Daily & Daily (No 2)

[2023] FedCFamC1F 858

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Daily & Daily (No 2) [2023] FedCFamC1F 858

File number(s):

ADC 4606 of 2018

Judgment of:

BERMAN J

Date of judgment:

13 October 2023

Catchwords:

 FAMILY LAW – PRACTICE AND PROCEDURE – Leave to reopen – Where judgment was delivered in March – Where s 75(2) factors were considered in the judgment – Where the quantum of damages remains outstanding – Where the applicant seeks leave to adduce further evidence in relation to his current circumstances – Where the application was not brought in a timely fashion – Where the Court’s discretion is to be guided and tempered by the interest of justice – Where the Court exercises its discretion to allow the applicant to adduce further evidence as to his legal fees which relate to the quantum of damages – Where the Court declines to exercise its discretion to allow the applicant to adduce further evidence as to his current s 75(2) factors – Orders.

FAMILY LAW – PROPERTY – Litigation funding – Where the applicant seeks litigation funding in the sum of $150,000 – Where the applicant proposes the money comes from net-proceeds of sale – Where the respondent opposes the order – Where the respondent may have a successful application for costs – Where the only source of funds for a cost order would be from the net-proceeds – Consideration of s 117(2A) of the Family Law Act 1975 (Cth) – Order for litigation funding in the sum of $50,000.

Legislation:

Family Law Act 1975 (Cth) s 72, 74, 79, 80(1)(h), 117, 117(2A)

Cases cited:

Aheb & Aheb (No. 3) [2009] FamCA 524

Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27

Breen v Breen (1990) 65 ALJR 195

Chester v Chester (1995) FLC 92-612

Daily & Daily [2023] FedCFamC1F 222

Daily & Daily (2020) 61 Fam LR 75

Gelly and Gelly (no 1) (1992) FLC 92-290

Murray v Figge (1974) 4 ALR 612

Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256

Stephens & Stephens & Anor (Enforcement) (2009) FLC 93-425

Strahan & Strahan(Interim property orders) (2011) FLC 93-466

Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471

Zschokke & Zschokke (1996) FLC 92-693

Division:

Division 1 First Instance

Number of paragraphs:

96

Date of hearing:

29 September 2023

Place:

Adelaide

Counsel for the Applicant:

Ms Miller

Solicitor for the Applicant:

Jordan & Fowler Family Lawyers

Counsel for the First Respondent:

Mr Anderson

Solicitor for the First Respondent:

Norman Waterhouse Lawyers

Counsel for the Second Respondent:

Mr Doyle KC and Ms Barnett

Solicitor for the Second Respondent:

Barry Nilsson

ORDERS

ADC 4606 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR DAILY

Applicant

AND:

MS DAILY

First Respondent

R LAWYERS

Second Respondent

ORDER MADE BY:	BERMAN J
DATE OF ORDER:	13 OCTOBER 2023

THE COURT ORDERS THAT:

1.The applicant be granted leave to adduce further evidence as to his legal fees, costs and disbursements.

2.By way of litigation funding, the sum of FIFTY THOUSAND DOLLARS ($50,000) be paid to the applicant by his solicitor’s trust account from the Joint Westpac Account of the applicant and the first respondent in Westpac account number …59. 

3.All outstanding applications be listed before the Honourable Justice Berman for further directions on 8 November 2023 at 9.00 am.

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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

REASONS FOR JUDGMENT

BERMAN J

INTRODUCTION

1. Mr Daily (“the applicant”) and Ms Daily (“the first respondent”) have been engaged in complex and highly contested litigation since 2018 in respect of the application of the first respondent to set aside a financial agreement entered into between the parties on 21 July 2005 and if successful, then to consider her application for property settlement and division pursuant to s 79 of the Family Law Act 1975 (“the Act”).

2. The background to the proceedings is adequately set out in reasons delivered in Daily & Daily [2023] FedCFamC1F 222 and in the earlier decision of Daily & Daily (2020) 61 Fam LR 75.

