Goncharova & Goncharov
[2021] FamCA 559
•2 August 2021
FAMILY COURT OF AUSTRALIA
Goncharova & Goncharov [2021] FamCA 559
File number(s): SYC 1111 of 2020 Judgment of: BERMAN J Date of judgment: 2 August 2021 Catchwords: FAMILY LAW – SPOUSAL MAINTENANCE – Lump sum – Where the wife seeks interim spousal maintenance by way of lump sum payment – Where the husband seeks that the application be dismissed – Where the wife has primary care of one child and part care of the other – Where the wife is unable to adequately support herself – Where the husband is unemployed but is being financially supported by funds borrowed from his parents – Orders.
FAMILY LAW – PROPERTY – Interim distribution – Where the wife seeks litigation funding – Where the husband seeks that the application be dismissed – Where the litigation is complex – Where the wife is unable to meet her legal fees – Where the husband has been able to meet his legal fees – Where a level playing field does not exist – Where each of the parties have an arguable case – Where it is in the interests of justice for an order to be made by way of partial settlement of property – Orders.
Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 79, 80, 117(2)
Cases cited: Ashton & Ashton (1986) FLC 91-777
Barro & Barro (1983) FLC 91-300
Drysdale & Drysdale [2011] FamCAFC 85
Edgar & Strofield (2016) FLC 93-711
Felice & Felice [2011] FamCA 162
Gabel & Yardley (2008) FLC 93-386
Hall v Hall (2016) 257 CLR 490
Maroney & Maroney [2009] FamCAFC 45
McCrossen & McCrossen (2006) FLC 93-283
Medlow & Medlow (2016) FLC 93-692
Stanford v Stanford (2012) 247 CLR 108
Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693
Number of paragraphs: 158 Date of hearing: 3 June 2021 Place: Heard in Sydney, delivered in Adelaide Counsel for the Applicant: Mr Scarlett Solicitor for the Applicant: Consort Family Law Counsel for the Respondent: Mr Ford Solicitor for the Respondent: Nolan Lawyers ORDERS
SYC 1111 of 2020 BETWEEN: MS GONCHAROVA
Applicant
AND: MR GONCHAROV
Respondent
ORDER MADE BY:
BERMAN J
DATE OF ORDER:
2 AUGUST 2021
THE COURT ORDERS:
1.That by way of lump sum spousal maintenance the husband pay to the wife the sum of FIFTY FIVE THOUSAND ONE HUNDRED AND FORTY DOLLARS ($55,140) on or before TWENTY EIGHT (28) days from the date of this order.
2.That by way of partial settlement of property the husband pay to the wife a further sum of ONE HUNDRED AND EIGHTY THOUSAND DOLLARS ($180,000) on or before sixty (60) days from the date of this order.
3.That in the event that the husband fails to comply with orders 1 and 2 herein then the parties shall do all things necessary and sign all such documents as may be required to cause the property situate at Suburb E in the state of New South Wales to be placed on the market by private treaty or public auction upon such terms and conditions as the parties may agree but in default of agreement as may be ordered.
4.That the proceedings be listed for hearing before a Registrar to determine matters of discovery and the appointment of an appropriately qualified single expert or experts to enquire into and report as to the value to be attached to the husband’s 15 per cent share in each of F Company and G Company being limited liability companies.
5.That on or before twenty one (21) days from the date of this order the husband file and serve an amended response particularising the final orders sought.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Goncharova & Goncharov has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Berman J
By Amended Initiating Application filed 29 September 2020, Ms Goncharova (“the wife”) seeks final orders for settlement of property summarised as follows:
(a)That the parties cause the property situated at Suburb E in the state of New South Wales (“the Suburb E property”) to be placed on the market for sale by private treaty and if unsuccessful by auction.
(b)That the net proceeds of sale be divided between the parties as to 60 per cent to the wife and 40 per cent to the husband.
(c)That each of the parties thereafter shall be solely, legally and beneficially entitled to the exclusion of the other to all property of whatsoever nature and kind in their separate ownership, possession and/or control.
(d)That each party forego any claims they may have to any superannuation benefit or entitlement owned by the other.
(e)That each party be responsible for their own debts and liabilities.
(f)That each party be solely liable for and indemnify the other against any liability encumbering any item of property to which a party may be entitled pursuant to orders made.
