Fowles and Fowles (No. 3)

[2018] FamCA 503

FAMILY COURT OF AUSTRALIA

FOWLES & FOWLES (NO. 3) [2018] FamCA 503

FAMILY LAW – INJUNCTIONS – Interim injunction to preserve assets – via redirection of monies paid for legal costs

APPLICANT: Ms Fowles

RESPONDENT: Mr Fowles

FILE NUMBER: MLC 8587 of 2015

DATE DELIVERED: 29 June 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 29 June 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D Sheales, Dr R Smith

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr T. North SC, Mr J Salamanca

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

Orders

(1)Until further order, the solicitors for the husband, Taussig Cherrie Fildes, do pay to the solicitors for the wife, Lander & Rogers, an amount equivalent to 30 per cent of any monies paid to them by or on behalf of the husband from this day until the recommencement of the hearing on Wednesday 4 July 2018 at 10.00 am, such monies to be paid by the wife upon receipt same in reduction of any owner’s corporation liability or body corporate fees in relation to the former matrimonial home and the balance in reduction of instalments due to Westpac Banking Corporation pursuant the mortgage over the former matrimonial home.

(2)I reserve liberty to Taussig Cherrie Fildes to apply to vary or set aside this Order or as it may be advised on notice to all parties.

(3)My reasons for decision be transcribed and when settled placed on the Court file and a copy provided to the parties.

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 (No. 3) 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

REASONS FOR JUDGMENT

1. On day 11 of the defended hearing for an alteration of property interests, we are adjourning once again until the latter half of next week to complete the husband’s evidence and, hopefully, the other evidence in the husband’s case. 

2. Because of the prolongation of the hearing, the husband has pre-paid his lawyers, Taussig Cherrie Fildes, on account of counsel’s fees and legal costs on an instalment basis.  For instance, since the last time we were in court, the husband has been required to pay, and has paid, the sum of approximately $131,000, which would cover his legal expenses for this week or approximately five days notwithstanding that we sat for only four.

3. I do not have a transcript of the proceedings, but my recollection is that when asked where the moneys were sourced for the payment of $131,000 to Taussig Cherrie, the husband indicated that he asked his administrative assistant, Mr K, to raise the funds, but was uncertain as to where they came from.  He thought it probably came from the business, L Pty Ltd and would in due course form a loan account liability.  When asked whether the mortgage payments due on the former matrimonial home were up‑to‑date, the husband was not sure.  When pressed, he said he didn’t know or did not recall.  Finally, it was established that he had not paid the mortgage instalments on the former matrimonial home for the last two months and that the total of the arrears was some $6000.  When asked why he had not paid them something the husband said to the effect of, “I did not feel like it.”  Later in the day, on the same topic, he referred to the payment to his solicitors being a matter which he was prepared to prioritise over payment of the mortgage on the former matrimonial home.

4. The wife and the parties’ child, D, reside in the former matrimonial home and have done since separation in 2015. 

5. On 5 October 2015, orders were made by Judge Hartnett in the Federal Circuit Court of Australia and they provided, in short compass, as follows:

   a)Until further order the husband was to pay the wife maintenance of $800 per week, including medical, hospital, dental, pharmaceutical treatment costs and expenses not covered by health insurance;

   b)Until further order, the husband was required to pay by way of urgent Child Support the sum of $250 per week for D, plus all school fees and medical, dental and hospital expenses, etcetera, not covered by health insurance. 

   c)Until further order, the husband was to be solely responsible for, and where appropriate, do all acts and things necessary in his personal capacity and in his capacity as an officeholder of various entities, to make the following payments as and when they fall due (including as to any arrears):

   i)repayments in respect of the mortgage and any other encumbrance pertaining to the former matrimonial home;

   ii)all rates, taxes, utilities (gas, water, electricity), phone and internet, insurances, owners corporation liabilities and statutory outgoings in respect to the home;

   iii)life insurance policy premiums;  and

   iv)a specific cost of $1078 for a roller door service.

6. D is a student at M School in Melbourne, a fee-paying school.

7. I am informed from the bar table, and it has been a matter touched on in the evidence, that the husband is seriously in arrears of the spousal maintenance payments.  Today, Dr Smith, for the wife, puts the arrears in the sum of approximately $48,800. 

