Daily & Daily (No 5)

[2024] FedCFamC1F 392

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Daily & Daily (No 5) [2024] FedCFamC1F 392

File number(s):

ADC 4606 of 2018

Judgment of:

BERMAN J

Date of judgment:

7 June 2024

Catchwords:

FAMILY LAW – LITIGATION FUNDING – Orders made in March 2024 providing the applicant with $142,000 – Where the applicant transferred the funds to a trust – Concession that he can access the funds – Where the applicant now seeks a further $145,000 – where the application has no reasonable prospect of success – application dismissed.

FAMILY LAW – SPOUSAL MAINTENANCE – Interim and lump sum – Where the applicant seeks orders for urgent and/or interim spousal maintenance – Where the applicant concedes the respondent is only able to pay from her property settlement – Application has no utility – Application dismissed.

Legislation:

Family Law Act 1975 (Cth) s 45A.

Cases cited:

Daily & Daily (No 3) [2024] FedCFamC1A 77

Daily & Daily (No 4) [2024] FedCFamC1F 149

Division:

Division 1 First Instance

Number of paragraphs:

40

Date of hearing:

3 June 2024

Place:

Adelaide

Counsel for the Applicant:

Litigant in person

Counsel for the First Respondent:

Ms Pyke KC

Solicitor for the First Respondent:

Norman Waterhouse Lawyers

Counsel for the Second Respondent: 

Ms Barnett (did not participate)

Solicitor for the Second Respondent:

Barry Nilsson Lawyers

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:	7 JUNE 2024

THE COURT ORDERS THAT:

1.The interlocutory orders sought in the Initiating Application filed 28 March 2024 are 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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 subsection 114Q(2) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

Berman J

INTRODUCTION

1. Mr Daily (“the applicant”) and Ms Daily (“the first respondent”) continue to remain engaged in contested litigation which commenced in 2018 in respect of the first respondent’s application to set aside a financial agreement dated 21 July 2005 (“the financial agreement”).

2. R Lawyers (“the second respondent”) provided legal services to the applicant in relation to the financial agreement.  The applicant joined the second respondent to the proceedings in circumstances where he sought common law damages against them for contractual uncertainty arising from a determination to set the financial agreement aside. 

3. Final orders were made for settlement of property and damages on 9 February 2024.  On 13 February 2024, the applicant filed a Notice of Appeal (NAA 30/2024).

   Litigation funding

4. By Application in a Proceeding filed 12 February 2024 and Amended Application in a Proceeding filed 16 February 2024, the applicant sought orders summarised as follows:

   (1)The orders of 9 February 2024 be stayed;

   (2)The first respondent be restraining her from accessing the settlement sum of $741,634,

   (3)The first respondent pay the applicant urgent spousal maintenance in the sum of $6,300 per month; and

   (4)There be a payment to the applicant in the sum of $45,880.50 to pay his previous solicitor’s fees and a further sum of $100,000 by way of litigation funding for the applicant’s reasonable expenses in anticipation of the appeal and/or the spousal maintenance application.

5. Judgment was delivered in Daily & Daily (No 4) [2024] FedCFamC1F 149 (“Daily & Daily (No 4)”) on 13 March 2024 and the consequence of the orders made, which disposed of the two Application in a Proceedings, allowed for the applicant to draw down approximately $142,933.82 from either a joint Westpac Account or if transferred, from his own personal account.

6. In Daily & Daily (No 4) (supra), the consequences of the orders made is summarised as follows:

   54.Whilst not readily accepted by the applicant, the concession made by the first respondent that of the money remaining in either the Westpac Account or the applicant’s account of $292,933.82, she seeks an order that quarantines the sum of $150,000 in anticipation of the Court determining her application for costs favourably.  The consequence is that the applicant will have immediately available to him the sum of $142,933.82.  That should be sufficient to pay outstanding costs to his solicitors and preserve an amount in anticipation of the appeal with the balance of approximately $50,000 for other expenditure.

7. On 28 March 2024, the applicant filed an Initiating Application wherein he now seeks the following orders:-

   Final orders sought

   1.That pursuant to section 72 of the Family Law Act 1975 (as amended) the [first respondent] do pay to the [applicant] spousal maintenance in such sum and in such manner as may be determined by this Honourable Court.

