Corelli & Beroni (No 2)
[2022] FedCFamC1F 197
•31 March 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Corelli & Beroni (No 2) [2022] FedCFamC1F 197
File number(s): ADC 1771 of 2016 Judgment of: MEAD J Date of judgment: 31 March 2022 Catchwords: FAMILY LAW – PROPERTY – Application for litigation funding either by lump sum or “dollar for dollar” – Where there was a previous application for interim property settlement/interim costs – Where the previous application was dismissed – Where assets owned by the respondent are significantly greater than that of the applicant – Where the applicant seeks an order for property settlement and spousal maintenance – Where the issue of contribution is contentious – Where the issue of future needs is contentious – Where the respondent submits there should be no alteration of his property interests – Where both parties have incurred costs of over $1 million each to date – Where the application is made under s 117 of the Family Law Act – Where counsel for the applicant acknowledges that the applicant will continue to be represented regardless of the outcome of the application – Where the Court finds that both parties prima facie have a case to support their substantive applications – Where the Court has not yet determined whether it is appropriate to alter the property interests of the parties – Where the property pool has not been identified – Where the respondent is in a position to pay the applicants costs if he is unsuccessful – Where the applicant is not in a position to pay the respondent’s costs if she is unsuccessful – Where the Court finds that the Court’s discretion to make an interim costs order has not been enlivened Legislation: Family Law Act 1975 (Cth) ss 75(2), 79(4), 117, 117(1), 117(2), 117(2A) Cases cited: Atkins & Hunt and Ors [2018] FamCA 14
Beroni & Corelli [2021] FamCAFC 9
Corelli & Beroni [2021] FedCFamC1F 125
Norbis & Norbis (1986) FLC 91-712
Rigby & Kingston [2017] FamCA 877
Salvage & Fosse [2020] FamCAFC 144
Stanford & Stanford (2012) FLC 93-518
Division: Division 1 First Instance Number of paragraphs: 64 Date of hearing: 28 March 2022 Place: Adelaide Counsel for the Applicant: Mr Whitington QC with Ms Doyle of Counsel Solicitor for the Applicant: Angela Ferdinandy Counsel for the Respondent: Ms Nelson QC with Mr Bullock of Counsel Solicitor for the Respondent: Griffins Lawyers ORDERS
ADC 1771 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CORELLI
Applicant
AND: MR BERONI
Respondent
ORDER MADE BY:
MEAD J
DATE OF ORDER:
31 MARCH 2022
THE COURT ORDERS THAT:
1.That the Application in a Proceeding filed herein on 18 January 2022 be dismissed.
2.That the question of costs of same be reserved to trial.
3.That the Response to an Application in a Proceeding filed herein on 16 February 2022 be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Corelli & Beroni is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
On 13 October 2021 I delivered reasons arising from an Application in a Case filed by the applicant on 31 January 2020 seeking, inter alia, orders:
…
5.That by way of interim settlement of property, interim costs order or, in the further alternative pursuant to section 90SF of the Act the de facto husband do pay to the de facto wife the sum of FIVE MILLION DOLLARS ($5,000,000) within 14 days.
6.That any sum paid pursuant to paragraph 5 by way of interim property settlement be brought to account in such way as this Honourable Court deems just and equitable at the hearing of this matter.
…
9.Pursuant to section 117 of the Act, or in the alternative section 114 or section 90SS(5) or 90SS(1)(K) of the Act from the date of these orders and within 7 days after the payment by or on behalf of the de facto husband of any monies in payment of accounts:-
9.1Rendered by solicitors or counsel for the de facto husband in connection with these proceedings;
9.2Rendered by accountants engaged by the de facto husband or the solicitors for the de facto husband, or on his or their behalf, to value or express an opinion or comment on the interest of the de facto husband and/or the de facto wife in any business, company, trust or entity or the de facto husband's income or loan accounts or unpaid present entitlements of the de facto husband or to examine any document for the purposes of these proceedings;
9.3Rendered by any expert engaged by the de facto husband or the solicitors for the de facto husband, to report on the interest the de facto husband has in any business, company, trust or entity in which he has an interest or to express an opinion or comment on the interest of the de facto husband and/or de facto wife in any business, company, trust or entity or the de facto husband's income or loan accounts or unpaid present entitlements of the de facto husband or of any associated entity or examine any document for the purposes of these proceedings.
