Fowles and Fowles

[2020] FamCA 282

FAMILY COURT OF AUSTRALIA

FOWLES & FOWLES [2020] FamCA 282

FAMILY LAW – PROPERTY – where an order was made requiring the husband’s practitioners to pay a proportion of all monies received from the husband to the wife’s practitioners to be applied on payment of outgoings on the former matrimonial home – where wife seeks to apply funds held by her solicitor in payment of liabilities not associated with the former matrimonial home and principally her legal costs – husband opposes distribution of funds – distribution allowed.

Family Law Rules 2004 (Cth)

APPLICANT: Ms Fowles

RESPONDENT: Mr Fowles

INDEPENDENT CHILDREN’S LAWYER: Ms Lonergan

FILE NUMBER: MLC 8587 of 2015

DATE DELIVERED: 4 February 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 4 February 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Smallwood SC

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr Salamanca

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

COUNSEL FOR THE INDEPENDENT CHILDREN’S LAWYER: Excused from attendance

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Victoria Legal Aid

Orders

1. From the monies held by Lander & Rogers accumulated by reason of paragraph 7 of the Order made on 5 July 2018 there be paid to the wife the following by way of part property settlement:-

   (a)       the sum of $150,000 to be applied in reduction of the wife’s liability to LL Company;

   (b)       the sum of $50,000 to be used as the wife sees fit.

2. In relation to costs of the interim proceedings of November and December 2019 and the costs of this day, any party wishing to make an application for costs do so within 14 days and support same with written submissions of not more than 5 pages. Otherwise:-

   (a) Without prejudice to any basis upon which costs may be sought to be calculated, any party making an application for costs accompany such application with a memorandum of those costs drawn in accordance with Schedule 3 to the Family Law Rules 2004; and

   (b)       Any party receiving an application for costs file and serve a response and submissions of not more than 5 pages within 14 days of service including a response and submissions as to liability and quantum.

   (c)       Seven days after the response is filed each party advise the other and my Associate – ... – as to whether he/she seeks to make further submissions orally and, if either party does, the matter be listed for mention (estimated to take one hour).

3. The submission as to costs take into account the costs associated with the application for costs and my preference is to fix the quantum of any costs rather than require the parties to participate in an assessment of costs.

4. The wife’s application and responses of the parties filed in November 2019, December 2019 and February 2020 be otherwise dismissed.

AND IT IS NOTED that the continuation of the final hearing of this matter is listed to a date to be fixed subject to a trial plan being submitted to my Chambers so that the matter can be allocated appropriately.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Fowles & Fowles has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8587 of 2015

Ms Fowles

Applicant

And

Mr Fowles

Respondent

And

INDEPENDENT CHILDREN'S LAWYER

REASONS FOR JUDGMENT

1. These reasons deal with the wife’s application to facilitate payments of monies held for her in the trust account of her legal representatives and husband’s opposition thereto. The Independent Children’s Lawyer is excused from participating in this financial issue.

2. By paragraph 7 of the Order made on 5 July 2018, I required that, for every dollar the husband paid to his lawyers in this proceeding, thirty cents in that dollar was to be paid to the wife’s lawyers.  Such monies is to be paid out by the wife in reduction of any owner’s cooperation liability or body corporate fees or mortgage payments in respect of the former matrimonial home which is an inner city apartment and other outgoings in relation to that home.  Since July 2018, some hundreds of thousands have passed from the husband to his solicitors, and after payment of monies due and owing for payments in relation to the former matrimonial home, there is about $234,000 held by the wife’s solicitors. 

3. By paragraph 3 of the wife’s Response to an Application filed on 6 December 2019, she sought a variation of paragraph 7 of the Order made on 5 July 2018 so that she could apply funds accumulated under that order to liabilities other than to outgoings for the former matrimonial home.  The liabilities include principal and interest on advances to the wife by LL Company.  LL Company is a litigation funding entity to which the wife currently owes some $350,000, a sum which accrues interest at a penalty rate. 

4. The wife also wants to pay fees due to Ms Smallwood, SC who commenced to appear in these proceedings at the end of last year. 

5. The wife also seeks to be able to pay outstanding disbursements in her family law proceedings owing to her solicitors for the services of transcript costs, JJ Company (accountants) fees and subpoena fees. 

6. Otherwise the wife seeks to be able to pay her legal fees generally in the proceedings and to have monies with which she could satisfy any liability which may be imposed upon her in relation to costs by an entity which she sought to join to these proceedings but now no longer seeks to join, EE Company of FF State.  Those costs are claimed, as best I understand it, in excess of $100,000. 