3. On 31 March 2023 I ordered that pursuant to s 90K(1)(d) and/or s 90KA of the Act the financial agreement entered into between the parties dated 21 July 2005 be set aside.

4. As part of those proceedings, the applicant joined R Lawyers (“the second respondent”) who provided legal services to the applicant in relation to financial agreement.

5. The contention of the applicant was that if the financial agreement was set aside, and the Court considered that the financial agreement was not drawn such that there was contractual certainty in respect of its terms and conditions, then the applicant seeks damages for negligence against the second respondent.

6. The Full Court made the following orders on 3 August 2023:

   1.        The appeal is dismissed.

   2.        The Notice of Contention filed on 9 June 2023 is dismissed.

   3.        Order 1 made on 31 March 2023 is amended to provide as follows:

   The financial agreement between the spouses, dated 21 July 2005, is set aside.

   4.The appellant shall pay the first respondent’s costs of and incidental to the appeal, fixed in the sum of $15,000.00

   5.The appellant shall pay the second respondent’s costs of and incidental to the appeal, fixed in the sum of $15,000.00

7. On the question of whether the second respondent was negligent in the legal services provided to the applicant, I found that the applicant has established a breach of duty with respect to the 2005 retainer and that the second respondent had not made out a defence.

8. Whilst it was initially anticipated that I would hear submissions as to how damages should be assessed, in final submissions there was no agreement between the applicant and the second respondent as to the basis of assessment and both parties sought the opportunity to consider the judgment and to make further submissions.

9. By Application in a Proceeding filed 1 September 2023, the applicant seeks the following orders:

   …

   2.        The applicant be granted leave to adduce further evidence in these proceedings.

   3.The quantum of litigation funding sought by the applicant in his Application in a Proceeding filed 3 May 2023 be amended to read $150,000.

   …

10. The first respondent is opposed to the orders sought by the applicant and by Response to Application in a Proceeding filed 31 August 2023, orders are sought that the Application in a Proceeding be dismissed.

    LEAVE TO ADDUCE FURTHER EVIDENCE

11. The orders sought by the applicant are supported by the matters raised in the affidavit of Andrew Ley Jordan (“the applicant’s solicitor”) filed 1 September 2023 and the affidavit of the applicant sworn 17 September 2023.

12. For reasons best known to the applicant and his solicitor, a decision was made that the applicant’s solicitor would depose an affidavit in support of the application.

13. Paragraph 4 of the affidavit of the applicant’s solicitor is in the following terms:-

    It has always been the expectation of the Applicant that he would be able to adduce further evidence in relation to his damages, for consideration by the Court following the finding of the validity or otherwise of the Binding Financial Agreement.

14. It is unlikely that the expectation of either the applicant or his solicitor is of relevance to whether leave should be given for evidence to be adduced however, there is now some tension as to whether the applicant seeks to adduce further evidence in relation to damages (paragraph 4) or whether in part, the application seeks to adduce evidence in respect of the determination of property settlement.

15. The applicant asserts that there is no judgment in relation to financial matters.  Whilst that submission is correct and accords with the determination of the Full Court that subject to an assessment of damages I am yet to make orders that determine the financial issues between the parties, it should not be overlooked that each of the parties presented evidence that enabled the Court to consider indicative orders for property settlement which might inform the question of hardship and provide a reference point for the determination of damages.  The applicant considered he should be compensated for loss should the first respondent obtain a better outcome than would have been the case if the financial agreement was binding on the parties and not set aside.  Whilst the proposition appears to be straight forward, it ignores the complexity of a financial agreement that was set aside for uncertainty.

16. Paragraphs [112] to [286] of Daily & Daily [2023] FedCFamC1F 222 provides the basis upon which I considered that subject to further consideration of whether the outcome may change in the event of a successful damages claim by the applicant, the indicative settlement sum to be paid by the applicant to the first respondent is $741,634.

