Fossey and Fossey

[2007] FamCA 889

FAMILY COURT OF AUSTRALIA

FOSSEY & FOSSEY [2007] FamCA 889

FAMILY LAW – PROPERTY – interlocutory financial orders –  sale of property FAMILY LAW – COSTS – interim

Family Law Act  1975 (Cth)

APPLICANT: MS FOSSEY

RESPONDENT: MR FOSSEY

FILE NUMBER: SYF 4456 of 2006

DATE DELIVERED: 18 July 2007

PLACE DELIVERED:	Sydney
PLACE HEARD	Sydney

JUDGMENT OF: Loughnan JR

HEARING DATE: 18 July 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT: Carlisle Attorneys

COUNSEL FOR THE RESPONDENT: Ms Clifford

SOLICITOR FOR THE RESPONDENT: Karras Partners

Orders

1. Orders are made in terms of the document titled “Orders” marked Exhibit A and attached hereto.

2. Otherwise the Application in a Case filed 19 June 2007 and the Response filed 16 July 2007 are dismissed.

1. The wife is to pay to the solicitor for the husband one half of the costs of the husband of and incidental to the proceedings today, assessed in the sum of $1,607.  That payment is to be made not later than seven (7) days after effect is given to any final settlement of property between the parties whether by agreement or made in contested proceedings.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgement of Judicial Registrar Loughnan delivered this day will for all publication and reporting purposes be known as Fossey & Fossey.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4456 of 2006

MS FOSSEY

Applicant

And

MR FOSSEY

Respondent

REASONS FOR JUDGMENT

1. These are proceedings for interlocutory financial orders.  The application was filed on 19 June 2007 and this is the first return date.  The parties are both present and represented.

2. When the matter was called on before me, I was asked to adjourn the matter to another date because the applicant wife wanted to issue some subpoenas in relation to some issues, in particular and in the context of a proposal that a property at P be sold, seeking to clarify the status of the mortgage on that property to the Commonwealth Bank. Then she wanted to address issues arising out of the husband's material, in particular issues about how he has funded certain payments.

3. The adjournment application was opposed and I refused it.  The next available date was in the middle of August and one of the wife’s claims was for moneys for an accountant whose work was necessary for documents going to a pre-trial conference in October. Those documents had to be ready, the solicitor for the wife thinks, in September. I was worried that if we left consideration of an order for the sale of real estate or personalty until the middle of August, then the whole proceedings would be delayed..  In addition of course the wife is the applicant and must have been reasonably confident in bringing the applications. In the normal course an applicant may well be forced on, on the application of the respondent.

4. Coming to the merits of the case, the wife seeks two forms of relief.  Firstly, she seeks interim spousal maintenance in the sum of $500 per week. Her case is hard to understand. The wife has filed a Financial Statement which says that her income is a salary of $700, estimated as $700 before tax, and $600 rental from properties in P and in the United Kingdom.  She says that she receives a benefit of the use of a car through her business and she does not know what the value of that benefit is.  She does not know what other rental or income, rental interest or dividend income she has, and she does not know what other income she has from the business.  So the wife’s disclosure of income adds up to $1300 but there are a number of ‘not knowns’ in the document.

5. Then there are expenses the total of which, again, is not known.  The expenses that are identified are income tax at $140 a week.  A figure for a mortgage which is paid through C Pty Ltd $320 (it transpires that is not a sum that the wife pays); then rates at $30; the mortgage on the P property at $114; $27 for private health insurance and $100 on her Visa card, although she discloses that the minimum payment is $15.  The total of all her other expenditure is $500.  In addition she says she makes a mortgage payment in respect of the United Kingdom property at $480 a week. That adds up to $1391 a week.  Her income is $1300 a week and her outgoings are $1391 a week.

6. That Financial Statement was filed in December of last year. She swore an affidavit on 19 June 2007 and she says, at paragraph 26:

   If I had a reasonable amount of income available to me, as was available to me during the course of the marriage, my day to day living expenses would be as follows:

7. And she lists $1090 worth of expenditure.  Rent of $450 a week; food and groceries, chiropractor, car expenses, clothing, hairdresser, entertainment, hobbies.  There are a couple of problems.  Firstly, I am told that the $500 of “other liabilities” included in the Financial Statement does not include the categories of expenses that are included in paragraph 26.  So this is $1090 in additional expenses over and above her weekly deficit of $91 disclosed in her financial statement. That takes the weekly shortfall to $1181 a week.  It is not acceptable for an applicant to say that she has a weekly expense of $500 and not to say what it is. It makes a mockery of the process of trying to determine proceedings that are difficult enough already, to simply say there is a secret category of expenses which the deponent cannot identify.

8. The greatest expense identified in paragraph 26 is for rental.  The wife does not incur any rent.  Her evidence is, and this is the totality of her evidence about this issue, is the sentence that I read out earlier:

   If I had a reasonable amount of income available to me, my day to day living expenses would be as follows.

