Hopkins & Elliott (No 6)
[2024] FedCFamC1F 116
•5 March 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hopkins & Elliott (No 6) [2024] FedCFamC1F 116
File number: SYC 5636 of 2021 Judgment of: CAMPTON J Date of judgment: 5 March 2024 Catchwords: FAMILY LAW – PROPERTY – PRACTICE AND PROCEDURE – Where the wife seeks for the trial listed to commence this month to be adjourned, and for interlocutory relief as to spousal maintenance, litigation funding for the appointment of a forensic accountant and for her legal representation, injunctive relief for the preservation of property, the appointment of an expert valuer other than the single expert valuer, and leave to issue subpoena – Where the wife seeks an adjusting sum in the s 79 proceedings that exceeds the property of the parties – Where much of the relief as sought has already been determined by this Court – Where the balance of convenience does not favour an adjournment – Where the husband agrees to an injunctive order for the preservation of property pending final trial, save for the application of funds to litigation funding – Injunctive orders for the preservation of property made – Application otherwise dismissed. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 79, 117 and 102QB
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 7.10
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Salvage & Fosse (2020) FLC 93-966; [2020] FamCAFC 144
Tsiang & Wu and Ors (2019) FLC 93-911; [2019] FamCAFC 128
Zschokke and Zschokke (1996) FLC 92-693; [1996] FamCA 79
Division: Division 1 First Instance Number of paragraphs: 64 Date of hearing: 4 March 2024 Place: Sydney Solicitor for the Applicant: Litigant in person Counsel for the Respondent: Ms Rusiti Solicitor for the Respondent: Parker Law ORDERS
SYC 5636 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ELLIOTT
Applicant
AND: MR HOPKINS
Respondent
ORDER MADE BY:
CAMPTON J
DATE OF ORDER:
5 MARCH 2024
THE COURT ORDERS THAT:
1.Pending further order, and until 22 March 2024, the husband be restrained from doing any act or thing to withdraw or deal with the balance of proceeds of sale of the property at B Street, Suburb C, held in a K Bank account in his name, number …18, presently in the sum of $620,897, save an except:
(a)To pay to his legal representatives $30,000 to be applied to the costs of these proceedings; and
(b)To comply with Order 2 hereof.
2.The husband pay directly to solicitors who file a Notice of Address for Service on behalf of the wife in these proceedings, by way of litigation funding of these proceedings, within 24 hours of the said solicitors providing him with a direction in writing pursuant to this order, the sum of $30,000, such sum to be only applied by the wife’s solicitors for work undertaken by them and disbursements incurred for the purposes of these proceedings subsequent to the date of these orders.
3.The wife do all things to provide her solicitors with a sealed copy of these orders and reasons for judgment.
4.The wife’s application to vacate the current trial dates, being over three days in the Rolling List commencing from 18 March 2024, be dismissed.
5.The relief sought by the husband pursuant to s 102QB of the Family Law Act 1975 (Cth) (“the Act”) as contained in paragraphs 3 and 4 of his Response to an Application in a Proceeding filed 1 March 2024, be adjourned to and consolidated with the financial trial listed to commence in the Rolling List in the week commencing 18 March 2024.
6.The wife file and serve any Response to the husband’s relief pursuant to s 102QB of the Act, an affidavit strictly in reply to that relief, on or before 12 March 2024.
7.For the purposes of the trial listed for the week commencing 18 March 2024:
(a)The husband have leave to rely upon the affidavit of Ms L filed 26 February 2024;
(b)The wife have leave to rely upon the affidavit of Mr M filed 27 February 2024, but only to the extent that affidavit does not replicate the affidavit from the same witness filed 19 February 2024, and upon her Amended Response to an Initiating Application filed 27 February 2024; and
Both parties are restrained from filing any other affidavit by way of the court portal or otherwise, without leave of the Court.
8.On or before 8 March 2024, the husband shall serve upon the wife a draft joint balance sheet to include all assets, liabilities, superannuation interests and financial resources as he understands to be suggested to be relevant and to include values he understands are alleged by each party.
9.On or before 13 March 2024, the wife shall make any additions to the balance sheet as required to reflect her contra allegations and any values that are agreed (if applicable).
