Gates & Gates
[2022] FedCFamC1F 667
Federal Circuit and Family Court of Australia
(DIVISION 1)
Gates & Gates [2022] FedCFamC1F 667
File number(s): SYC 5599 of 2021 Judgment of: BRASCH J Date of judgment: 7 September 2022 Catchwords: FAMILY LAW – PARENTING – Interim orders – Where the parents could not agree on the time the younger child would spend with the father during school term time and Christmas Day – Where consent orders were made and only discrete issues remained.
FAMILY LAW – PROPERTY – Interim orders – Where the mother sought payment from the father as funds for litigation expenses – Where the father was in a position of financial strength – Where both parties agree the mother’s entitlement will exceed the sum sought – Orders made for interim property settlement.
Legislation: Family Law Act 1975 (Cth) ss 60B, 60CA, 60CC, 60CC(2), 60CC(2)(a), 60CC(2A), 60CC(3), 69ZL, 72, 74, 75(2), 79, 79(4), 79(6), 80(1)(h), 114, 117 Cases cited: Bing & Bing (2007) FLC 93-318; [2007] FamCA 418
Eaby & Speelman (2015) FLC 93-654; [2015] FamCAFC 104
Gabel & Yardley (2008) FLC 93-386; [2008] FamCAFC 162
Goode & Goode (2006) 36 FLC 93-286; [2006] FamCA 1346
Leandra & Randles [2021] FedCFamC1A 51
Marvel & Marvel (2010) 43 Fam LR 348; [2010] FamCAFC 101
Mazorski & Albright (2007) 37 Fam LR 518; [2007] FamCA 520
Strahan & Strahan (Interim Property Orders) (2009) 42 Fam LR 203; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 84 Date of hearing: 23 August 2022 Place: Sydney Counsel for the Applicant: Mr Todd Solicitor for the Applicant: Mills Oakley Lawyers Counsel for the Respondent: Ms Beck Solicitor for the Respondent: Sexton Family Law ORDERS
SYC 5599 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GATES
Applicant
AND: MR GATES
Respondent
order made by:
BRASCH J
DATE OF ORDER:
7 SEPTEMBER 2022
THE COURT ORDERS THAT:
Property
1.Order 2 of the father’s Response to an Application in a Proceeding filed 1 July 2022, be adjourned to the final hearing.
2.Within seven (7) days of the making of these Orders, the father is to do all acts and things to the pay the mother the sum of $50,000, with such sum to be characterised as an interim property settlement and paid into the mother’s solicitors’ Trust Account.
Parenting
3.Upon the father securing accommodation of not less than two bedrooms, the child Y born in 2008 (“Y”) will spend time with the father:
(a)During school terms from the conclusion of school (or 3.00pm if a non-school day) Thursday until the return to school (or 8.30am if a non-school day) on Monday, with such time to commence on the first Thursday of each school term and to continue each alternate weekend thereafter;
(b)During the Christmas period:
(i)In each odd numbered year, with the mother from 10:00 am on Christmas Eve until 10:00 am on Christmas Day and with the father from 10:00 am on Christmas Day until 10:00 am on Boxing Day; and
(ii)In each even numbered year, with the father from 10:00 am on Christmas Eve until 10:00 am on Christmas Day and with the mother from 10:00 am on Christmas Day until 10:00 am on Boxing Day.
THE COURT NOTES THAT:
A.This Order should be read in conjunction with the Consent Order dated 26 August 2022.
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 Gates & Gates is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J:
The parameters of dispute
This matter was listed for an interim hearing on 23 August 2022. In contest were both interim parenting and property issues. To their very great credit, the parties were able to resolve many of the issues and I made consent orders that afternoon. The consent orders have issued.
In addition to the many matters that were resolved by consent, the father also sought the following interim orders:
2.That for the purpose of the proceedings, the Court declare that the value of the wife’s interests in [B Company] is $1,273,458.
3.That the parties do all acts and things within 7 days of Order 2 above being made to give effect to Orders 5 and 9 of the Orders dated 11 March 2022 AND IT IS NOTED that those Orders provide for the appointment of a single expert business valuer and a single expert real property valuer.
