Guardino & Guardino
[2022] FedCFamC1F 1074
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Guardino & Guardino [2022] FedCFamC1F 1074
File number(s): MLC 12090 of 2019 Judgment of: KARI J Date of judgment: 20 December 2022 Catchwords: FAMILY LAW – INTERIM APPLICATION – Ex-Tempore reasons – Where the husband seeks the release of funds currently held in the wife’s solicitor’s trust account for the purpose of funding his legal representation – Orders made for the release of funds to each of the parties to be applied solely for the payment of their respective legal and associated expenses Legislation: Family Law Act 1975 (Cth), ss 75(2), 79 Cases cited: Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 Division: Division 1 First Instance Number of paragraphs: 54 Date of hearing: 20 December 2022 Place: Adelaide (via videolink) The Applicant: Litigant in Person Counsel for the Respondent: Ms Colla Solicitor for the Respondent: Hicks Oakley Chessell Williams ORDERS
MLC 12090 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GUARDINO
Applicant
AND: MS GUARDINO
Respondent
order made by:
KARI J
DATE OF ORDER:
20 DECEMBER 2022
UPON NOTING:
A.That the Wife does not oppose the Husband obtaining a retrospective valuation of the various entities which he owned and/or had an interest in at the commencement of the relationship.
THE COURT ORDERS THAT:
1.That forthwith the sum of $60,000 be released to each of the parties from those funds held on trust by the Respondent Wife’s solicitors, by way of interim property settlement, with such funds to be applied by each of the parties solely to the payment of their respective legal and associated expenses.
2.That the Husband’s application to discharge paragraph 12 4.1 of the orders made by Justice Johns on 10 December 2019 be adjourned to Trial.
3.That the parties each contribute one half of the costs of the further fees of B Valuers being the sum of approximately $330 each.
4.That the Husband’s Amended Application in a Proceeding filed on 1 December 2022 and the Wife’s Response to an Application in a Proceeding filed on 25 November 2022 do otherwise stand dismissed.
5.That the husband be given an extension of time to 4.00pm on 10 February 2023 to file the following:
(a)Any Affidavit that he intends to rely on for the purposes of trial;
(b)Any Amended Application for Final Orders.
6.That the Wife be given leave to orally give any evidence in chief in reply to the Husband’s trial material at Trial.
7.That the Wife’s costs in relation to the interlocutory applications referred in paragraph 4 be reserved to Trial.
8.That all extant interlocutory applications do otherwise stand dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Guardino & Guardino has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX-TEMPORE REASONS FOR JUDGMENT
KARI J
INTRODUCTION
I am going to give some reasons in the matter. Given the hour of the day, my reasons may well be brief rather than expansive.
The matter comes before me today with respect to financial issues arising from an Amended Application in a Proceeding filed by the applicant husband on 1 December 2022. He originally filed an Application in a Proceeding on 15 November 2022.
The wife filed a response on 25 November 2022.
ORDERS SOUGHT BY THE PARTIES
So far as the husband’s application is concerned, it must be viewed against a backdrop which I will come to shortly. The application however that has been made has, as its primary focus, the release of funds currently held in the wife's solicitor's trust account from the sale of an asset, and where a sum of $260,000 or thereabouts has been preserved. The husband seeks the release of approximately $100,000 in order to apply such funds towards his legal representation. The wife opposes that application.
The husband's application also seeks some further orders. Firstly, the discharge of an order previously made by Justice Johns, on 10 December 2019, requiring the husband to meet some payments for and on behalf of the wife. In addition the husband seeks orders directed to valuation issues and the like.
The specific orders sought by the husband are:
(1)That all times be abridged and leave be granted for this application to be listed and heard on an urgent basis.
(2)That the sum of $100,000 of the funds held in a controlled moneys account by the Wife's solicitors be distributed to the Husband forthwith into an account nominated by him with such sum to be characterised as part property settlement.
(3)That the Husband and Wife do all such acts and things to sign all documents necessary to authorise the release in paragraph 2.
