

    Adequacy is the key concept in determining whether the threshold set by s 72 has been crossed. But that concept is not left behind once the step into s 74 enquiry as to what is ‘proper’ is taken. Though application of the factors set out in s 75(2) may, in a given case, lead to a generous interpretation of needs that are ‘adequate’ and of what is ‘proper’, the nexus between ‘adequate’ and ‘proper’ must remain.

    …

    The choice of the form of maintenance here involved in the identification and ‘weighting’ of factors militating against or favouring one form or the other. Weight could only be expressed in qualitative terms, such as ‘important’ or ‘serious’.

    In contrast, in the calculation of a specific sum, the opportunity was available to disclose the weight given to relevant factors in a quantitative manner by the attribution of a monetary amount. A failure to do so is likely to make demonstration of the nexus between the award and ‘adequacy’ or ‘appropriate in the circumstances’ more difficult to identify.

    [10] (2007) FLC 93-316.

13. The husband contends that the wife’s expenses, outlined in her Financial Statement, are excessive and bear no meaningful relationship to the amount of spousal maintenance she is seeking. 

14. In her Financial Statement the wife claims that her average weekly expenses total $8,162. In my view some of the claims made by the wife concerning her expenditure are quite extraordinary. For example, she claims that she spends $1,200 per week on food, $1,000 per week for clothing ($250 for herself and $750 for the children who are aged six, five and three) and $450 per week for toiletries and makeup. She also claims that she is paying $1,841 per week in education expenses. Very few of the expenses claimed in the wife’s Financial Statement are attributed properly to be expenses for herself and the children respectively.

15. Even taking the wife’s expenses at their highest, having regard to the principles laid down in Nutting & Nutting (supra) and In the Marriage of Bevan (supra) the wife is not entitled to be maintained by the husband to the same standard the parties enjoyed prior to separation. In circumstances where the husband has agreed to continue to pay $5,000 per month in child support to the wife and the children’s school and preschool fees, I am of the view that the wife’s necessary personal expenses cannot amount to $7,000 per week.

16. The husband has agreed, as noted in the orders of 13 November 2017, to continue to pay the wife $5,000 per month, $1,250 per week, in child support and to pay the children’s school and preschool fees, said to be approximately $1,800 in the wife’s Financial Statement. Removing these expenses from Part N of the wife’s Financial Statement, the wife has a shortfall of $5,000 per week.

17. However, as previously stated, some of the expenses outlined by the wife in Part N are excessive. $1,200 for food, $1,000 for clothes and $450 for toiletries, hair and makeup are not reasonable amounts for the mother to spending each week. As the wife is not working, and is not expected to be working given her full time care of the three young children, $625 per week for cleaning is not in my view a reasonable expense, nor is $150 for child minding, particularly in circumstances where the wife has conceded she receives some assistance from her family in caring for the children.

18. Holiday expenses, totalling $1,000 per week according to the wife’s Financial Statement, cannot reasonably be expected to be covered by the husband in any payment for spousal maintenance. If and when the wife, or the husband, seeks to take the children on holiday the parties will need to discuss the costs of such a holiday at that time.

19. Doing the best I can on the evidence available to me and having removed or amended the aforementioned expenses in Part N of the wife’s Financial Statement I find that the wife has $1,000 in reasonable expenses per week that she cannot meet herself.      

20. Accordingly I make orders as set out at the forefront of these Reasons for the husband to pay the wife $1,000 per week in spousal maintenance.

Interim Costs

1. The wife seeks an order that the husband pay $130,000 in a lump sum into the trust account of her solicitors for payment of her legal costs. In the alternative to a lump sum payment the wife seeks that a “dollar for dollar” order be made.   

2. The husband opposes both orders as sought by the wife.

The Law and Discussion

1. It was observed in Paris King Investments Pty Ltd v Rayhill[11] that there are a number of juridical bases for an order of the type sought by the wife.  The Full Court in Zschokke & Zschokke[12] had observed that there was some uncertainty as to the source of jurisdiction to make the orders of the type sought but were of the opinion that the decisions in Wilson & Wilson[13] and Poletti & Poletti[14] established that where there are pending proceedings under s 79 of the Act for property settlement, an order for funds for litigation expenses may be made pursuant to s 80(1)(h) or s 117(2).