10.Wheresoever controversy exists as to the inclusion of an item or the value of an item a footnote shall be appended to explain the controversy.
11.A final, settled version of the joint collaborative draft balance sheet shall be filed and served by the husband by no later than 14 March 2024.
12.On or before 14 March 2024, each party shall file and serve a Case Outline document and shall include:
(a)A list of material relied upon; and
(b)A brief chronology listing significant events that are relevant to the issues to be determined by the Court;
(i)A summary of contributions claimed or contended for, and the percentage-based contributions contended for;
(ii)A summary of the relevant s 75(2) factors and the percentage-based adjustment contended for; and
(iii)Any further factors relevant to determining a ‘just and equitable’ division of property.
13.The husband and the wife are to exchange offers of settlement on or before 14 March 2024 and shall do all things to ensure that an offer of settlement remains open for acceptance until the conclusion of the trial;
14.The wife be granted leave to issue no more than 10 subpoena for the production of documents for the purposes of the trial directed to the husband’s accountants or accountants for the entities in which he has an interest, and to any bank or financial institution. Any such subpoena shall be made returnable no later than seven days before the commencement of the trial and documents produced are to be inspected prior to the first day of hearing.
15.Save and except as provided for by these orders, the wife’s Application in a Proceeding filed 28 February 2024 and the husband’s Response to an Application in a Proceeding filed 1 March 2024 are 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).
REASONS FOR JUDGMENT
CAMPTON J:
These reasons determine an Application in a Proceeding filed by Ms Elliott (“the wife”) on 28 February 2024, listed for hearing with short notice in the shadow of the competing financial relief of the parties listed for final trial in the Sydney Rolling List in the week commencing 18 March 2024. The Application in a Proceeding sought relief by way of 30 discrete orders. Mr Hopkins (“the husband”) in his Response to an Application in a Proceeding filed 1 March 2024, opposed the relief as sought by the wife and sought relief pursuant to s 102QB of the Family Law Act 1975 (Cth) (“the Act”).
For the reasons that follow, the application to adjourn the trial dates is refused. Injunctive orders are made for the preservation of property pending the trial, and orders are made by way of litigation funding. The balance of the relief sought by the wife in her Application in a Proceeding filed 28 February 2024 is dismissed. The s 102QB relief as contained in the husband’s Response to an Application in a Proceeding filed 1 March 2024 is adjourned to the final hearing. The balance of the relief sought in that Response is dismissed.
CONTEXT
The background to the litigation informs and gives context to the current application of the wife.
The parties are in dispute as to the date of their cohabitation, although it appears to have commenced in or around 2014. They married in 2016, and on the husband’s case, separated under one roof on 2 June 2020, the husband vacating the home at B Street, Suburb C (“the Suburb C property”) on 12 February 2021. The wife contends the parties separated in February 2021. There are no children of the marriage.
These proceedings were commenced in what was then the Federal Circuit Court, by way of an Initiating Application filed on 5 August 2021 by the husband. The proceedings were transferred to the Federal Circuit and Family Court of Australia (Division 1) on 14 December 2022.
The litigation between the parties has been expansive. It has not been restricted to that pursuant to the Act. They have been engaged in Supreme Court proceedings as to a caveat, and in litigation as to a workers’ compensation claim of the wife against a corporate entity in which the husband wholly owns, being D Pty Ltd.
The parties both make allegations of family violence, as well as to the unilateral use and application of substantive funds by way of the predispositions of property in an attempt to defeat substantive claims and as to the failure to comply with disclosure obligations.
These proceedings have consumed over 20 listings in this Court, this includes:
(a)11 case management, duty list and directions hearing before delegated judicial officers;
(b)Six interim hearings;
(c)Two enforcement hearings; and
(d)Two completed sets of appeal hearings.
They have filed a total of 10 Applications in a Proceeding and three Applications for Review.
