Henson & Marlin
[2022] FedCFamC1F 648
Federal Circuit and Family Court of Australia
(DIVISION 1)
Henson & Marlin [2022] FedCFamC1F 648
File number: BRC 10186 of 2020 Judgment of: HOGAN J Date of judgment: 31 August 2022 Catchwords: FAMILY LAW – PROPERTY – Interim property – Where the applicant seeks an order for partial property settlement – Where the respondent seeks the application be dismissed because the parties have previously entered into a consent order pursuant to Part 19 of the Property Law Act 1974 (Qld) – Where the applicant contends the consent order does not prevent her from seeking property settlement orders pursuant to s 90SM of the Family Law Act 1975 (Cth) – Where orders are made by way of partial property settlement. Legislation: Family Law Act 1975 (Cth)
Family Law Amendment (De facto Financial Matters and Other Measures) Act 2008 (Cth)
Property Law Act 1974 (Qld)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021
Cases cited: Ashton & Ashton (1986) FLC 91-777; [1986] FamCA 20 Bevan & Bevan (1995) FLC 92-600; [1993] FamCA 95
Black & Kellner (1992) FLC 92-287; [1992] FamCA 2
Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856; [1999] FamCA 745
Breen v Breen (1990) 65 ALJR 195
Clayton v Bant (2020) 385 ALR 41; [2020] HCA 44
Collingridge & Aiolfi [2019] FamCAFC 88
Dahl & Hamblin (2011) FLC 93-480; [2011] FamCAFC 202
Harris &Harris ; [1993] FamCA 49
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) ; [2003] FamCA 395
Fenton & Marvel (2013) FLC 93-550; [2013] FamCAFC 132
Kyriakos & Kyriakos and Anor (2013) FLC 93-528; [2013] FamCAFC 22
Linder & Linder [2016] FamCAFC 139
Maroney & Maroney [2009] FamCAFC 45
Norton & Locke (2013) FLC 93-567; [2013] FamCAFC 202
Oriolo and Oriolo (1985) FLC 91-653; [1985] FamCA 54
Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
Penfold v Penfold (1980) 144 CLR 311; [1980] HCA 4
Rakete & Rakete (2012) 48 Fam LR 325; [2012] FamCA 267
Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184; [1998] HCA 44
Rice & Rice [2020] FamCAFC 174Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Strahan & Strahan (Interim property orders) (2011) FLC 93-466; [2009] FamCAFC 166
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Zschokke and Zschokke (1996) FLC 92-693; [1996] FamCA 79
Division: First Instance Number of paragraphs: 66 Date of hearing: 6 August 2021 Place: Brisbane Counsel for the Applicant: Ms Minnery Solicitor for the Applicant: Slade Waterhouse Lawyers Counsel for the Respondent: Mr Green Solicitor for the Respondent: Parker Family Law ORDERS
BRC 10186 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS HENSON
Applicant
AND: MR MARLIN
Respondent
order made by:
HOGAN J
DATE OF ORDER:
31 AUGUST 2022
IT IS ORDERED THAT:
1.Pursuant to s 90SE(1) of the Family Law Act 1975 (Cth) (“the Act”), the respondent pay periodic spousal maintenance to the applicant in the sum of $553 per week, with such payment to be paid weekly in advance into a bank account nominated by the applicant.
2.Pursuant to s 117(2) of the Act, the respondent pay the applicant the sum of $114,535 within 30 days of the date of this Order, with such sum to be paid to the trust account of Slade Waterhouse Lawyers Pty Ltd.
3.Pursuant to ss 90SM and 90SS(1)(a) of the Act and by way of partial property settlement, the respondent pay the applicant the sum of $290,051 within 60 days of the date of this Order, with such sum to be paid into a bank account nominated by the applicant.
Valuation of household furniture and effects and other property
4.In the event the parties do not agree on the value of the following property then, pursuant to Rule 7.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, B Group be appointed the independent joint expert to value the following:
(a)the household furniture and effects of the applicant; and
(b)the household furniture and effects of the respondent; and
(c)any other item of property in which the applicant and or respondent have an interest in.
5.The costs of any valuation report prepared by B Group and any other jointly appointed expert be paid for by the respondent in the first instance and the applicant’s half share is to be paid from her final property settlement.
Disclosure
6.Pursuant to Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 the parties continue to comply with their duty of disclosure and in particular (but not in lieu of their ongoing obligation to make full and frank disclosure of their financial circumstances), if they have not already done so, provide copies of the following documents to each other within 14 days of the date of these Orders:
(a)copies of the parties’ most recent Individual Income Tax Returns and Notices of Assessment; and
(b)all documents about superannuation interests, including the member’s last Superannuation Statement; and
(c)copies of the parties’ bank statements (including Credit Card and Loan accounts) for the last 12 months; and
(d)documents relating to any corporation, trust or partnership in which either party has an interest including the following:
(i)for any company, including but not limited to C Pty Ltd, D Pty Ltd and E Pty Ltd, the following documents:
A.Financial Statements for the company including Profit and Loss Statements, Balance Sheets and Depreciation schedules for the last 12 months; and
B.Income Tax Returns and Assessments for the company for the 2020/2021 year; and
C.Business Activity Statements for the last 12 months if the company carries on a business; and
D.Bank statements showing all transactions for the last two (2) years; and
E.The monthly Management Stock Lists from February 2020 to 30 May 2021; and
F.The Management Stock Lists on a monthly basis from 30 June 2021 with the provision of the same to be made within seven (7) days from the end of each month and continuing until a settlement has been reached or and Order of the Court.