7. Notwithstanding that the wife’s application was filed, in the form of a response, on 6 December, the husband did not respond to it until yesterday at 5.09 pm when his “response” was filed.  It would have been more accurately filed as a reply, but no one takes issue with its form.  By paragraph 2, the husband seeks that the wife’s application for a variation of the 30 cents in the dollar order be dismissed.  He seeks that the 30 cents in the dollar order, being paragraph 7 of the Order made on 5 July 2018, be discharged.  However, Mr Salamanca who appears to day for the husband does not press that application. 

8. By paragraph 3 the husband seeks orders that the monies currently held by Lander & Rogers, that is the $234,000, continue to be applied in effect in accordance with paragraph 7 of the Order of 5 July 2018, and otherwise to meet his own obligations as and when they fall due to pay spousal maintenance, to pay a monthly figure of $2200 to the wife, the private school fees for D to attend M School and child support due from him to the wife.

9. By paragraph 4, the husband seeks that in the alternative to paragraph 5 of the orders, he seeks that the $234,000 and inferentially any further funds which may be paid into that account be held open “pending final order determination of these proceedings” so that they continue to be applied in accordance with paragraph 7 of the Order made on 5 July 2018. 

10. The husband seeks such further or other order as the court considers appropriate and he wants the costs of an incidental to this application.  The husband also seeks that the wife pay the costs of an incidental to the husband’s application and a case filed on 29 November 2019, on a solicitor client basis, and that such costs be determined by the conclusion of these proceedings.  The application of 29 November 2019 which was to facilitate the husband to go overseas. It has been disposed of save for the issue of costs. 

11. There are further things that need to said about the relief sought by the husband.  Whereas he does not press his application to discharge the 30 cents in the dollar order, counsel for the husband submitted that the husband may in due course be making – and, indeed, within the next month or so – may be making an application to have the $234,000 paid to him for his use in the eventuality of the businesses which have provided the husband with a lot of funds up until now fails.  Mr Salamanca submitted that the husband’s obligations to pay $2200 per month to the wife, child support and payment of school fees to M School would make only a miniscule difference to the amount of monies held in trust.  That is, they are all paid up to date at the moment and Mr Salamanca says that they, on an ongoing basis, will not be significant.  I do not know how Mr Salamanca basis a submission that the husband’s businesses are on the brink of failure and the husband might soon be left without any funds, but that is what was submitted. 

12. The husband’s opposition to the orders sought by the wife amount to following:  first, he says the 30 cents in the dollar order was originally made in order to preserve the former matrimonial home as a residence for the wife and child pending a final disposition of the competing property applications.  At that point the husband was paying some hundreds of thousands of dollars, or had paid some hundreds of thousands of dollars, by way of legal costs.  The wife had paid next to no legal costs and, additionally, did not have sufficient funds to pay the body corporate fees or mortgage payments on the former matrimonial home.  Mr Salamanca’s description of the circumstances is correct.  The monies were not then destined for payment of the wife’s legal fees or as litigation fund.  However, that was in July 2018 when I optimistically, but most erroneously, thought that this proceeding might finish.  It has not.  Furthermore, the husband has continued to pay hundreds of thousands of dollars to his solicitors and as a consequence of that, has been the accumulation of the $234,000 in the wife’s account. 

13. The next basis of opposition is that in about July 2019, about a year after the 30 cents in the dollar order was made, Mr Sheales attempted to make an application for litigation funding.  I refused to deal with that application. Mr Salamanca has taken me to the part of the transcript which is relevant to my interchange with counsel.  In short, I said that Mr Sheales should get on with the case and finish it rather than seeking to expand the interim issues.  At that point, being July 2019, I optimistically, but again erroneously, thought that the matter might be able to be concluded. 

14. The next basis of the husband’s opposition was not immediately apparent from Mr Salamanca’s submissions, but about halfway through those submissions Mr Salamanca indicated that the husband may in due course be making an application for payment of those monies to him, but he was not making that application today.  My impression is that the husband wants the fund preserved so that he can make another application.

15. Last night at 5.09 pm an affidavit by Mr DD, the husband’s accountant, was filed.  I do not know when it was served.  By virtue of amendments to the Family Law Rules 2004 annexures referred to in the affidavit could not be annexed.  The annexures are some 24 pages long and were not handed up until this hearing commenced.  They were also, as I understand it, not handed over to the practitioners for the wife until this morning.  I have not read the annexures in full.  I have looked in a cursory way at page 23 and 24.  Ms Smallwood, correctly in my view, points out some inaccuracies in page 24.  Page 24 purports to be a table of monies which have been paid by the husband for the benefit of the wife and child or, as more particularly stated by Mr Salamanca, monies paid by the husband from which the wife and child have had some benefit.  Some of the payments, or at least one of them, is claimed as a payment of $8800 to a mediator when in fact that was the totality of the mediator’s fee.  Ms Smallwood points out that funds paid into the trust account of the wife’s solicitors pursuant to the 30 cents in the dollar order are quantified for the last quarter of 2019 at $75,000 when it is a matter of record that there was some $91,000 paid.  I do not know what the inaccuracy is attributable to. 