   Interlocutory orders sought

   1.That the [first respondent] do pay to the [applicant] by way of urgent and/or interim spousal maintenance the sum of $4,500 per month for his reasonable living expenses (from her property settlement funds).

   2.That the [first respondent] do pay the [applicant] by way of litigation funding the sum of $50,000 for his future legal fees for the appeal (from her property settlement funds.)

8. The interim orders sought are supported by an affidavit sealed 26 March 2024.

9. At [28], the applicant sets out how he has disbursed the money available to him consequent upon orders made on 13 March 2024.

   28.Since having partial access to settlement funds I have refinanced my car lease with [UU Finance] $59,436 using a loan from my parents $50,000 (included as Attachment “C”), transferred $115,000 to the family trust to cover the shortfall in funds required for both of my children to complete their schooling at [YY School] (included as Attachment “D”), and settled amounts owing to my former solicitor [XX Lawyers] $24,744 (included as Attachment “E”).

10. It was not suggested by the applicant in submissions made on 21 February 2024 that a substantial component of any money available to him would be paid into the trust set up for the payment of the children’s private school fees.

11. The settlement of the trust for the purpose of the children’s private school fees is not the subject of agreement between the parties.  It was considered as property of the parties and there was no evidence nor any finding that in some way the parties had agreed to either quarantine money already in the trust or that there should be an expectation that the trust would be topped up from time to time.

12. The applicant argues that he has provided money to the trust in the sum of $115,000 and therefore he does not have that money available to him other than by way of a loan from the trust to pay his future legal fees in anticipation of the appeal.

13. In the appeal, the applicant filed an application for extension of time which was heard by Austin J on 8 May 2024.  His Honour noted the submission of the applicant that even if he was unsuccessful in an application for litigation funding, he had financial resources that would enable him to be legally represented.  Whilst there exists some uncertainty as to the source of those funds, it now appears that either his family would provide him with funds, or he would enter into a loan agreement with the trust.

14. The consequence therefore is that less than three weeks after the delivery of judgment on 13 March 2024 which provided the applicant with $142,933.82, a sum that was considered to be sufficient to pay outstanding costs to his solicitors, litigation funding in anticipation of the appeal and about $50,000 for other personal expenditure, the applicant contends that the money has been exhausted.

15. The first respondent argues that it was a matter for the applicant as to what he did with the monies that were available to him but given the amount included a component for litigation funding and other personal expenditure, it is difficult to understand how the applicant considered it appropriate to pay the trust $115,000.  In any event, the applicant has conceded that he can access that money and, in those circumstances, there is no merit in the further application for litigation funding.

16. It is also a relevant consideration that at present, the applicant either does not have solicitors or if he does, their discussions are at a preliminary stage.  No Notice of Address for Service has been filed and certainly no estimate and/or schedule of the costs involved in the appeal form part of his application.  Doing the best he could, the applicant submitted that a rough estimate was in the region of $60,000 for the likely costs of the current appeal.

17. As such, there was no basis for an application for litigation funding.

18. The respondent opposes interlocutory orders sought by the applicant as to litigation funding and urgent spousal maintenance.

19. The opposition by the respondent falls into the category of an application for summary dismissal.

20. Section 45A of the Family Law Act 1975 (Cth) (“the Act”) provides as follows:

    (2) The court may make a decree for one party against another in relation to the whole or any part of a proceedings if:

    (a) the first party is defending the proceedings or that part of the proceedings; and

    (b) the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.    

    (3)For the purposes of this section, a defence or proceedings or part of proceedings need not be:

    (a)       hopeless; or

    (b)       bound to fail;

    to have no reasonable prospect of success.       

    (4)The court may dismiss all or part of proceedings at any stage if it is satisfied that the proceedings or part is frivolous, vexatious or an abuse of process.

21. The affidavit in support of the interlocutory orders provides no assistance as to why the applicant considered it was necessary for $115,000 to be placed into the trust.  The trust should not be considered as a special or different category to the other property of the parties.  It is an entity controlled by the applicant in his capacity as appointor and trustee.  The applicant is also in the class of beneficiaries. 