7.Pursuant to Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 the parties continue to comply with their duty of disclosure and in particular (but not in lieu of their ongoing obligation to make full and frank disclosure of their financial circumstances), if they have not already done so, provide copies of any relevant documents or information requested by the other party within 14 days of receiving such written request for such documents or information.
8.The respondent comply with any reasonable request in writing made by F Valuation Company for documents and or access to the Quickbooks accounting software, to allow for the valuation of the Business to be completed, within twenty-one (21) days of receiving such request.
9.In the event that a party seeks an order that another party pay the costs of and incidental to the application determined by this Order:
(a)such party shall, within fourteen (14) days of today, file and serve written submissions in support of such application for costs; and
(b)the party against whom an order for costs is sought shall, within a further seven (7) days thereafter, file and serve any brief written submissions in answer to the submissions filed and served by the party seeking an order for costs; and
(c)the party seeking an order for costs shall, within seven (7) days of being served with the submissions relied on by the party against whom an order for costs is sought, file and serve any further written submissions, strictly in reply, to the submissions served by the party against whom an order for costs is sought,
and any such application for costs shall be considered in Chambers.
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 Henson & Marlin has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HOGAN J:
By her Further Amended Initiating Application filed 5 August 2021, the applicant seeks final property settlement orders which would see her receive property valued at 45 per cent of the nett value of the property of the parties and the respondent receive property valued at 55 per cent of the nett value of the property of the parties. She also seeks the payment of an unspecified amount of spousal maintenance and that orders departing from the administrative assessment of child support to be paid by the respondent be made.
The respondent, by his Response filed 15 September 2020, seeks that the applicant’s application be dismissed. It is the respondent’s position that the applicant is prevented from relying upon s 90SM of the Family Law Act 1975 (Cth) (“the Act”) to seek either an alteration of their interests in property on a final basis or partial property settlement on an interim basis by virtue of the application of one or all of the principles of estoppel, abuse of process and/or res judicata. The respondent contends that this is because, in November 2008, following the parties’ first separation, they entered into a consent order (“the November 2008 consent order”) in the Supreme Court of Queensland pursuant to Part 19 of the Property Law Act 1974 (Qld) (“the Property Law Act”) – the legislation which then applied in relation to property adjustment following the breakdown of a de facto relationship.
The applicant does not accept the respondent’s assertion that the November 2008 consent order prevents her from seeking final property settlement orders pursuant to s 90SM of the Act or partial property settlement orders.
Whilst by no means definitive, the evidence appeared to suggest that the total gross value of the combination of real property owned by the respondent (about 10 or 11 properties) and real properties owned by entities under his complete control (about 10 or 11 properties) was assessed by the commercial lender (from which he sought to borrow $4.5 million in 2020 to fund the purchase of a property) at $25,352,991,[1] with associated liabilities of $16,595,395, giving a nett total value of about $8,757,596.[2] This amount does not, obviously, include a value for the business operated by the respondent.
[1]Not significantly different from the value ascribed by Mr F who valued the properties at a gross total value of $25,710,000.
[2] See: “Documents to be tendered by the applicant”, pages 52 and 53.
It is in this context that the orders sought by the applicant on an interim basis are to be considered.
Background
By way of brief background, the parties initially commenced cohabitation in either late 2002 (on the applicant’s case) or early 2003 (on the respondent’s case). Their first child, X, was born 2005 and is now 17 years of age. Having lived together for about (or nearly) four years, the parties separated in November 2006.
The November 2008 consent order provided that: the respondent pay $350,000 to the applicant within 45 days; upon receipt of the payment, the applicant return a motor vehicle she had in her possession to the respondent; otherwise, both parties retain ownership of the property each owned in their respective names. In broad summary, the applicant retained a real property (subject to mortgage) that she owned (subject to mortgage) at the commencement of the relationship,[3] and the respondent retained a number of real properties, most of which were subject to mortgages.[4]
[3] Affidavit of the applicant filed 31 July 2020, paragraph 15.
[4] Affidavit of the respondent filed 15 September 2020, Annexure “M-2”.
There is no dispute that each party complied with the terms of the November 2008 consent order.
The parties resumed cohabitation in either mid-2009 (on the applicant’s case)[5] or late 2011 (on the respondent’s case).[6] That is, their separation ran from November 2006 until either mid-2009 (a period of nearly three years) or late 2011 (a period of nearly five years). The parties’ second child, Y, was born 2011 and is now 11 years of age; their third child, Z, was born 2013 and is now nearly nine years of age. It seems accepted that the parties separated in February 2019 – after living together for not quite 10 years (on the applicant’s case) or a little over seven years (on the respondent’s case).
[5] Affidavit of the applicant filed 31 July 2020, paragraph 16.
[6] Affidavit of the respondent filed 15 September 2020, paragraph 10.