Ultimately, it was agreed by the parties that I adjourn proposed order two (2) to the final hearing. I agree that will be the more appropriate place for that issue to be tested. I will so order. In those circumstances, proposed order three (3) was not pressed. That too was entirely appropriate.
The following issues remained in dispute:
(1)What ought be the term time parenting arrangements for the child Y, born in 2008. The mother proposed the child spend three nights a fortnight with his father. The father proposed Y spend five nights a fortnight with him;
(2)What ought be the arrangements on Christmas Day. The mother proposed the children spend 10.00 am Christmas Day to 10.00 am Boxing Day with her every year. The father sought an alternating of this special day; and
(3)Whether $50,000 ought be provided to the mother by way of interim property distribution to “get her to mediation” with the funds to be used for legal fees and thus added back. The father opposed the provision of any funds to the mother.
Brief Background
Given the discrete nature of the disputes, I will only give a brief background.
The applicant mother is Ms Gates. She was born in 1969, and is thus 53 years of age. The respondent father is Mr Gates. He was born in 1968 and is thus 54 years of age.
The parties commenced cohabitation in 1994 and married in 1996. They have two children: X (born in 2005) aged 17 years, and Y (born in 2008), aged 14 years.
The parties separated on a final basis on or about November 2020 for the mother and 15 March 2021 for the father. I do not need to resolve that dispute. It seems common ground that physical separation occurred when the mother left the home on 16 June 2021. The mother commenced these proceedings by filing an Initiating Application on 4 August 2021. The father filed a Response on 3 September 2021.
These interim proceedings arose out of the mother’s Application in a Proceeding filed 2 June 2022. The respondent joined issue with that application, and filed a Response to an Application in a Proceeding on 1 July 2022.
On 11 March 2022, orders were made for disclosure, for obtaining valuations and to attend mediation.
When the matter came before me, no parenting orders were in place. However, the parties were able to agree on many parenting orders. Sensibly, the parties also agreed that X - 18 next year - was at an age that he would continue to navigate his relationship with his parents around his many activities and commitments, including the pressures of high school and sport at an internationally competitive level, aiming for the Olympics in 2024. The consent orders that I made accommodated this.
Material
The mother relied upon the following documents:
·Amended Initiating Application filed 4 November 2021;
·Affidavit of Ms Gates filed 2 June 2022;
·Affidavit of Ms Gates filed 10 June 2022;
·Financial Statement filed 2 June 2022;
·Child Impact Report of Ms C dated 6 June 2022; and
·Outline of Case Document filed 23 August 2022.
The father relied upon the following documents:
·Amended Response to Initiating Application filed 3 February 2022;
·Response to Application in a Proceeding filed 1 July 2022;
·Affidavit of Mr Gates filed 1 July 2022;
·Financial Statement filed 2 September 2021;
·Child Impact Report of Ms C dated 6 June 2022;
·Outline of Case Document filed 19 August 2022; and
·Documents tendered during the hearing that became Father’s Exhibit 1 and 2.
PARENTING PRINCIPLES
This is an interim hearing, and accordingly, shorter reasons are permitted pursuant to section 69ZL of the Family Law Act 1975 (Cth) (“the Act”). It is also a matter which falls within Part VII of the Family Law Act, with its objects and principles at s 60B. The best interest of the child are paramount in deciding whether to make a particular parenting order in relation to the children as provided by s 60CA of the Act. The considerations to assist me in determining those best interests are set out at s 60CC.
To the great benefit of both children and their parents, this is not a matter where either party alleges the other poses an unacceptable risk to the children. The parents simply cannot agree on term time for Y and his father, and how Christmas Day is to be arranged.
The Full Court in Goode & Goode (2006) 36 FLC 93-286 (“Goode”) set out at [81-82] the approach to be adopted in interim parenting matters:
In making interim decisions the court will still often be faced with conflicting facts, little helpful evidence and disputes between the parents as to what constitutes the best interests of the child. However, the legislative pathway must be followed.