For the purposes of the trial, the husband prosecutes his Amended Initiating Application filed 7 July 2023. He seeks to retain his legal interest in the property of the parties, and by way of s 79:
4.That the Applicant Husband, within twelve weeks of Orders, pay the Respondent Wife the sum of one hundred and fifty thousand dollars ($150,000,000) less;
4.1the amount of all Costs Orders (including Supreme Costs Order) made against the Respondent Wife in favour of the Applicant Husband; and
4.2half of all valuation fees paid by the Applicant Husband pursuant to the Orders made on 4 February 2022.
The wife prosecutes her relief as contained in her Response to an Initiating Application filed 27 February 2024 seeking up to 49 different orders or declarations. Doing the best I can, she prosecutes relief pursuant to s 79 whereby she would be adjusted “88% of the net property pool available for distribution between the parties (including superannuation entitlements)” together with spouse maintenance of $4,000 per week for a period of five years. She further seeks an order that the husband be solely responsible for any Australian Taxation Office (“ATO”) debt due personally by him or any corporation in which he has an interest. If I understand her case correctly, she is seeking that the husband pay her a sum of not less than $975,416.
THE IDENTICAL RELIEF PROSECUTED BY THE WIFE BY WAY OF THE INTERLOCUTORY APPLICATION WITH THAT PROSECUTED AT THE FINAL TRIAL LISTED IN MARCH
The affidavit of the wife in support of the Application in a Proceeding filed 28 February 2024, was 65 pages in length and purported to exhibit a further 1482 pages in documents. During the hearing, the wife was advised that the exhibits would not be accepted in a bundle and it was a matter for her to tender each document contained in the exhibit bundle as she considered relevant. The wife’s orders as sought in her Application in a Proceeding was as follows:
1. Leave granted to submit this application.
2. This application heard [sic] on Urgent basis.
3. The court orders Forensic Audit assessment of the asset pool.
4. The court orders that the money obtained from the sale of the matrimonial home (Suburb C Property) located on [B Street Suburb C] to be frozen and held by an independent trustee or receiver to eventually distribute the funds.
5. The court orders that the proposed court dates set out in the orders by Rees J on 15 November 2023 be adjourned until further court order or if 5(C) below is granted, at least until that report is complete (6-12 months estimated see annex)
6. Set aside orders/judgments that relied on financial statements by the Respondent (husband) including but not limited to: A) Eviction from matrimonial home (Order 2 made by Austin J on the 17th of March 2023 with reasoning 17-19) (see annex) B) Denial of spousal maintenance as per the judgment of Austin J on the 17th of March 2023 at 35 (see annex) C) Orders made by Rees J on the 15th of November (see annexure 2) be postponed until the forensic audit is completed (6-12 months estimated, see annexure 3). D) All cost orders against the Applicant to be dismissed. E) Any other order that relied on the Respondent (husband)’s financial circumstances, financial statements and affidavits to the Applicants detriment. F) Any other order that the court finds appropriate.
7. The court order the matter to go to an Undefended final hearing in the absent of the Respondent husband.
8. The court considers the Respondent’s documents and submissions to be not reliable, questionable and voided for matters benefiting The Respondent Husband.
9. These orders to be made on an undefended basis, given The Respondent Husband apparent [sic] lying to the court.
10. The Court hereby orders the striking out of substantive relief of the Respondent and to dismiss the Respondent’s any requests or claims for relief from consideration in the legal proceeding.
11. The court orders that, [Mr N] from [O Financial Services] Forensic accountant appointed and instructed by the applicant wife (Annex) to perform an audit and forensic investigation on, without hinderance, companies and intertwined personal assets and financial affairs of The Respondent Husband. Total fee paid by the Respondent husband to the wife within 3 days of receiving the invoices.
12. The court orders unfettered discovery and access for the forensic accountant.
13. That The Respondent Husband pay a minimum of $100,000.00 to precure [P Lawyers] to be paid in 3 days (See annexure 5) and any further funds within 7 days after the applicant provides the respondent with any invoices in relation to further litigation costs.
14. The Respondent (husband) to pay for suitable accommodation for the Applicant similar to the amount of the mortgage on the MH. The Respondent Husband was paying $7381 per month for the mortgage of the MH (affidavit 8/11/23 at 45-see annexure 4). The Respondent Husband should pay the Applicant that amount (or whatever the court sees fit) to obtain similar accommodation.