It is presently unnecessary to resolve the disputed dates of cohabitation; it is sufficient to note that, after the November 2008 consent order was made, the parties lived together as a de facto couple in a de facto relationship for either nearly 10 years or about seven years and four months. It is also relevant to note that there was no suggestion that the legislative prerequisites imposed by ss 4AA, 90SB, 90SD and 90SK of the Act are not satisfied in this case.[7]
[7] Norton & Locke (2013) FLC 93-567.
Despite initially living with the applicant, X now resides primarily with the respondent. Y and Z have lived primarily with the applicant following the February 2019 separation. As she was for the three children during the cohabitation, the applicant remained the primary carer for the parties’ two youngest children after the February 2019 separation.
The applicant sought that the respondent be ordered to pay her the following amounts:
(a)$603 per week periodic spousal maintenance, in addition to continuing to meet the payment of the mortgage repayments, rates, home and contents insurance, water, electricity and pay television service for the home in which she and two of the children live;[8] and
(b)$290,051 – to be characterised as partial property settlement, or alternatively lump sum spousal maintenance or by way of litigation funding; and
(c)$114,535 – to be characterised as an interim costs order or by way of litigation funding.[9]
[8]The payment of which outgoings by the respondent was previously agreed between the parties and the subject of orders made by consent in October 2020.
[9] Applicant’s Case Outline filed 23 July 2021, p.2.
Whether this Court has jurisdiction and power to make the interim orders sought by the applicant
As noted earlier, the respondent contends that, given the November 2008 consent order, the Court does not have jurisdiction or power, pursuant to s 90SM of the Act, to make an order altering the property interests of the parties after their February 2019 separation.
I accept the submission made by counsel for the applicant to the effect that the Court has jurisdiction and power to make the interim orders for the payment of the lump sum amounts and the spousal maintenance sought by the applicant. I do so because I am not persuaded that the November 2008 consent order “merged” the parties’ right to seek de facto property settlement orders pursuant to s 90SM of the Act or the right to seek the payment of maintenance pursuant to s 90SE of the Act. As was said in Clayton v Bant[10] (albeit in a different context), the rights created by these legislative provisions cannot “merge” into any judicial orders other than final orders of a court having jurisdiction under the Act to make orders under those sections – the right of the parties to a de facto relationship which has broken down continue to have separate existence unless and until the powers to make those orders are exercised on a final basis and thereby exhausted.
[10] (2020) 385 ALR 41 per the plurality at [26].
Further, in the circumstances of this case – as briefly summarised above – I am not persuaded that the applicant is estopped from seeking the relief she seeks or that her actions in doing so constitute an abuse of power.
It was submitted on behalf of the respondent (amongst other things) that it is long established that parties who resume a de facto relationship after having been the parties to a de facto relationship which has earlier broken down are resuming a “single” relationship and not, in a sense, embarking on a second or “new” de facto relationship; however, authority such as Dahl & Hamblin[11] seems to me to acknowledge the possibility that the happening of something “extraordinary” may mean that this is not the case. Whilst it is not necessarily a completely concluded view, it seems to me, on a prima facie basis at least, that applying for and having the November 2008 consent order made to formalise the end of their financial interrelationship after their November 2006 separation may constitute such an event – especially where the parties then complied with the terms of the same.
[11] (2011) FLC 93-480.
It is also relevant to note that Dahl and the authority to which the court referred therein were cases in which the court was asked to consider the meaning to be ascribed to the phrase “the total of the periods” in s 90SB of the Act – that is, the focus was on determining whether parties to de facto relationships which had involved various separations could aggregate the various “periods” of their de facto relationship in order to meet the legislative prerequisite of their de facto relationship being for a period (“or the total of the periods”) of at least two years’ duration – rather than on addressing the issue which arises in the present case. Further, the focus in Fenton & Marvel[12] was, it seems to me, a consideration of the jurisdictional facts (sourced in Item 86 of Schedule 1 Part 2 Division 2 of the Family Law Amendment (De facto Financial Matters and Other Measures) Act 2008 (Cth) and ss 4AA and 90SB of the Act) about which a court must be satisfied in order to be persuaded that it has the jurisdiction within which to exercise the power to make orders, including orders for property settlement[13] or spousal maintenance[14] – rather than on the issue which arises in the present case.
[12] (2013) FLC 93-550.
[13] Family Law Act 1975 (Cth) s 90SM.
[14] Family Law Act 1975 (Cth) s 90SF.
For these short reasons – which I consider adequate in the circumstances – I have concluded that the Court has jurisdiction and the power to make orders in terms sought by the applicant.
Disclosure
The applicant contends that the respondent has so far failed to comply with his duty to provide her with full and frank disclosure of documents that are or have been in his possession or control. Underpinning many of the submissions made by counsel for the applicant was the assertion that, given the respondent’s admission in this respect insofar as not making any disclosure until 27 October 2020, the Court should not be unduly cautious in making findings sought by the applicant.[15] Whilst accepting that he had not made disclosure prior to the commencement of proceedings, the respondent did not necessarily accept that he had failed to comply with his ongoing obligation to disclose documents relevant to issues in dispute between the parties in the proceedings.
