Gormley & Gormley (No 2)

Case [2023] FedCFamC1F 433

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Gormley & Gormley (No 2) [2023] FedCFamC1F 433

File number: CAC 2949 of 2020
Judgment of: CAMPTON J
Date of judgment: 29 May 2023
Catchwords: FAMILY LAW – PROPERTY – Application by the wife for litigation funding and for the husband to pay the stamp duty on a newly acquired real property – Where trial is in six weeks’ time – Where the property pool available for adjustment is significant – Where neither of the husband nor the wife have capacity to pay their legal representatives pending the trial – Where there is no evidence that the legal representatives for the husband and wife will cease to act if their fees are not paid pending the trial – Where no uneven footing nor unfairness between the husband and wife in their prosecution of the litigation is identified – Application for litigation funding refused – Where the wife has recently exchanged on a property and is unable to meet the stamp duty on the purchase – Where the husband asserts that any partial property payment sought by the wife would interfere with the operation of the parties’ business interests – Where the known penalty to be incurred upon late payment of the stamp duty must be weighed against the unknown prejudice identified by the husband – Where it is not in the interests of justice to make an order for a partial property order to be made in the context of this case – Application dismissed.
Legislation:  Family Law Act 1975 (Cth) ss 79, 80, 118
Cases cited:

Gormley & Gormley [2023] FedCFamC1F 296

Marchant & Marchant (2012) FLC 93-520; [2012] FamCAFC 181

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Ming & Dao [2020] FamCA 726

Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 144

Strahan & Strahan (2011) FLC 93-466

Swift & Swift [2020] FamCA 991

Zschokke and Zschokke (1996) FLC 92-693; [1996] FamCA 79
Division: Division 1 First Instance
Number of paragraphs: 50
Date of hearing: 25 May 2023
Place: Sydney
Counsel for the Applicant: Mr Matthews KC with Ms Tulloch
Solicitor for the Applicant: Orman Solicitors
Counsel for the Respondent: Mr Harper
Solicitor for the Respondent: Walsh & Blair

ORDERS

CAC 2949 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS GORMLEY

Applicant
AND:

MR GORMLEY

Respondent

order made by:

CAMPTON J

DATE OF ORDER:

29 May 2023

THE COURT ORDERS THAT:

1.That the relief sought in paragraphs 2 and 3 of the Amended Application in a Proceeding of the wife filed on 18 April 2023 be refused and the said Amended Application in a Proceeding be dismissed.

2.The costs of both parties of and incidental to the Amended Application in a Proceeding filed on 18 April 2023 be reserved to the trial listed to commence on 10 July 2023.

Note:   The form of the order is subject to the entry in the…

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AGLC
Gormley & Gormley (No 2) [2023] FedCFamC1F 433
Case
[2023] FedCFamC1F 433
Decision Date

CaseChat Overview and Summary

The case of Gormley & Gormley (No 2) involves a dispute between the husband and wife concerning the adjustment of property under the Family Law Act 1975 (Cth). The wife sought a partial property settlement and litigation funding, while the husband opposed these requests. The matter is scheduled for trial over five days beginning on 10 July 2023. The central legal issues addressed by the court pertain to the appropriateness of granting interim property settlement and litigation funding in the context of an upcoming trial, where both parties acknowledge that an adjusting payment will ultimately be made by the husband to the wife. The court was required to determine whether it was just to grant the wife’s application for litigation funding and a partial property settlement at that juncture, considering the proximity of the trial and the anticipated outcome of the proceedings.

The court assessed the application for interim property settlement and litigation funding in light of the trial being only six weeks away and the agreement that the trial will result in an adjusting payment by the husband to the wife. The court concluded that it was not in the interests of justice to make an order for interim or partial property settlement for litigation funding at that time. The court emphasized that each application must be evaluated based on its unique circumstances. In this case, the court found that the wife’s application for litigation funding and a partial property settlement was not warranted given the imminent trial and the likelihood of an adjusting payment being made by the husband. Consequently, the wife's application was dismissed, and the costs associated with the application were reserved to the trial.

In summary, the court refused the wife's request for litigation funding and a partial property settlement, given the trial's proximity and the expected outcome of the proceedings. The costs related to the wife's application were reserved for the trial, and the wife retains the right to make further applications if the trial does not conclude within the allocated timeframe.