By Amended Response to Initiating Application filed 1 October 2020, Mr Goncharov (“the husband”) seeks that the wife’s application for property orders be dismissed and further seeks to be excused from particularising orders for property settlement until:
(a)The Court has determined loan agreements between the husband and his parents;
(b)The parties have obtained joint property valuations with respect to any remaining matrimonial property, if any; and
(c)The wife has provided full and frank disclosure as required by the Family Law Rules 2004 (Cth).
The wife filed an Amended Application in a Case on 13 May 2021 seeking:
(a)That within 14 days the husband pay the wife:
(i)a sum of $200,000 by way of lump sum spousal maintenance; and
(ii)a sum of $180,000 to the trust account of Consort Family Law, the solicitors of the wife.
The amended application provides that in default of the payment of the lump sums as sought, the husband shall cause a property situated in Country B at Suburb H, Street J to be sold and if a sale does not occur then the Suburb E property is to be sold.
An alternative position for the applicant in respect of the sum of $180,000 is by way of a “dollar for dollar” order.[1]
[1] See G & T (2004) FLC 93-176
By Further Amended Response to an Application in a Case filed 31 May 2021, the husband seeks that the wife’s Amended Application in a Case be dismissed.
BACKGROUND
The parties were married in Country B and moved to Australia in 2014.
There are two children to the relationship, X who is 16 years of age and Y who is 10 years of age.
The parties purchased the Suburb E property in 2016 for $1,775,000.
The parties separated in August 2019. The wife left the Suburb E property and moved to nearby rental accommodation.
Y resides primarily with the mother whereas X moves between the parties’ separate households.
The proceedings commenced on 20 February 2020.
On 10 July 2020, Judge Monahan delivered judgment in respect of the wife’s application that she have sole use and occupation of the Suburb E property but in the alternative that the husband do pay her the sum of $150,000 to be categorised at a final hearing.[2]
[2] See Goncharova & Goncharov [2020] FCCA 1880.
In default of payment of the sum, the wife sought that the Suburb E property be placed on the market for sale. The husband also sought orders for sole use and occupation of the Suburb E property and opposed the provision of any lump sum to the applicant.
His Honour’s determination of the interim applications can be summarised as follows:
(a)The husband have the sole right to use and occupy the Suburb E property to the exclusion of the wife;
(b)The husband meet all applicable outgoings including water, electricity and council rates and be responsible for the day to day care and maintenance of the property;
(c)The husband pay the wife the sum of $70,000 within 14 days in such manner as the wife directs in writing;
(d)All extant applications be transferred to the Family Court of Australia; and
(e)The husband serve a copy of the orders made on 24 June 2020 and a copy of the orders of 10 July 2020 to Mr C Goncharov and Ms D Goncharova (“the husband’s parents”).
I refer to his Honour’s helpful discussion of the background and procedural history as adequately set out in his judgment.[3]
[3] Ibid.
Relevant to the current application is the basis upon which his Honour determined that the husband should pay the wife the lump sum of $70,000.
It appears that the wife did not seek to identify the head of power pursuant to which she sought the lump sum of $150,000.
His Honour considered that the Court had power under ss 79 and 80 of the Family Law Act 1975 (Cth) (“the Act”) or in the alternative to an interim property distribution an order under s 117(2) of the Act for litigation funding.[4]
[4] Barro & Barro (1983) FLC 91-300.
The wife argued that the husband had effective control of the assets and resources of the parties. His Honour referred to subpoenaed documents to show that from 26 September 2019 to 31 May 2020 the husband was able to make significant deposits and withdrawals from various accounts controlled by him. In particular, his Honour found that the balance of the husband’s M Bank account went from $219,451.40 on 1 May 2020 to $135.50 in May 2020. His Honour recorded the husband’s concession that he had withdrawn approximately $205,000 from this account in a two week period between the wife filing her application and the husband filing his response. [5]
[5] Goncharova & Goncharov [2020] FCCA 1880 at [76]
Whilst the husband agreed that he had transferred the lump sum from Australia to Country B, it was his contention that the money was transferred following receipt of Notices of Demand from his parents who claim that he owes them $2,945,000.