In an interim case that would involve the following:
•identifying the competing proposals of the parties;
•identifying the issues in dispute in the interim hearing;
•identifying any agreed or uncontested relevant facts;
•considering the matters in s 60CC that are relevant and, if possible, making findings about them (in interim proceedings there may be little uncontested evidence to enable more than a limited consideration of these matters to take place);
•deciding whether the presumption in s 61DA that equal shared parental responsibility is in the best interests of the child applies or does not apply because there are reasonable grounds to believe there has been abuse of the child or family violence or, in an interim matter, the court does not consider it appropriate to apply the presumption;
•if the presumption does apply, deciding whether it is rebutted because application of it would not be in the child’s best interests;
•if the presumption applies and is not rebutted, considering making an order that the child spend equal time with the parents unless it is contrary to the child’s best interests as a result of consideration of one or more of the matters in s 60CC, or impracticable;
•if equal time is found not to be in the child’s best interests, considering making an order that the child spend substantial and significant time as defined in s 65DAA(3) with the parents, unless contrary to the child’s best interests as a result of consideration of one or more of the matters in s 60CC, or impracticable;
•if neither equal time nor substantial and significant time is considered to be in the best interests of the child, then making such orders in the discretion of the court that are in the best interests of the child, as a result of consideration of one or more of the matters in s 60CC;
•if the presumption is not applied or is rebutted, then making such order as is in the best interests of the child, as a result of consideration of one or more of the matters in s 60CC; and
•even then the court may need to consider equal time or substantial and significant time, especially if one of the parties has sought it or, even if neither has sought it, if the court considers after affording procedural fairness to the parties it to be in the best interests of the child.
With respect to disputed facts, it was observed in Leandra & Randles [2021] FedCFamC1A 51 at [35] that:
However, it does not follow that merely because there are facts in dispute, the evidence on the issue should be disregarded but one must approach fact finding in interim maters with considerable circumspection.
Finally, the Court ought take a conservative approach at an interim hearing. See for example Marvel & Marvel (2010) 43 Fam LR 348 (which has been cited with approval by the Full Court in Eaby & Speelman (2015) FLC 93-654) the Full Court said at [120]:
As has frequently been emphasised interim parenting proceedings, and orders made as a consequence, are a necessary but temporary measure until all the evidence can be tested, evaluated and weighed at a final hearing by the making of final parenting orders. Decisions judicial officers have to make in interim proceedings are difficult and, often for very good reason, a conservative approach, or one which is likely to avoid harm to a child is adopted. This is often to the understandable distress of a party who may not achieve the outcome he or she desires, or thinks to be in the best interests of their child or children…
And at [122] and [123]:
In SS & AH [2010] FamCAFC 13 the majority (Boland and Thackray JJ) discussed at paragraph 88 of their reasons the care necessary to be exercised in making findings in interim parenting proceedings. Their Honours said:
In our view, findings made at an interim hearing should be couched with great circumspection, no matter how firmly a judge’s intuition may suggest that the finding will be borne out after a full testing of the evidence.
Later, at paragraph 100 their Honours amplified their comments and said:
The intuition involved in decision-making concerning children is arguably of even greater importance when a judge is obliged to make interim decisions following a hearing at which time constraints prevent the evidence being tested. Apart from relying upon the uncontroversial or agreed facts, a judge will sometimes have little alternative than to weigh the probabilities of competing claims and the likely impact on children in the event that a controversial assertion is acted upon or rejected. It is not always feasible when dealing with the immediate welfare of children simply to ignore an assertion because its accuracy has been put in issue.
Section 60CC considerations
In determining the best interests of children, there are two primary considerations and many additional considerations to take into account. The two primary considerations, set out in section 60CC(2) of the Act and referred to as the “twin pillars” in the decision of Mazorski & Albright (2007) 37 Fam LR 518 are:
(a) The benefit to the children of having a meaningful relationship with both parents; and
(b) The need to protect the children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence
I am required pursuant to section 60CC(2A) of the Act to give greater weight to the second of those two primary considerations, being the need to protect the children from physical or psychological harm from being subjected to, or exposed to, abuse, neglect or family violence.
I will consider the relevant s 60CC factors in the discussion below.