15. The Respondent Husband to pay spousal maintenance at $4,000 per week- (or an amount the court sees appropriate) as well as backpay from the judgment made on the 17th of March 2023 by Austin J. -see the -see the annex -husband $480,000 amended income 2023 and $ 520,000 in 2022, the payroll symmetry, director loans 2023and 2021
16. An injunction to be made in relation to protection of the other assets, including but not limited to, the [Suburb G] Property. ([F Street, Suburb G].)
17. The court orders the striking out of the affidavit of [Mr Q] from [R Valuers] and the relevant submissions by Parker Law submitted on 13/02/2024 concerning an old and outdated valuation of both properties, contravening Order 4 issued on 14 November 2023.
18. The court orders that, [Mr T] and or any other associate from [S Valuers] appointed and instructed by the applicant wife (Annex) to perform valuation of the [Suburb G] property without hinderance, with consideration of as is where is in the highest and best used valuation price, under new zoning, impact of new [City U amenity] on the value of the property and the Development Application proposal advertised as STCA. [S Valuers] is also to value the [Suburb C] property if the court doesn’t accept the appraisals and the current shadow valuer’s price provided by Applicant (ANNEX). The property valuer’s total fee paid by the Respondent husband to the Applicant Wife within 3 days of receiving the invoices. The Respondent husband to be remembered half, from the Applicant Wife’s final settlement.
19. The Respondent Husband to pay $17,495.00 for the cost of storage and moving acquired as a result of the eviction in 7 days of these orders.
20. The Respondent Husband pays the Applicant’s past and future litigation costs on an indemnity basis.
21. The applicant to be given leave to issue up to 20 subpoenas.
22. The wife’s share of the asset order by court to be as non-dischargeable in a case of bankruptcy.
23. The Court orders that any asset disposed by The Respondent Husband and any damages done to the asset pool, be considered as part of his share in any settlement.
24. The court orders that the wife's interest in the asset pool shall be paid as a priority obligation. Such payment shall be effectuated through garnishment, encompassing any and all forms of future earnings, shares, assets, and other financial interests owned or acquired by the husband.
25. The court place a lien or charge on the husband's property or assets to secure the payment owed to the wife.
26. In the case that the available asset pool is lower than the wife’s share of the asset pool, the court order wage garnishment, whereby a portion of the husband's wages are withheld and paid directly to the wife until the debt is satisfied.
27. The court orders wage garnishment for any of the above orders to be paid The Respondent Husband
28. The court issue an injunction prohibiting the husband from dissipating or transferring any assets until the debt owed to the wife is paid.
29. The court finds the husband liable for damages to the asset pool from the fire sale of the matrimonial home (see annex). The Applicant wife is therefore to be granted 80% of the estimated $495,000 loss representing the market value and average price in a public auction value of the house -see the annex and the list relevant rules from family law act 1975 (CTH the beginning of the document),
30. The court orders that the Husband's debts, encompassing all personal or company tax debts and liabilities, shall be considered solely his own responsibility.
31. The court imposes on The Respondent Husband any disciplinary orders including penalties and sanctions as it deems appropriate.
32. The Court hereby orders that any assets disposed of by the Respondent Husband (RH) and any damages inflicted upon the asset pool shall be deemed integral to his share in any settlement. Should the aggregate of these disposals and damages amount to a value lesser than his rightful share, the Respondent is mandated to compensate the deficit to the Applicant wife accordingly.
33. Any other order that court find appropriate.
(As per the original)
Orders 3 – 12, and 14 – 48, as sought reproduce what is contained in orders 20 – 28, 39 (presumably mislabelled, and meant to be 29), 30 – 48 as sought in her Amended Response to an Initiating Application filed 27 February 2024. Many orders as sought are not competent. The scope of the wife’s relief sought refined during the hearing to the following:
(a)Adjournment of the current trial;
(b)Injunctions for the preservation of property pending final hearing;
(c)Litigation funding to permit the wife to instruct:
(i)A forensic accountant to audit and report on the integrity of the published financial statements of the corporate entities of which the husband had an interest and to otherwise investigate and report on the intertwining of the husband’s financial affairs and those corporations; and
(ii)Lawyers to act on her behalf in the litigation.