[15]See, for example: Oriolo and Oriolo (1985) FLC 91-653 at 80,256; Black & Kellner (1992) FLC 92-287; Weir & Weir (1993) FLC 92-338 at 79,593; Collingridge & Aiolfi [2019] FamCAFC 88; Rice & Rice [2020] FamCAFC 174.
Counsel for the applicant submitted that the deficiencies in the disclosure received by the applicant from the respondent meant that the applicant had difficulty pointing to a specific source of funds from which the respondent could pay the lump sum amounts she sought. Counsel also submitted, though, that the following would persuade the Court to draw inferences adverse to the respondent and to conclude that he had sufficient funds available to him (from whatever sources) to be able to satisfy the terms of the interim orders sought by the applicant:
(a)his delay in providing the single expert appointed to value the various corporate interests under his control with:
(i)access to Quickbooks (which had been requested by the single expert in April 2021 and which was only provided by the respondent in the days prior to the hearing); and
(ii)documents that had been requested,
which meant that a report commissioned to analyse the income of the corporate entities was not available to the applicant or the Court at the time of the hearing; and
(b)he had disclosed the existence of a cheque in the sum of $624,643.88 for the first time in an affidavit filed two days prior to the hearing – his evidence included that solicitors acting for him in relation to the sale of a property he previously owned told him on 17 August 2020 that they held a cheque in that sum for him and that he had not expected to have such ready access to the same following previous communications about the bank’s requirement that these sale proceeds be applied to discharge other borrowings; he said he ultimately applied that sum to reduce borrowings secured over a property (known as the H Street Property) that he had acquired after the February 2019 separation – albeit that he appears to have drawn a cheque in the amount in early 2021 and only deposited it to reduce the borrowings in mid-2021; and
(c)the respondent’s failure to mention, in two previous affidavits or his financial statement, the existence of this $624,643.88 or its subsequent use.
I generally accept the submissions made by counsel for the applicant wherein she outlined the following chronology relating to the respondent’s possession of the $624,643.88 cheque, being the nett proceeds he received following his sale of real property he previously owned:
(a)the cheque was available to the respondent on about mid-2020 (prior to him filing material in the proceedings); and
(b)an affidavit and a financial statement sworn by the respondent on 15 September 2020 do not contain any reference to the existence of the cheque, then held by his conveyancing solicitor; and
(c)in the affidavit he swore on 15 September 2020, the respondent said that the funds he had received from the sale of the property (the cheque) had been paid to the bank to reduce debt – when, in fact, the cheque remained held for him by his conveyancing solicitor; and
(d)despite the parties being before Judge Middleton on 17 November 2020, the respondent did not then take the opportunity to correct this false assertion; and
(e)having left the cheque with his conveyancing solicitor until late 2020, the respondent banked the same into a new bank account in late 2020; and
(f)the respondent withdrew the funds in early 2021 (prior to the proceedings being before a Registrar of the Court on 24 February 2021) and applied the same to reduce the debt secured over the H Street Property; and
(g)after the respondent swore, in an affidavit on 23 June 2021, that he had only one bank account in his name, the applicant issued a subpoena to that bank on 22 July 2021 – this subpoena was returnable on 3 August 2021 and the respondent only disclosed the existence of the “new” bank account referred to in (e) above and the cheque in an affidavit he swore on 4 August 2021.
That the Court may take a firm and robust approach and not be unduly cautious about making findings in favour of the innocent party in proceedings where it is established that the other party has failed to abide the obligation to disclose relevant financial information[16] is not an approach that is confined to the final disposition of property settlement proceedings.[17] The integrity of the process inherent in the disposition of interim applications for the payment of maintenance and lump sums by way of partial property adjustment orders or costs orders depends as much upon the absolute duty of parties to meet their obligations of full and frank disclosure of all information relevant to the case (including disclosure of their financial position both as to assets and liabilities) as does the integrity of the s 79 or s 90SM process.
[16]See, for example: Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338; Linder & Linder [2016] FamCAFC 139; Collingridge & Aiolfi [2019] FamCAFC 88; Rice & Rice [2020] FamCAFC 174.
[17] Rice & Rice [2020] FamCAFC 174 at [133].
I accept that the bank statements tendered by counsel for the applicant show that the balance of a bank account held in the name of one of the companies controlled by the respondent has, at times, been in excess of $100,000.[18] I also note that counsel for the applicant submitted that, whilst the respondent’s nett rental income according to the contents of his financial statement was about $88,600, the information he provided to the Australian Taxation Office (as taken from his 2020 tax return) was to the effect that his nett rental income was about $207,000. Counsel appeared to suggest that the discrepancy was another reason why the Court should be hesitant to simply accept the respondent’s bald assertions about his financial position generally, including in relation to his assertions about his capacity (or lack of the same) to pay the amounts sought by the applicant, whether by way of periodic maintenance payments or lump sums.
[18] “Documents to be tendered by the applicant”, documents 6 and 7; affidavit of the respondent filed 15 September 2020, paragraph 40.
I consider, even on an interim basis (and noting and accepting the limitations associated with the same in terms of the discharge of the fact-finding obligation), that the respondent’s actions in relation to the $624,643.88 cheque constitute a clear failure to comply with his ongoing obligation of full and frank disclosure about financial matters. Given this, I consider it open to be robust in assessing his evidence about issues such as his asserted incapacity to pay maintenance to the applicant and his asserted incapacity to pay any lump sum she sought that he be ordered to pay.