   [11] [2006] NSWSC 578

   [12] (1996) FLC 92-693

   [13] (1989) FLC 92-033

   [14] (Unreported, Family Court of Australia, Nygh J, 2 March 1990)

2. In Strahan & Strahan[15] at [84] the Full Court said:

   In Paris King Investments Brereton J, with whom on this point we agree, at [30] said that Zschokke “establishes that it is important, when contemplating an order for interim provision for litigation expenses, to identify the relevant source of power because it is the source of power that determines the necessary preconditions and relevant considerations for making the order”.

   The Full Court went on to say at [86]:

   … If the source of jurisdiction is s 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. …

   [15] [2009] FamCAFC 166

3. Counsel for the wife was very careful to make it clear that the wife brings her application for this order under s 117 of the Act and that an application based upon s 80(1)(h) utilising s 79 will be made at a future date if the court’s jurisdiction is not ousted by a BFA between the parties.

4. In Strahan & Strahan (supra) the Full Court said:

   If the source of jurisdiction is s 117 of the Act, in Zschokke at 83,217 the Full Court said:

   If the order is to be made under s.117(2) then, in our view, the matters contained in s.117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti.  In saying this we acknowledge that a number of the paragraphs in the sub-section (notably paragraphs (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question.  We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by paragraph (g). 

5. Section 117(1) of the Act sets out the general rule as being that each party is to bear his or her own costs. That principle is, however, subject to subsection (2) which gives a Court a discretion to make an order for costs if there are circumstances that it in the opinion justify it in doing so. Any such order for costs is to be pursuant to section 117(2) “as the Court considers just”.

6. The High Court in Penfold v Penfold[16] indicated that the circumstances justifying an order for costs need not be exceptional, but they must, of themselves, be sufficient to justify the making of an order for costs.  Therefore, there is no additional or special onus on an applicant seeking an order for costs other than the Court finding justifiable circumstances to make such an order.

   [16] (1980) 144 CLR 311

7. Section 117(2A) sets out the relevant matters, if any are applicable, to which the Court is to have regard in considering an order for costs.Few of the considerations in section 117(2A) are relevant at this stage in the proceedings but the matter most relevant in this case is the financial position of each party.

8. Counsel for the wife submits that the husband has the control of a significant pool of assets, worth millions of dollars, and the wife has limited access to funds. It is further submitted that an order for the husband to pay a lump sum to the wife or a “dollar for dollar” costs order will “level the playing field” between the two parties given the large disparity between their current earning capacities and financial resources.

9. Counsel for the husband submits that the husband does not have the capacity to make the payments sought by the wife and an order that would force the husband to borrow further on a loan when the parties are currently in dispute as to the composition of the asset pool would not be appropriate.

10. In In the Marriage of J U and T Poletti[17], Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:

    …It is rather, as it certainly was in Wilson and Wilson[18], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case... 

    [17] (1990) 15 FamLR 794.

    [18] (1989) 13 Fam LR 205.

11. It is clear from the evidence before me that the wife has limited access to funds and that the husband has substantial financial resources and assets. It is also clear from the evidence, and given the multiplicity of companies, trusts and other entities in which the husband has an interest, that this matter has the potential to be complex and lengthy. At minimum the parties will be required to attend court on a number of occasions to determine the nature and status of the purported BFA discussed earlier in these Reasons.

12. As noted in Lesley & Lesley (supra) the question of whether a court makes an order for the provision of funds by one party to the other to enable the continuation of litigation is separate and distinct from the question of enforcement of such an order which may be dealt with at a later date. Given the husband’s control over significant financial resources I am of the view that despite his claim to lack capacity to access liquid funds, the husband has the financial capacity to make a lump sum payment to the wife.