17. The affidavit of the applicant’s solicitor summarises the extent of the further evidence sought to be adduced as follows:-

    10.      The Applicant seeks to adduce further evidence as to the following matters:

    (a)his current circumstances including care arrangements for the children;

    (b)       an updated balance sheet;

    (c)       an updated report from his psychiatrist, Dr E;

    (d)       his further borrowings;

    (e)       his further drawings upon superannuation; and

    (f)updated particulars of his legal fees paid (including a breakdown of the separate matters for which fees were incurred).

18. The evidence in support of the additional evidence to be adduced is set out in the applicant’s affidavit.

    LEGAL PRINCIPLES

19. I have considered the often quoted decisions of Urban Transport Authority of New South Wales v Nweiser (1992) 28 NSWLR 471, Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27 and Stephens & Stephens & Anor (Enforcement) (2009) FLC 93‑425 (“Stephens”), in particular at [272] to [274].

20. I have also had regard to the decision of Murray v Figge (1974) 4 ALR 612, Gelly and Gelly (no 1) (1992) FLC 92-290 and Smith v New South Wales Bar Association (No 2) (1992) 176 CLR 256 at [32] (“Smith”).

21. The cases were also referred to by counsel and comprehensively encapsulate the common law principles that apply when a court is required to consider either an application for leave to adduce further evidence or to reopen a case.

22. The overarching principle is that to grant leave to adduce further evidence, is an exercise of discretion, guided and tempered by the interest of justice.

23. I consider that whilst the applicant’s application is to reopen his case and adduce further evidence, it is a distinction without a difference.  The common thread through the case law can be summarised by Murphy J in Aheb & Aheb (No. 3) [2009] FamCA 524:-

    35.In a case involving an application for settlement of property, it can be said that common law principles govern applications to reopen in this court (see eg Gelley v Gelley [1992] FLC 92-290 and the cases there discussed). Those principles make it clear that the granting of leave to reopen is discretionary. That discretion is guided by the interests of justice. The essential question is: is the court more able to do justice in the facts and circumstances of the particular case if the application is granted.

    (Citations omitted)

24. Of significance to the application at hand, the High Court in Smith (supra), stands for the proposition that an application brought in a timely fashion (albeit towards the end of the evidence) will raise the primary consideration of the extent of any prejudice such an application may cause if granted.  In this case, the antidote may be remedied by a cost order.

25. In Stephens (supra), there is a convenient and apposite summary: 

    273.We observe that in Australian Securities and Investments Commission v Rich (2006) 235 ALR 587 Austin J set out at 593 what he described as a “useful statement of relevant discretionary factors” to the exercise of discretion to permit a beginning party in a civil penalty proceeding to adduce further evidence after it had closed its case. The factors included:

    •the nature of the proceeding;

    •whether the occasion for calling further evidence ought reasonably to have been foreseen;

    •the importance of the issue on which the further evidence is sought to be adduced;

    •the degree of relevance and probative value of the further evidence;

    •the prejudice to the other party;

    •the public interest in the timely conclusion of litigation;

    •the explanation offered for not having called the evidence.

    It may also be relevant to consider what the High Court recently said in Aon Risk Services Australia Limited v Australian National University (2009) 239 CLR 175.

    Care arrangements for the children

26. The parties are the parents of X born 2006 (now aged 17 years) and Y born 2009 (now aged 14 years).  The applicant contends that since May 2019, there has been a gradual progression from equal time in May 2019 to a position where since 1 July 2022 the percentage care arrangements for the children is such that X lives with the applicant for 95 per cent of the time and Y for 45 per cent of the time.

27. The applicant considers that the arrangements are now stable and not likely to change.

28. No Child Support Assessment is in place and the parties have apparently received correspondence from the Child Support Agency dated 20 April 2023 confirming that for the Child Support Assessment period 1 January 2023 to 30 June 2024, neither parent has a child support obligation to the other.

29. The parenting arrangements were given consideration in Daily & Daily [2023] FedCFamC1F 222. The position was summarised at [261] as follows:-

    Each of the parties have the shared care of the children. During the course of the proceedings, various assertions were made as to the current parenting arrangements however, neither party sought to reopen the proceedings to adduce evidence as to matters relating to the care of the children and the financial implications that might arise from the parenting arrangements as they apply from time to time.