His Honour records the following:
77. … In support, the husband produced:
•an agreement dated 10 November 2014 that he asserts evidences a loan to be advanced to him by his parents in the amount of [USD1,800,000] (with a loan mature date of 31 December 2020) and which states that the lenders can request an early repayment and that the loan is deemed to be made in US dollars;
•a supplementary agreement dated 10 April 2016 that purports to vary the earlier agreement by reducing the amount to be borrowed to [USD1,637,018] (with a revised loan mature date 31 December 2026) and makes reference to the purchase of a property in Suburb E for [$1,775,000] and confirming the transfer of various amounts of foreign currency that total [USD1,637,018.] In addition, I note that the “lenders” were entitled by the agreement to “register an encumbrance” over the Suburb E property.
•Neither document refers to the wife being a borrower.
The husband has not complied with a request made by the wife that the original loan agreement documents be produced to enable a forensic inspection to be undertaken. Simply put, the wife considers that there was no loan of monies by the husband’s parents and the purported loan agreement documents are a fabrication made after the event to circumvent or thwart the final orders sought by the wife.
His Honour found that the wife should receive a lump sum to assist with her accommodation costs, living expenses and legal fees but that she had not sufficiently established the basis for the amount of $150,000 as claimed. His Honour was ultimately satisfied that the wife should receive the sum of $70,000.
His Honour declined to categorise the payment and considered that it should be a matter for determination at a final hearing.
At this stage of the proceedings the significant issues in dispute appear to be the following:
·The assets of the parties; and
·The extent, if any, to which the liability in favour of the husband’s parents should be brought to account as a liability of the parties.
SPOUSAL MAINTENANCE
In Edgar & Strofield (2016) FLC 93-711 at 81,475 the Full Court said:
15.… the limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing …
The Full Court also held that interim proceedings do not relieve the applicant from the obligation of establishing what is required for a court to consider the grant of the relief sought.
In the decision of Hall v Hall (2016) 257 CLR 490 (“Hall v Hall”), the High Court set out the appropriate approach in considering an application for interim spousal maintenance as follows:
3.… The gateway to the operation of Part VIII in relation to spousal maintenance is in s 72(1). That subsection provides that “[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)”.
4.The liability of a party to a marriage to maintain the other party that is imposed by s 72(1) is crystallised by the making of an order under s 74(1). That subsection provides that, “[i]n proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part”.
5.A court exercising the power conferred by s 74(1) is obliged by s 75(1) to take into account the matters referred to in s 75(2) and only those matters (s 75(1)). Those matters are presented as a comprehensive checklist. They include what s 75(2)(b) refers to as “the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment”. They also include, by virtue of s 75(2)(o), “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.
…
8.Unlike a court exercising the power to make an urgent order conferred by s 77, a court exercising the power to make an interim order under s 74(1) must be satisfied of the threshold requirement in s 72(1) and must have regard to any matter referred to in s 75(2) that is relevant. No doubt, on an application for an interim order “[t]he evidence need not be so extensive and the findings not so precise” as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth). A court determining an application for an interim order under s 74(1) cannot make such an order without finding, on the balance of probabilities on the evidence before it, that the threshold requirement in s 72(1) is met having regard to any relevant matter referred to in s 75(2).
(Footnotes omitted)
As noted in Hall v Hall (supra), the High Court confirmed that an applicant seeking an order for spousal maintenance carries the evidentiary burden as set out in s 140 of the Evidence Act 1995 (Cth). This can be particularly challenging in the context of an application for interim spousal maintenance.
In this case, the wife considers that the gateway requirement referred to by the High Court in Hall v Hall (supra) is satisfied. That is, as a result of her financial circumstances, the primary care of one child and part care of another child and her best endeavours to support herself, she is unable to do so adequately as contemplated by s 72(1)(b) of the Act.
The issues to determine are therefore:
(a)To what extent is the wife unable to support herself;
(b)What are the wife’s reasonable needs;
(c)What capacity does the husband have to meet a spousal maintenance order, if such an order was to be made; and
(d)If necessary considerations favour an order to be made for spousal maintenance, what order is reasonable having regard to s 75(2) of the Act and in particular that the wife seeks a lump sum order of $200,000.
In Maroney & Maroney [2009] FamCAFC 45 Coleman J said:
56.… Once a party … establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.
