Hopkins & Elliott
[2023] FedCFamC1F 167
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hopkins & Elliott [2023] FedCFamC1F 167
File number: SYC 5636 of 2021 Judgment of: AUSTIN J Date of judgment: 17 March 2023 Catchwords: FAMILY LAW – PROPERTY – Practice and procedure – Review of decision – Exclusive occupation – Where the wife advanced no proper legal reason for her sole and exclusive use of the husband’s home – Family violence injunctions – Where a family violence order made by a State court is already in force – Litigation funding – Where the husband’s financial position is precarious and the wife could not identify any asset in the husband’s possession that could be liquidated to fund her litigation costs – Interim property settlement – Where no reason was advanced by the wife to support an interim order compelling the husband to discharge the debts of both parties in advance of the trial – Spousal maintenance – Where the husband does not have the reasonable capacity to pay maintenance – Financial injunctions – Where the wife failed to demonstrate the husband should be restrained from discharging his usual directorial duties in relation to two corporations he controls – Orders made – No orders as to costs. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 69ZM, 79, 114AB, 117, 121
Income Tax Assessment Act 1936 (Cth) Pt III, Div 7A
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pts 6.1, 6.2, 6.3, rr 5.07, 5.08
Domestic and Personal Violence) Act 2007 (NSW)
Cases cited: Gabel v Yardley (2008) FLC 93-386
Hearne v Street (2008) 235 CLR 125
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Sarto and Sarto (2022) 65 Fam LR 605
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Division: Division 1 First Instance Number of paragraphs: 54 Date of hearing: 17 March 2023 Place: Newcastle Solicitor for the Applicant: Parker Law The Respondent: Litigant in person ORDERS
SYC 5636 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HOPKINS
Applicant
AND: MS ELLIOTT
Respondent
order made by:
AUSTIN J
DATE OF ORDER:
17 March 2023
THE COURT ORDERS THAT:
1.Orders 2 to 18 inclusive made by the registrar on 31 January 2023 are set aside.
2.Within one month of the date of these orders the respondent shall vacate the real property and improvements known as B Street, Suburb C, NSW (“the property”) and is thereafter restrained from entering upon the property.
3.Leave is granted to the applicant pursuant to s 121(9) of the Family Law Act 1975 (Cth) to provide copies of the following documents filed by the respondent in these proceedings to the subrogated workers compensation insurer and its lawyers managing or defending the workers compensation claim made by the respondent against D Pty Ltd, upon condition that such documents not be disclosed beyond the confines of those proceedings:
(a)The affidavit filed by the respondent on 25 September 2021; and
(b)The affidavit filed by the respondent on 15 October 2021.
4.Otherwise:
(a)the application for interim relief within the Initiating Application filed by the applicant on 5 August 2021 is dismissed;
(b)the application for interim relief within the Response filed by the respondent on 10 November 2022 is dismissed;
(c)the Amended Application in a Proceeding filed by the applicant on 24 February 2023 is dismissed;
(d)the Response to an Application in a Proceeding filed by the respondent on 8 December 2022 is dismissed; and
(e)the Application for Review filed by the respondent on 7 February 2023 is dismissed.
5.The applicant’s application for costs of and incidental to this hearing is 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 Hopkins & Elliott has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
AUSTIN J:
The parties are in the midst of contesting orders for property settlement relief under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
On 31 January 2023, the registrar made interlocutory orders between the parties covering multiple issues, including:
(a)the nature of the instructions furnished to the single expert appointed to value the parties’ corporate interests (Orders 2, 3, 7, 8, 9 and 10);
(b)the parties’ permission to confer with and ask questions of the single expert (Orders 4, 5 and 6) – even though Div 7.1.6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) already makes express provision for it;
(c)procedural matters of no present consequence (Orders 11, 12, 13, 16, 17 and 18); and
(d)the “withdrawal” of the parties’ interlocutory applications (Orders 14 and 15) – the meaning of which is quite opaque, because it is not styled as a dismissal order and the applications were not discontinued.
By an Application for Review filed on 7 February 2023, the wife seeks the review of those particular orders, which review entails the hearing de novo of the parties’ interlocutory applications comprised within:
(a)the Initiating Application filed by the husband on 5 August 2021;
(b)the Response filed by the wife on 10 November 2022;
(c)the Amended Application in a Proceeding filed by the husband on 24 February 2023 (which amends and therefore supersedes the Application in a Proceeding filed on 29 July 2022); and
(d)the Response to an Application in a Proceeding filed by the wife on 8 December 2022.