Further discrepancies to which counsel for the applicant made specific reference in both the Case Outline and during the course of her oral submissions provide a further basis for such assessment.
Spousal maintenance
The applicant seeks that the respondent be ordered to pay to her $603 per week by way of periodic spousal maintenance (in addition to the various amounts he is already required to meet payment of on her behalf).
Relevantly, the Court may make such order as it considers proper for the applicant’s maintenance.[19] In exercising this jurisdiction, the Court must apply the principle that the respondent must maintain the applicant only to the extent that he is reasonably able to do so and only if she is unable to support herself adequately whether by reason of having the care and control of a child of the de facto relationship who has not attained the age of 18 years or by reason of age or physical or mental incapacity for appropriate gainful employment or for any other adequate reason.[20] In applying this principle, the Court must have regard only to the matters referred to in s 90SF(3) of the Act. Authority makes clear that the party’s pre-separation standard of living must not automatically be awarded where a respondent's means permit it; reasonableness in the circumstances is the guiding principle. [21]
[19] Family Law Act 1975 (Cth) s 90SE(1).
[20] Family Law Act 1975 (Cth) s 90SF(2).
[21] Bevan & Bevan (1995) FLC 92-600 at 81,981-81,982.
The respondent challenged the applicant’s inability to support herself; he contended that she has a capacity to obtain employment, given that the children are at school. Such position may well be challenged even more vigorously if the applicant maintains her current claim for a final order for the payment of maintenance. Counsel for the respondent submitted that the Court would not be persuaded that the applicant cannot support herself adequately because there was no evidence to suggest that she had attempted to find paid employment. He also submitted, in essence, that if the Court was persuaded that the applicant could not support herself adequately:
(a)there had been a double counting of some expenses included in the amount sought by the applicant (such as car maintenance and health insurance) which the respondent was already required to pay and that the amount sought should be reduced to reflect this; and
(b)because the respondent’s weekly expenses ($18,065) already exceeded his weekly income ($16,303) and he was liable for large amounts outstanding to the Australian Taxation Office, the children’s private school, local councils for rates and by way of child support payments, the respondent did not have the capacity to pay any amount for the applicant’s maintenance; and
(c)the respondent was already meeting payments relating to the home in which the applicant resided and that the quantification of such payments made for her benefit was approximately $628.15 per week.
Despite the submissions made by counsel for the respondent, I accept that the applicant:
(a)was the main homemaker and parent during the cohabitation; and
(b)has the primary care of the two younger children of the relationship (notwithstanding their attendance at school); and
(c)has been engaged in home duties since the birth of the parties’ first child, X, in 2005 save for two short periods of employment at a business not connected to the businesses run by the respondent,
and, given this, am satisfied, on the evidence before me and on an interim basis, that the applicant’s current earning capacity is minimal and that she is unable to support herself adequately. To the extent that it is necessary to do so, I record that I prefer the submissions made by counsel for the applicant about the issue of the applicant’s incapacity to support herself adequately to those made by counsel for the respondent.
I am not persuaded to discount the amounts claimed by the applicant as representing the cost of her weekly needs as these are particularised in her financial statement; I am satisfied that the same are reasonable in all the circumstances. In arriving at this conclusion, I have taken into account the contents of paragraph 23 of the applicant’s Case Outline in assessing the reasonableness of the applicant’s claimed expenditure.
However, I accept the submission made by counsel for the respondent to the effect that, as the respondent is already required by the terms of the October 2020 order to pay all of the costs of, amongst other things, maintaining the applicant’s car, the $50 per week she asserted she spent on the maintenance of the same should be deducted from her weekly needs – consequently, I quantify the applicant’s reasonable weekly needs in the amount of $553.
Counsel for the applicant submitted, in essence, that the difficulties the applicant faced in her attempts to identify either the respondent’s capacity to pay maintenance as sought or his capacity to pay the lump sum payments sought had to be considered in the circumstances of this case – which included that: the respondent controls all relevant entities; the respondent had not disclosed financial statements for relevant entities as at 30 June 2020; the respondent had simply asserted that the entities had not declared any dividends despite his position as complete controller of the same making such declaration a matter completely within his control; whilst the respondent had asserted that he had a deficit of rental expenses over rental income, only some of the expenses claimed appeared to relate to properties owned by him in his name alone and, given that other properties were owned by various entities under his control, his failure to provide disclosure meant that there was an absence of clarity attached to the attempt to characterise those expenses which were properly his and those which should have been paid by the corporate owners of the properties; the respondent had deposed to intending to borrow a further $2 million to pay toward real property he purchased for over $4.2 million after the February 2019 separation. I generally accept her submission in this respect and prefer them to the submissions made by counsel for the respondent.
Further, counsel for the applicant also submitted that the revelation about the significant sum of money which the respondent had had available to him (the $624,643.88 cheque) and his evidence about the use he had made of the same meant that, in addition to all of the other sources of funds which she submitted were available to him as a consequence of his complete control of a trust and various corporate entities, there was equity in the H Street property in this amount – which he could use, if he chose, to meet any order the Court might be persuaded to make in the applicant’s favour. She submitted that there was nothing in the respondent’s evidence to support the contention that he could not redraw the amount sought by the applicant from the loan facility secured over the H Street Property or that the funds were not otherwise available to him.