9. And:

   Subsequent to separation, I have ceased to reside within the former matrimonial home and this home is presently occupied by my husband to my exclusion.  I presently reside with my son and his wife at their home in […].

10. There is no evidence that she cannot live with her son and daughter-in-law.  There is no evidence that they do not want her to live there.  There is no evidence that the accommodation is not suitable; that it compares poorly to the accommodation that the parties had during the marriage.  Nothing.  So it is a category of expense that the wife does not incur, neither when she swore her Financial Statement nor on the day she filed the affidavit and no reason is offered as to why she would incur it.  As with the $500, she could make a case for it, but she has decided not to.  It is not for me to make her case;  I am flat out deciding it.

11. So on the face of the documents, I cannot say that there is a significant shortfall. I ignore the $500 which is likely to be either a duplication of living expenses identified in para.26, or a category of expense that would not pass muster. I also take away the unpaid rental and there is no significant shortfall.  So there is no case at the moment for the claim that is being made and in the circumstances of some doubt, it is not for me to pluck a claim out of the air.  So I am not satisfied that there is an inability by the wife to support herself from her own resources. 

12. It gets a bit worse because there is some evidence that the parties have used drawings on a company for their living expenses in the past and there is no explanation in the wife's case why she does not take advantage of that, now. Further there is no evidence that she has explored any other ways of raising funds, for example the methods relied on by the husband. He has been able to draw on his superannuation.  It is not clear that she would be able to do so but I gather that he did and there is no evidence that the fund is not a compliant fund.

13. So I cannot be satisfied that there is a shortfall in the wife’s weekly budget or at all. Had the wife made a case then the husband has represented to the court that he has a weekly surplus of nearly $1,000. Like the wife, the husband has not provided details of his living expenses in his Financial Statement. It may be that there was no maintenance relief sought when the husband completed his Financial Statement. However, it does not explain why nothing was done to update his evidence before today. 

14. The next part of the claim is in relation to interim costs.  The wife seeks $40,000.  She has a principled basis for seeking it. Her costs need to be paid at some point.  I have some doubt as to whether the rigour of the earlier case law still applies.  The irony of interim costs proceedings that almost invariably, the parties are asking to use their own money, to pay their own costs. In this case the wife does not really care where the husband gets the money from. To the extent that it comes from the same source he has drawn on, company finds, to the extent that the parties have an interest in the company, they are joint funds.  The wife is asking for access to her own funds to pay her own lawyers. That is a proper application.  It should be supported.  It is just a matter of the practicalities of it.

15. I think the sensible course would be that I make an order that the husband cause the wife to be paid $40,000 by way of interim costs, but I do not specify a time for that payment. In the event that that money is not paid within a certain time then the parties should proceed to sell the two items that have been mentioned:  a boat and the P property. As to the boat, for reasons that are not explained in the husband's material, at a time of downturn in the business he thought it would be sensible to take money out of the company and buy a boat.  However, he is happy for it to be sold, and indeed it is on the market for sale with an agent.  He is even happy for the wife to take over the sale process if she is not happy about the speed of the sale.  I will make that order.

16. The husband has been given some advice that the boat might sell better a bit later in the year.  In addition, but subject to the wife’s agreement, I will order that the parties sell the P property.  There is an issue about whether that is going to generate any net proceeds but in any event it will reduce their borrowings and might keep the wolf from the door. The parties do not know whether the mortgagee will be willing to take only the borrowing earmarked for that property and not the entire proceeds as part of an all moneys mortgage. If the wife is not willing to agree to that sale it I will not order it, but I think that is a sensible course.  It has a benefit, even in the worst case.  In the best case there is an outcome and unless the parties want to be heard further about it, in each case they could divide the proceeds of the sale equally.  That has another benefit of course in that, if the wife chooses, she can apply additional funds to her expenses and it addresses in that way, the claim that she tried to make in relation to spousal maintenance.

RECORDED  :  NOT TRANSCRIBED

1. There is an application for costs in relation to these proceedings.  Generally the position is that parties bear their own costs, these sorts of proceedings are a bit unusual because they differ from the usual context of family law proceedings. The general provision is that parties bear their own costs and it applied in an environment where usually there are two applicants.  Usually parenting orders are sought by each of the parties and property settlement orders are sought by each of the parties. Here we are at Court because one party wants some orders and the other opposes them, so it is a situation akin to the arrangement that applies in other civil jurisdictions, where often costs follow the event. 