Submissions and discussion
In the mother’s affidavit filed 2 June 2022, she deposed at paragraph 60 that since she vacated the former matrimonial home, the children have been living with her and spending time with their father four to five nights a fortnight. The mother said this arrangement remained until January 2022 when X ceased overnight time with the father.
The father deposed in his affidavit at paragraph 25 that the children currently live with the mother and Y spends approximately five nights a fortnight in his care. The father said X spends time with him in accordance with his wishes but notes that they recently travelled to Country D together to facilitate X competing in a sporting event.
The report writer said this at paragraphs 6 and 7:
… However, on either parent’s account it appears that since the beginning of the 2022 school year [Y] has generally spent frequent and regular time with his father each fortnight of either four, five or six nights.
[X] has not stayed overnight time in his father’s home since February/March 2022. The parents attribute this to different reasons. However, on all accounts [X] continues to communicate with his father, sees his father at various extra-curricular activities and other events and has also travelled with his father interstate and internationally to participate in [sporting events]. He and his father have plans to travel to [Country D] for two weeks in July/August 2022 so that [X] can participate in [a sporting event].
I do not need to resolve what the parenting has actually been other than on each parties’ account, X, a young man soon to turn 18 years, has a flexible arrangement with his father centred around X’s activities and schedule. On both accounts, Y has been spending substantial and significant time with his father.
It was the mother’s submissions that for:
(a)Christmas Day, her orders proposing Y spend time with the father “during the Christmas period from 10.00 am Christmas Eve to 10.00 am Christmas Day each year” preserved “the status quo”. I observe that parties have only had one Christmas (2021) since physical separation. The mother also submitted that the father and his family celebrated Christmas on Christmas Eve; and
(b)Term time, her proposal that Y spend three nights a fortnight reflected his views. I was referred to the Child Impact report at paragraph 30 in particular, but also paragraphs 16, 28 and 32, all of which I extract below.
However, in the Child Impact Report this was attributed to the mother at paragraph 10: “In her interviews she voiced no objections to either X or Y communicating freely with the father or Y spending regular and frequent time with the father each alternate weekend for four consecutive nights”. No submission was made that she was erroneously recorded, nor was this disputed in her affidavit.
The gravamen of the father’s submissions were that for:
(a)Christmas Day, there was no “status quo”, Christmas Eve was not his special evening and this special day should be shared between the parents such that time alternated year to year;
(b)Term time: the mother had not put on evidence to explain why time ought be reduced; quality time with the father required there be sufficient time; 9-5 “is good” because Y sees both parents; and, I was also referred to specific parts of the Chid Impact Report being paragraphs 29 and 30, which are extracted below.
In the Child Impact Report, Y was reported as saying:
In relation to future parenting arrangements, [X] and [Y] expressed unambiguous views about wanting to live primarily with their mother. Both boys expressed a strong wish to be able to attend school from their mother’s home. They are each opposed to an equal time arrangement as per their father’s proposal.
(Child Impact Report of [Ms C] dated 6 June 2022, paragraph 16)
To the father’s credit, his application for time before me was not for an equal time arrangement, but for five nights a fortnight. The other paragraphs, to which I was referred, relevantly, said this:
... [Y] appears to experience his mother as being more attuned and sensitive to him and his feelings (than his father). However, [Y] is very clear that while his mother’s house feels more like home, he also enjoys being with his father. [Y] identified various activities that he likes doing with father such as playing tennis, going to rugby games or football, going camping and on holidays.
[Y] said of a 9:5 arrangement that it is “good” because he gets to see both his parents. However, he finds midweek interruptions that come with moving between his two homes difficult. He also talked of the difficulties he can experience in organising, packing, and transferring his belongings between households. These difficulties are clearly exacerbated by the difficulties his parents experience in directly talking to one another and the conflict [Y] perceives exist in the parental relationship.
…His preferred parenting arrangement during school terms would be one that sees him live primarily with his mother and spending time each alternate weekend with his father. He suggested being in his father’s care from either a Thursday or Friday afterschool to either a Monday or Tuesday before school.