16. The relief sought by the wife, in my view, is necessarily an order in the exercise of this Court’s power to make orders for the alteration of property interests.  Whereas the wife seeks to pay costs with those monies this is not an application for which the wife invokes the Court’s costs power.

17. The Court usually exercises its property powers on one occasion, but providing the Court is satisfied that it’s just and equitable and proper to do so it can in fact exercise its property power over a series of orders.  I have not heard anything in opposition to the Court’s power to make an alteration of property interests to give the wife a further partial property settlement of those funds that are currently in Lander & Rogers’ trust account.  Indeed, in response to the submissions of Mr Salamanca that those monies might need to go back into the pool to prop up the business which has supported the family for all these years.

18. The husband opposes the wife’s application. Ms Smallwood has taken me to the husband’s current application, which is that set out in the amended response to the third further amended initiating application, a document filed on 6 February 2018.  Under the heading “Property” the husband seeks relief requiring the wife to vacate the former matrimonial home and deliver the keys to it to him at that he pay her $600,000 “by way of property settlement inclusive of section 75(2)” factors.  Ms Smallwood submits that if the husband is currently proposing to pay the wife $600,000 why should she not receive $234,000 of that now.  The wife has previously received part property payments, and in order to describe same I will refer to paragraph 24 of the annexures to Mr DD’s affidavit.  These figures might be attended with the same inaccuracy as was the figure of $75,000 for funds paid into Lander & Rogers.  However, the husband relies on this document to substantiate that in the fourth quarter of 2015 the wife was paid $75,000 and in the first quarter of 2016 she was paid $100,000.  Even taking into account those monies, if the husband is to pay the wife $600,000, the $234,000 she now seeks is comfortably accommodated.  My reading of paragraph 3 of the husband’s application for property orders would not impel me to consider the $175,000 is something that ought to be subtracted from the amount of $600,000, but it makes no difference to this application. 

19. The wife has a number of pressing debts.  They are set out in her affidavit sworn on 6 November 2019 under the appropriate headings.  There is also the affidavit of Mr KK sworn on 31 January 2020.  I have regard to that evidence.  I note that there was no application to cross-examine either the wife or Mr KK.  The outgoings on the former matrimonial home are reasonably modest.  It is estimated that to pay them for six months in advance would costs about $30,000.  And that amount could be quarantined by the wife from the amount in trust. 

20. In effect she seeks $200,000 be paid out for legal costs.  In paragraph 20 of Mr KK’s affidavit he particularises those payments as $15,000 to senior counsel, who must by definition be Ms Smallwood, $50,000 to LL Company the litigation funding agency, and the balance he says can be either part property settlement or a security for costs.  I will not be making order in exercise of the costs power of the Court.  I would be making as a part property settlement for which the wife would ultimately need to account. 

21. In my view it is just and equitable that there be an alteration of property interests now.  I take into account the submissions of Mr Salamanca that the $234,000 should be preserved until the final determination or a determination of any application that the husband seeks to bring in the future.  However, the wife has pressing needs now and her proposed use of funds is per se unremarkable.  It allows her to repay some of the debt incurred for legal costs.  In the terms of my order, the wife will be paying costs or retiring debt attributable to costs at a fraction of the rate at which the husband has paid his legal representatives and represents a benefit to the wife which is within the alteration of property interests proposed by the husband in his last filed response.

22. I am satisfied that the order I make is appropriate within the meaning of Section 79(1) of the Act.

1. I asked counsel whether there were any applications for the costs of today’s proceedings.  Mr Salamanca made an oral application seeking the costs of all interlocutory applications which he recognised encompass a number of different issues and material prepared.  I asked Mr Salamanca what he had to say about the costs of today, due to a lack of time to deal with a costs application for all interlocutory applications, noting that those costs would be reserved.  He maintained the position that his application was for costs of all interlocutory applications.  Ms Smallwood sought an order that the husband pay the wife’s costs of this day, however, could not provide a costs figure on scale other than to say the costs were in the sum of $8,600. 

2. Costs are important and should not be an afterthought. It is unfortunate that neither counsel are ready to make an application for costs supported by a memorandum of costs sought in accordance with Schedule 3 to the Family Law Rules 2004. I will order that any party wishing to make an application for costs of the interim proceedings of November and December 2019 and the costs of this day, do so within 14 days and support same with written submissions of not more than 5 single sided pages, double spaced and in font not smaller than font 13.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 4 February 2020.

Associate: 

Date:  24 April 2020