Garnier & Garnier (No 2)
[2022] FedCFamC1F 351
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Garnier & Garnier (No 2) [2022] FedCFamC1F 351
File number(s): SYC 8916 of 2020 Judgment of: ALDRIDGE J Date of judgment: 19 May 2022 Catchwords: FAMILY LAW – INTERIM – Where the wife seeks interim orders for spousal maintenance, interim property settlement, interim costs, child support departure and adult child maintenance – Where the wife also seeks to enforce existing orders for the payment of regular sums by the husband – Where the husband does not have the capacity to meet the payments sought by the wife – Applications for spousal maintenance, interim property settlement, child support departure and enforcement are dismissed – Claim for adult child maintenance not established – Appropriate approach is to make a dollar for dollar order on the basis the husband pay to the wife some contribution of her costs to be incurred.
FAMILY LAW – PRACTICE AND PROCEDURE – Where the husband seeks to have the wife’s affidavit struck out due to the length – Where selected portions of the wife’s affidavit are relied upon – Application is futile – Application dismissed.
Legislation: Child Support Assessment Act (1989) (Cth) ss 98X, 99, 117
Family Law Act 1975 (Cth) ss 72, 177
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 25, 66L, 68, 132
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 5.08(2)
Cases cited: Gamble & Gamble (1978) FLC 90-452
Rakete v Rakete (2013) 48 Fam LR 325
Salvage & Fosse (2020) FLC 93-966
Strahan & Strahan (Interim property orders) (2011) FLC 93-446
Wall & Mitchell [2010] FamCA 1194
Zschokke and Zschokke (1996) FLC 92-693
Division: Division 1 First Instance Number of paragraphs: 107 Date of hearing: 22 March 2022 Place: Sydney Counsel for the Applicant: Mr Batey Solicitor for the Applicant: York Law Counsel for the First and Fourth Respondents: Mr Kearney SC with Ms Jeliba Solicitor for the First and Fourth Respondents: Barkus Doolan Family Lawyers The Second and Third Respondents: Did not participate ORDERS
SYC 8916 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GARNIER
Applicant
AND: MR GARNIER
First Respondent
MS C GARNIER
Second RespondentB PTY LTD
Third Respondent
P PTY LTD
Fourth Respondent
ORDER MADE BY:
ALDRIDGE J
DATE OF ORDER:
19 MAY 2022
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed on 25 January 2022 is dismissed.
2.Orders 1.1 and 1.2 made on 15 February 2021 are discharged as from the date of these orders.
3.The Court declares that, as at 1 December 2021, the respondent owed the applicant $24,000 and $28,000 pursuant to Orders 1.1 and 1.2, respectively, made on 15 February 2021.
4.The Application in a Proceeding filed on 17 December 2021 is otherwise dismissed.
5.From the date of these orders:
(a)Within seven (7) days after any payment made by or on behalf of the respondent for accounts rendered by his solicitors for work undertaken by them and disbursements, excluding payments for counsel’s fees and single experts, in relation to expenses associated with this case, the respondent pay or cause to be paid the same sum of money to the applicant’s solicitors;
(b)Within 24 hours after any such payment by the respondent to his solicitors, the respondent shall cause a memorandum to be given to the applicant’s solicitors setting out the amounts paid;
(c)Any such payment made by the respondent shall be held in trust by the respondent’s solicitors and not applied in payment of their account until such time as the payment required under Order 4(a) has occurred;
(d)In the event that the payment to the solicitor for the applicant required by Order 4(a) is not made within seven (7) days, then the respondent is to direct his solicitors to pay 50 per cent of the payments made by the respondent to the applicant’s solicitors; and
(e)The amounts that the applicant’s solicitors receive from the respondent or his solicitors pursuant to the above orders are to be applied only to meet the applicant’s solicitor’s costs and disbursements, excluding counsel’s fees.
6.The application for interim orders as contained in the Second Amended Initiating Application filed on 25 October 2021 is otherwise 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).