In Drysdale & Drysdale [2011] FamCAFC 85 Coleman J said:
40.It is the nature of an interim spousal maintenance order that, as here, it is made after a circumscribed hearing, in reliance upon evidence which is incomplete and/or unable to be fully tested. Whilst different to urgent spousal maintenance pursuant to s 77 of the Act, orders for interim maintenance are as their title implies. The Court hearing and determining financial proceedings between the parties on a final basis, as clearly will occur in this case in the absence of any intervening settlement, has abundant power to accommodate within its final orders, whether by way of settlement of property or spousal maintenance, any anomalies which full agitation of disputed issues of fact may reveal to have resulted from an earlier interim spousal maintenance order. ...
In McCrossen & McCrossen (2006) FLC 93-283 at 80,838, the Full Court considered the question of whether or not a person is able to support themselves “adequately” as follows:
32.The question is not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances…
(Citations omitted)
The Full Court further held that:
33.It is not necessary for an applicant for maintenance to use up all of his or her assets and capital in order to satisfy the requirement that he or she is unable to support him or herself “adequately”…
(Citations omitted)
In considering the source from which an order may be satisfied, trust assets may be a financial resource for the purpose of satisfying a spousal maintenance order where a party may have the “capacity to control and deal with the trust property and to borrow from it…”.[6]
[6] Ashton & Ashton (1986) FLC 91-777 at 75,661.
In determining the “reasonable ability” of a party to satisfy an order for interim spousal maintenance, an order may be made notwithstanding the liable spouse can only satisfy the order out of capital or borrowings against capital assets.
Following separation, the wife left the Suburb E property and moved into rental accommodation. At the time her rent was about $1,560 per fortnight.
She initially worked as a consultant in Suburb E however, as a result of COVID-19 restrictions her employer was no longer able to pay her wages.
In March 2020 the wife moved to shared rental accommodation in Suburb N and in April 2020 she and her business partner set up a business in Suburb O.
The business commenced operation in late October 2020 and it is the wife’s contention that the business continues to incur loss. Between 24 October 2020 and 23 March 2021 the wife contends that sales totalled $25,383 and that the business related expenses, including the lease at $33,600 per annum, far exceeded the income.
The order of Judge Monahan of 10 July 2020 provided the wife with $70,000 to assist her in obtaining appropriate accommodation for herself and the children.
The order also enabled the husband to have sole use and occupation of the freehold Suburb E property.
The applicant has spent the $70,000 on accommodation, child related expenses, personal expenses and legal fees.
The wife’s circumstances are exacerbated by Y having been diagnosed with various medical conditions.
The wife has the primary care of Y who spends one night in the husband’s care whereas X shares his time between the homes of each of the parties.
The husband does not pay child support.
It is a significant foundation to the wife’s application that she is not able to return to a full-time job because of the needs of the children but in particular Y who requires to be taken to and from school each day.
In addition, the wife is incurring rapidly increasing legal fees.
The wife relies upon her financial statement filed 9 May 2021. The broad summary is that she has no income from her involvement in the business and her total personal expenditure is $2,353 comprised as follows:
·Part G personal expenditure of $643;
·Part N expenses for the wife and the children $1,710.
A significant component of the wife’s average weekly expenses is the sum of $1,185 for the children.
The personal expenditure of the wife is unobjectionable given that the principal component is the wife’s rental commitment at $630 per week.
The average weekly expenses for the wife and the children need some revision.
The wife’s evidence in support of the average weekly expenses is scant, although the wife’s expenses are modest in the total sum of $525 per week.
It is important to distinguish between the expenses of the wife who seeks an order for spousal maintenance and the expenses of the children of the marriage.
I assume that there is no reasonable likelihood of an assessment being made for child support payable by the husband which would be sufficient to offset or defray the reasonable costs of the children.
When considering the husband’s financial statement filed 5 May 2021 it is notable that his personal expenses are not dissimilar to the wife although the expenses claimed for the children is about one half of that as claimed by the wife.
If the expenses claimed by the wife are added to the expenses claimed by the husband, the total expenses for the children amount to $1,740 per week.
Whilst I acknowledge that Y is in the primary care of the wife whereas she contends that X remains in the husband’s care for only 50 per cent of his time, nonetheless I am not able to bring to account the full extent of the expenditure that she claims relates to children’s expenses.
I propose to reduce the following items claimed as follows:
Item Current Reduced to Food for the children $250 $150 Telephone $50 $25 Clothing and Shoes $80 $40 Medical, Dental & Optical $100 $50 Chemist/Pharmaceuticals $100 $50 Other necessary commitments $200 Nil Education $100 $50
Accordingly, the Part N expenses for the wife are reduced from $1,710 to $1,195.