22. Whilst I accept that money held by the trust has been earmarked for the payment of the children’s private school fees, that is a matter entirely at the election of the applicant.  There is no obligation on him to place money in the trust nor does it appear that there is any restriction on the applicant to withdraw money.

23. In Daily & Daily (No 3) [2024] FedCFamC1A 77, Austin J noted that the conduct of the appeal was not dependent upon a successful application for litigation funding and that the applicant acknowledged that funds were available to him from other sources.

24. Whilst the applicant contends that if he withdraws money from the trust it is on the basis of a loan, that is a matter entirely for him.  What is certain is that in Daily & Daily (No 4) (supra), the money available to the applicant was sufficient to pay his outstanding legal fees, litigation funding in anticipation of the appeal and a substantial residual amount being available for personal and other living expenses.

25. Given that the applicant has money available to him by reason of orders made 13 March 2024 and that no evidence has been presented that he has or will instruct solicitors and if so, any estimate as to future costs, the application for litigation funding has no reasonable prospect of success.

    Spousal maintenance

26. The applicant also seeks orders for the sum of $4,500 per month by way of urgent spousal maintenance with such sum to be deducted from “[the first respondent’s] property settlement funds”.

27. The orders made on 13 March 2024 dismissed the applicant’s previous Applications in a Proceeding seeking orders for urgent spousal maintenance in the sum of $6,300 per month but also by way of lump sum of $45,880.50 per month.

28. In Daily & Daily (No 4) (supra) it was noted that there was no Initiating Applications seeking orders for spousal maintenance and no orders were sought for spousal maintenance during the substantive proceedings. A concern expressed at [51] was that the applicant was intending to use the spousal maintenance power by way of lump sum relief to pay for future legal fees.

29. The applicant also conceded that the amount of $6,300 per month was what might be considered as an ambit claim and that the amount could not be paid by the first respondent other than from the property settlement that she had received.

30. I assume that it is in response to remarks in the judgment that the applicant has now filed an Initiating Application seeking a general order for spousal maintenance.  Whilst it has not been the subject of consideration, there may well be an argument that the application for spousal maintenance is out of time.  That submission was not made on behalf of the first respondent and at this stage, the application for spousal maintenance as a final order will run its course through the Court process.

31. The basis for the urgent or interim order for spousal maintenance is set out in paragraph 30 as follows:

    30.My total average weekly income is $782 and average weekly expenditure is $1,857 a deficit of $1,075 per week or $4,658 per month.

32. The application is supported by a Financial Statement filed on 26 March 2024.  The applicant’s income of $782 per week is comprised of a Centrelink benefit or pension. 

33. The expenditure derives from $925 being average weekly expenses for both the applicant and the children with the balance making up the total sum of $1,857 for rent, insurance and motor vehicle expenses.

34. The first observation is that spousal maintenance is for the applicant and without more, should not include the expenses for the children calculated to be $404 per week.  I am not advised as to the status of any application for child support, assessment or challenge in that regard.

35. Accordingly, the monthly amount sought by the applicant should be reduced by $1,750 to $2,907 or $34,884, however I must disregard the income of the applicant that is derived from a Centrelink benefit or pension.  As such, the weekly expenditure is $1,857 per week less the children’s costs of $404 leaving a balance of $1,452 or $75,504 per annum.

36. The orders sought by the applicant for a lump sum payment was given effect by the orders of 13 March 2024 wherein the applicant received the total sum of $142,933.82.  On the basis that $50,000 is likely to be available as litigation funding after the payment of $25,000 for outstanding legal fees, the sum of $67,933.82 remains available to the applicant.  Even on the most generous consideration of the applicant’s expenses, the sum available to him is significantly in excess of that which is required in the short or medium term.

37. There is no utility in the application for spousal maintenance on an urgent/interim basis.

38. Irrespective of whether there is a more significant barrier, the applicant has sufficient resources to obviate the need or necessity of an order of spousal maintenance given his concession that the first respondent would not be able to meet the order he seeks from her income.

39. I propose to dismiss the interlocutory orders sought by the applicant in his Initiating Application.

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

    
    

I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman.

Associate:

Dated:       7 June 2024