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 the pseudonym Garnier & Garnier (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
INTRODUCTION
Ms Garnier (“the wife”) seeks interim orders for spousal maintenance, interim property settlement, interim costs, child support departure and adult child maintenance pending the final hearing of this matter. She also seeks to enforce existing orders for the payment of regular sums by Mr E Garnier (“the husband”) which he has not been paying. For his part, the husband opposes the making of these orders and proposes instead that the matrimonial home at Suburb H, in which the wife presently lives, be sold and that from the proceeds each party receive the sum of $250,000 as a partial property settlement.
The final property proceedings are fixed for 10 days commencing 15 August 2022. Neither the second respondent (“the husband’s mother”) nor the third respondent wished to be heard on the interim application.
In addition, there is a further Application in a Proceeding filed on 25 January 2022 before the Court in which the husband seeks to have the wife’s affidavit filed on 16 December 2021 in support of the application for interim orders struck out on the basis that it exceeds the 25 page limit provided for by r 5.08(2) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). Indeed it does – it is 89 pages long. It is convenient to deal with this application first.
APPLICATION TO REFUSE LEAVE TO RELY ON AFFIDAVIT
On 16 December 2021 the wife filed an affidavit, the text of which covered 89 pages but totalled 653 pages including the exhibits, updating her previous affidavit filed on 27 August 2021 which was similar in length. In response to the latter, the husband filed an affidavit of some 42 pages in length, together with 261 pages of exhibits. Further updating affidavits were sworn by both witnesses in February and March of this year.
Obviously, such affidavits were in breach of the Rules and leave of the Court was required to rely on them.
On 27 January 2022 the husband, seemingly oblivious to or unconcerned by the fact that he himself was seeking to rely on an affidavit that was in breach of the Rules, filed an Application in a Proceeding seeking an order that the wife be refused leave to rely on her affidavit and that directions be made for an affidavit to be filed that complied with the Rules. That application was supported by a 9 page affidavit of the husband and was met by a 24 page affidavit of the wife, with a further five page affidavit of the wife’s solicitors.
Unsurprisingly enough, the primary affidavits ranged far and wide in the topics they sought to cover, occasionally providing evidence relevant to the issues before the Court. When, in accordance with my usual practice, the parties were required to identify those portions of the filed affidavits on which they relied and on the basis that regard would only be had to the passages and exhibits so identified. Only a small a fraction of the material that had been filed was relied upon.
The drawing of such excessively long and largely irrelevant affidavits is to be deprecated. It not only wastes valuable court time but it unnecessarily increases the costs of the parties in both drawing the affidavits and in responding to them. This is particularly so in a case such as the present where the wife asserts that she has insufficient funds to support herself and the children and where the husband asserts that he lacks the income to do so.
The Application in a Proceeding seeking to strike out the affidavit can only be described as an unnecessary piece of satellite litigation par excellence. It did nothing whatsoever to advance the interest of the parties. If any genuine complaint was to be raised, it should have been raised as soon as the affidavit was served and not well after it had been the subject of a lengthy affidavit in reply.
If indeed there was force in the proposition that there was much in the wife’s affidavit that was irrelevant, then, notwithstanding the fact that the husband decided to compound the error by responding to the irrelevant material, no enquiry was made as to what material would actually be relied upon and indicating an intention to object to the affidavit. However, it is difficult to see what prejudice could flow from the affidavit given that it had already been replied to in length.
Sections 68(1) and (2) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) require parties to civil proceedings to conduct the proceedings in a manner that is consistent with the just resolution of disputes as quickly, inexpensively and efficiently as possible. It is difficult to see how this application and the response to it, and indeed the affidavits originally filed, comply with that obligation. That is all the more so when, as here, both parties assert that they are unable to make ends meet, but are able to afford the luxuries of such pointless litigation.
Given that only selected portions of the various affidavits have been relied upon, without objection, the application is futile and will be dismissed.