(Emphasis added)
(Child Impact Report of [Ms C] dated 6 June 2022, paragraphs 28-30)
Counsel for the father, understandably, put great emphasis on the 9:5 referred to in paragraph 29. She added that I would not place much weight on the “from either a Thursday or Friday afterschool to either a Monday or Tuesday before school” in paragraph 30, because it is unclear what that meant. I disagree and say more about this below.
Whilst [Y] expressed some opinions about the type of parenting arrangement that he believes would work best for him, it was obvious that he would likely be happy with any arrangement that his parents agreed on, so long as it would allow him the opportunity to spend regular and predictable pattern of time in each household and time with [X] and had minimal midweek changeovers per week or fortnight.
(Emphasis added)
Child Impact Report of [Ms C] dated 6 June 2022, paragraph 30)
The parties have agreed to an order for equal shared parental responsibility. That requires me to then consider whether equal time would be in the children’s best interest. I do not conclude that. First, neither party asked me to consider this. Second, neither of the children want it. Indeed, Y rejects that option. Third, X is of an age that the parents are content for him to keep engaging with is parents as he wishes and I agree that is appropriate.
I then turn to substantial and significant time, which both parties’ proposals fall within.
Of particular relevance in this matter is to craft an order that will see Y having a meaning relationship with both his parents, and to take account of his wishes and any reasons therefore.
I was not taken to any other particular s 60CC factors other than his wishes (s 60CC(3)(a)). I have nevertheless turned my mind to all.
When I look at what Y said in the Report, I see a young man who plainly wants to spend time with both parents, but, unlike the parents, is relaxed about the quantity. For example, what he said at paragraph 30 saw him express an opinion about a range of time with which he would be comfortable, from three nights a fortnight (Friday to Monday), up to five nights (Thursday to Tuesday), to anything in between.
I will order Y spend four nights a fortnight with his father. I do not do so because that is the midpoint between the two proposals. Rather I do so because, first, where the parties have agreed on so many parenting orders, it is important for the children’s benefit that I foster, as best I can, this cooperative approach; see s 60CC(3)(o) of the Act. Conversely, if I ordered three nights a fortnight, the mother might perceive she had ‘won’ and the father perceive he had ‘lost’. If I ordered five nights, then the same might eventuate but in reverse. Consistent with s 60CC of the Act and in light of their many agreements forged in court on 23 August 2022, I do not consider that to be in the children’s best interests.
Second, I am comforted in reaching this outcome of avoiding a winner and a loser by reference to paragraph 42 of the Child Impact Report:
In this matter, any prevailing risk to either [X] or [Y] is, potentially, emotional distress/discomfort of being caught in the middle of discord and conflict between their mother and their father. They will inevitably fair better if the parents can keep their conflict low, discourage the boys from “choosing sides” between the parents and keep them out of parental communication.
In not “choosing a side”, the boys will hopefully not perceive that the court favoured one parent or their position over the other. To that end the parents would be well served to keep in mind what the Child Impact Report writer said at paragraph 59:
The parents should remain aware that, at this age, it is not the apportion of time that either [Y] and [X] spend in each household over a fortnight period that will ensure that they are emotionally and psychologically healthy and help them to maintain positive relationships, but the way in which the adults liaise and work together to manage their conflict and disagreements that potentially will have the biggest influence.
Third, four nights a fortnight fits comfortably within the wishes expressed by Y as set out above. That consideration finds expression in s 60CC(3)(a) of the Act. Further to the consideration of Y’s wishes in s 60CC(3)(a), my determination of four nights a fortnight has regard to the effect of changes to Y’s circumstances involving his separation from X (see 60CC(3)(d)(ii)).
As for the specific days, the mother proposed (albeit on three nights a fortnight) change overs occur from school Thursday to a return Sunday evening. The father’s proposed time (albeit five nights a fortnight) was from school Friday to the return to school Wednesday morning. There is no magic in my selection of days. Time will start from the conclusion of school on Thursday, to Y’s return to school on the next Monday. I have chosen those days as the Thursday start must be workable in the mother’s household, as she proposed it. That also gives the father the opportunity to be involved in Y’s day to day school life on a Friday, gives them a full weekend together, and gives the father another opportunity to engage with Y’s school on a Monday morning. Using school for changeovers also quarantines Y from the adult conflict which might be visible if his parents were involved. I will make orders that accommodate either change over day being a pupil free day at school.