2. The Court has power to make an order and in doing so is required to take into account certain matters:  the financial circumstances of the parties;  whether either is in receipt of Legal Aid, that does not apply here;  any offers of settlement under s.117C or otherwise in writing;  whether either party has been wholly unsuccessful in the proceedings;  the conduct of the parties in relation to the proceedings;  whether the proceedings have been brought about by  reason of a failure to comply with Court orders.  I have referred to the financial circumstances of the parties.  The bit that is missing out of that is the wife asserts in her affidavit that the parties have in excess of two million dollars in net assets and some superannuation, and the husband says he thinks it is about 2.4 million dollars and superannuation.

3. I have said what I can say about income.  I did not need to go to the husband's income position but he shows an income of drawings.  He shows an income of about, I think, a similar amount to the wife, notionally by way of salary and some rental income and some other things.  There have been offers of settlement over time and offers that are not dissimilar to the ultimate outcome of the proceedings in relation to both matters. 

4. There is an offer under cover of a letter of 29 June 2007, which was after the application was filed:  to join in the sale of the P property;  sell the boat;  borrow some money on a certain basis and there is a representation made about an availability of drawing funds on a superannuation fund that the parties have an interest in.  And there had been an earlier letter in relation just to the sale of the P property.

5. There is nothing about the conduct of the proceedings that comes to attention.  The matter was dealt with promptly.  The only thing is that the documents from the husband came in a little late.

6. Neither party has been wholly unsuccessful in terms of the entire proceedings.  The wife was unsuccessful in relation to maintenance in a sense although, as I said, the orders facilitate access to some funds which could be applied by her to her own maintenance if she wished.  The real issue, I think, is the costs of the maintenance claim.  I accept what is said on behalf of the wife in terms of interim costs.  Some moneys have been applied by the husband to his own legal costs and one would wonder why a similar facility was not made available to the wife.  The wife is entitled to chance her arm in relation to interim costs and to seek, not that she pay the costs, as has ultimately been the result in the short term, but that the husband pay the costs. 

7. There are a whole lot of imponderables as have been said on both sides in an interim proceeding.  And it is not necessary or possible for me to get to the bottom of those issues.  It might be that the wife had a perfectly good case;  it might be that the business, without exceeding the parties’ drawings on the business beyond those which the business can afford, could have supported an advance to the wife sufficient to cover the costs that she seeks.  It might be that the husband himself has access to the funds.  It could be.  I did not have to determine that because there is another available way of dealing with the matter.

8. Court decisions are made on the basis of findings of fact about disputed issues of fact. In interim proceedings, conducted on the papers I am not permitted to make a finding of fact on a disputed issue unless there is an agreement about it or there is independent evidence that wholly excludes one version of events or supports the other.  So it is not possible or necessary for me to get to the bottom of anything today.  The mischief that interim costs addresses is the mischief of the exercise of power by the Court miscarrying because one party is not able to properly litigate the case. It typically arises in situations where one party has more information about the business or the financial affairs of the parties and the other has less.  The person without the information often has additional costs.  I do not even know whether that applies here because in the unique circumstances of this case I understand that it was the wife who did the books for the business.  But that is the mischief that is addressed, and so the critical thing from my point of view was to make sure that the wife was able to get access to funds which would enable her to litigate the case on an even footing and, hopefully, as occurs in 95 per cent of cases, she would be able to get advice so that she could compromise the case, settle the case. Early settlement is good because the irony of financial proceedings is that the parties chew up the pool of assets in deciding how to divide it. It can be the case that parties spend tens of thousands of dollars deciding how to divide money and get to the point where all of the money representing the legitimate range of discretion has been spent before the matter gets before the trial.

9. At the end of the day I do not know that there is a source of funds available to the husband and that is why I cast the orders so as to give him the opportunity to make the payment without these other steps being taken, but if not paid, providing for  self-executing orders against assets.

10. The question of the real character of the payment can all be dealt with on another day.  The trial judge can make a decision, "Well, it turns out that those advances to the wife of her costs should ultimately, in the scheme of things, be met by the husband" for one reason or another.  So it cannot be said that the interim costs application was wholly unsuccessful.  I cannot be satisfied that the wife was imprudent in not accepting the proposals and she did have the material of the husband fairly late. 

11. The problem comes in the spousal maintenance case where I could not make head nor tail of the wife's evidence and I had a horrible feeling that there might have been a case there, I just was not told about it and it is, with respect, a nonsense to say to a judicial officer, "Well, there is a $500 a week outgoing and I cannot tell you what it is".  The documents have to make sense. It is not for me to dig around. Thus the application has been lost at the first hurdle and that is fatal and there should be a costs order in relation to that issue.  That has been a waste of money and time and energy.  I do not know how the costs were calculated.  You mentioned an odd number.

RECORDED  :  NOT TRANSCRIBED

1. I am told the total costs in relation to the proceedings were 3214.90.  I am doing the best I can,  I am going to make an order in relation to half that sum.  It has to be paid not later than seven days after final settlement of the property proceedings between the parties.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Judicial Registrar Loughnan

Associate: 

Date:  24 August 2007