(4)Order 12 4.1 of the Orders of Justice Johns made 10 December 2019 be discharged (discharging the Husband from continuing to pay the Wife's utilities).
(5)That the parties obtain a retrospective valuation of [C Pty Ltd] for the financial year 2012/2013 with the costs of same to be borne by the Husband in the first instance and he be reimbursed one half by the Wife upon settlement of these proceedings.
(6)That the parties obtain a retrospective valuation of [D Pty Ltd] for the financial year 2012/2013 with the costs of same to be borne by the Husband in the first instance and he be reimbursed one half by the Wife upon settlement of these proceedings.
(7)That the parties obtain a retrospective valuation of [E Pty Ltd ATF Guardino Family Trust] for the financial year 2012/2013 with the costs of same to be borne by the Husband in the first instance and he be reimbursed one half by the Wife upon settlement of these proceedings.
(8)That the invoice dated 28 November 2022 by Joint Expert [B Valuers] numbered […] in the sum of $660.00, for the provision of an updated valuation report on the 3 properties known as [F Street. Suburb G], [H Street. Suburb J] and [K Street, Suburb L] be paid immediately from the funds held in a controlled moneys account by the Wife's solicitors on behalf of both parties with one half attributed to each party at settlement.
(9)That the reasonable costs of [Mr N], Accountant be paid following the receipt of his invoice for work undertaken at the request of joint expert [M Pty Ltd] from the funds held in a controlled moneys account by the Wife's solicitors on behalf of both parties with one half attributed to each party at settlement (such fee not to exceed $500.00).
The wife simply responds to the orders sought and asks that the husband's application be dismissed.
DOCUMENTS CONSIDERED BY THE COURT
I have the benefit of the parties affidavits filed in support of their respective applications and response.
I also have the benefit of two further documents which have been of some assistance to me today in understanding the submissions of the parties and ultimately coming to a view about the applications. Those documents are the trial affidavit of the wife filed 12 December 2022, which has now been filed by the wife in compliance with trial directions first made by Justice Hartnett J on 19 October 2021 and amended twice by me along the way. I also have the benefit of a balance sheet which, while labelled a joint balance sheet, is not in fact such a document.
The balance sheet document has been filed by the wife in circumstances where the husband refused to correspond with the wife's solicitors in relation to the contents of the joint balance sheet. The filing of the joint balance sheet again was something that I had required pursuant to previous orders that had been made in the matter, first on 21 March 2022 and then amended on 22 August 2022. In that document the wife has attempted to identify that which she thinks is the husband's position with respect to various items on the balance sheet, including the value of assets and all liabilities attached to various items on the balance sheet.
BACKGROUND OF THE PROCEEDINGS
Going to the background of the matter, I note that I have had significant exchange between counsel for the wife and the husband directly in relation to matters relating to background and I incorporate all of the discussions that I have had during the course of the hearing in my reasons.
Importantly for present purposes, it is significant to note the following. These proceedings were commenced by the husband on 25 October 2019. When he commenced the proceedings he sought final orders both in relation to parenting issues, the parties have two children, and also in relation to the question of property settlement.
The matter was first referred for a trial by Justice Hartnett when she made orders on 19 October 2021 referring the matter for a five day trial listing. When her Honour made those orders, she made a raft of ancillary orders of a procedural nature to ready the matter for trial. They included orders for the filing of the parties’ respective trial material and associated documents. The husband's documents were to have been filed by 15 February 2022 and the wife's by 7 March 2022.
Those orders were ultimately varied by me on 21 March 2022 when the matter was allocated to me. Amongst the orders that I made that day, was an extension of time for the filing of their trial material, the husband to 7 October 2022 and the wife to 21 October 2022.
Otherwise on 21 March 2022 I gave the matter a trial listing on 21 November 2022. As is obvious from today’s date, that trial did not proceed and was ultimately vacated by me pursuant to orders that I made on 22 August 2022.