30. As considered, there had been a stay of Child Support Assessment made on 20 December 2019.  It is now agreed that there is no current or intended Child Support Assessment for the foreseeable future.

31. X will reach the age of 18 years in 2024.  Even on the applicant’s case, Y will remain in what is effectively a share cared arrangement.  At the trial, neither party sought to put forward evidence as to the care arrangements for the children and in particular, the financial consequences of the arrangement.  Judgment was delivered on 31 March 2023.  Whilst the proceedings remain open, it was upon the application of the applicant and the second respondent that they were not in a position to make submissions in respect of quantum of damages until judgment was delivered.

32. The applicant was given all possible opportunity to introduce evidence as to the financial implication and consequences of the evolving care arrangements for the children.

33. It was accepted by the parties, taking into account the age of the children, in particular X, that the ongoing care arrangements would likely be significantly influenced by the wishes of each of the children.

34. It was entirely foreseeable that each of the parties considered the ongoing care arrangements for the children was a matter of significance.  Ample opportunity was provided for the issue to be explored.

35. The applicant does not put forward any explanation as to why the parenting arrangements for the children was not raised during the course of the proceedings in particular, since the applicant acknowledges that X has lived with him for 95 per cent of the time since 1 July 2022.

36. No attempt has been made by the applicant to set out what might be the financial consequences of the current care arrangements for X up to his eighteenth birthday in 2024.

37. In circumstances where there is no explanation provided by the applicant as to why the issue was not raised during the course of the proceedings, given that the parties considered that the children’s parenting arrangements may change depending upon their circumstances from time to time, I should not allow evidence to be called as to the current and likely care arrangements for the children.

    Update Financial Statement and balance sheet

38. The applicant filed a Financial Statement on 3 May 2023.  It appears that the Financial Statement was prepared by the applicant and not his solicitor.

39. The applicant sets out his financial summary as follows:-

ITEM	VALUE
Total value of property owned by you	$1,146,907
Total liabilities	$110,250
Total gross value of superannuation	$173,197

1. The applicant seeks to compare his financial position as at 3 May 2023 with his financial position as set out in his Financial Statement filed 28 September 2023 wherein the financial summary is as follows:-   

ITEM	VALUE
Total value of property owned by you	$1,073,184
Total liabilities	$204,128
Total gross value of superannuation	$74,867

1. Whilst it is difficult to compare the two documents in circumstances where the applicant’s items of property and liabilities were not relevant to the current proceedings, it appears that the most significant change is in the applicant’s superannuation entitlement with RR Superannuation which was $173,197 as at 3 May 2023 and has been reduced to $74,867 as at 28 September 2023.

2. The applicant has also incurred more legal fees and has either borrowed or been provided with the sum of $50,000 from his parents.

3. To the extent that there has been a change in the applicant’s rental commitment, it seems that it may have increased by $50 per week.

4. It is a matter for the applicant as to how he chooses to run his litigation.  An unfortunate consequence of the proceedings is that the applicant has incurred solicitor’s fees in the sum of $283,310, counsel fees in the sum of $432,958 with estimated further fees outstanding to counsel and solicitors of a further $64,000.  The applicant was unsuccessful at the second appeal on 3 August 2023 and was ordered to pay costs of the first and second respondents in the total sum of $30,000.

5. The applicant estimates that his costs incurred in respect of property matters, which exclude costs paid in respect of his parenting matters, total $801,623.

6. In Daily & Daily [2023] FedCFamC1F 222 at [286], I provide an indicative settlement sum to the first respondent of $741,634. At present, the sum of $944,247 remains in joint Westpac bank accounts for and on behalf of the parties.

7. Subject to any adjustment that might arise as a result of the consideration of the applicant’s damages claim against the second respondent, if the first respondent received the indicative settlement sum, there would be $202,613 available to the applicant noting that the cost order of $30,000 is yet to be paid.