The wife’s total expenditure including Part G expenses is $1,838.
The husband opposes the application for spousal maintenance on the basis that the wife holds a tertiary qualification as a consultant and over the period from 26 August 2019 to 14 August 2020 she earned an average income of $757.40 gross per week.
There is a contention between the parties as to whether the wife has produced the following documents in respect of her interest in the business:
11.1 Copies of all Financial Statements;
11.2 Copies of all Business Activity Statements;
11.3 Copies of all Profit and Loss Statements;
11.4 Copies of the fixed asset register;
11.5Copies of statements, records and record of transactions confirming all funds applied by [the wife] towards the business.[7]
[7] Affidavit of the husband filed 17 February 2021, paragraph 11.
The implication of the husband’s position is that the profitability of the wife’s business is not known.
Furthermore, the husband points to the sale by the wife in December 2019 of an apartment in Country B and the rental that the wife receives from a tenanted house in Country B.
The wife did disclose rent she receives in the sum of $155 per week from her Country B property.
The conduct of the wife in starting up the business was not unreasonable. Whilst I appreciate that there remains a concern that the non-disclosure by the wife of financial records pertaining to the business does not enable the husband to consider the wife’s assertion that the business is not profitable, given COVID-19 and other related circumstances, it is an open finding that the business is likely to be of marginal profitability, if any.
There is no explanation by the wife as to the basis upon which the sum of $200,000 was calculated. Even on a reduced pool such sum would represent a spousal maintenance obligation calculated over an extended period.
No attempt has been made to capitalise the periodic sum sought given there is no explanation as to intent of the wife if the business remains unprofitable.
I am satisfied that the medical and allied health issues experienced by Y are significant and it is not unreasonable that the wife considers any employment that may be available to her would have to be part-time and subservient to Y’s needs.
Doing the best that I can, I consider the wife will need to make a decision as to whether she persists with the business or whether she uses her best endeavours to find alternate employment.
At this stage, I consider that the wife has established that she is not able to support herself adequately but that the period should be limited to thirty weeks. At the weekly rate of $1,838 that equates to a lump sum of $55,140.
The husband is currently unemployed.
According to his affidavit, the husband contends that his fixed and weekly expenses total approximately $1,361 which is offset by income of $450 per week previously including a JobSeeker payment of $390 per week and a family tax benefit of $60 per week.
The husband’s financial statement filed 5 March 2021 sets his income at the slightly reduced sum of $400 per week, again including a significant JobSeeker component.
The shortfall is met by the husband borrowing funds from his parents.
The husband held a valuable interest in a Country B based company known as G Company. This entity was involved in commercial leasing and management. The CEO of G Company is the husband’s father Mr C Goncharov. The husband concedes that he held 15 per cent of the company.
It appears that the wife’s solicitors sought financial statements and other company documents for G Company.
The husband also held valuable interest in a second Country B company called F Company which is also a commercial leasing and management company. The CEO of F Company is the husband’s father.
There were further requests from the wife’s solicitors for financial statements relating to F Company.
The husband states that he forwarded the requests for documents to the Country B companies and received the following response:
“As for providing our register of depreciable assets, at the moment it does not appear to be possible. As per the approved Rules and Regulations all the asset-related documents of the Company and (or) other accounting materials under the legislation of [Country B] may be provided to the courts and court enforcement agencies only.”[8]
(Original emphasis)
[8] Affidavit of the husband filed 17 February 2021, paragraphs 37 and 44.
On 20 January 2021, the husband transferred his 15 per cent share holding back to each of the respective companies.
The husband anticipates payment for his transfer of the 15 per cent share in G Company and F Company is in the total sum of $43,636.[9]
[9] Financial Statement of the husband filed 5 May 2021, item 57.
The wife considers that the value of the husband’s 15 per cent share in the two companies has a value of $1,875,000. At paragraph 35 of her affidavit filed 26 April 2021, the wife sets out 16 properties that she contends were held by the two companies with a total cadastral value of $225 million in local currency or about $4 million dollars.
There is no agreement between the parties as to the value of the Country B properties purported to be held by the two Country B companies and a significant issue in the proceedings is the manner in which evidence is able to be adduced as to value, given that the properties are situate in Country B.