The de facto husband pay or cause to be paid the same amount/s to the trust account of the solicitors for the de facto wife, to be applied to her legal costs and expenses in connection with these proceedings.
10.Within 24 hours after the payment by or on behalf of the de facto husband of any amount/s referred to in Order 9 hereof the de facto husband cause to be given to the de facto wife's solicitors a memorandum stating the amount or amounts so paid to the solicitors or accountants or expert/s.
11.The de facto husband instruct his solicitor that all monies paid to them including on his behalf as referred to in order 10 hereof should be held in trust by them and not applied in payment of any outstanding legal fees until such time as the same amount has been paid by or on behalf of the de facto husband to the solicitors for the de facto wife on the Court record from time to time in these proceedings.
12.In the event that the payment to the de facto wife referred to in Order 9 hereof is not made within 7 days thereafter, the de facto husband is to instruct his solicitor to pay 50% of whatever amounts have been received by them (as referred to in Order 8 hereof and held by them in trust) to the solicitors for the de facto wife on the Court record from time to time in these proceedings.
13.That the de facto wife instruct her solicitor that the amounts paid, or caused to be paid by the de facto husband to the solicitors for the de facto wife pursuant to the preceding Orders be applied by the solicitors for the de facto wife in payment of the legal costs and disbursements incurred or to be incurred by the de facto wife in the conduct of these proceedings, including but not limited to the reasonable costs and disbursements:
13.1rendered by the solicitors or counsel for the de facto wife;
13.2rendered by accountants (engaged by the de facto wife or the solicitors for the de facto wife), to value the interests of the de facto husband in any business, company, trust or entity or comment upon the de facto husband's income, loans, or unpaid present entitlements; or
13.3rendered by valuers (engaged by the de facto wife or the solicitors for the de facto wife) to report on and value the real and personal property relevant in these proceedings and the income and loan accounts or unpaid present entitlements of the de facto husband relevant in these proceedings.
14.The question of how payment of costs to the de facto wife pursuant to these Orders are treated at the final hearing be a matter for determination by the Trial Judge.
15.That leave be granted to the de facto wife on 14 days' notice to make any application required to assist her to pay her solicitors, counsel, accountant or expert so that she is able to put her case as to the values of and the income and financial resources of the de facto husband and the entities and businesses associated with him at all relevant times.
…
In orders made that day I dismissed paragraphs 5, 6 and 9 to 15 of that application.
On 18 January 2022 the applicant filed an Application in a Proceeding seeking, inter alia, orders as set out in paragraphs 4, 5 and 6 of that document, namely:
4.That pursuant to section 117 of the Family Law Act and within 28 days the de facto husband do pay to the de facto wife the sum of $385,815.00, or in the alternative:-
(a)Within 7 days after the payment by or on behalf of the de facto husband of any monies in payment of accounts:-
(i)Rendered by solicitors or counsel for the de facto husband in connection with these proceedings;
(ii)Rendered by accountants engaged by the de facto husband or the solicitors for the de facto husband, or on his or their behalf, to value or express an opinion or comment on the interest of the de facto husband and/or the de facto wife in any business, company, trust or entity or the de facto husband's income or loan accounts or unpaid present entitlements of the de facto husband or to examine any document for the purposes of these proceedings;
(iii)Rendered by any expert engaged by the de facto husband or the solicitors for the de facto husband, to report on the interest the de facto husband has in any business, company, trust or entity in which he has an interest or to express an opinion or comment on the interest of the de facto husband and/or de facto wife in any business, company or trust or entity or the de facto husband's income or loan accounts or unpaid present entitlements of the de facto husband or of any associated entity or examine any document for the purposes of these proceedings.
the de facto husband pay or cause to be paid the same amount/s to the trust account of the solicitors for the de facto wife, to be applied to her legal costs and expenses in connection with these proceedings.
(b)Within 24 hours after the payment by or on behalf of the de facto husband of any amount/s referred to in Order 3 (a) hereof the de facto husband cause to be given to the de facto wife's solicitors a memorandum stating the amount or amounts so paid to the solicitors or accountants or expert/s.
(c)The de facto husband instruct his solicitor that all monies paid to them including on his behalf as referred to in order 3 (a) hereof should be held in trust by them and not applied in payment of any outstanding legal fees until such time as the same amount has been paid by or on behalf of the de facto husband to the solicitors for the de facto wife on the Court record from time to time in these proceedings.