When I vacated the trial date by the orders made 22 August 2022, I allocated a new trial date in the matter being a date commencing on 27 March 2023 with respect to financial issues only. I also made various orders for an extension of time for the filing of various documents for trial purposes. Those orders did not provide, pursuant to the published orders, any extension of time for the filing of the parties’ trial affidavits. There was however an extension of time for the parties to file their respective amended Applications and Responses for final orders, the husband's due on 18 November 2022, and the wife's on 25 November 2022.
I also, on that date, gave the matter yet another conciliation conference. At my count, there have been three separate dates given for a conciliation conference in the matter, one which did proceed some time ago, a second that was given by me pursuant to the orders I made on 21 March 2022, and a third given by me pursuant to the orders made on 22 August 2022. Neither of the latter two conferences, proceeded. Albeit that the parties attended the conference ordered on 22 August 2022 and it appears that the Judicial Registrar determined that, in all of the circumstances and given the application of the husband now before the Court but yet to be determined for the release of funds for his legal expenses, the Senior Judicial Registrar determined that the application needed to be dealt with prior to any conciliation conference.
I give that background because it is illustrative of the inability of both of the parties to reach agreement about a range of matters. I accept that each of the parties are critical of the other of them as to why circumstances have devolved to the state that they are currently in. That may or may not be a matter that is ultimately relevant for trial purposes and/or any costs applications that flow.
I also give that background to illustrate that it was not until the eleventh hour that the husband determined to file his application in a proceeding on 15 November 2022 for the release of funds for the purposes of legal expenses.
As is obvious from the summary that I have just provided, this matter has been before me from at least March 2022. I personally can recollect that on each and every occasion that I have heard the matter, I have urged the husband to obtain legal representation.
Why it is that the husband’s application has been so late in the proceedings is a matter that concerns me deeply, particularly as it has the potential to delay the trial listing that I have given the matter.
I make it clear to the parties that I will not lightly entertain any application for an adjournment of the trial. From my perspective, the trial dates are to be preserved. They are the second allocation of trial that the matter has been given and I will not, unless there are exceptional circumstances that warrant an adjournment of the trial, consider adjourning the trial lightly.
DISCUSSION
In terms of the applications that are presently before the Court, the husband has indicated that he will be content with an adjournment of his application for the discharge of orders made by Justice Johns for the payment of moneys to the wife.
The wife resists that application and says that the application is incompetent and that there is insufficient evidence before the Court. That may be so but I am satisfied, at this juncture, to adjourn further consideration of that application to trial.
So far as the balance of applications before the Court, as I indicated during the course of the submissions, the Court is not required to consider that there are compelling circumstances for the release of funds to any applicant who asks the Court to exercise powers for partial settlement of property. This case is a little unusual because it is more often than not the circumstance that the person who is in the least position of financial power is the person who makes the application for the release of funds. In the present case, what is clear on any view is that the husband is the person in control or largely in control of all of the assets yet he is the applicant for the release of funds to fund his legal expenses.
I propose to pause briefly now to consider the application and in a moment I will give some more background to the parties and the litigation. As I indicated, the husband does not need to show compelling circumstances for the release of funds. Rather, what is required of the Court is that the power to make an interim order for the release of funds is one which should be exercised in circumstances that are appropriate.
As identified by the Full Court in Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166 at [128] when the Court is determining when it is appropriate to exercise power for interim property settlement orders, the case must be analysed through the prism of the usual s 79[1] four-step process, identifying the pool, the contributions, s 75(2)[2] factors and whether ultimate orders are just and equitable.
[1] Family Law Act 1975 (Cth).
[2] Family Law Act 1975 (Cth).
In addition, Strahan identified that the Court is also required to consider any disputed facts and circumstances, consider the claims of the parties and their legitimate expectations, whether orders could be reversed ultimately at final hearing and that the Court make orders that are just and equitable.
As is also identified in Strahan, it is preferable for the Court to make orders once and for all on a final basis rather than on an interim basis.
