Hillier and Olly

[2016] FamCA 764

FAMILY COURT OF AUSTRALIA

HILLIER & OLLY [2016] FamCA 764

FAMILY LAW – PROPERTY – Interim litigation costs funding – Whether $90,000 should be distributed to the wife for payment of legal costs – Where funds from sale of matrimonial property held in wife’s solicitor’s trust account – Where the husband  is self-represented – Where $50,000 also distributed to husband to retain legal representation for trial.

Family Law Act 1975 (Cth)

APPLICANT: Ms Hillier

RESPONDENT: Mr Olly

FILE NUMBER: BRC 2234 of 2015

DATE DELIVERED: 9 September 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 8 September 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Ms Barron

Pullos Lawyers

THE RESPONDENT: In Person

Orders

1. That for the purposes of interim litigation costs funding the following shall happen:

   (a)That within two (2) business days of the making of these Orders, the amount of $90,000 shall be paid to the Applicant from the funds held in the trust account of Pullos Lawyers on behalf of the Applicant and Respondent being the net sale proceeds of the properties situated at 21 B Street, Suburb C and D Street, Suburb E and paid to the Applicant to be used by her to pay her existing liability to Pullos Lawyers for legal costs and outlays and to pay her anticipated future liabilities to that firm for legal costs and outlays of and incidental to these proceedings and the trial currently listed for four days commencing on 10 October 2016;

   (b)That within two (2) business days of the making of these Orders, the amount of $50,000 shall be paid to the Respondent from the funds held in the trust account of Pullos Lawyers on behalf of the Applicant and Respondent being the net sale proceeds of the properties situated at B Street, Suburb C and D Street, Suburb E and paid into the trust account of Pullos Lawyers on behalf of the Respondent to be used by him to pay for his anticipated future liabilities for legal costs and outlays of and incidental to these proceedings and the trial currently listed for four days commencing on 10 October 2016 but with such money only to be paid out of the trust account of Pullos Lawyers as follows:

   (i)Immediately upon receipt by Pullos Lawyers of a written request for payment signed by the Respondent and a firm of solicitors who have also served Pullos Lawyers with a Notice of Address for Service filed in these proceedings evidencing that such firm of solicitors is representing the Respondent in these proceedings, Pullos Lawyers shall pay the amount of $10,000 to the trust account of the requesting firm for the Respondent’s use in meeting the first $10,000 of legal costs and outlays he incurs with that firm for their representation of him in these proceedings; 

   (ii)Upon receipt by Pullos Lawyers of a copy of an invoice or invoices for legal costs and outlays incurred beyond the first amount of $10,000 and a request for payment of the amount of that invoice or those invoices by the firm that is representing the Respondent in these proceedings, Pullos Lawyers shall pay such further amounts to that firm in payment of that invoice or those invoices up to a total of $50,000 (including the first amount of $10,000 provided for in (i) hereof); and/or

   (iii)Upon receipt by Pullos Lawyers from the firm representing the Respondent in these proceedings of a copy of an executed Costs Agreement between that firm and the Respondent and a copy of an executed Retainer Agreement with a barrister retained to appear for the Respondent at the trial in these proceedings and a request by that firm for payment of the balance of the amount of $50,000, Pullos Lawyers shall pay such further amount to that firm that would take the total amount paid to that firm pursuant to these Orders up to the amount of $50,000, such sum only to be used for the Respondent’s costs and outlays in these proceedings in this Court;

   (iv)Should the firm of solicitors that files a Notice of Address for Service on behalf of the Respondent in these proceedings subsequently file in these proceedings a Notice of Ceasing to Act, any amount held in that firm’s trust account as a consequence of these Orders not already expended on the Respondent’s costs and outlays in these proceedings shall be forthwith returned to the trust account of Pullos Lawyers and held on trust for the Respondent pending written agreement of the Applicant and the Respondent or further order of this Court;

   (c)That the determination of the appropriate treatment in property adjustment proceedings between the Applicant and the Respondent of any amounts paid to the Applicant and the Respondent pursuant to these Orders shall be a matter for the trial Judge.

2. That the time within which the Respondent father is to comply with paragraphs 1, 2 and 3 of the Orders of Registrar Brooks of 17 August 2016 is extended to the close of business on Friday, 23 September 2016 and the Respondent father will need the leave of the Court, first obtained, to be entitled to rely at the trial on any affidavit or other document filed other than in strict accordance with the Orders of Registrar Brooks of 17 August 2016 and these Orders.