APPLICATION FOR INTERIM ORDERS
Background
The parties began a relationship in 1993 and were married in 2000 and separated on 25 December 2019. They have four children born in 2002, 2005, 2008 and 2009. The parties’ eldest child is currently at university and the other three children attend private schools.
The wife presently resides in the former matrimonial home at Suburb H (“the Suburb H property”). That property was purchased on 12 October 2018 for around $11,200,000. The owners of the Suburb H property are J Pty Ltd (“J Pty Ltd”) as trustee for the J Trust as to 60% per cent and the husband and wife as to 40% per cent. The prior joint tenancy between the husband and wife was severed on 8 June 2021 and now they each hold a 20% per cent interest as tenants in common.
In the wife’s Financial Statement filed on 16 December 2021, she regarded her interest in the Suburb H property was being worth $2.25 million. In the husband’s Financial Statement filed on 4 March 2022, he ascribed a value of $2.6 million. It is yet to be valued for the purposes of the final hearing.
I will return to J Pty Ltd shortly.
The husband was a professional athlete until 2006. The following is taken from the husband’s evidence, although I did not understand the primary facts to be substantially in dispute. The effect of these transactions is however the subject of dispute which will be determined at the final hearing.
The husband’s parents were engaged in the family business which they operated through a company called B Pty Ltd (“B Pty Ltd”). On 23 October 2003, whilst the husband was still competing and not yet involved, the husband’s father caused the incorporation of J Pty Ltd and the establishment of the Garnier Family Trust of which J Pty Ltd was the trustee.
On or about 10 December 2003, the Q Business was purchased by B Pty Ltd and J Pty Ltd as the trustee for the Garnier Family Trust as tenants in common in equal shares. The business has operated as a partnership ever since that time.
The husband was employed by B Pty Ltd in 2006. At that time, it owned a business at Suburb O and the half interest in the Q Business.
On 23 October 2007, the husband’s parents resigned as directors of J Pty Ltd and the husband was appointed as the sole director. In 2010, the husband was appointed a director of B Pty Ltd and in 2021 became the chief executive officer.
The J Trust, a unit trust, was established in 2018 with J Pty Ltd as the trustee. The husband is the sole unitholder.
Since the husband’s employment with the company, B Pty Ltd has acquired a number of other businesses.
The husband’s father died in 2020. The current shareholding of B Pty Ltd is that the husband’s mother holds 35 ordinary shares and one redeemable preference share as the trustee of a testamentary trust set up by the husband’s late father and 35 ordinary shares in her own capacity. The husband and each of his two sisters hold 10 ordinary shares. J Pty Ltd owns one redeemable preference share.
On 29 June 2018, the P Trust was established. The trustee of that trust is P Pty Ltd, of which the husband is the sole director and shareholder.
On the same date, the R Trust was established. The trust’s trustee is S Pty Ltd, of which the husband is the sole director. The sole unitholder of the R Trust is P Pty Ltd as trustee for the P Trust.
At the same time, B Pty Ltd leased the T Business, the Property F and U Business to the R Trust on a short-term lease. B Pty Ltd remained the owner of those businesses. A further property, the V Business, was purchased by B Pty Ltd and it too has been leased to the R Trust.
It is the position of the wife that the husband, in fact, is in sole control of B Pty Ltd and entitled to deal with its assets as he sees fit. She relies upon a number of equitable principles to establish that claim. The evidence of the husband’s mother and his two sisters is to the contrary, but no doubt that will be tested at the final hearing.
The operations of all of the businesses ceased on 27 June 2021 and did not reopen until 11 October 2021 due to the COVID-19 lockdown in Sydney. Only the retail outlet attached to the U Business continued to operate. This obviously had a significant impact on the financial position of B Pty Ltd and the entities associated with it. Thus, although B Pty Ltd’s balance sheet for the year ended 30 June 2021 indicates that B Pty Ltd had $2.225 million in cash reserves, that is not inconsistent with the husband’s evidence that due to the lockdown, B Pty Ltd is struggling to meet its commitments and it has deferred expenditure and reduced staff.