As for Christmas Day, the mother’s proposed order (contained in her Case Outline) was that the children would always have Christmas Eve and morning with the father, and she have the balance:
14.That upon the Father securing accommodation of not less than two bedrooms, [Y] is to spend time with the Father as follows:
…
14.6 During the Christmas period from 10.00am Christmas Eve to 10am Christmas Day each year.
…
15. That the Father’s time pursuant to Order 14 is suspended on the following occasions when [Y] is to remain in the care of the Mother:
…
15.4 During the Christmas period from 10am Christmas Day until 10am Boxing Day each year.
The father’s proposal was this:
During the Christmas period
i. In each odd numbered year, with the Mother from 10:00am on Christmas Eve until 10:00am on Christmas Day and with the Father from 10:00am on Christmas Day until 10:00am on Boxing Day; and
ii. In each even numbered year, with the Father from 10:00am on Christmas Eve until 10:00am on Christmas Day and with the Mother from 10:00am on Christmas Day until 10:00am on Boxing Day.
Neither party put on any evidence that it might have assisted me in resolving this dispute, nor was I taken to any legal principles which might assist.
Nevertheless, the parties separated in November 2020 for the mother and March 2021 for the father. What is common ground is that they were separated under one roof to June 2021 when the mother left the home. Thus, I do not accept that one Christmas Day after their physical separation (2021) created a status quo. Even if it did, then Goode makes it clear that the status quo is not preserved just for the sake of the status quo, at [72]. I acknowledge the Full Court added that the court may ultimately find a well settled arrangement is in the child’s best interest but that would be arrived at after consideration of the relevant s 60CC factors, at [73].
Here, the only principle I can turn to in deciding this issue is that of s 60CC(2)(a): that the children have a right to a meaningful relationship with both parents. Spending Christmas Eve and waking up Christmas morning in one household, and then in the other household the following year, gives articulation to that principle. Similarly, the sharing of these special days finds support from s 60CC(3)(f), whereby each parent can provide for the needs of the child on these special days.
Accordingly, I will make the Christmas time order as proposed by the father.
Property principles: litigation funding
Past authorities have made reference to property adjustment orders which are “interim”, “partial”, and “final”. Nowhere in the Act does the word “partial” appear in the context of orders for settlement of property. Reference to “partial” orders for settlement of property may now be seen as less than helpful (see Gabel & Yardley (2008) FLC 93-386 (“Gabel & Yardley”) at 82,955). “Interim” orders for settlement of property are expressly referred to in the Act (see s 79(6)) and also envisaged by the Act (see s 80(1)(h)) (see Strahan & Strahan (Interim Property Orders) (2009) 42 Fam LR 203 (“Strahan”) at 227-228). I will use the adjective, “interim.”
There are a number of statutory heads of power under which the court may make orders to facilitate funding of litigation. The orders may be made in the guise of spousal maintenance orders (ss 72, 74) or costs orders (s 117), and provided there are pending proceedings for adjustment of property interests, the orders may also be made as interim property settlement orders (ss 79, 80(1)(h)). It may even be possible to make such orders pursuant to the injunctive power (s 114) (see Strahan at 220-221). But the overall purpose of the orders must be to meet past or future costs of pursuing the litigation (see Strahan at 224).
In this matter, it was common ground that in determining this interim application, I would exercise power under s 79, 80(1)(h) of the Act. Identifying the source of power is important, as that determines the necessary preconditions and relevant considerations for considering the order sought (see Strahan at 221, 247). I will approach the matter on the basis proposed by the parties; that is, I will consider the matter under ss 79, 80(1)(h) of the Act.
It was also common ground that my power to make orders for settlement of property has not been exhausted or “spent” but will exercised in an interim manner (see Gabel & Yardley at 82,957-958; Strahan at 229-230).