3. That the Respondent father shall disclose to the Applicant mother’s solicitors by close of business on Friday, 23 September 2016 the following documents:

   (i)Completed Financial Statements including balance sheets, and profit and loss statements for the company, F Pty Ltd, for the financial years ended 30 June 2013, 30 June 2014 and 30 June 2015;

   (ii)Copies of Income Tax Returns (including Depreciation schedules) lodged by the company, F Pty Ltd, with the ATO for the financial years ended 30 June 2013, 30 June 2014 and 30 June 2015;

   (iii)Bank Statements for any and all bank accounts held by or for the company, F Pty Ltd, covering all of the period from 1 July 2015 to the date of disclosure;

   (iv)Statements for any and all credit card accounts held by or for the company, F Pty Ltd, covering all of the period from 1 July 2015 to the date of disclosure;

   (v)Any and all documents evidencing the sale since 1 July 2015 by the company, F Pty Ltd, of any motor vehicle, trailer, tools or other assets including in particular details of the sale price and the name and address of the purchaser;

   (vi)Any and all documents evidencing any and all liabilities paid since 1 July 2015 by the company, F Pty Ltd;

   (vii)Any and all documents evidencing the current value of any asset still retained by the company, F Pty Ltd;

   (viii)Any and all documents evidencing the existence of any current liabilities of the company, F Pty Ltd.

IT IS NOTED that one of the documents the Respondent father must file by close of business on Friday 23 September 2016 is an Undertaking as to Disclosure. That is to be filed in full cognisance of the obligation imposed upon him by paragraph 3 of these Orders.

1. The matter is listed for further mention and a compliance check before his Honour Justice Forrest at 9.30 am on Friday, 30 September 2016.

Note: The form of the Order is subject to the entry of the Order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hillier & Olly has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 2234 of 2015

Ms Hillier

Applicant

And

Mr Olly

Respondent

REASONS FOR JUDGMENT

1. The Applicant and the Respondent are the mother and father of a little girl born to their de facto relationship that ended several years ago. They are parties to parenting orders and property adjustment orders proceedings which have been before this Court and the Federal Circuit Court for several years. Some months ago, the proceedings were listed for a four day trial before me to take place commencing on 10 October 2016, just over four weeks away. 

2. The former couple had two residential properties – one in which they lived and the other an investment property they rented out. Both properties were mortgaged. The Respondent operates a building/painting business through a private company. The Applicant is a nurse.

3. At separation, the Applicant and the child moved out of the family home and took up independent residence elsewhere at her own expense. At that time, the mortgage liability, secured by the two properties, was approximately $12,000 in advance. The net rent received for the investment property also went towards meeting the mortgage loan repayments.

4. Earlier this year, I made Orders on the Applicant mother’s application for the two properties to be sold and any net proceeds of sale to be secured in the trust account of her solicitors pending final resolution of the matter. The father did not have legal representation. I was satisfied the properties had to be sold as the Respondent father, who had occupied the former family home with his new partner and her child, had allowed the mortgage liability to fall from $12,000 in advance to $12,000 in arrears and was using the net rental income from the investment property for his own purposes instead of paying the mortgage with it.

5. The two properties have now been sold and there is approximately $383,000 held in the trust account of the Applicant’s solicitors. The Applicant asserts she has $5,000 worth of household goods, approximately $4,000 equity in her motor car and about $10,000 in credit card debt. She also has $280,214 in her superannuation account, but is only 37 years old and asserts she had superannuation of some amount (as yet not specified) in that account when she and the Respondent commenced cohabitation. She also asserts that the Respondent had little in the way of assets, including superannuation at that time. Considering those matters alone, there is $672,214 in cash held as trust monies, superannuation and other assets, excluding any liabilities.

6. The Respondent father said in his filed Financial Statement (18 July 2016) that the net assets of the company, F Pty Ltd, are only worth $5,000 and that his household contents are only worth $1,200. That would take the value of the assets and superannuation to almost $680,000 before any liabilities are taken into account.

Interim Litigation Costs Funding

1. The matter came before me for hearing of the Applicant’s interim litigation funding application on 8 September, 2016. The Applicant sought an amount of $90,000 be paid to her out of the money currently held by her solicitors on trust for her and the Respondent, to enable her to pay about $33,000 that she now owes to her solicitors and to provide funds for anticipated future costs and outlays of the trial. Quite remarkably, considering the Applicant’s solicitor advanced the submission that the Applicant seeks 90 per cent of the total pool of cash, superannuation and assets, the Applicant swore that her solicitors (who have acted for her for many months, if not years, and who hold the $383,000 in their trust account) had told her that unless she pays them in advance on account of the anticipated costs and outlays of the trial, they will not continue to act for her. The Applicant’s solicitor confirmed that as correct at the hearing.

2. The Respondent father had filed no Response and no affidavit. When he was asked what his position was, it became clear fairly quickly that he did not oppose the Applicant being paid the $90,000 for her legal costs and outlays provided he could be paid some money as well, so as to be able to obtain legal representation for the trial. Unsurprisingly, he said if the Applicant was to be paid $90,000 then so should he. However, that clearly did not give proper recognition to the fact that $33,000 of that was for liabilities already incurred for past work done by her solicitors, leaving the Applicant being provided with only $57,000 for anticipated future costs.