At a directors meeting held on 23 July 2021, the directors, other than the husband, resolved that B Pty Ltd would cease to provide any further support to the husband from 20 August 2021. It was not disputed that the husband’s current salary from B Pty Ltd is $300,000 per annum plus a motor vehicle.
B Pty Ltd continues to make the loan repayments to the mortgagee of the Suburb H property in respect of the loan obtained by J Pty Ltd to purchase the property. The principal of that loan is $6,705,000 and the loan repayments are approximately $6,060 per week. That loan expired on 31 January 2022, however, representations have been made by the husband and the loan has been extended to 31 August 2022.
In addition to the borrowing by J Pty Ltd which is being paid by B Pty Ltd, the purchase of the Suburb H property was also financed by a loan obtained by the husband and wife from the D Bank. The monthly repayments are $5,370 per month.
Save for the claim for litigation funding, the husband did not greatly dispute the wife’s need for further funds but asserted that he no longer had the means to meet them. In response, the wife asserted that the husband’s lifestyle indicated that he had access to funds beyond those identified in his Financial Statement and that, in any event, if orders were made, either the husband’s mother would give the funds necessary to meet orders, or it could come from B Pty Ltd or the trusts.
It has to be recognised that unless the husband is found to have the capacity to comply with all of the orders sought by the wife, success by her on some aspects of her claims must necessarily diminish her prospects on others. The wife did not attempt to grasp this nettle by identifying claims which were of particular importance to her.
Periodic spousal maintenance
The wife seeks the following payments, pursuant to s 72 of the Family Law Act 1975 (Cth) (“the Act”):
·$3,900 per week;
·Private health insurance premiums;
·Mobile phone charges;
·Toll charges;
·The Suburb H property mortgages;
·Water rates, council rates, insurance, electricity, gas, landscaping, lawn mowing, roof and gutter cleaning, pest control, internet and telephone accounts, pool maintenance and cleaning, home cleaning, carpet cleaning and all other expenses referable to the Suburb H property;
·House and contents insurance for the Suburb H property;
·All repairs and maintenance costs for the Suburb H property; and
·Registration costs, insurance, maintenance and repairs, and tolls in relation to the wife’s Motor Vehicle 1.
The payments are proposed to be in addition to the payments made under the orders of 15 February 2021, which requires the husband to pay to the wife $1,500 per week and the maintenance of a credit card with a $7,000 limit.
For his part, the husband proposed orders, which must be recognised are premised upon the sale of the Suburb H property, that he pay the wife as and when due, the following expenses:
·All instalments for private health insurance;
·The wife’s mobile phone charges;
·Loan repayments in respect of the Suburb H property mortgage;
·Water rates, land rates, electricity, gas, internet and telephone referrable to the Suburb H property;
·Home, building and contents insurance for the Suburb H property; and
·Registration, comprehensive insurance and maintenance in relation to the Motor Vehicle 1 registered in the wife’s name.
The wife has not worked in full-time employment since 2002 and has no income. Whilst, the husband submitted that the wife had some capacity for work he did not identify the potential source of that work or seek to explain how that would fit in with the wife’s primary care of the three children in school, one of whom has some special needs. Her unchallenged evidence was that she had sold some jewellery and furniture to support herself and the children.
She is unable to support herself adequately. The next step is to identify her reasonable needs.
It is to be noted that the interim orders, as presently envisaged, will only operate until the final proceedings, which are to be heard in August 2022 and concluded by a judgment.
Part N to the wife’s Financial Statement identifies her weekly expenses as being $3,844 per week. However, this includes $1,000 for holidays, $400 for clothing and footwear, $146 for the use of a kennel for six weeks (presumably for when holidays are taken) and $90 for a dog walker. The amount claimed for the other weekly expenses might be seen to be rather on the high side. The wife would respond that the parties lived a lavish lifestyle. That may be so, but the circumstances have clearly changed. Further, even so, the husband must have the means to make such payments. In Gamble & Gamble (1978) FLC 90-452, his Honour said:
Where the capacity of the husband is such that he is able to provide maintenance for the wife at a level which enables both of them to continue to enjoy a standard of living equivalent to that which they enjoyed for some time prior to the separation or which enables the wife to enjoy a standard of living which may be higher than the average in the community it may be proper to make an order which broadly achieves that result…
(Emphasis added)
I accept however, subject to the issue of the husband’s capacity, the wife has established an entitlement to an order for spousal maintenance.