8. Indicative orders for property settlement provided for each of the parties to retain their separate superannuation entitlements without adjustment.  It is apparent, consistent with the applicant’s conduct over a number of years, that he has drawn down on his superannuation entitlement to the total sum of about $1,100,000 but in particular on 11 March 2022, 6 June 2022 and 27 June 2022 the applicant withdrew the total sum of $300,000 less tax of $33,463. 

1. It is a reasonable assumption based upon the applicant’s preparedness true to draw down on his superannuation entitlement, that he continues to do so in circumstances where the applicant and first respondent will retain their separate entitlements without claim against the other.

2. The financial circumstances of parties to proceedings will inevitably change as time passes.  It could not be said that the applicant’s current financial circumstances are in any way impacted by the conduct of the first respondent. 

3. It was a matter for the applicant to seek the adjournment of the final submissions and upon receipt of the judgment, to institute the appeal which was ultimately unsuccessful.

4. The applicant’s financial position has not necessarily changed significantly in that he has utilised his superannuation entitlement consistent with his previous history of significant withdrawals.  The applicant’s entitlement to make further withdrawals was confirmed with the indicative orders for property settlement.

   Medical Evidence

5. The applicant accepts that the treatment of his medical circumstances was adequately dealt with in the proceedings such that his health and earning capacity was given the highest consideration.     

6. There is no further evidence before the Court, and it is conceded that no report is available.  It is difficult to see how the applicant will be adversely affected either in respect of property settlement or damages if he was not permitted to adduce further medical evidence.

   Legal Fees

7. Following the filing by the applicant of his Initiating Application for parenting orders on 5 November 2018, the first respondent filed her Response on 7 December 2018 seeking to set aside the financial agreement and orders for property settlement.  The parenting matters were resolved by Consent Order on 17 May 2019.  The legal fees incurred in relation to financial matters as opposed to parenting issues are relevant to the assessment of damages.

8. The applicant estimates that his costs in respect of financial matters are in the total sum of $801,625 although that figure includes unpaid costs as ordered by the Full Court in the sum of $30,000.

9. The applicant’s affidavits of 17 and 26 September 2023 provide little assistance in corroborating the assertion of the applicant as to the accuracy of the applicant’s assessment of his costs.

10. The applicant did not rely upon the solicitor/client terms of engagement (if any) nor was there any attempt made to consider the calculation of costs on a party/party basis as opposed to solicitor/client.

11. In submissions, counsel referred to a quantity of invoices for legal services rendered to the applicant as being available for discovery and production.  It was apparent that the invoices had not been looked at to ascertain whether the description of legal fees invoiced related to parenting (up to 17 May 2019) or financial matters and if so, the extent to which they might properly be considered as party/party costs.

12. If it is a contention that the applicant’s legal fees may well be a relevant consideration in assessing damages, it could not be said that other than a broad consideration of the proportion of solicitor/client costs that relate to financial matters being undertaken, the manner in which the purported costs of the applicant are to be taken into account has not yet been enunciated.

13. The extent to which the applicant’s legal fees might be considered as relevant to the assessment of damages was entirely foreseeable and as such, it is surprising that a more rigorous approach as to the assessment of necessary costs incurred has not been undertaken.

14. I do not ignore that the wife has incurred legal fees to date of $388,216 of which she currently owes $65,131 with a further $1,510 for unbilled work in progress and $27,000 for unbilled counsel fees remain outstanding.

15. It is conceded by the applicant that the question of his legal fees only has relevance to the assessment of damages.  It is not suggested by the first respondent that there is likely to be a substantial change in the indicative settlement sum as determined.  In her affidavit of 31 August 2023, the first respondent anticipates that there may well be an application for costs to be assessed on an indemnity basis against the applicant although there is no indicative amount identified.

16. Whilst opposed by the first respondent, the second respondent concedes that the relevant component of the applicant’s costs relating to the negligence of a second respondent’s conduct is a relevant consideration and does not oppose further evidence being adduced. 