Orders

Orders of the court

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Background

Background to the litigation

For the reasons that follow, the relief sought in paragraphs 2 and 3 of the Amended Application in a Proceeding of the wife filed 18 April 2023 will be refused and the said application will be dismissed. The costs of both parties of and incidental to the application will be reserved to the trial listed to commence on 10 July 2023.Background The husband and the wife married in 2008 and separated on 28 February 2019. An order for divorce was made on 22 September 2020. They have two children, X who is currently 13 years old, and Y who is currently 10 years old. The husband and wife are each currently 39 years old. The wife commenced proceedings as to the adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) on 24 December 2020. She currently prosecutes final relief as contained in her Amended Initiating Application filed on 12 February 2023, that she transfer to the husband all of her interest in the five real properties owned jointly by the parties, and that he pay her an adjusting sum so as to effect a division of the property pool of 47.5 per cent in her favour. The husband filed a Response on 9 February 2021. He broadly agrees that the wife should transfer to him her interest in the five real properties, but seeks that the adjusting sum to be paid would effect a 20 per cent division of the property pool in her favour. The matter is in the Major Complex Financial Proceedings (“MCFP”) list. On 12 August 2022, extensive orders and directions were made listing the proceedings for trial over five days commencing on 10 July 2023, being in about six weeks’ time. Neither party suggested during the course of the hearing on 25 May 2023 that the matter will not be ready to proceed to trial as listed or that it will not be heard and completed in the allocated five days. The management of the litigation and an assessment of the anticipated issues in dispute forecast an unlikelihood as to an extended period elapsing before any reserved judgment is delivered. As recorded in the reasons for judgment delivered on 21 April 2023 (Gormley & Gormley [2023] FedCFamC1F 296), the value of the parties’ property interests available for adjustment is significant:23.[The wife] contends that the value of the property of the parties available for adjustment is in excess of $30 million. The husband contends that it is in the range of $30 million. For the purpose of this determination only, the wife said she would not take issue with a prior contention of the husband that the value of the property available for adjustment was $27 million. Of the five real properties owned jointly by the parties, four are the rural properties transferred to the husband and the wife by the husband’s father without monetary consideration in mid-2014. Those real properties comprise a significant part of the current property of the parties. The fifth real property owned by the parties jointly was purchased by them in late 2017, and is also a rural property.DOCUMENTS RELIED UPON BY EACH PARTY

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Again, the wife’s application for a partial property settlement must be considered in the context of the trial being only six weeks away, and it being uncontroversial that the result of the trial will be that an adjusting payment is made by the husband to the wife. Having regard to the above matters, I am not satisfied it is in the interests of justice for an order to be made for interim or partial property settlement for litigation funding in the terms sought by the wife at this time.CONCLUSION Paragraphs 2 and 3 of the Amended Application in a Proceeding filed on 18 April 2023 will be refused and the balance of her application dismissed. Having regard to the proximity of the trial, each party’s cost of and incidental to the wife’s Amended Application in a Proceeding will be reserved to the trial. In the event, the trial does not proceed to completion within the five days allocated to it commencing on 10 July 2023, the wife is at liberty to bring such further application for litigation funding and/or interim property orders as she is advised.

Ratio Decidendi

Legal Principle Established

In support of his Response to an Application in a Proceeding filed on 23 May 2023, the husband relied on:·His affidavit filed 18 May 2023;·His Case Outline document filed 24 May 2023 (Exhibit 2);·His costs notice filed 24 May 2023 (Exhibit 6); ·A record of transactions for the Q Bank account number …33 of the Gormley Family Trust recording transactions between 26 April 2023 and 24 May 2023 (Exhibit 4); and·A record of transactions for the Q Bank account number …04 of the Gormley Family Trust recording transactions between 26 April 2023 and 25 May 2023 (Exhibit 5).The sources of power grounding the wife’s relief and the necessary preconditions and relevant considerations for making the order sought As to her relief that the husband pay her $250,000 for litigation funding, the wife relied on the costs power pursuant to s 117 of the Act, or if that was not successful, then relied on s 79 and s 80(1)(h) of the Act. As to her relief that the husband pay her $215,200 to meet the payment of stamp duty due subsequent to her exchange of contracts on 10 March 2023 to acquire the property at P Street, Suburb R (“the P Street property”), the wife relied on the power to make an interim of partial property order pursuant to s 79 and s 80(1)(h) of the Act. Before an order as to costs can be made, the Court must be satisfied that the order is, in the circumstances, just (s 117(2) of the Act). Until that point, there is no power to make an order departing from the general rule that each party pays their own costs. Once enlivened, the discretion to make an order as to costs is governed by the considerations contained at s 117(2A) of the Act. There is no authority that contends that more than one of the factors in s 117(2A) need be present. Indeed, any one factor may be determinative. In Salvage & Fosse (2020) FLC 93-966 (“Salvage & Fosse”) the Full Court identified that litigation funding orders have a long history and are made to alleviate the obvious unfairness of a party with control of the assets being able to marshal them to pay lawyers, leaving the other party to attempt to pursue the proceedings without being able to resort to property that might subsequently be transferred to them. That said, each application must be looked at according to its own particular facts and circumstances. As to litigation funding, the principles relevant to the making of such orders were identified by the Full Court in Zschokke and Zschokke (1996) FLC 92-693. The Full Court in that decision said three matters were relevant regardless of “whether the matter was determined as an interim property settlement order under s 80(1)(h), or as an interim costs (or security for costs) order under s 117(2), or indeed even a maintenance order” (at 83,217), being:(a)A position of relative strength on the part of the respondent;(b)A capacity on the part of the respondent to meet his or her own legal costs; and(c)Inability on the part of the applicant to meet his or her legal costs.