In Strahan at [131], Boland and O’Ryan JJ agreed that there is a two-stage approach to applications for partial property settlement: first, the procedural or adjectival step (i.e. whether the Court should exercise its discretion to entertain or embark on hearing and determining an interim property settlement application), and secondly, the substantive step (i.e. the nature of the order to be made once it has been decided it is appropriate or just to hear and determine the application).
In relation to the first step, their Honours said at [132]:
... In our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the ‘overarching consideration’ is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
At [133], their Honours considered some examples of circumstances where it may be appropriate to exercise the power at an interim stage, including where one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.
The overarching consideration at the first procedural step is the interests of justice. It is not necessary for the applicant to establish the existence of compelling circumstances (see Strahan at 231-236, 241, 249)
In relation to the second step, their Honours said at [135] that:
as the jurisdiction under s 79 of the Act is being exercised the provisions of that section must be considered and applied but with limitations given that it is not the final hearing.
They continued at [137]:
Once a court proceeds to exercise the power in s 79 of the act, being in the substantive phase, a court is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. However consideration of such matters may be brief and if it is established that ‘it seems likely to the court that ... the applicant ... will be likely to receive by way of property settlement a sum sufficient to cover the advance, that would seem to be sufficient to enable the order sought to be made’: Zschokke; Polletti and Polletti per Nygh J and Wenz v Archer. As senior counsel for the Wife submitted, ‘provided scope can be found within the assets of the parties for an order of the size sought ... then that should be the end of the matter’. In other words, in such circumstances the applicant would only be receiving what he or she was entitled to receive when the power was exhausted.
However, their Honours emphasised at [139] that “in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party”.
Submissions and discussion
The parties balance sheet became Father’s Exhibit 1.
The mother’s submissions were that: the money was to get her to mediation and would be paid to her solicitors’ Trust Account; the monies would be added back; the father had just over $70,000 in his …76 account; and, on a pool of $1.5 million for the mother, or $2.8 million for the father, it was certain that her entitlement would be greater than $50,000.
The mother deposed in her 2 June 2022 affidavit that the father had significantly drawn down on funds from matrimonial property sale proceeds that were deposited into a bank account in his sole name (mother’s affidavit filed 2 June 2022, paragraphs 76-78 and 85).
The father’s submissions were that: the mother was receiving at least $8,500 per month from a United States trust; she is a beneficiary of that trust; she has accounts for which there has been no disclosure for six months; the Father’s Exhibit 2 (a wad of the mother’s bank statements from June 2021 to December 2021) showed money coming into her account, culminating in a submission that she had better capacity to fund her legal fees than the father; that if he was ordered to pay $50,000 then he would not be able to pay his own legal fees; and, his expenses outweighed her expenses.
In response to the father’s submissions about trust fund distributions, the mother said she was receiving funds by way of a loan (mother’s affidavit filed 2 June 2022, paragraphs 82 and 83). I cannot resolve that dispute on an interim basis.
I also cannot resolve how the father has used funds from the …76 account, which had $181,600 per his Financial Statement filed 3 September 2021, but now has almost $70,040 (Father’s Exhibit 1).
With regard to the non-disclosure asserted by the father, the mother deposed in her 10 June 2022 affidavit that steps were being undertaken with her accountant in the United States to provide these documents (mother’s affidavit filed 10 June 2022, paragraphs 9-12).
Both parties are agreed that the mother’s property entitlement will be greater than the $50,000 sought. That said, the principles I have referred to previously require more than just an excess of entitlement.
Turning, first, to the procedural or adjectival step, both parties seek orders for alteration of interests in property pursuant to s 79 of the Act – the father seeks 60 per cent of the pool. The mother seeks 65 per cent of the pool. Hence, each concede it is just and equitable to make an order, as required by s 79(2) of the Act. I accept, as I must, that the usual order pursuant to s 79 is a “once and for all order” made after a final hearing. The issue I must determine is whether I should make an order at this interim stage of the proceedings.
Looking at the Joint Balance Sheet (father’s Exhibit 1), there are a number of issues in this case surrounding:
(a)the valuation of the father’s interest in F Pty Ltd;
(b)the valuation of the father’s interest in G Limited;
(c)the mother’s interest in B Company;
(d)the mother’s interest in two family trusts;
(e)whether the mother has a loan/s owing to family members;
(f)whether those trust interests are property or a financial resource.