17. In those circumstances I propose to grant leave to the applicant to introduce evidence of his legal fees that he considers relevant to the determination of damages.  At this stage, and as a result of the lack of particularity provided by the applicant, the extent of the further evidence to be led and the extent of any cross-examination, if any, is not to be determined.  But for the concession of the second respondent, the paucity of evidence provided by the applicant would have been a factor to consider. 

    LITIGATION FUNDING

18. The applicant seeks an order for litigation funding in the sum of $150,000.

19. In his affidavit of 3 May 2023, the applicant sets out the estimates for future legal fees as advised by his solicitor as follows:-

Solicitor’s fees for the Appeal	$15,000
Counsel fees for the Appeal	$35,000
Solicitor’s fees to conclude the principal proceedings	$20,000
Counsel fees to conclude the principal proceedings	$30,000

1. The applicant has the following outstanding legal fees:

Solicitor	$36,092
Mr O KC	$4,400
Ms Miller of counsel	$10,000 (estimate)
TOTAL	$50,492 (estimate)

1. The estimate from the applicant’s solicitor to conclude the principal proceedings remains consistent in the sum of $50,000.

2. The applicant claims he is indebted to his parents for legal fees in respect of the second appeal in the sum of $50,000.  No evidence has been provided by the applicant as to the terms and conditions upon which monies were provided.  It is not controversial that the applicant was unsuccessful in his appeal and was the subject of a costs order in the total sum of $30,000.

3. If successful, the applicant proposes that the litigation funding should come from the funds held in the joint bank accounts of the parties.

4. As discussed, assuming that the first respondent’s entitlement was in the sum of $741,634 the balance remaining would be in the sum of $202,613 less the sum of $30,000 for costs payable by the applicant to the first and second respondents for the failed appeal, would leave an amount of $172,613.

5. The first respondent opposes the application for litigation funding on the basis that she may well have a successful application for costs and that the only source from which those costs could be paid would be the balance of the proceeds in the joint accounts.  The first respondent has not enunciated the basis for any costs order nor the potential quantum to be sought.  There has been ample opportunity for the first respondent to do so. 

6. If successful, a significant damages award in favour of the applicant may well have a beneficial impact upon the settlement sum payable to the first respondent.  As considered, the applicant has not been diligent in attempting to determine the quantum of his costs that are likely to be relevant to an assessment of damages other than the amount as set out in his affidavit. 

7. In Strahan & Strahan(Interim property orders) (2011) FLC 93-466 (“Strahan”), the Full Court said:-

   79.The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that "very often the wealth of the parties is controlled by one rather than by both of them”; Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmeyer and O’Ryan JJ).

8. Following the decision of Zschokke & Zschokke (1996) FLC 92-693 (“Zschokke”), the heads of power that would permit the making of an interim order are summarised as follows:-

   (1)A maintenance order (either periodic or lump sum) under s 72 and 74 of the Act;

   (2)An order under s 79 as allowed pursuant to s 80(1)(h) of the Act; and

   (3)A costs order under s 117 of the Act.

9. In Zschokke (supra) the Full Court said at 83,217:-

   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 (g). …

10. In Strahan (supra), the Full Court said:-

    90.In Zschokke at 83,217 the Full Court said that “whether the matter was determined as an interim property settlement order under s 80(1)(h), or as an interim costs (or security for costs) order under s 117(2), or indeed a maintenance order”, three matters would all be relevant, namely:

    1.        a position of relative financial strength on the part of the respondent;

    2.a capacity on the part of the respondent to meet his or her own litigation costs;

    3.an inability on the part of the applicant to meet his or own litigation costs.

11. When considering s 117(2A) of the Act, clearly the relevant sections relate to the financial circumstances of each of the parties to the proceedings, the conduct of the parties to the proceedings and such other matters as the Court considers relevant.

12. The financial circumstances of the applicant is set out in his Financial Statement filed 28 September 2023.  Over and above the money held jointly with the first respondent, the applicant holds funds in his bank account in the sum of $40,987 and his superannuation entitlement of $74,867.  It appears that the second respondent has been able to draw down on his superannuation entitlement apparently being able to satisfy a condition of release.  Other than his outstanding legal fees and money obtained from his parents for the purpose of the unsuccessful second appeal, his only other liability is in respect of the finance obtained to purchase a motor vehicle.