(d)In the event that the payment to the de facto wife referred to in Order 3 (a) hereof is not made within 7 days thereafter, the de facto husband is to instruct his solicitor to pay 50% of whatever amounts have been received by them (as referred to in Order 3 hereof and held by them in trust) to the solicitors for the de facto wife on the Court record from time to time in these proceedings.
(e)That the de facto wife instruct her solicitor that the amounts paid, or caused to be paid by the de facto husband to the solicitors for the de facto wife pursuant to the preceding Orders be applied by the solicitors for the de facto wife in payment of the legal costs and disbursements incurred or to be incurred by the de facto wife in the conduct of these proceedings, including but not limited to the reasonable costs and disbursements:
(i) rendered by the solicitors or counsel for the de facto wife;
(ii)rendered by accountants (engaged by the de facto wife or the solicitors for the de facto wife), to value the interests of the de facto husband in any business, company, trust or entity or comment upon the de facto husband's income, loans, or unpaid present entitlements; or
(iii)rendered by valuers (engaged by the de facto wife or the solicitors for the de facto wife) to report on and value the real and personal property relevant in these proceedings and the income and loan accounts or unpaid present entitlements of the de facto husband relevant in these proceedings.
5.The question of how payment of costs to the de facto wife pursuant to these Orders are treated at the final hearing be a matter for determination by the Trial Judge.
6.That leave be granted to the de facto wife on 14 days' notice to make any application required to assist her to pay her solicitors, counsel, accountant or expert so that she is able to put her case as to the values of and the income and financial resources of the de facto husband and the entities and businesses associated with him at all relevant times.
An affidavit was filed by the applicant on 18 January 2022 in support of her application.
At the hearing on 25 January 2022 I adjourned the hearing of that application to the commencement of trial on 28 March 2022.
On 16 February 2022 the respondent filed a Response to the Application in a Proceeding. He sought that the application be dismissed and that the applicant his costs of and incidental to the application or in the alternative that each party bear their own costs.
An affidavit was filed on behalf of the respondent in support of the Response by a solicitor in the employ of Griffins Lawyers which had assumed conduct of the substantive proceedings on behalf of the respondent. That part of the affidavit relating to the issue of costs/litigation funding commenced at paragraph 31 and appears to consist entirely of submissions.
In the applicant’s affidavit the relevant matters on which she relied with respect to litigation funding appeared from paragraph 43 onwards. She deposed, inter alia, to:
·incurring total costs to date in the sum of about $1,019,528.83;
·the respondent paying party/party costs as ordered to date in the sum of $570,309 arising from a costs order made by Tree J following upon his order setting aside the Binding Financial Agreement on 2 December 2019 and the dismissal by the Full Court of the respondent’s appeal against those orders on 10 February 2021;[1]
[1] Beroni & Corelli [2021] FamCAFC 9.
·utilising $90,000 provided to her by the respondent in December 2016 towards counsel fees and disbursements;
·not having paid anything towards her solicitors’ costs out of her own funds since 29 March 2017;
·owing her solicitor outstanding costs and disbursements as at 18 January 2022 in the sum of $322,761;
·counsel fees from 12 November 2021 to 18 January 2022 being $4,445;
·anticipated costs for seven days preparation for trial commencing on 17 January 2022 being $26,950;
·anticipated costs for conferring with counsel for two days being $7,000 in solicitors fees;
·anticipated fees for further preparation to answer the respondent’s affidavit material, analysing the single expert report, obtaining the advice of a shadow expert and in further preparation of the trial requiring five days work at an estimated cost of $24,500;
·costs of a solicitor and junior solicitor or clerk attending a ten day trial being $73,500;
·senior counsel’s estimate of fees for preparation and trial being $123,750 and junior counsel for the same purpose in the amount of $82,170;
·anticipated costs of transcript being approximately $14,000;
·anticipated costs of an interpreter approximately $3,500;
·total costs to be incurred of and incidental to the trial being approximately $385,815;
·having no capacity to pay or contribute towards the costs;
·her solicitor holding shares originally worth approximately $60,000 but as at 18 January 2022 having a value of approximately $38,000 by way of a lien;
·no capacity to pay legal costs on an ongoing basis out of income even taking into account $1,000 per week spousal maintenance;
·utilising $90,000 arising from the order of 13 October 2021, being arrears of spousal maintenance, to purchase a property in her name in C;
·the respondent being in control of almost all of the entire asset pool;
·the respondent filing a financial statement on 27 May 2020 asserting assets worth $102,966,082 and superannuation entitlements to a value of $1,006,365;
·the respondent having income, assets and resources being an identifiable source of funds to pay a litigation funding order;
·the respondent having a position of relative strength as against her resources to fund the litigation;
·the respondent having the capacity to meet his own costs with ease; and
·seeking a “dollar for dollar” order or alternatively a lump sum litigation order in the sum of $385,815 to produce a “level playing field”.