At paragraph 45 of her affidavit filed 26 April 2021, the wife also makes the point that on 13 February 2020 the husband had the following amounts in his Australian Bank Accounts:
(a)ANZ - $100,084
(b)Q Bank - $237,647
(c)R Bank - $183,780
(d)R Bank term deposits - $90,000
The husband concedes that without the wife’s knowledge he transferred approximately $317,358 from his personal accounts to his parents. The husband’s explanation is that it was in part payment of the substantial funds that he contends were loaned by his parents, enabling the parties to purchase the Suburb E property.
The wife does not accept the husband’s assertion but rather considers that money received by the husband was as a result of his involvement in the two Country B companies and was not by way of a loan from his parents.
The Suburb E property holds a value of approximately $3,000,000. It is freehold but for a caveat lodged on behalf of the husband’s parents consequent upon the second loan agreement purporting to enable encumbrance to be lodged.
As was noted by Judge Monahan, the wife was not a signatory to either of the two loan agreements nor did she consent to any encumbrance impacting upon her interest in the Suburb E property.
At this stage, I am not aware of whether the caveat has been warned. I am satisfied that the husband’s parents are aware of the proceedings but at this stage have declined to intervene or be heard.
Each of the parties retain interest in property in Country B. The status of the Country B properties remains uncertain.
The husband is not currently in employment although there is no explanation as to what efforts he has made to return to paid employment.
I accept the extent of his expenditure and it is apparent that it significantly exceeds his income.
There would be no capacity for the husband to pay a periodic sum by way of spousal maintenance.
The husband sought to retain the sole use and occupation of the Suburb E property. The position of the wife is that the property could and should be sold. On the husband’s case, it is difficult to see how the substantial outstanding liability to his parents can be repaid without the property being sold and in circumstances where the parties have limited other resources.
It is a further concern that the wife’s previously unencumbered interest in the Suburb E property appears now to be the subject of an encumbrance.
Other than the wife’s property in Country B, the husband retains control of all of the assets of the parties.
The husband remains in the Suburb E property and without notice transferred his interest in the two Country B companies back to his father or other nominee.
Without the knowledge or consent of the wife, the husband concedes that in May 2020 he transferred to his father the sum of $351,700, a further sum of $150,000 and spent the balance of $135,168, less the wife’s early withdrawal of $25,000, on his own expenses, X’s school fees and his own legal fees.
At present and upon terms and conditions that are not disclosed the husband remains supported by funds borrowed from his parents.
The situation is that the husband is able to pay for his expenses and legal fees.
In an appropriate case, an order for spousal maintenance can be made from the capital or assets of the parties.
I consider that it is appropriate to order that the husband pay to the wife the sum of $55,140 by way of lump sum spousal maintenance calculated on the basis of $1,838 per week over thirty weeks.
The time for payment is 28 days.
LITIGATION FUNDING
The wife seeks the sum of $180,000 to assist her in the payment of her current and anticipated future legal fees.
The litigation is complex. The parties are not able to agree future parenting arrangements and in that respect the wife is not able to meet one half of anticipated disbursement for the preparation of an external family report and assessment estimated to be between $8,000 and $11,000.
There is real property in Australia and in Country B that will need to be valued. The valuation of the Suburb E property is likely to be a straight forward exercise however, the valuation of real estate in Country B which the wife contends is the basis of the two Country B companies from which the husband exited will involve an overseas valuation.
It is possible that even if the real estate held by the Country B companies is valued, a further expert may be required to place a value on the minority interest transferred by the husband.
The estimate of costs is between $150,000 and $200,000 and the wife’s current debt to her solicitors as at 26 April 2021 is approximately $35,000.
The amount sought by the wife is unlikely to be sufficient to cover current and future anticipated legal fees.
The parties are not agreed as to the asset pool available for division although the value of the Suburb E property is unlikely to be problematic.
There is uncertainty as to the value and status of the remaining properties held by the parties in Country B. The wife estimates that the property at Street S, Suburb H in Country B is valued at $400,000. The wife contends that she has not been able to sell the property and it is currently tenanted producing a modest weekly rental.
As discussed, the wife considers that the husband has significant funds available to him as evidenced by his transfer of 15 per cent of the shareholding in G Company and F Company back to each of the respective companies with a value of $1,875,000. In addition, the wife highlights that following the husband receiving notice of the wife’s intention to commence proceedings he held $611,511 in his bank accounts all of which was effectively dissipated by May 2020.