Whilst the respondent’s asserted weekly expenses exceed his nett weekly income (according to the details contained in his financial statement), his approach to the issue of the existence of more than $600,000 that was available to him (as outlined in detail above) has caused me to approach his evidence about this asserted deficiency with some scepticism. Even if it was accepted though, authority makes it clear that:
(a)an applicant does not necessarily have to establish that a respondent has a directly identifiable recurring income stream before an application for maintenance can succeed; and
(b)a respondent’s capacity to meet an order for the payment of spousal maintenance is not confined to a consideration of income but, instead, can take into account the capital and financial resources available to the party from whom maintenance is sought;[22] and
(c)maintenance does not necessarily have to be paid from income but can be paid from other assets or financial resources; and
(d)trust assets may be a financial resource for the purpose of satisfying a maintenance order where a party has the capacity to control and deal with trust property and to borrow from it;[23] and
(e)the circumstances of a case may be such that it may be open for a trial judge to draw an inference that a respondent’s true financial position is better than his or her stated position to the extent that he or she can meet an order for the payment of maintenance – a conclusion I have reached in the present case.
[22] See, for example: Maroney & Maroney [2009] FamCAFC 45.
[23] See, for example: Ashton & Ashton (1986) FLC 91-777.
Having regard to the matters already discussed and the submissions made by counsel for the applicant about the issue of the respondent’s capacity to pay maintenance to the applicant (which I generally accept), I am satisfied that the respondent is reasonably able to maintain the applicant to the extent of paying her $553 per week in advance and that it is proper that he do so.
Partial property settlement
The applicant seeks that the respondent pay to her, by way of partial property settlement, the sum of $290,051.
The amount sought by the applicant is to be applied to:
(a)outstanding extracurricular fees for Y and Z – $10,715; and
(b)an outstanding orthodontist bill for X – $2,000; and
(c)outstanding school fees – $40,568; and
(d)loans owed by the applicant to various friends used to meet her living expenses since July 2020 – $58,580; and
(e)a debt to Centrelink – $178,188.
Counsel for the applicant submitted, in essence, that the use to which the applicant proposed the funds be put needed to be seen in the context of the applicant’s assertions that, because the respondent had refused to provide her with any financial support other than that which he was required to do by the October 2020 order, she had been required to borrow funds from friends to meet the shortfall in her living expenses and that, save for making some lump sum payments towards arrears for the children’s school fees (which had already increased again), the respondent had paid no child support to her for the children since the February 2019 separation.
When considering whether a party should receive lump sum payments, it is necessary to identify the source of power relied upon to make such an order.[24] In the current case, counsel for the applicant relied upon the Court’s power to make an interim property order pursuant to ss 90SM and 90SS(1)(a) of the Act.
[24]Kyriakos & Kyriakos and Anor (2013) FLC 93-528 at 86,937, [37]; see also Strahan & Strahan (Interim property orders) (2011) FLC 93-466 and Zschokke and Zschokke (1996) FLC 92-693.
The legal principles to be applied in making an order for interim property settlement are well settled.[25] In summary, those principles include that:
(a)the discretion to make an interim property order must be exercised within the parameters of s 90SM– although there is no requirement that the consideration be as thorough as is required if the Court was determining the matter on a final basis; and
(b)in considering whether or not to make an order, the Court must be satisfied that it is just and equitable to make the same; and
(c)it is preferable for only one order (a final order) to be made in the exercise of the s 90SM power; and
(d)as the order sought is an interim order, a degree of caution is required; and
(e)an applicant for an interim property order need not establish compelling circumstances and an order, if made, need not limit the use to which any sum ordered to be paid may be put; and
(f)it is insufficient for an applicant to establish merely that a property order of the type sought will be made at trial; and
(g)a significant factor to be considered in determining whether or not to exercise the discretion to make an order on an interim basis and in determining its terms is whether or not such order is capable of reversal.
[25]Harris &Harris ; Strahan & Strahan (Interim property orders) (2011) FLC 93-466; Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) ; Stanford v Stanford (2012) 247 CLR 108.
Given the circumstances of this case, as discussed briefly within these Reasons and as outlined by counsel for the applicant in the Case Outline and in the submissions made orally, I am persuaded that the interests of justice make it appropriate to exercise the power under ss 90SM and 90SS(1)(a) to make an interim order as sought by the applicant.
Whilst the respondent contended that the Court would not be persuaded that it is just and equitable to make the interim order sought by the applicant, I consider that it is – the parties’ February 2019 separation that makes it clear that various express and implied assumptions which underpinned the existing property arrangements have been brought to an end by “the voluntary severance of the mutuality of the relationship.”[26] Given the evidence, including about the duration of the accepted de facto relationship after November 2008, that the same was productive of two of the parties’ three children and that the applicant was primarily responsible for meeting their care needs prior to the February 2019 separation and since then, I consider that the “just and equitable” requirement in this case to be readily satisfied.
[26] Stanford v Stanford (2012) 247 CLR 108 at 122, [42].