On 25 March 2022 the respondent filed a Costs Notice disclosing:
·costs paid (including previous solicitors and former counsel) - $1,311,966.60;
·costs owing - $0;
·costs incurred but not billed (including counsel) - $94,552.31;
·estimated costs future costs (including counsel) - $290,000;
·expert witness fees (paid or payable) - $36,650.64.
On 26 March 2022 the applicant filed a Costs Notice containing the following information:
·costs paid to date (by her and by the respondent pursuant to costs orders - $757,060;
·costs owing up to today’s date - $314,485;
·unpaid solicitor work and disbursements performed but unbilled up to today’s date - $140,271;
·unpaid counsel work performed but unbilled up to today’s date - $93,500;
·costs to complete the matter (at least) - $351,000.
I take this opportunity to express my very significant concern as to the quantum of funds expended to date on legal fees and those anticipated to complete this matter.
The applicant’s case
Submissions were made by Mr Whitington QC of Senior Counsel in support of the orders sought by the applicant relying on the provisions of s 117 of the Family Law Act 1975 (Cth) (“the Act”). In the alternative to an order for a lump sum he submitted an order should be made for what is commonly known as a “dollar for dollar” order.[2]
[2] Atkins & Hunt & Ors [2018] FamCA 14 at [46].
In support of his client’s application senior counsel submitted:
·the applicant should not have to realise either of her two Country G apartments to pay legal costs in circumstances where funds for the purchase of the first apartment were provided to the applicant by the respondent with a view to her buying the property for her sons to live in, and the second one being purchased from funds paid to the applicant by the respondent by way of arrears of spousal maintenance in recognition of financial support received from them during the period when she was unable to support herself;
·that any argument advanced by the respondent’s counsel as to unexplained transactions appearing in the applicant’s bank statements take the matter no further in circumstances where:
·the applicant has maintained more than one bank account with numerous transfers between her bank accounts which are all addressed in an affidavit filed today by Ms Ferdinandy, in particular in annexure “B” thereto; and
·there is evidence contained in paragraphs 500 to 504 of her trial affidavit to the effect of the respondent utilising her ANZ bank account on many occasions to forward money from his bank accounts in Country K to Australia without the knowledge of the Australian Taxation Office;
·the respondent has not disclosed any Costs Agreement notwithstanding that the applicant’s Costs Agreement was produced earlier in the proceedings to the respondent’s then solicitors;
·the applicant’s Costs Agreement did not include any concept of “no win no fee”;
·as to any argument advanced by the respondent that the applicant’s costs are disproportionate to the claim in circumstances where it is the applicant’s case that she has a claim for property settlement to which the respondent says he has a defence, the Court cannot be expected at this stage of the proceedings to rule on the merits of the applicant’s claim in a manner that is adverse to the applicant;
·the authorities are clear that the applicant only needs to demonstrate that she has an arguable case;
·if the respondent genuinely believed the applicant had no claim for settlement of property it raised the question of why he was so anxious to establish the existence of the original Binding Financial Agreement and attempted to have a second Binding Financial Agreement executed during the relationship;
·in 2014 the respondent was prepared to provide to the applicant a payment of $3 million as well as twelve months residence free of charge in the Suburb L property in his Will;
·such issues argue against a submission that the claim in unmeritorious;
·that complaint as to the quantum of the applicant’s costs is disingenuous in circumstances where:
·the respondent has taken every point to punish the applicant with respect to the amount of costs incurred by her, having challenged the judgment of Tree J in setting aside the Binding Financial Agreement which challenge was found by the Full Court to be unmeritorious; and
·legal fees incurred by the respondent in respect of the appeal included $22,000 plus GST per day for senior counsel and junior counsel;
·the application for litigation funding cannot be said to be late;
·reference was made in the Court’s reasons of 13 October 2021 to the possibility of the Court being required to consider a further application for litigation funding as matters got closer to trial and disputes became clearer;[3]
·the Court may have regard to the question of whether any order for litigation funding in favour of the applicant is reversible but the authorities make it clear that it is not essential that it be so, and if the Court does consider the issue it should be regarded as a matter of low order;
·the Court can take into account the existing order for spousal maintenance in favour of the applicant in the sum of $1,000 per week in the event of any concern with respect to the question of the reversibility of an order for litigation funding;
·the Court is perfectly entitled to make an order in the sum of $360,000 but noting that such amount is based on an estimated trial time of ten days;
·the Court has already determined in reasons delivered on 13 October 2021 that each party has a prima facie case;[4] and
·a number of issues arise from the expert report just received such that matters referred to in paragraph 192 of the Court’s reasons of 13 October 2021 have come to pass.