8. The Body Corporate or building manager has referred the outstanding owner’s liability fees, of more than $10,000, for recovery in VCAT.

9. On 2 May 2017, the wife made an application in a case with respect to interim financial support and to enforce the outstanding arrears of spousal maintenance and child support as they then stood.  A response to that application was filed on 17 May 2017 in which the husband sought specifically to vary his obligations to pay spousal maintenance (therefore under paragraph 2 of the order of 5 October 2015) and child support (under paragraph 3 of the order made on 5 October 2015).  On my reading of the husband’s response to the application in a case, he does not seek to vary or discharge his obligations under paragraph 4 of the order made on 5 October 2015. 

10. For the husband, today, Mr Salamanca says that it is implicit in the husband’s application filed 17 May 2017 that the husband did not propose to continue to pay the mortgage or was seeking a variation of his obligation to do so.  That is not my reading of his application.  It matters little, however, because the Order of 5 October 2015 has not been varied or discharged.  Furthermore, there is no reasonable explanation provided by the husband as to why he has stopped paying the mortgage instalments and the body corporate fees.

11. Earlier today I asked the husband if he had any objection to a proportion of the funds that are to be paid to his lawyers in the very near future being diverted to pay the mortgage instalments on the home.  The upshot of that interchange – and, again, I do not have transcript – but my specific recollection is that it was words to the effect of, “Well, if moneys are going to be paid to the wife from moneys via my solicitors, I will not pay my solicitors and I will be without representation.”

12. Later this afternoon it seems that the husband recast his position.  He indicated that he had already given instructions (presumably to his assistant) for moneys to be paid to Westpac Bank.  This is the balance of some account which he has in Australia and which he says will not satisfy the arrears of $6,000 currently outstanding.

13. The mortgage is due on a monthly basis.  The husband is running these proceedings at a cost which he considers he can afford, or is in any event prepared to meet, of some $25,000 a day and yet the relatively modest mortgage instalment over the former matrimonial home, is going unpaid.  That is not, in my view, a satisfactory circumstance. 

14. The husband’s evidence was that his solicitors now required more funds.  Initially he said he did not know how much was required and asked not to be told because he does not want to be upset.  After lunch, the husband gave evidence that his lawyers require another $50,000 before this hearing re-commences next week.

15. The wife makes an oral application for an order that dollar for dollar she be paid whatever the husband pays his solicitors. This is an order to preserve the assets. Any funds she receives pursuant to this Order will be applied to the mortgage or levies on the former matrimonial home. I consider that the ratio of 1:1 is too high. However the concept of the husband complying with his obligations for payments under the Order of 5 October 2015 as and when he pays legal fees is entirely appropriate as well as “proper” within the meaning of s114(i)(e) of the Family Law Act 1975.  For the avoidance of doubt, I am not sanctioning the husband raising funds contrary to any orders of the Court and I do not take the wife to be doing so either.  There are extant restrictions on the husband’s ability to draw funds.  If he pays money in contravention of orders he can expect consequences.

16. The order which I propose to make will operate, so that everything keeps pace with everything else, on the husband’s solicitors paying to the wife’s solicitors, or at their direction, a proportion of all moneys received by them from the husband. 

17. I will require that Taussig Cherrie Fildes pay to the wife’s practitioners a sum equivalent to 30 per cent of any moneys they receive from the husband between now and the resumption of the hearing.  If the husband pays nothing, then nothing will be paid to the wife’s solicitors.  However, if the husband does pay what has been requested, wife’s practitioners should receive approximately $15,000 which I require the wife to expend on the arrears of mortgage payments or body corporate fees.  That is an appropriate amount.  It will pay the arrears outstanding and one more mortgage instalment payment and the amount which I understand is admitted as to be outstanding body corporate fees. 

18. It is, of course, open to Taussig Cherrie Fildes to require the husband to pay more funds than $50,000 so that the 70 cents in the dollar that they can retain equates to the $50,000 that they require in order to continue to be retained in this matter. 

19. I have not provided Taussig Cherrie Fildes with a right to be heard.  Mr North was fairly sanguine on the issue and accepted that it would be sufficient in this instance to reserve liberty to the solicitors to apply should they wish to do so.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 29 June 2018.

Associate: 

Date:  5 July 2018