The husband does not provide any information as to his occupation or current employer. The wife contends that since the parties moved to Australia, the husband has never worked although his banking records reveal that he has received substantial amounts from the Country B companies.
The wife rejects the existence of loans between the husband and his father and raises the reasonable point that in the absence of an income or a potential financial resource it is difficult to understand how the husband was ever going to be able to repay the substantial sum that he contends he borrowed from his family even though as a consequence of the supplementary loan agreement, the repayment of the balance is not due until 2026.
Based upon the husband’s assertion that he is impecunious, his personal expenses and ongoing legal fees are being paid for by funds sourced from his family.
Given the proceedings are complex, it is reasonable to find that his costs would not be dissimilar to that of the wife.
The husband concedes that he borrows funds from his parents and that the terms of agreement with his solicitors require that the estimated fees for each stage of the litigation be paid upfront and prior to each Court event.
An order for litigation funding may be founded either by way of an interim property distribution or an order pursuant to s 117 of the Act.
A determination of an interim property order requires the Court to consider two stages:[10]
(a)The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case trigger the Court’s power to invoke s 80(1)(h) of the Act to make an order for interim property settlement before a final hearing. At this stage, the “overarching consideration” is the interest of justice.
(b)The second stage is the “substantive step” where the provisions of s 79 of the Act must be considered and applied but with limitations, given that it is not a final hearing.
[10] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466.
In Medlow & Medlow (2016) FLC 93-692 at 81,088 (“Medlow & Medlow”), the Full Court confirmed that the starting point with respect to any property application, including an application for interim property orders, is “the identification of the parties’ property and of their interests in it.”[11]
[11] Medlow & Medlow (2016) FLC 93-692 at 81,088 [69].
In circumstances where a party seeks property orders, the Full Court said at 81,090:
86.The onus was clearly upon the husband to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife’s property claims. The onus was not on the wife to adduce such evidence.
In that context, the Full Court in Medlow & Medlow (supra) referred to Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466 (“Strahan & Strahan”) and the authorities referred to therein confirming that an interim order for distribution of property must be “amenable to adjustment on a final hearing”.[12]
[12] Medlow & Medlow (2016) FLC 93-693 at 81,090 [83].
The very nature of an interim hearing is that the Court is not in a position to properly evaluate the evidence and, accordingly, the Court should take a conservative approach, including in respect to determining whether there is likely to be sufficient resources of the parties available at final hearing to accommodate any “adjustment issue”.
In terms of the second consideration in respect to an application for interim property orders, in Stanford v Stanford (2012) 247 CLR 108 at 112 the High Court stated:
2.Under s 79(2) of the Act, a court shall not make a property settlement order unless satisfied that it is “just and equitable” to do so.
The following principles are relevant to the Court’s consideration of when and whether to make an interim property order:
(a)Together, ss 79 and 80(1)(h) of the Act confer a power on the Court to make an order for interim property settlement.
(b)Section 79 of the Act confers a discreet power to make orders for property settlement and the Court may exercise the power conferred by s 79 through “a succession of orders until the power… is exhausted”[13] or until a final order dealing with all known property of the parties is made.
[13] Gabel & Yardley (2008) FLC 93-386 at 82,957 [57].
Section 80 is not in itself a source of jurisdiction for such an order to be made. Rather, the section is an “enabling provision” that provides various ways in which the general power in s 79 may be exercised in individual cases. This includes by s 80(1)(h), the making of “a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during lives or until further order”.
Given that an applicant is effectively seeking access to their own funds, it is unnecessary for a “detailed enquiry as to the purposes for which the funds are to be used”.[14]
[14] Felice & Felice [2011] FamCA 162 at [12]
Sufficient details must nonetheless be provided to enable the Court to determine:
(a)That the application is genuine;
(b)To identify the circumstances that make it appropriate to give consideration to exercise its power; and
(c)To sufficiently weigh the identified need against the benefit of having only one exercise of s 79 power.
An applicant is required to show more than the mere fact that upon a final hearing they would receive the property being sought from the other party. The overriding consideration at all stages of the process is that the Court is satisfied that it is “just and equitable” to make the order in circumstances before the Court.