[3] Corelli & Beroni [2021] FedCFamC1F 125 at [193].
[4] Corelli & Beroni (supra) at [188].
The respondent’s case
Submissions to support the orders sought in the Response were made by Ms Nelson QC of Senior Counsel based on the written Summary of Argument provided to the Court and to the applicant’s counsel, as well as additional oral submissions.
Turning firstly to the written Summary of Argument it was submitted:
·in circumstances where the application is brought under s 117 of the Act the Court must be satisfied that there are “circumstances that justify it” in making an order as to costs;[5]
[5] Family Law Act 1975 (Cth) s 117(2).
·if the discretion to order costs is enlivened the Court must take into account the requirements of s 117(2A) of the Act;
·the Court is not justified in departing from the usual rule of each party bearing their own costs in circumstances where the applicant has been able to maintain legal representation throughout the proceedings and there is no evidence that her legal representatives will cease to act for her;
·the applicant’s existing financial resources are unclear as is her ability to pay her own legal costs and there is no evidence of any Costs Agreement between the applicant and her solicitor;
·the Court must consider whether costs incurred or likely to be incurred by the applicant are reasonable, how they relate to the scale of costs and whether she will have any costs liability if her claim is unsuccessful;
·the applicant’s legal expenditure to date is disproportionate as against her claim;
·her application for litigation funding is late and a very similar application has previously been dismissed;
·if an order is made and her claim is dismissed in the substantive proceedings the applicant has had the benefit of “hundreds of thousands” of dollars of litigation funding;
·the respondent concedes he has significant financial resources and could meet an order for costs;
·the applicant has not sought to sell or rent either of her apartments in Country G to meet legal fees;
·there are numerous unexplained transactions in the applicant’s bank statements;
·the lack of clarity about her financial circumstances weighs against an order being made;
·the Court must have regard to a Costs Agreement when considering the parties’ financial circumstances;
·the relationship between the applicant and the respondent was of short duration;
·the applicant made no significant contribution to the acquisition or maintenance of any of the respondent’s assets other than in a minor way;
·there is no evidence of any relevant change in circumstances between the previous application for litigation funding and the present application;
·there is a risk that in the event an order for litigation funding is made the respondent may ultimately be unable to recover those funds if he succeeds in the substantive proceedings; and
·in the circumstances of this case in the absence of evidence that the applicant will be required to represent herself, there is less reason to expose the respondent to the risk of costs already paid on behalf of the applicant to be recovered.
Senior counsel further submitted that:
·in circumstances where the applicant unavoidably had to secure alternate junior counsel as pleaded by her in paragraph 44(a), on taxation the respondent would not be obliged to pay such additional costs on a party/party basis;
·there has been no change at all in the applicant’s circumstances with respect to her costs of litigation since the matter was determined by the Court in October 2021;
·the respondent has already paid to the applicant the sum of $570,000 by way of costs;
·the making of the order is an exercise of discretion;
·bank statements recently provided by the applicant are deficient and fail to clarify the applicant’s true financial circumstances;
·the applicant’s ownership of the Country G apartments cannot be glossed over in circumstances where they are freehold and where it is the applicant’s position that she has turned cash into an asset and now tells the Court she is unable to pay her legal fees;
·the respondent should not have to pay costs where unreasonable work has been done by a solicitor – the costs have to be in proportion to the claim;
·the applicant has made no contribution to the assets owned by the respondent as referred to in s 79(4) of the Act;
·if the applicant has any entitlement, then the business interests of the respondent must be excluded;
·the applicant lived at Suburb L being a property built by the respondent in 1979 and later renovated;
·at best the applicant’s case involved her undertaking some housework and household duties as well as some gardening during a short relationship; and
·there has to be a proper case for adjustment of property interests and the applicant’s case is out of all proportion to the facts.