Going back to the background of the matter, and I do so because I am approaching the matter through the usual four-step process, I am mindful, having regard to the parties filed material, of a number of factors. These parties, on any view, have not had an insubstantial relationship that has produced two children. While there is a dispute between them as to the date of cohabitation, either sometime in late 2012 or sometime in 2013, they married in 2015 and they separated on 30 July 2019. They are not yet divorced. As I have said, the parties have two children, one who is eight years of age, X, and the other, Y, who is six years of age. At the moment I am told that the parties are agreed that the children are already in or about to move into a shared care parenting arrangement.
The wife is currently 35 years of age and the husband is 47 years of age.
There appears to be no dispute that, so far as contributions are concerned, the husband came into the relationship with not insignificant assets. While it might be in dispute as to the value of those assets and exactly what they are, on any view, even on the wife's case, the husband came in with assets. Those assets included the business which the husband continues to operate with various partners together with other real property. The wife's initial contributions, even on her case, were far more nominal and likely limited to nominal savings and some superannuation entitlements.
The assets that are now available for division, I understand are the subject of some dispute but with regard to the balance sheet that has been filed by the wife, the net pool, excluding superannuation, is likely to be in excess of $2 million.
The wife's counsel has highlighted to the Court that the husband is effectively in control of all of the assets other than the superannuation entitlements of the wife. The wife's position is that she is entitled to a 55 per cent division in her favour. The husband's position is that the wife is entitled to a 30 per cent division in her favour. While that is the ultimate question to be determined at trial, on any view of the case, in circumstances where the husband is in control of all of the assets, he will be required to make a payment to the wife as and by way of final settlement of property. The only issue in dispute is the quantum of that payment.
While I accept that there may be some dispute between the parties as to the value of the pool, on any view, it is unlikely to be any less than about $2 million.
I am conscious that in the context of the litigation, there have been orders for the release of funds to both the parties throughout the life of the litigation. Orders have been made for the release of funds to the wife and an order has been made for the release of funds to both parties.
I am equally conscious that the husband has sought the release of funds to him historically and, on occasions, those applications have been refused. While those matters are relevant, they are not determinative of the present application before me.
It appears to me that the wife's opposition to the husband's application is based on the following. Firstly, that the application has been made late and it should be refused because there is no certainty that funds will be applied to legal fees. Secondly, because the husband is in control of all of the assets he has income available to him.
There is also a question and a query at the wife's end whether the husband has divested himself of income and/or assets in the way he manages his financial affairs and accordingly she says that there is no need to exercise the power to make an order for partial settlement of property for the payment of the husband's legal fees when he could have and should have managed his financial affairs differently in order to meet his legal expenses.
The wife's other opposition to the application is that if the Court was minded to order the release of funds to the husband for the payment of legal fees then, she says, the moneys should not come from those preserved in the solicitor's trust account but rather from the sale of various other assets, pointing in the first instance to a houseboat and licence together with an item of real property.
From the Court's perspective, as I said earlier, this is an unusual application because effectively it has been made by the party in the position of financial strength. However that is not the only factor that the Court is required to consider. Much like when an application is made by the financially weaker party, the Court gives consideration to whether it is appropriate to lock that weaker party out from access to assets in order to fund legal expenses pending any resolution of the proceedings, either by trial or negotiated settlement.
Clearly there are a range of decisions from the Court which indicate that the release of funds for legal fees by way of a partial order for property settlement is an appropriate exercise of the Court's discretion. In the circumstances of this case it is frankly no different whether it is made by the weaker or the stronger financial party. The reality is that the application is made for the release of capital assets to fund legal expenses, understanding that that would not mean that those funds are to be brought to account in some way in the ultimate resolution of the matter.
In all of those circumstances I simply, on the one hand, do not understand why the husband should be locked out from the release of funds to him if it is to fund his legal expenses.
I equally do not understand why one asset should be attacked for that purpose over and above and ahead of a liquid asset sitting in a solicitor's trust account in the form of cash.