I am not persuaded that the applicant does not have an arguable case for substantive relief; I think it much more likely than not, on an interim basis, that the respondent continues to be able to meet his own living expenses and legal costs and, if required to make payments to the applicant, will be able to do so – either from income available to him (which it seems to me he is able solely to determine in terms of decisions about the declaration of dividends and/or distributions from the trust) or drawing against loan facilities secured over real property under his control or the sale of the same (as he previously did after separation – a sale which resulted in his receipt of the $624,643.88 cheque which he applied to reduce the level of indebtedness secured over a property he acquired in his own name after the February 2019 separation).
I am not persuaded that, if orders are made for the respondent to pay the lump sum monies sought by the applicant, the remaining property of the parties which is the subject of the proceedings would be insufficient to meet the legitimate claims of both parties when an order which exhausts the Court’s jurisdiction is made. Even on an interim basis, having regard to the submissions made by counsel for the applicant – which I generally accept and prefer to those made on behalf of the respondent, particularly where the same touch upon the estimated nett value of the property of the parties the subject of these proceedings – I consider it highly unlikely that the applicant will receive a lesser sum than the total of the monies she seeks that the respondent pay to her on an interim basis. I consider it clear that the funds which the respondent will be ordered to pay to the applicant can be taken into account when an order which exhausts the Court’s jurisdiction in these proceedings is made.
For these reasons, I consider it appropriate that the respondent pay the applicant the sum of $290,051 by way of partial property settlement. Whilst the applicant sought that such payment be made within a shorter duration than the order I intend to make will provide, I consider it appropriate that the respondent be afforded a longer time within which to make the payment.
Litigation funding
The applicant sought that the respondent pay the sum of $114,535[27] by way of interim costs order or, alternatively, by way of partial property settlement.
[27]Representing the combination of $81,974.78 then outstanding to her solicitors and $32,560.22 in anticipation of legal fees likely incurred up to and including the parties participating in a mediation.
Counsel for the applicant submitted that, in balancing the applicant being denied access to legal representation and the potential that any amount paid by the respondent to meet the applicant’s legal fees may not be recoverable by him, the Court would be persuaded to accord greater weight to the former than to the latter.[28] Counsel for the applicant also submitted, in essence, that if no order for litigation funding was made, the applicant would be unfairly denied access to legal representation in circumstances where, because of the respondent’s ongoing failure to disclose relevant documents in a timely manner, it had been difficult for her to obtain an understanding of his true financial position.
[28] Rakete & Rakete (2012) 48 Fam LR 325.
Whilst counsel for the respondent accepted that the Court needed to balance the competing interests of the parties, he submitted that the Court should place particular weight on the assertions that the existence of the November 2008 consent order means that the applicant cannot bring her claim for property adjustment orders pursuant to s 90SM of the Act, such that the proceedings really only entail an application for maintenance: given this, he submitted, in essence, some level of proportionality ought to be borne in mind and it would be unjust to require the respondent to pay such a significant amount for legal fees for the applicant for only a maintenance claim and that any amount the respondent is ordered to pay to the applicant would likely be unrecoverable.
In Strahan & Strahan (Interim property orders),[29] Boland and O’Ryan JJ said at [79]:
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: Blueseas Investments Pty Ltd v Mitchell [1999] FamCA 745; (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
[29] (2011) FLC 93-466.
This statement clearly resonates in the present case.
The starting point in relation to costs in proceedings under the Act is that each party to the same shall bear his or her own costs.[30] However, such starting point is ameliorated by the existence of s 117(2) of the Act which provides that, if it is of the opinion that there are circumstances that justify it in doing so, the Court may, subject relevantly to subsection (2) and the applicable Rules of court, make such order as to costs (whether by way of interlocutory order or otherwise) as the Court considers just.
[30] Family Law Act 1975 (Cth) s 117(1).
Neither party is in receipt of assistance by way of legal aid.
In Zschokke and Zschokke[31] the plurality of the Full Court of this Court held, at 83,215:
Accordingly, while the present state of the law remains somewhat unclear, it can be asserted with some confidence in light of Brennan J’s comments in Breen that there is at least power under s 117(2) (the costs power) for the Court to make an order which seeks to ensure that one party should be able to prosecute pending matrimonial proceedings and that the other party should provide the first mentioned party with the funds required to do so.
[31] (1996) FLC 92-693.
In Re JJT; Ex parte Victoria Legal Aid,[32] Gaudron J[33] said, at 85-181:
The power conferred by s 117(2) of the Family Law Act 1975 (Cth) (“the Act”) is a power to “make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.” That power is not simply a power to make an order for costs. Were it so, it would only authorise orders to indemnify for “costs actually incurred in the conduct of litigation”. However, a power to make an “order as to costs” is a broader power. And when regard is had to the consideration that s 117(2) expressly authorises interlocutory orders, that sub-section must, in my view, be construed as authorising orders requiring a party to proceedings under the Act to provide another party with funds to conduct those proceedings.
[32] (1998) 195 CLR 184.
[33]With whom Gummow and Kirby JJ agreed insofar as that s 117(2) of the Act permits the Court to make orders as to future costs of a spouse in proceedings under the Act.