The law
I refer to and incorporate in these reasons paragraphs 157 to 163 inclusive of my reasons delivered in this matter on 13 October 2021.[6]
[6] Corelli & Beroni (supra) at [157] to [163].
Subsequent to the hearing on 12 June 2020 to which those reasons referred, the Full Court dismissed the appeal of the respondent against the setting aside of the Binding Financial Agreement by Tree J.[7]
[7] Beroni & Corelli (supra).
The original order made by Tree J setting aside the Binding Financial Agreement included an order for costs against the respondent, as did the order of the Full Court dismissing his appeal.
The ultimate result of those orders was payment by the respondent to the applicant on account of her costs in the sum of approximately $570,000.
It was submitted by senior counsel for the respondent that this sum of costs had already been paid by the respondent to the applicant, but of course they are costs that arise from orders made by the Court in favour of the applicant and should not be confused with matters currently at hand.
The relevant parts of s 117 of the Act for the purposes of this application are the following:
117 Costs
(1)Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
…
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a) the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as the court considers relevant.
As submitted by senior counsel for the respondent, before making any order for costs pursuant to s 117(2) of the Act, the Court must be satisfied that there are circumstances that justify it in making such an order contrary to the usual circumstance of each party bearing their own costs pursuant to the provisions of s 117(1) of the Act.
In paragraphs 174 to 178 of reasons I delivered on 13 October 2021 in these proceedings I referred to the judgment of Carew J in Rigby & Kingston [2017] FamCA 877, a case in which, in circumstances of disparate financial circumstances between the parties, her Honour was persuaded to make an order for interim costs.
In that case the wife’s wealth was estimated at $11 million in contrast to the husband having assets to a value of approximately $260,000. Of his assets $200,000 comprised superannuation entitlements, and in addition he had outstanding legal fees of approximately $60,000 and an alleged liability to his mother of approximately $100,000.
Her Honour observed, as set out in [53] of her reasons, that on the parties’ respective versions of the evidence they each established a prima facie case for the orders they sought. In that case the wife sought to dismiss the husband’s application for settlement of property, whereas the husband sought such an order. Her Honour said at [66] and [67] of her reasons:
66.In this case I consider that the circumstances justify an order for costs and that a sum of $135,000 is just. In coming to that conclusion I have taken into account, in particular, the wife’s far superior financial position, the prima facie case for substantial relief established by each party, the prejudice to each party in making or not making an order and the estimate of costs provided.
67.The sum ordered is to be retained in the husband’s lawyer’s trust account to be used only for the purpose of payment of his legal fees.
In that case however, her Honour found that the husband was likely to be at a significant disadvantage to the wife in that it was likely he would be forced to represent himself at trial, his solicitors having deposed to being unwilling to act for him if his legal costs were not paid as and when invoiced.[8]
[8] Rigby & Kingston (supra) at [54] and [62].
It is conceded appropriately by senior counsel for the applicant in this matter and acknowledged by senior counsel for the respondent that the applicant will continue to be represented by counsel who of course will be instructed by solicitors, regardless of the outcome of this interim application.
I referred in my reasons of 13 October 2021 to the outcome of the appeal against the order of Tree J being unknown at the time of the hearing of the application. That has now been determined and the costs paid.
The applicant’s evidence with respect to the extent of her outstanding and anticipated costs has been put before the Court in her affidavit in support of her application in significantly greater detail than the evidence upon which she relied in support of her earlier application.
Complaint is made by senior counsel for the respondent that the applicant’s discovery of her financial circumstances has been less than satisfactory, and that there are significant questions to be asked of her regarding various transactions that appear in bank records that have been produced by her suggesting the movement of large amounts of money in her various accounts. She submits that the Court simply cannot be satisfied as to the capacity of the applicant to fund her litigation.