There is a further difficulty with the wife's alternative position for other assets to be sold and that is, given the pending trial in March 2023, I cannot see that assets will be able to be sold, capital realised and disbursed for the purposes of funding the husband's legal expenses so as to preserve the trial dates.
While I accept all of the criticisms made at the wife's end as to the lateness of the husband's application and as to the lack of proper evidence before the Court as to the likely costs of his legal fees and whether indeed he is able to secure legal representation, the husband himself has acknowledged that whatever funds are released to him, he is content with an order that they solely be applied to his legal and associated expenses, valuation and the like and not for any other purpose.
That concession is a significant one because it ensures that capital is not lost to the pool but rather it does two things. It deals with the funds being applied for a specific purpose but also, from the Court's perspective, the release of funds as proposed by the husband, not necessarily the quantum he has sought, will ensure, from the Court's perspective, that if he is at all going to be represented for trial, there is sufficient time for that to occur prior to the trial in March 2023, bearing in mind that we are on the doorstep of Christmas and Christmas closures.
In circumstances where it is clear that on whichever party's case as to outcome is correct, assets may or may not need to be sold and/or the husband will need to realise funds in some way, borrowings or through the sale of assets to make a payment to the wife, I cannot see any reason why the wife is prejudiced by the application that has now been made by the husband for the release of some funds ahead of the trial.
Turning to the quantum, the difficulty with the husband's application is that he has put no evidence before the Court as to his anticipated legal expenses and nor has he complied with the Court's requirements for a costs notice to be filed and served in advance of this hearing. I do however have the benefit of the wife's costs notice. That costs notice indicates that to date, the wife has paid the sum of approximately $240,000 in legal expenses, that she has unbilled fees of just shy of $18,000 and that her anticipated legal expenses to conclude a four day trial are estimated to be, in total, a little over $60,000. As I say, the husband has not provided any context and colour to what his legal expenses are likely to be.
The wife's position put orally during the hearing in the alternative, is that if funds are to be released to the husband, that commensurate funds be released to her. The husband has not responded specifically to that application in his submissions today. What the husband does say is that his fees are likely to be in excess of that which the wife has identified in her costs notice to get her to trial. He says that is because, having not had the benefit of legal representation for a substantial period of time, his solicitors will need to get on top of the file. While that may be so, at this juncture I am satisfied that the appropriate quantum to have released to the husband is an amount of $60,000. I am equally satisfied that, in all of the circumstances of the case, that it is also appropriate to release to the wife the same amount of funds. That leaves both of the parties on an equal footing with respect to their legal representation moving forward and I propose to make an order for an interim settlement of property to each of the parties in the amount of $60,000 with such sum to be applied solely to the parties’ legal and associated expenses.
Turning to the associated expenses, I am mindful that, in the course of his submissions in reply, the father submitted that the valuation issues which he sought to agitate in his application, are costs which he is prepared to meet if an order for interim property settlement is made in his favour. I propose to take up that position proffered by the husband.
That leaves one issue and that is the question of whether the wife should be required to contribute to a fee of $660 towards a valuer who, having met with the husband and the wife's solicitors, reconsidered his earlier valuation opinion and charged a fee for doing so. At this juncture I consider it appropriate, given the orders that I am to make, that the parties equally share those expenses and I propose to do so.
For all of those reasons, I firstly consider it just and equitable for the Court to make an order by way of interim property settlement to each of the parties in the amount of $60,000. I otherwise propose to adjourn the husband's application in relation to a discharge of the earlier order made by Justice Johns to trial and I will make an order that each of the parties contribute one-half of the costs of the expenses of the expert, B Valuers.
I otherwise propose to dismiss the parties competing interim applications, so accordingly I make the following orders.
NOTE: These reasons were delivered orally. They have been corrected from the transcript. Topic headings have been inserted and grammatical errors have been corrected. In addition amendments have been made to make the orally delivered reasons clear and easy to read.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 20 January 2023
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