In Strahan & Strahan (Interim property orders),[34] the plurality said, at [81]:
In Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (“Paris King Investments”) Brereton J observed at [29], “[t]he juridical bases for an order for preliminary provision for litigation costs in matrimonial proceedings are diverse”. As Brereton J said, an order may be made as a maintenance order under ss 72 and 74 of the Act or a property settlement under s 79 and s 80(1)(h) or a costs order under s 117. The spouse maintenance and costs jurisdiction to make such an order was recognised by the High Court in Breen v Breen (1990) 65 ALJR 195 (“Breen”) per Brennan, Dawson and Gardron JJ, when dismissing an application for special leave to appeal against such an order. In Paris King Investments Brereton J at [30] described such an order as an “order for interim provision for litigation expenses” and this may be a more appropriate description than an “interim costs” order so as to more accurately reflect the various sources of jurisdiction.
[34] (2011) FLC 93-466.
It is trite to note that the power to make such order as to costs is broad and fettered only by the requirements that there are “proceedings under the Act” (as there are here) and that the order (if made) is one which is “just”.
Whilst an applicant must persuade of the existence of “justifying circumstances” as a prerequisite to the making of an order under s 117(2) of the Act, such circumstances can exist without there being a clear or exceptional case.[35]
[35] Penfold & Penfold (1980) 144 CLR 311 per Stephen, Mason, Aickin and Wilson JJ.
Even taking the submissions made by counsel for the respondent into account, I am satisfied that the circumstances here justify the making of an order that the respondent pay the amount sought by the applicant by way of an order as to costs.
I arrive at this conclusion having regard to the submissions made by counsel for the applicant about this issue (which I accept and prefer to the submissions made by counsel for the respondent) and because I consider that, given the extent of the respondent’s financial interests (which appear, on a prima facie basis, to be significantly superior to those of the applicant), his conduct to date in relation to his failure to disclose the existence of very significant funds available to him (until it must have become apparent that the same was about to be discovered by the applicant) and his delay in providing the single expert appointed to value the various entities under his sole control, the applicant will likely struggle to prosecute her case without the benefit of legal assistance – which she is highly likely to be unable to afford absent an order requiring the respondent to contribute to the same. In addition, the submissions made by counsel for the respondent suggest that the respondent’s case will involve some legal complexity – a further matter that seems to me to suggest that, absent legal assistance, the applicant may struggle in the presentation of her case.
I accept that there is certainly a very real prospect that, if an order requiring him to pay the applicant’s costs in the amount sought is made now and his arguments find favour at the final hearing, the respondent may be unable to recover such amount from the applicant. However, having balanced this prospect and the matters adverse to the applicant,[36] I consider that the potential injustice to the applicant in terms of the restriction on her ability to prosecute her case outweighs the potential injustice to the respondent of being unable to recover the amount to be ordered on account of the applicant’s costs.
[36] See: Rakete & Rakete (2013) 48 Fam LR 325.
In summary then, I am satisfied, for these reasons and accepting the thrust of the submissions made by counsel for the applicant in support of the exercise of the costs power to make the interim order sought, that the circumstances justify the making of an order that the respondent pay the applicant the amount sought as to her costs. In the circumstances of this case, as outlined in the submissions made by counsel for the applicant, which I have generally accepted and have preferred to those made by counsel for the respondent, I am also satisfied that an order requiring the respondent to pay the amount sought by the applicant as to costs is just.
Orders for disclosure
Whilst counsel for the applicant sought that I make orders for the respondent to provide specific documents by way of disclosure,[37] she also acknowledged that some of the documents sought had likely been disclosed by the respondent in the days prior to the hearing. As she was unable, because of this, to particularise those documents which had been received and those which remained outstanding, she sought that an order for disclosure as sought be made on the understanding that the respondent’s answer to that order may be that he had already disclosed some of the documents.
[37] Applicant’s Case Outline filed 23 July 2021, p.19.
Counsel for the respondent opposed that course. He submitted that, as orders for the respondent to provide disclosure had already been made on 6 October 2020, the applicant was simply, in essence, seeking unnecessarily to have such orders remade. He submitted that the respondent should not be required, by order, to provide documents which have already been disclosed or in respect of which his answer to earlier requests for the same has been that they do not exist.
I accept that the respondent’s duty of disclosure only extends to documents which are or have been in his possession and control.[38] I also note that a party is not required to serve another party with a document that the first-mentioned party has already provided to the second-mentioned party.[39] Noting that counsel for the respondent outlined that he would not oppose the respondent being ordered to disclose the documents sought (subject to the proviso “if they exist”) – albeit that he did oppose an order being made in what he described as “carte-blanche” terms – it seems to me appropriate that an order for disclosure is made generally in the terms sought by the applicant.
[38] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.03(a).
[39] Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.06(10).
It is perhaps trite to observe that it seems to me that it is always open to a party the subject of an ongoing duty of full and frank disclosure to advise the party to whom such disclosure must be made that they have disclosed all relevant documents in existence. It is also, it seems to me, axiomatic that one cannot disclose something that does not exist.
It is only proper that I conclude these Reasons with a sincere apology to the parties for the time taken to resolve the applications.
I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hogan. Associate:
Dated: 31 August 2022
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