13. The applicant submits that his weekly expenditure of $2,636 is significantly in excess of his income comprising of government benefits in the sum of $741 and that the shortfall is funded by continuing drawdowns on his superannuation entitlement.  In summary, the applicant’s contention is that if he used the balance of money in his bank account and his superannuation for costs he would be impecunious and unable to meet his day to day expenditure.

14. The matters to be considered are those as set out in s 117(2A) of the Act. The application is not founded upon s 79 considerations and therefore the matters that may be relevant to the exercise of jurisdiction pursuant to s 79. That approach is not required if the source of the jurisdiction is s 117(2) of the Act.

15. In Strahan (supra), the Full Court at [96] referred to the remarks of Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 as follows:-

    96.In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:

    •an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92‑612 (“Chester”) at 82,107 per Moss J;

    •there would be evidence of the applicant’s “likely costs of the litigation”: see Wilson & Chester;

    •“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing bias: Columb & Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes & Coomes (1995) FLC 92-558 per Cohan J;

    •an order may “make provision for litigation expenses at a rate that appears in all the circumstances”;

    •an order can be made “in respect of costs already incurred as well a future costs”;

    •“whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of the provision for costs to be incurred, may be relevant to the discretion to make an order, and its quantum”;

    •“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination on the issue of costs”: Breen.

16. The above matters are relevant considerations not just in respect of s 117(2A)(g), but whilst less important, may have some relevance and application where the source of power is pursuant to s 79 and s 80(1)(h) of the Act.

17. As discussed, the statement of the applicant’s costs, whilst providing a breakdown of solicitor’s fees, counsel fees and disbursements, provides no assistance to the manner in which the costs were incurred.  No guide is available as to the manner in which the applicant’s costs have accrued or perhaps more importantly, the extent to which they are likely to accrue into the future.

18. The decision of Chester v Chester (1995) FLC 92-612 and Breen v Breen (1990) 65 ALJR 195 impose a level of rigor in terms of the ability to calculate both how costs have been incurred and are likely to be incurred into the future. It is only by some reasonable assessment upon the basis upon which costs have accrued that the Court is able to consider with any accuracy what is required by way of lump sum order.

19. Similarly, while I consider that a s 117 order can be made to provide for past costs, that exercise must also carry with it some obligation to set out the basis upon which the costs were incurred.

20. I accept that there will be future proceedings although, the manner in which they are to be conducted is, to a significant degree, to be determined by the applicant.  Given that the application for leave to adduce further evidence is dismissed, other than the question of the applicant’s costs that may relate to the negligence of the second respondent, the future litigation should be a matter of narrow compass.

21. It is reasonable to accept the estimate provided by the applicant’s solicitors that the sum of $50,000 will be required to complete the proceedings.  Whilst that is likely to be generous, neither the first or second respondents spoke against the amount.

22. A balance of the money sought by the applicant is to repay his parents in the sum of $50,000 and to pay his past costs in approximately in equal amount.

23. The applicant has not presented any evidence as to the terms and conditions of money provided to him by his parents.  If the money provided was to fund the costs of the unsuccessful appeal then that is a matter for the applicant. 

24. Whilst I accept that the applicant has outstanding legal costs, the lack of assistance provided by the applicant as to how the fees were incurred must be balanced against the potential for the first respondent to have the indicative settlement sum increased should there be a successful assessment of damages in favour of the applicant.

25. At this stage, the focus should be directed to ensuring that the proceedings are brought to an expeditious conclusion.

26. The first respondent also has fees outstanding and will inevitably incur fees until the matter is finally resolved.  The first respondent did not bring an application for litigation funding or interim property settlement.  If she had, it is likely, subject to their financial circumstances, that it would have met with success.

27. Accordingly, I propose to make an order by way of litigation funding in the sum of $50,000 to be paid from the funds held jointly by the parties.

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

I certify that the preceding ninety-six (96) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman.

Associate:

Dated:       13 October 2023