I shall return to the husband’s capacity to pay when all of the wife’s claims have been identified.
Child Support Departure
The wife seeks the payment of $1,100 in periodic child support per week per child. The following non-periodic payments are also sought as child support departure orders:
·School fees and other incidental expenses;
·The cost of text books and uniforms;
·Cost of extra-curricular activities;
·All medical, dental, orthodontic and optical gap expenses;
·X’s chemist and pharmaceutical expenses; and
·Maintain the children’s private health cover.
A difficulty arises from s 98X and s 99 of the Child Support Assessment Act (1989) (Cth) (“the Child Support Act”), which provides that the Federal Circuit and Family Court of Australia (Division 2) has jurisdiction in relation to child support departure orders. The question is whether that difficulty can be solved by the application of s 25 and s 132(1)(d) of Federal Circuit and Family Court of Australia Act 2021 (Cth) because this matter was transferred by the Chief Justice to Division 2 and back to Division 1 on 28 March 2022.
It is unnecessary to decide that question because the unchallenged evidence of the husband was that he was paying the school fees of the children and having borrowed funds to do so. It is, therefore, difficult to see what special circumstances could be established under s 117 of the Child Support Act.
As will be explained shortly, the husband does not have the means to meet this order having regard to the other orders sought.
Adult Child Maintenance
The eldest child is currently at university, although he works for 2–3 days a week for B Pty Ltd earning up to $900 per week. The mother seeks an order pursuant to s 66L of the Act that there be a payment of $1,480 per week to her as adult child maintenance until the child completes his university degree. Counsel for the wife properly and correctively conceded that the only two paragraphs of the wife’s affidavit that dealt with this application could not establish a claim for such maintenance or quantify that claim in the amount claimed (Wife’s affidavit filed on 16 December 2021, paragraphs 266–267).
Partial Property Settlement and Interim Costs
The wife seeks an order that there be a payment to her in the sum of $250,000 by way of partial property settlement. The wife seeks this sum as “a buffer” to meet any exigencies between now and when the implementation of orders are achieved. As I have said, the wife is currently without funds and she has only been able to meet some of her expenses and those of the child by selling some furniture and jewellery.
The payment of partial property settlements is governed by the principles set out in Strahan & Strahan (Interim property orders) (2011) FLC 93-446; Zschokke and Zschokke (1996) FLC 92-693 and Salvage & Fosse (2020) FLC 93-466 (“Salvage”). Where there are sufficient funds to enable the payment of such an order, and where the effect of any such order can be readily taken into account at a final hearing, it may not be difficult for such an order to be made, particularly where a need is shown.
Although the husband did not accept that the wife had made a basis for such a claim, his main opposition was that he cannot afford it. In order to answer that question, regard must next be had to the wife’s claim for an interim costs order.
The wife’s initial claim was for an interim costs order in the sum of $200,000, but by the time of the hearing of this application, it had expanded to seek the payment of $624,450 for legal fees. Alternatively, the wife seeks a “dollar for dollar” costs order.
In her affidavit filed on 16 December 2021, the wife identified her estimated costs up to the final hearing to be $874,450. At that time, the wife owed her lawyers $117,180.14. The wife now owes her lawyers in excess of $140,000. The wife has obtained a litigation funding loan in the sum of $400,000 which, when taken into account, reduces her claim to that identified.
As explained in Salvage, where all of the assets of a marriage which are to be divided in a property settlement are held by, or are under the control of one party, who is able to marshal them to pay for their legal fees, generally speaking, provision should be made from those assets for the other party to be able prosecute the proceedings.