In the context of interim property orders, in Strahan & Strahan (supra) the Full Court analysed the relevant authorities and noted at 85,631:
80.In Poletti & Poletti (unreported, Family Court of Australia, 2 March 1990) Nygh J, when describing an application for “interim costs”, referred to the reasons of the Full Court in Wilson & Wilson (1989) FLC 92-033 (“Wilson”) and said it is a “situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case”…
The Full Court in Zschokke & Zschokke (1996) FLC 92-693 considered that it was desirable for both parties in family law proceedings to be represented. In his judgment, Monahan J found the following:
84.The evidence clearly supports the wife’s submission that the husband largely controls the assets of the marriage and is in a position of financial strength. The wife’s evidence is sufficient for the Court to find that her current capacity to meet her living and legal expenses is under some pressure given the husband’s exclusive occupation of the former matrimonial home and the capacity to control the receipt and transfer of income and assets notwithstanding the husband apparently meeting the criteria to receive the Job Seeker benefit.
85.The wife can renew her interim argument for the sale of the former matrimonial home (and for an interim distribution to be paid) at the appropriate time. The husband’s parents should be formally placed on notice about these proceedings and they may wish to intervene to protect their alleged debt.[15]
[15] Goncharova & Goncharov [2020] FCCA 1880
It is apparent from his Honour’s determination that the application to sell the Suburb E property was raised by the wife but was not the subject of determination by the Court.
The husband’s parents are now aware of the proceedings and can be under no misapprehension that the wife challenges the veracity of the purported loans.
They have not intervened.
The ability of the wife to meet her legal fees, costs and disbursements is a genuine consideration.
The husband’s position in relation to his ability to pay legal fees is clear. He is able to do so on an ongoing basis given the terms of engagement that he has with his solicitor.
Unless the wife is placed in sufficient funds, not only will she be unlikely to retain legal representation but of more immediate concern is that even as a self-represented litigant, she does not have the financial resources to cover her share of the costs of anticipated disbursements for single experts. Given that English is not the first language of the parties and the complexity of the proceedings, the wife may not have the capacity to represent herself.
It could not be said that at present there is a level playing field.
I also consider that each of the parties have an arguable case. There is no suggestion by the husband that the wife’s position is forlorn of hope or without merit.
The conduct of the husband in transferring significant sums from locally based accounts to Country B was the subject of comment in the lower court.
It is not clear to what extent the husband argues that the wife’s interest in the Suburb E property are subject to the loans from his parents.
The husband has not yet particularised the orders that he seeks. Doing the best that I can, the husband’s case must be based upon a modest asset pool taking into account his contention that the value of his shareholding in the Country B companies is limited to $43,636 and after the loans from his father are brought to account, the net equity in the Suburb E property is modest.
Other than the interest that each of the parties hold in the remaining properties in Country B there is little else.
It is an important consideration that other than the husband’s intention to remain in the Suburb E property pending final determination, there is nothing that indicates his intention to retain the Suburb E property as part of any final orders made.
For these reasons, I am satisfied that it is in the interest of justice that an order be made by way of partial settlement of property that the husband cause to be paid to the wife the sum of $180,000.
The wife has a positive obligation to demonstrate either that there is a source from which the funds can be paid and if not that at settlement appropriate adjustment can be made.
The parties retain a valuable interest in the former matrimonial home in Country B. Each of the parties retain interest in other valuable real estate in Country B.
I accept for various reasons that the parties are not able to readily sell the Country B properties.
I note that the husband does not press an injunction that the wife be restrained from selling the property held by her.
The wife does not wish to retain the Suburb E property as part of her final orders sought. The husband is unlikely to be able to do so other than in circumstances where he obtains significant financial support from his family in Country B.
I have given careful consideration to the advantages and disadvantages of an order being made for the Suburb E property to be sold if the husband is not able to satisfy the order that is proposed.
The parties are not yet resolved as to final parenting orders however at present Y resides in the primary care of the applicant and X lives with each of the parties as he may wish.
In circumstances where the husband has demonstrated clear control over the property of the parties and has acted without recourse to the wife in respect of the following:
(a)The transfer of his interest in the Country B companies;
(b)Entering into loan agreements with the husband’s father; and
(c)The transfer of large sums of money to Country B as part repayment of loan arrangements that the husband understood the wife disputed;
I consider that the order as sought by the wife should be made and in default, the Suburb E property be placed on the market for sale by private treaty or by public auction.
I make orders as appear at the commencement of these reasons.
I certify that the preceding one hundred and fifty-eight (158) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 2 August 2021
0
5
2