For the reasons which follow, the orders made by the registrar are discharged and replaced by others, but not in the wholesale way the wife proposed.
Evidence
The husband relied upon:
(a)the affidavit of his solicitor, Ms Parker, filed on 29 July 2022;
(b)his affidavit filed on 29 July 2022;
(c)the affidavit of his solicitor filed on 22 February 2023;
(d)his affidavit filed on 24 February 2023; and
(e)his Further Amended Financial Statement filed on 24 February 2023.
The wife relied upon:
(a)her Financial Statement filed on 10 November 2022;
(b)the affidavit of her former solicitor, Mr E, filed on 8 December 2022;
(c)her affidavit filed on 8 December 2022; and
(d)her affidavit filed on 24 February 2023 (though the documents referred to as attachments in the text of the affidavit were not actually attached).
These are not child-related proceedings (s 69ZM) so the rules of evidence apply. Although the wife’s evidence would mostly be inadmissible if the subject of any objection, no objection was ultimately pressed. Nevertheless, it lacks probative value because it is voluble, opinionated and argumentative.
The wife also sought to rely upon an affidavit and other miscellaneous documents she filed electronically at 00.52 am and 04.27 am this morning (17 March 2023), but permission was refused because their admission into evidence would have denied the husband procedural fairness. Affidavits must be filed and served at least two business days before the hearing date (r 5.07 of the Rules), let alone that parties are ordinarily allowed to rely upon only one affidavit (r 5.08 of the Rules). The affidavit was served this morning, but the documents had not been served upon the husband at all.
Short history
The parties began cohabitation no earlier than mid-2014, married in 2016, and separated in early 2021. The relationship was not quite seven years in length.
The husband commenced these proceedings seeking property settlement relief in August 2021. Despite the relative brevity of the parties’ relationship and the substantially greater capital contributions apparently made by the husband at the commencement of the relationship, the wife purports to maintain a claim to the majority of the net value of the aggregated matrimonial assets.
The wife deposes that she has no assets of any significant value, but significant debt.
The husband conducts professional practice through two corporations, which he controls. He and the corporations have interests in two parcels of real estate, though he is the sole owner of the property in which the parties lived while they cohabited (“the Suburb C property”).
The husband’s assets and business interests secure significant debts owed to his bank and the Australian Taxation Office (“the ATO”). According to the husband’s unchallenged evidence, he pays over $3,000 per week to the ATO to service an agreed payment plan. He must also pay rent on the accommodation he leases and mortgage repayments on the home he owns, occupied by the wife at no cost. The husband has personal liabilities of around $1.5 million and one corporation he controls is indebted to the ATO for about $350,000. The cost of maintaining the husband’s liabilities outstrips his income, without taking into account ordinary living expenses.
Possession of the Suburb C property
The husband owns the Suburb C property, but the wife lives in it.
The husband seeks orders compelling the wife to vacate the home, remove her personal property from it, return the keys to it to him, and remain away from the property (Initiating Application Orders 2, 3, 6 and 7)
In response, the wife seeks orders dismissing that application, entitling her to sole and exclusive occupation of the property, and compelling the husband to pay the mortgage, rates and utilities (Response Orders 6 and 13).
The wife advanced no proper legal reason for granting her sole and exclusive use of the husband’s home, which privilege would entail making an injunction trammelling his legal right to enjoy the possession of his own property. Her contention is that she has no alternate accommodation and would otherwise be homeless. Contrary to her apparent belief, no former interlocutory order was made granting her sole occupation of the property.
No aspect of the evidence advanced by the wife suggests she has any realistic chance of securing exclusive legal title in the property, free of encumbrance, as part of the eventual property settlement. She asserts the home is worth $2.1 million and there is no doubt it is encumbered by a mortgage securing debt of around $1.16 million. She is in receipt of workers compensation and has no demonstrated capacity to either buy-out the husband’s interest or take over responsibility for the mortgaged loan.
It follows that the wife must vacate the property at some point in time. There is no satisfactory reason why it should not be sooner rather than later. At law, the husband is entitled to immediate possession of the property and is at liberty to have her ejected as a trespasser without any further court order (Sarto and Sarto (2022) 65 Fam LR 605), but an order should be made to ensure a more orderly transition of possession. The husband is renting other premises on a month-to-month lease and will need to give one month’s notice to terminate the lease. The wife will have one month within which to vacate the property.
Family violence injunctions
The husband seeks injunctions against the wife restraining her from pestering him, coming near to his place of work, or contacting him directly (Initiating Application Orders 4, 5 and 8).