The applicant has adduced evidence in her trial affidavit that her ANZ account, was utilised during the period of the relationship by the respondent to funnel the transfer of his own funds from Country K to Australia without alerting the Australian Taxation Office to such transfers.[9]
[9] The applicant’s trial affidavit filed 1 March 2022 – paragraphs 500 to 501.
These are matters to be determined at trial but I am not satisfied on the evidence of the respondent before the Court at this interim time that he has made out a prima facie case that the applicant has been or is in possession of large sums of money from which she could pay her legal fees.
I do not accept the submissions of senior counsel for the respondent that the sums claimed by the applicant are significant and disproportionate to her application.
Both parties have expended or are in the process of expending large amounts of money in this matter, which on the face of each of their costs certificates are similar. This is in circumstances where I have already found that prima facie they have a case to support the orders they seek. That is not to say that those cases could not have been put before the Court at significantly less cost.
In my view the most important aspect for the Court to consider in respect of this application where:
·the respondent has the capacity to pay litigation costs to the applicant;
·the costs sought are not unfortunately disproportionate to the claim in the circumstances of the conduct of this litigation;
·there is no evidence of the applicant having capacity to put her legal representatives in funds both owning and anticipated as quantified by her solicitor; and
·correspondingly there is no evidence before the Court that her legal representatives will cease acting for her such that she would be disadvantaged by having to represent herself at trial,
is the prejudice to each party in making or not making an order.[10]
[10] Rigby & Kingston (supra) at [66].
The Court’s discretion to make an order for interim costs or litigation funding pursuant to the terms of s 117 of the Act requires the Court to determine that there are circumstances that justify making such an order. It is only after that finding that the Court turns to the provisions of s 117(2A) of the Act and considers the factors set out thereunder.
In Salvage & Fosse [2020] FamCAFC 144 the plurality of the Court said at [24] and [25], in their consideration of a litigation funding order, that in determining whether the Court is justified in all of the circumstances in making such an order there should be an assessment of the nature and quality of any property claim, including a consideration of a likely division that would follow, and whether such proceedings are justified by the nature and quality of the claim.
Their Honours said earlier in [14] of the same judgment:
The critical question therefore is whether the applicant has ‘any real prospects of obtaining justice unless the order sought is made’ (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant’s case and the effect of the order upon the respondent.
Later in the same judgment their Honours referred in [30] to [34] to the issue of whether or not it was a necessary consideration of the Court that a costs order made under s 117 of the Act be “reversible” in the sense of being, in the circumstances of the likely outcome of the proceedings, capable of being “reversed” if the applicant was unsuccessful. Their Honours said in [30] to [34]:
30.We also wish to address the submissions on what was said to be the ‘irreversibility’ of the costs order which occupied much of the Court’s time.
31.First, as we have tried to explain, that concept is more apt to an order for the transfer of an asset or payment of money during the course of the property settlement proceedings, although in our opinion, it is an unfortunate and not entirely accurate shorthand expression of the applicable principle. Rather, the Court must take into account whether, and if so how, such an order could be taken into account, adjusted or possibly reversed at the final hearing.
32.It is as plain as a pikestaff that if the respondent failed to set aside the Cohabitation Agreement, the funds obtained by her could never be repaid. Thus, the order was incapable of being reversed, although if she succeeded, it was capable of being taken into account at a subsequent property settlement hearing. Another possibility is that the order might simply stand as appropriate if the Cohabitation Agreement was set aside.
33.As Kent J has persuasively reasoned, the fact that an interim costs order may never be repaid is not a bar to one being made. As the history of such orders demonstrates, it is not a determinative matter (Rakete v Rakete (2012) 48 Fam LR 325; [2012] FamCA 267 at [55]).
34.It is, however, a consideration which justifies the particular evaluation we have described earlier.
The proceedings between the parties in this matter commenced by way of the applicant’s application to set aside a Binding Financial Agreement. The applicant succeeded, the Binding Financial Agreement was set aside and an order was made that the respondent pay her costs.
The respondent appealed that order. He was unsuccessful and again was ordered to pay the applicant’s costs.
The applicant now seeks an order for settlement of property. It is resisted by the respondent.