13. As any order for litigation costs will be made under section 117 of the Act such an order would be taken into account in determining any application for costs made by either party later in these proceedings.

14. It is clear that, given the substantial disparity in assets and financial resources available to each party, there are justifiable circumstances in this matter for me to make an order for litigation costs against the husband.

15. The wife seeks that the husband pay her $130,000 in a lump sum to fund her costs of litigation. The reasonableness of such an amount were I to make an order for costs was not challenged by counsel for the husband at interim hearing. 

16. Accordingly I make an order as set out at the forefront of these Reasons for the husband to pay to the wife $130,000 for litigation costs.

Restraints in relation to property

1. The wife also seeks orders being injunctions restraining the husband from transferring, selling, charging, encumbering, disposing of or otherwise adversely impacting upon his shareholding in any public or private company, his interest in any trust, and his interest in any real property.

2. The husband opposes the making of any injunctions as sought by the wife.

The Law and Discussion

1. Section 114(3) of the Act provides that a court may grant an injunction “in any case in which it appears to the court to be just or convenient to do so”.

2. The Full Court in In the Marriage of BA and RS Waugh[19] dealt with interlocutory injunctions under this section which had been made by a trial judge restraining the husband from dealing with property, rental income, trusts, business entities or ventures pending the determination of a property settlement between him and his former wife.  In granting leave to appeal and allowing the appeal against these injunctions, the Court set out the principles of law to be applied in such a case.

   [19] (1999) 27 FamLR 63

3. Firstly, it was noted [at 32] that “it is important to bear in mind that the jurisdiction to grant interlocutory injunctions under the Act is a statutory jurisdiction derived from s 114(3) and/or s 34(1) of the Act”. In this regard the Court considered the principles enunciated and explained by the High Court when considering a very similar grant of power to the Federal Court in Jackson v Sterling Industries Ltd[20].  In Waugh extracts from Deane J’s judgment in Jackson include when discussing the purpose of a Mareva injunction the following, [at 37]:

   It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the Court by depriving the plaintiff of the fruits of any judgment obtained in an action.

   [20] (1987) 162 CLR 612; 71 ALR 457

4. It was noted [at 53] in Waugh (supra) that the wife’s affidavit in support of her application in that case had many statements about her fears that the husband would deal with property under his control but there were no assertions that he had, in fact, disposed of anything or incurred any liability other than in the ordinary course of his business operations.

1. Another High Court case dealing with Mareva injunctions referred to in Waugh is Cardile v LED Builders Pty Ltd[21].  In Cardile the plurality referred referred to the observations of Dixon J in Glover v Walters[22] who referred to a Mareva injunction as a “drastic remedy” and said “its purpose is to preserve the status quo”.  In Cardile Kirby J (concurring with the result reached by the plurality) said “the plaintiff must establish a real risk of assets being disposed of”.

   [21] (1999) 198 CLR 380

   [22] (1950) CLR 172 at [175-6]

2. Counsel for the husband submits that the wife has produced no evidence in support of the granting of injunctive relief. Counsel did give some indication on multiple occasions throughout the interim hearing that the husband may agree to these injunctive orders if the words “except in the normal course of business” were added to the current orders sought by the wife.

3. The only submission made on behalf of the wife in support of her application for injunctive relief is that the orders sought are not oppressive and do not unfairly restrict the husband. No submission was made in regards to the suggestion from the husband that the words “except in the ordinary course of business” be added to the orders sought by the wife.

4. There is no evidence in the affidavit of the wife or the husband that the husband has disposed of any of his assets nor is there any evidence that establishes a real risk that he will dispose of any of his assets.

5. The wife has not met her burden of establishing a real risk of the husband disposing of his assets and accordingly I decline to make the injunctive orders as sought by her.   

6. For the foregoing reasons, I make the orders set out at the forefront of this Judgment.

I certify that the preceding one hundred and nine (109) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 6 December 2017.

Legal Associate: 

Date:  6 December 2017