For his part, the husband asserts that the case against him and the other respondents pursued by the wife is fundamentally misconceived.
The husband also submits that the wife’s costs are inflated as he will be bearing the initial cost of paying for the many single experts that will be required for the proceedings. However, again the husband’s main point is that he simply cannot afford it and that the proposed payments would be inequitable given the size of the net property pool. As to the latter, the husband contends that the present asset pool including superannuation is in the order $3.9 million plus his 10 per cent in B Pty Ltd (whatever that may be valued at). That of course, is subject to the further qualification that it is not clear on what basis the husband and wife calculated their equity in the Suburb H property.
If made, the order sought by the wife for partial property settlement and interim costs would require the husband to pay to the wife $874,450. If the property pool is, indeed as the husband would have it, this sum represents a considerable proportion of it.
The more pressing question is the source of the funds to meet such a payment. The wife identified three sources of potential funds.
The first is the husband’s mother.
It is submitted that the husband has a proven track record of borrowing from his mother. That may be so, for example as of 30 June 2021 she had lent the husband $957,563, but there is no evidence that his mother has in excess of $800,000 readily available to her to lend or give to the husband, should she choose to do so. I am not prepared to assume that she has such funds.
There is no obligation on the part of his mother, who is the second respondent, to provide the husband with the means to meet his expenses, although she could do so if she wished. Some indication of her attitude may be gleaned from the motion passed by B Pty Ltd, to which I have referred earlier. I cannot presume that his mother can or would meet the husband’s obligations to pay a partial property settlement or interim costs order.
The second source of funds identified was B Pty Ltd. Clearly, in the past, the husband has funded his obligations towards the wife and others by taking advances or obtaining money from B Pty Ltd through his loan account. B Pty Ltd has resolved not to provide further funds to the husband. That resolution cannot be ignored. The present ability of B Pty Ltd to provide such funds was not explored and its financial position prior to the CVOID-19 pandemic cannot be relied upon to demonstrate that it now has such funds. It is presently obliged to pay $6,060 per week under the mortgage it entered into to acquire its interest in the Suburb H property.
According to his evidence, the husband has recently sold two expensive boats in order to cover his expenses. The funds from the boats were used to reduce the husband’s loan account with B Pty Ltd.
I am not satisfied that B Pty Ltd could or would be a source of the funds to enable the husband to meet these orders.
The third suggested source of payment was from the trusts.
The accounts of the Garnier Family Trust show that the husband has a credit loan account in the sum of $129,340. However, as its accounts show, it has no assets other than a loan account with B Pty Ltd. The husband owed B Pty Ltd $580,070. He also owed $299,664 to the J Trust.
The records of the trusts and B Pty Ltd, which speak as of the 30 June 2021, do not suggest that the husband has the immediate right to draw on any sums, let alone a sum in excess of $800,000. That of course does not take into account the disruption in trading conditions which I have already noted.
It was suggested that the husband has received regular distributions from the trusts. Indeed, the husband has done so, as well as having received regular dividends from B Pty Ltd. There is no evidence to suggest that those trusts or B Pty Ltd are presently in a position to continue to make such distributions, but even if they are, the annual distribution so far has been no greater than $130,000. This would not go very far at all in meeting the claims of the wife.
The consequence of these findings is that the wife has not identified a source of funds from which either the partial property settlement could be made or the order for lump sum of costs to be paid. Whilst the wife asserts that the husband has the effective control over B Pty Ltd and the trusts, that is a matter yet to be determined. In any event, even if that were so, a source of available funds would still need to be established.
It follows that those two applications must be dismissed.
The wife sought in the alternative to the lump sum costs order, a dollar for dollar costs order. The effect of such an order is to require the husband to pay to the wife’s solicitors the same amount he spends on his own. The husband opposed the order on the basis that she has already secured litigation funding of $400,000 and that there is no suggestion that the wife is presently required to meet the costs of expert fees.