The applicant seeks a final order by way of settlement of property such that “the assets” be divided on a 30/70 per cent basis in favour of the respondent, or in the alternative that the respondent do pay to the applicant the sum of $10 million.[11] She further seeks an order for spousal maintenance in the sum of $2,000 per week on a final basis.[12]
[11] Amended Initiating Application of the applicant filed 5 December 2019 – paragraph 3.
[12] Amended Initiating Application of the applicant filed 5 December 2019 – paragraph 4.
The respondent seeks an order for dismissal of that application in its entirety.
I have already said on more than one occasion that on the facts relied on by each party they each have a prima facie case to support the orders they seek.
If the applicant succeeds in her application any interim costs order made pursuant to s 117 of the Act may be taken into account in determining the amount she should receive by way of settlement of property.
The respondent has the capacity to pay the amount sought by the applicant by way of an interim costs order, would not be significantly financially inconvenienced by such an order and could be reasonably confident such payment would be taken into account in the final order.
In the event that the respondent obtains the orders he seeks by way of final order there would be no payment to the applicant by way of property settlement or spousal maintenance. There is little doubt that the order would not be “reversible” in that prima facie the applicant would appear to demonstrate no capacity to repay those monies. In addition, the respondent has liability for his own legal fees in meeting the applicant’s claim, which are anticipated to be of a similar considerable nature to those of the applicant.
As I said in my reasons delivered 13 October 2021, this is an unusual matter. The orders sought by each of the parties could only be described as at “the opposite ends of the scale”. Nevertheless, prima facie both parties advance evidence and argument of merit.
The credit of the parties in establishing the facts on which they rely will be important in the circumstances of this particular case.
What is not in dispute is that the relationship was of reasonably short duration, commenced when the respondent was approximately 78 years old and had amassed significant wealth, and where on the face of the evidence of both parties there was no commonality of purpose with respect to either the accumulation of assets or the use of those assets.
The parties’ finances were at all times separate, and it appears to be common ground that decisions made by each of them as to financial expenditure were made solely at their individual discretion.
There is significant dispute between the parties as to the extent of non-financial contributions made by the applicant during the relationship,[13] and her financial needs into the future.[14]
[13] Family Law Act 1975 (Cth) s 79(4).
[14] Family Law Act 1975 (Cth) s 75(2).
Each party comes to the Court seeking orders to which it might be said a greater degree of risk attaches than is seen in the majority of cases involving applications for settlement of property and/or spousal maintenance where assets have been acquired through the efforts of both parties with common purpose, either over a relatively short period of time when the matter is sometimes approached by way of an “asset by asset” determination,[15] or over a longer period of time when the Court is more likely to approach the question of distribution of the parties’ assets with a “global” approach.[16]
[15] Norbis & Norbis (1986) FLC 91-712.
[16] Norbis & Norbis (supra).
There is no doubt that the respondent is in a vastly superior financial position to that of the applicant. The Court has not yet however determined whether it is appropriate for there to be an adjustment of the parties’ interests in property.[17] It is only if that is determined in the affirmative that assets the respondent owns or controls may be identified as forming part of the property pool for the purpose of determining the parties’ respective interests.
[17] Stanford & Stanford (2012) FLC 93-518.
I do not consider the applicant to be at significant disadvantage in these proceedings in circumstances where her solicitors and her counsel intend to continue to represent her and where the matter is now ready to commence.
I accept that some issues may arise as a result of the late delivery of the expert report concerning the respondent’s business interests but I am not satisfied that of itself justifies an order for litigation funding.
The applicant has to date been successful both with respect to her application to set aside the Binding Financial Agreement and in the appeal with respect to that matter, and the respondent has been ordered to and has paid her costs in that regard on a party/party basis.
In the event the applicant is successful in the substantive application it is likely that she will seek payment of her costs of the application. She can safely assume that if such an order is made the respondent has the capacity to pay same.
In the event the respondent is successful in the substantive application, there can be no expectation on his part that the applicant will be in a position to pay anything towards his costs.
I am unable to find that the circumstances of this case enliven the Court’s discretion to make an order for interim costs pursuant to the provisions of s 117 of the Act.
In those circumstances it is not necessary for me to consider further the provisions of s 117(2A) of the Act.
Taking all of those matters into account I make the orders as set out at the commencement of these reasons for judgment.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mead. Associate:
Dated: 31 March 2022
7
1