The wife seeks orders dismissing that application and reciprocal injunctions restraining the husband from pestering her or coming to the Suburb C property (Response Orders 6 and 26).
So far as the evidence goes, in early 2023, a family violence order was consensually made by a State court against the husband for the wife’s protection pursuant to the Crimes (Domestic and Personal Violence) Act 2007 (NSW) for a period of six months and is currently in force. Accordingly, the wife’s application cannot be granted (s 114AB(2)). She instead sought that an injunction be made so it commences upon the expiry of the State order, but the evidence does not justify such an extension. She can later apply for an extension if it is needed.
During submissions, the husband abandoned his application for the injunctions he sought against the wife.
Litigation funding
Even though the wife is not now legally represented, she pressed her application for litigation funding.
She seeks orders compelling the husband to pay her $200,000 so she may fund the litigation, either by way of an interim property settlement order or in the guise of a costs order (Response Orders 1, 10, 11, 12). Alternatively, she applies for a dollar-for-dollar costs order (Response to Application in a Proceeding Orders 7 and 8). The husband applies for the dismissal of those applications (Amended Application in a Proceeding Order 7).
In determining any application for litigation funding, regardless of the head of power within the Act relied upon to justify the order, three issues are always relevant: the applicant must show the respondent enjoys a position of relative financial strength; the respondent must have the demonstrated capacity to meet his or her own litigation costs; and the applicant must be unable to meet his or her own litigation costs (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at 85,633–85,634 and 85,655–85,656). In support of the application, the applicant should adduce evidence of an arguable case for substantive relief and the likely costs of the litigation (Strahan at 85,635 and 85,646–85,647).
Even if it be assumed the husband is in a stronger financial position than the wife and she cannot afford to meet her own litigation costs (supposing she re-engages lawyers), the husband’s overall financial position is still precarious. The wife could not identify any asset belonging to the husband which could be liquidated to meet a lump sum litigation funding order. She could only suggest an order compelling the husband to take money from one of the corporations he controls or sell a parcel of real property which he does not own. The primary application for lump sum litigation funding fails.
In respect of the alternate application for a dollar-for-dollar costs order, the evidence shows the husband’s obligatory expenditure on debt exceeds his income, so he has no demonstrated capacity to pay her costs on an incremental basis. What financial arrangement exists between the husband and his lawyers for their payment is unknown.
The litigation funding application, in its different guises, is dismissed.
Interim property settlement
The wife seeks orders by way of interim property settlement compelling the husband to forthwith pay his own debts, together with nearly $140,000 of her own debts (Response Orders 30 and 31). The husband applies for dismissal of that application (Amended Application in a Proceeding Order 7).
There is only one exercise of power under s 79 of the Act to adjust the parties’ property interests (Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [40]-[48]; Strahan at 85,638–85,640), though the power may be exercised partially or on an interim basis until it is entirely spent or exhausted (Gabel v Yardley (2008) FLC 93-386 at 82,958; Strahan at 85,640–85,640). Nonetheless, it is clearly preferential for there to be only one exercise of the power (Strahan at 85,640–85,641 and 85,657) so there must be some principled reason for fragmenting the process.
No reason was advanced by the wife for why an interim order should be made compelling the husband to discharge debts of both parties in advance of the trial, at which time the metes and bounds of their financial dispute will be explored. There is no principled reason to make the interim property settlement orders proposed by the wife. Her application is dismissed.
Spousal maintenance
The wife seeks orders compelling the husband to pay her spousal maintenance of $4,000 per week (Response Orders 8 and 9), which application the husband resists.
Accepting the wife’s unchallenged evidence, she is unable to maintain herself to the same standard she has hitherto enjoyed and is in need of spousal maintenance.
However, she cannot demonstrate the husband has the reasonable capacity to pay maintenance by resort to his income, which is exhausted servicing debt. The forced sale of the Suburb C property would liberate capital to pay out secured debt, but may not yield enough net proceeds to support both parties in separate households. If the debt is serviced, the Suburb C property can readily provide accommodation for one of them. Contrary to the wife’s belief, the husband cannot be compelled to strip the corporation he controls of its money or assets to meet a spousal maintenance obligation to her because that would create another liability under Pt III, Div 7A of the Income Tax Assessment Act 1936 (Cth).
While the wife’s financial circumstances may be perilous, she still receives workers compensation payments and has no dependents. She can likely subsist until the property settlement dispute is resolved. The spousal maintenance application is dismissed.
Disclosure
The wife seeks an order directing the husband to give “full and frank financial disclosure” under the Rules (Response Order 2), but there is no need for an order.