Having regard to the principles in Wall & Mitchell [2010] FamCA 1194 and Rakete v Rakete (2013) 48 Fam LR 325, the Court ultimately must be satisfied that the order is just.
The husband submitted that such an order would not be just because of:
·The misconceived nature of the wife’s case for final orders;
·The financial circumstances of the husband and his own need to fund his representation in the proceedings;
·The limited availability to make adjustment for inequity given the husband’s contention as to the size of the property pool; and
·The inequity that would result in circumstances where the wife has secured the litigation funding order already referred to.
As to the first point, it is true that the wife faces a difficult case. It is not to be equated with one where it is clear that there will be success in substantial sum, although the precise quantity of that sum is not known. It has to be accepted that the wife’s claim might fail and that the property to be divided will consist only of the parties’ equity in the Suburb H property and the superannuation.
On the other hand, the fact that the wife’s claim could fail does not mean that her claim for a costs order must fail, but it is a factor to be taken into account.
I accept that the husband is entitled to pay for his own legal representation, but that must be seen in the light of the philosophy behind litigation funding orders as expressed in Salvage. To suggest that the husband should not pay any funds towards the wife’s legal fees in circumstances where the bulk of the assets that may be divided are said to be under his control, is merely to perpetuate the inequity so identified.
Of more concern is the litigation funding. In her affidavit filed on 23 February 2022, the wife said:
30. … Last week [DD Company] [the litigation funder] approved the maximum they allow for family law litigation being $400,000. That sum will only cover my counsel and Senior Counsel fees for the interim and final trial. I will have no money to support myself and pay my lawyers fees and disbursements.
(Wife’s affidavit filed on 23 February 2022, paragraph 30)
Account must be taken of the litigation funding loan which appears to provide for counsels’ costs of the hearing.
Whilst the evidence suggests that the financial position of B Pty Ltd and the trusts has suffered and that the majority of the board of B Pty Ltd are not inclined to extend further support to the husband, he has no difficulty in incurring legal fees on his behalf. The source of such fees is not at all clear, given the matters noted above, but the fact remains that the respondent seems to have unfettered access to such funds as to permit him to engage in litigation to the extent of pursuing unnecessary and extravagant applications. I am therefore satisfied that it is just to make on interim order for the payment of costs.
These matters suggest that the appropriate approach is to make a version of a dollar for dollar order on the basis that the husband (who does not have a litigation funding loan) pay to the wife some contribution of her costs to be incurred from the date of the order. As the costs of her counsel have been covered by the litigation funding loan, the appropriate order is that the husband pay to the wife’s solicitors a sum equivalent to the sum he pays to his own solicitors for the provision of their services (as opposed to the provision of services by others such as counsel).
Sale of the Suburb H property and the discharge of the orders made on 15 February 2021
The husband seeks an order for the immediate sale of the Suburb H property and the distribution of $250,000 to each party of the marriage from its net proceeds of sale. The sale is opposed by the wife.
The sale of the Suburb H property would have the advantage of freeing up funds to the parties to use for their support, upkeep and legal expenses. The proposed payment of $250,000 to each party is not going to go very far in meeting their financial difficulties.
The mortgagees are not pressing for its sale because the loans which fell due (that being the J Trust loan) has been extended and is now not due for repayment until 31 August 2022. I accept that the payment of the mortgage repayments is a continuing and significant strain on B Pty Ltd and for his part, the husband.
However, the proposal for the property’s sale does not make any allowance for where the wife and the children, three of whom live primarily with her, would live after its sale. Certainly, proposed payments from the proceeds of sale would not permit the purchase of another place for them to live. There was no suggestion as to how a suitable property could be rented.
The wife wishes to retain the Suburb H property, if possible, as part of an overall property settlement.
Finally, the Suburb H property is yet to be valued which further adds to the uncertainty.