It is also apparent from submissions that disclosure, or the lack thereof, is in issue, in particular what the mother’s United States accountant have provided, or not.
At trial, those various issues may be resolved in favour of the father or in favour of the mother. At this stage, I do not know, nor can I even make a preliminary view. However, at present, they are issues, and potentially complex ones, which the mother is entitled to pursue and investigate. Clearly, that will increase the mother’s legal costs and disbursements up to and at trial.
The mother’s costs notice dated 22 August 2022 disclosed that, as at that date, she had incurred legal costs and disbursements totalling $74,920.02. Her future estimated costs and disbursements up to and including the interim hearing were $12,650, then for the mediation were in the order of $37,540, and, $58,000 to trial. The source of those funds was the mother’s income and loans from family members.
The application for $50,000 in litigation funding seems reasonable to me. There was no challenge to the actual sum by the father. I also accept the bona fides of the mother’s application for litigation funding, with the funds to be paid onto her solicitor’s Trust Account.
The father’s costs notice dated 22 August 2022 discloses that, as at that date, he had incurred legal costs and disbursements totalling $44,587.79 and his solicitors held the sum of $5,197.50 in trust in anticipation of costs and disbursements. His future estimated costs and disbursements up to and including trial were in the order of $75,282-$92,782 inclusive of the interim hearing estimated cost. The source of those funds was his income and borrowings.
Looking at the parties’ Financial Statements, I accept the father is in a position of relative financial strength to that of the mother. The mother’s gross income is $2,412 per week and the father’s $3,430 per week. Of course they both have expenses from that income. The father however holds the great proportion of matrimonial assets in his name.
It is well established that a purpose of litigation funding orders, is to level the proverbial playing field. In this case, the “field” favours the father.
Thus, in the circumstances of this case, I find that it is in the interests of justice, and appropriate, (both terms being used by Boland and O’Ryan JJ in Strahan [at [132]) to exercise the power at this juncture in the proceedings.
Turning, secondly, to the substantive step, whilst I am required to undertake consideration of the matters in section 79(4), such consideration may be brief – and particularly so in this case, because both parties concede the mother’s entitlement will be greater than the $50,000 she seeks. I can safely infer that they both do so by reference to their respective assessments of her contributions and any relevant s 75(2) factors.
Suffice to say, the parties’ relationship spanned some 26 years in duration, on the mother’s case, or 27 years in duration on the father’s case. They have two children, who are presently aged 17 and 14. X spends time with his father in a flexible arrangement. By virtue of my orders, Y will spend time with his father on special occasions and on four nights a fortnight during term time.
The parties’ joint balance sheet provides a pool of between $1.5 million and $2.86 million. As said, both parties agree that whatever the pool found at trial, the mother’s entitlement will be greater than any interim property settlement of $50,000.
The father says he cannot afford to make the payment to the mother, and says he would not be able to fund his litigation if I ordered the payment. That submission however, overlooks the fact that the father stands possessed of a share portfolio in his name worth $134,594, a property in Tasmania with a value of somewhere between $195,000 to $237,500, and his interest in F Pty Ltd with a value of at least $475,000. That is in addition to the in addition $70,000 in his …76 account.
In Bing & Bing (2007) FLC 93-318 at [27], in the Full Court, the plurality said:
Finally it has been asserted that the husband was and remains unable to raise the capital sum sought by the wife. This is a matter which may become relevant if and when the husband defaults in the order and an enforcement application is brought. However, the question of enforcement of the order remains a separate question from the propriety of granting the orders in the first place.
Thus, it is not necessary for me to consider the father’s capacity to pay or cause to be paid the partial property settlement I shall order. However, I am nevertheless satisfied that he does have the capacity to do so by reference to his financial circumstances, as I have set out above.
Accordingly, I will order that the father pay or cause to be paid to the mother the sum of $50,000 by way of interim property settlement pursuant to s 79 of the Act, and to be used for this litigation.
I certify that the preceding eighty-four (84) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 7 September 2022
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