3. The Applicant opposed the payment of $90,000, or an amount close to that amount to the Respondent, submitting that if he is only to receive 10-15 per cent in the overall property adjustment then he would have already received all of his share in cash whilst the Applicant would receive $280,000 of her share in superannuation and that would not be equitable. I must say, at first thought, I fail to appreciate how that might be unjust and inequitable if she was receiving the balance of the money held in trust, which would be just over $200,000, in addition to the $90,000 by way of the litigation funding order. In addition, having regard to the evidence relied upon by the Applicant in those parts of her trial affidavit that are relevant to the property adjustment proceedings, again, at first thought, it is hard to consider the submission that the mother should receive 90 per cent of the total of the parties’ cash, superannuation and other assets as anything other than an overly generous ambit claim.

4. However, during the course of the hearing I asked some questions of the Respondent about his assertion that the net assets of the company are only worth $5,000. His answers certainly did not persuade me, at this point, that his assertion as to value is correct. In particular, he told the Court that the company owns a motor boat worth at least $20,000 and possibly as much as $30,000. He made no assertion that there is any debt pertaining to that boat. He told the Court that he had purchased a second hand motor vehicle earlier this year to replace two vehicles the company had sold. He said he had purchased it for $18,000 using a credit card on which he now owes around $21,000. I understand those matters alone to point to the company having net assets of $17,000 to $27,000 without more. He could give no further detail of other liabilities owed by the company.

5. At the end of the hearing I was reasonably satisfied that although the Applicant opposed the payment to the Respondent of an amount for interim litigation costs funding that her solicitor exhausted all she could say as to why an order in favour of the Respondent should not be made. I was not persuaded that such an order should not be made if it is limited to an amount of $50,000, which is around the amount the Applicant will be getting for her anticipated future costs, and there are some safeguards put in place to ensure that it is only paid out to the Respondent if he does, in fact, retain solicitors to represent him from now through to the end of the trial.

6. Accordingly, I will be making an order that the Applicant receives $90,000 from the funds held by her solicitors on trust for both the Applicant and the Respondent to be used for legal costs and outlays incurred and anticipated and I will be making an Order that the Respondent receives $50,000 from the same funds to be used for legal costs and outlays anticipated, but only in circumstances where he has solicitors who have gone on the record as acting for him in these proceedings. Indeed, he satisfied me that he has already been to see a firm of solicitors, known for their expertise and competence in family law, and that they have indicated the terms, including as to payment of an initial $10,000 retainer fee, upon which they would be prepared to act for him. The Respondent indicated his intention, if funded, to go back to retain that particular firm. It is to be hoped that he does. It would be extremely beneficial to him, to the Applicant and her lawyers, the Independent Children’s Lawyer and the Court if he does act on his expressed intentions with the benefit of the orders I make. If he does not and fails to obtain legal representation, the $50,000 payment to him will not be made prior to finalisation of the property adjustment proceedings.

7. Ultimately, on the material before me today, I am quite satisfied that it is just and equitable to make a payment of $90,000 to the Applicant and a payment of $50,000 to the Respondent, (less than 10 per cent of the value of the total cash, superannuation and other assets) even in circumstances where it may prove very difficult to recover any of that amount if the Respondent is later adjudged to have received greater than his entitlement. I am satisfied, on the balance of probabilities, that it is most unlikely that it would be so adjudged on more careful consideration. It is most likely that such payments will be later determined by me to have been made by way of partial property adjustment as between the former de facto couple, though I leave that determination for the trial.

Disclosure and Trial Directions

1. It became clear to me that the Respondent has very little capacity to competently represent his own interests in the proceedings. It became clear, on his own admissions to the Court, that he had not provided disclosure to the Applicant in respect of much relevant financial documentation, particularly relating to the company, F Pty Ltd, and its financial circumstances, assets and liabilities. Satisfied that he must comply with his obligations in this respect, I determined to make orders that he provide specific disclosure within just over two weeks. That will give the Applicant only just over two weeks herself to consider those documents in her preparation for the trial. That is better than not being able to consider them if the Respondent is not ordered to disclose them.

2. The Respondent has also, without any good reason, failed to file an affidavit of evidence in chief in the parenting proceedings that he was directed to have filed by 2 September 2016, as well as other documents including an Undertaking as to Disclosure, a chronology of relevant facts and a Case Information Document setting out particularly the orders he seeks. Before me, he maintained a desire to file an affidavit, as well as others not even referred to previously in the trial directions made by the Registrar in August of this year.

3. I will give the Respondent one last opportunity to file his affidavit and the other documents by 23 September 2016. Hopefully, he will be assisted by solicitors he now retains. I have made it abundantly clear, both in Court at the hearing and in my Orders that I will make, that the Respondent will have no right to rely upon any other document not filed in accordance with the existing directions without first obtaining the leave of the Court. I assessed the Respondent as clearly understanding that today. 

Compliance Mention

1. Finally, I consider it appropriate to list the matter for mention early one morning after 23 September 2016 and before the trial dates to check on compliance by the parties with trial directions and trial arrangements. I will do that. All parties and their legal representatives will be required to attend, including the Independent Children’s Lawyer.

2. I make the Orders set out at the commencement of these written reasons.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 9 September 2016.

Associate: 

Date:  9 September 2016