I am not persuaded that it is just to make orders for the immediate sale of the Suburb H property. That of course, will have consequences on the husband’s ability to comply with other orders. In particular, such a sale would have provided a source of funds for interim costs orders and repayment of arrears, as well as a source of funds for future payments of spousal maintenance, at least insofar as the mortgages would no longer need to be paid, but that will not be the case.
ENFORCEMENT APPLICATION
The wife filed an Application in a Proceeding on 17 December 2021 seeking the enforcement of orders that were made on 15 February 2021. On that day, orders were made that the husband pay the wife $1,500 per week and provide her with a credit card of $7,000 per month, on the basis that the charges were to paid by the husband within the month it had been used.
The husband did not dispute that the orders had been made and that he had not complied with them for the period of 1 September 2021 to 1 December 2021. The husband said simply he could do afford to do so.
In addition, the wife asserts that the husband has not complied with Order 1.3 made on that day to pay certain expenses as they fell due.
The husband disputed whether the expenses claimed by the wife were, in fact, payable by him under the orders. The evidence was not clear and the amount involved was small. I do not propose to deal with these claims further.
As to the balance, the wife seeks a declaration that the amount owing under Order 1.1 is $24,000 and $28,000 under Order 1.2 as at 1 December 2021.
In response, the husband seeks an order that Order 1 made on 15 February 2021 be discharged as and from 23 June 2021, such that no further monies are due and payable pursuant to them.
The husband has not sought to vary the existing orders; he simply has not complied with them.
The sum outstanding is not in dispute and there will be a declaration as sought.
The wife also seeks an order that these sums be paid. As there is already an existing order that those sums be paid by the husband, there is little point in making a further order for them to be paid. The Court should refrain from repetitive orders to the same effect. There is no basis for making an order that B Pty Ltd pay the arrears.
WHAT MAINTENANCE ORDERS SHOULD BE MADE?
I now turn to the question of the husband’s capacity to meet the orders sought against him.
The orders of 15 February 2021 effectively required the husband to pay support to the wife of $13,000 per month. If those orders were maintained and the order for spousal maintenance as sought by the wife were made, the husband would be required to make payments well in excess of $28,600 per fortnight. I am not satisfied that the husband has the capacity to do so.
The husband says his expenses are $11,124 per week. Those expenses suffer the same criticisms as those levelled against the wife, although to a lesser degree. Even taking such matters into account he would still have expenses in excess of his income which he said was $7,162 per week.
The wife submitted the activities of the husband indicated that he had access to other funds.
In her Case Outline filed on 21 March 2022, the wife asserted that the husband spent four weeks staying at BB Town during the peak tourist season where he spent $40,137.88 between 16 June 2021 and 15 July 2021 and $12,065.28 was between 16 July 2021 and 12 August 2021. The wife accepts that this accommodation was paid for by the husband’s mother from funds she obtained from B Pty Ltd. Those payments were made before the motion was passed by the directors of B Pty Ltd, which restricted the funds available for the husband’s benefit. As I have said, I cannot and will not assume that the husband’s mother or B Pty Ltd are a source of funds for the husband.
It must also be accepted that the financial position of the businesses and the entities that own and operate them have been significantly and adversely affected by the COVID-19 pandemic and the lockdown in Sydney in late 2021, and that they are no longer flush with the funds that they held prior to it (and as largely reflected in the accounts for the year ended 30 June 2021).
The husband did go on an expensive trip to attend the CC Event in January 2022, but his evidence was that all the costs of that trip were paid by a major client was unchallenged.
I bear in mind that the husband has significant obligations under the mortgage, his borrowing to meet the school fees, the 15 February 2021 orders and the partial dollar for dollar costs order.
I am persuaded to discharge the order for the payment of $1,500 per week and the order as to the provision of the credit card made on 15 February 2021 because the husband has no apparent means to meet the orders.
The husband’s expenses set out above did not include payments under the 15 February 2021 orders. It follows that, having regard to the husband’s income, he does not have the capacity to meet the further payments sought by the wife even though he has been freed from those obligations.
It follows that her application for spousal maintenance will be dismissed.
I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 19 May 2022
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