Pt 6.1 and Pt 6.2 of the Rules already make provision for such disclosure. The wife did not seek an order extending beyond the reach of the Rules.
Interrogation
The wife seeks a declaration that she may ask the husband 20 specific questions (Response Order 3). It is unnecessary as Pt 6.3 of the Rules already gives the wife permission to do so.
Single expert (corporate interests)
The wife seeks orders regulating the appointment and instruction of a single expert to value numerous corporate and trust entities (Response Orders 17, 18, 19, 20, 21 and 22; Response to an Application in a Proceedings Orders 5 and 6). The husband formerly sought orders about the instruction of the expert (Application in a Proceeding filed 29 July 2022), but that application was abandoned (Amended Application in a Proceeding filed 24 February 2023).
Orders were made appointing a single expert on 4 February 2022 (though the orders were amended on 29 March 2022) and on 31 January 2023 the registrar appointed an identified person as the single expert (Order 1), which order the wife did not challenge.
On 4 April 2022, orders were made about the joint letter of instruction to the expert, with provision for the parties to instruct the expert separately in the event of disagreement. Those orders were never challenged. The wife could not explain how or why she could not comply with the existing orders. Nobody came to the hearing seeking orders that materially changed the existing orders.
During submissions, the husband made an oral application for an order to be made replicating Order 2 made by the registrar on 31 January 2023, which specified the nature of the instructions which should be furnished to the expert. The belated application should not be entertained as it took the wife by surprise and she opposed it. If a dispute over that issue genuinely needs to be resolved, it ought be done with proper notice of the precise form of application and supporting evidence.
Single expert (real property interests)
The wife seeks orders regulating the appointment and instruction of a single expert to value two parcels of real estate (Response Orders 14, 15 and 16; Response to an Application in a Proceeding Orders 2, 3 and 4).
Orders were made appointing a single expert for that purpose on 4 February 2022 (though the orders were amended on 29 March 2022). Further orders were made about the identity of the single expert and the instruction of the expert on 4 April 2022 and 14 December 2022.
The wife’s application is misconceived. Orders of the type for which she applied already exist.
Financial injunctions
The wife seeks far-reaching injunctions preventing the husband from dealing with the funds and assets of unidentified corporate and trust entities (Response Orders 23, 24 and 25).
The husband deposed in his Financial Statement to his sole directorship of, and sole shareholding in, two corporations, both inextricably linked to the conduct of his professional practice. He also deposed in his affidavit to an “interest” in a third named corporation. There is no evidence he has any office or shareholding in any other corporation. There is no evidence he controls any trust, either as the appointor, the trustee, or as the director of a corporate trustee.
The wife advanced no proper reason to explain why the husband should be restrained from discharging his usual directorial duties in relation to the two corporations he controls.
Order under s 121 of the Act
The husband seeks an order under s 121(9) of the Act permitting him to provide copies of three particular documents filed by the wife in the proceedings to a worker’s compensation insurer (Amended Application in a Proceeding Order 5).
The wife was formerly employed by one of the corporations the husband controls. After the marital separation, the wife filed a claim for workers compensation. The solicitors acting on behalf of the subrogated worker’s compensation insurer have requested the husband to provide copies of “all documents” filed in these proceedings “including all documents filed by the [wife]”. Notwithstanding the unconfined ambit of the request, the husband has applied for permission to publish to the insurer and its solicitors three documents filed by the wife in the proceedings. The publication of such documents appears to fall within the exception to publication prescribed by s 121(9)(a) of the Act. Even if it did not, such publication permission could be granted pursuant to s 121(9)(g) of the Act.
The husband’s application to furnish the workers compensation insurer with two affidavits filed by the wife is granted, not least because she consented. Those documents contain the wife’s sworn or affirmed evidence, including as to the nature of her employment by the corporation controlled by the husband. The release of such documents to the insurer is on condition that they are not used or disclosed beyond the confines of the workers compensation proceedings, breach of which condition may amount to contempt of the Court (Hearne v Street (2008) 235 CLR 125).
The husband’s application to also furnish to the worker’s compensation insurer a copy of a Case Outline document filed on behalf of the wife on 4 February 2022 was abandoned, as it contains no more than unverified submissions.
Costs
The husband sought his costs of and incidental to the hearing against the wife, though was prepared to delay payment until finalisation of the proceedings between the parties. The application is refused. Although the wife’s applications were largely unsuccessful, the manner in which the husband contested the hearing hardly helped its efficient disposition. Most importantly, the wife’s poor financial circumstances militate against any costs order. The usual rule under s 117(1) of the Act will prevail.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 24 March 2023
3
2
0