(d)To appoint an expert that she would nominate, not being a single expert, to opine as to the value of real property; and
(e)Leave to issue subpoena to accountants and banks.
THE WIFE’S APPLICATION TO VACATE THE TRIAL
The husband resists the wife’s application.
Orders and directions have been made over the course of these proceedings in an effort to progress the litigation, including but not limited to repetitive directions for the appointment of single experts to value the property of the parties and repeated interlocutory applications often on the same subject matter. On transfer of the matter to Division 1 on 14 December 2022, the following was noted by Eldershaw J:
C.The matter has been transferred to Division 1 on the basis that there are a number of issues arising from both parties’ material that may indicate that the husband’s business is or may be insolvent or close to insolvency, or may be or become personally insolvent, there is a separate cause of action being prosecuted by the wife against the husband’s business for worker’s compensation, the wife alleges serious matters against the husband which, if pressed, may require the husband to seek a certificate pursuant to s 128 of the Evidence Act. From a case management perspective, this matter is likely to require significant active case management which exceeds the capacity of a Division 2 Judge in a legacy docket.
Many of the wife’s current prayers for relief were determined by Austin J on review on 17 March 2023, and were not disturbed on appeal. Trial directions were made on 5 September 2023, with further trial directions being made on a defended basis, by Rees J on 15 November 2023. The wife’s application for a forensic investigation as to “all of the husband’s financial dealings” was not acceded to by Rees J. Those orders provide:
1.That each party be permitted, pursuant to Rule 7.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, to instruct an adversarial expert to prepare a report in relation to the value of the corporate entities and in relation to any other issue.
2.That each party file and serve any affidavits, including affidavits by experts, upon which he or she seeks to rely, by 4pm on 19 February 2024, noting that each party will be permitted to rely on one affidavit only by him or herself and one affidavit only by each witness, including accountants.
3.That each party file an updated Financial Statement by 4pm on 19 February 2024.
4.That the parties instruct the single expert real estate valuer to prepare updated valuations on the real property at [B Street, Suburb C] and [F Street, Suburb G] and to file those updated valuations by 4pm on 19 February 2024.
5.That no further affidavits are to be filed after 19 February 2024 without the leave of the Court first obtained.
6.That the matter is placed in the Callover on 18 March 2024 at 9:30 am before the Honourable Justice Campton for allocation of a Judge for hearing in the Rolling List that day.
7.That, unless leave is granted for the filing of further material, this matter will proceed on the evidence filed in accordance with these directions.
By way of implementation of the orders made by Rees J, the husband instructed Ms L to prepare a report opining as to his interests in the following as at 30 June 2023:
·D Pty Ltd;
·Hopkins Group Pty Ltd; and
·H Investments Pty Ltd.
Ms L’s affidavit was filed on 26 February 2024. She opines as follows:
2.The Husband holds 100% of the issued capital of [D Pty Ltd] [sic] and [Hopkins Group Pty Ltd].
3.[Hopkins Group Pty Ltd] holds 14% of the issued capital of [H Investments Pty Ltd], the corporate trustee for [H Pty Ltd], and 14% of the units of [H Pty Ltd].
…
Summary of Valuation
6.Below is a summary of the values of the Husband’s interests in the different entities:
Entity Value of Interest D Pty Ltd (253,106) Hopkins Group Pty Ltd 180,266 H Investments Pty Ltd atf H Pty Ltd — Total 72,840 Note: The share of [H Investments Pty Ltd] atf [H Pty Ltd] is included in the valuation of [Hopkins Group Pty Ltd]
7.Below is a summary of the loans from/to the Husband which appear in the balance sheets of the different entities and are included in their vales. These loans should also be included on the Family Law balance sheet:
Entity Loan amount Type D Pty Ltd 145,663 Asset Hopkins Group Pty Ltd (39,387) Liability Total 106,276
Pivotally, the expert opines that as at 30 June 2023, D Pty Ltd had a liability to the ATO of $668,384, that had increased as at 9 November 2023, to be $728,958. The tax debt produced a negative net asset position of D Pty Ltd as at 30 June 2023 of $791,490. The only asset of the corporation was a small amount of plant and equipment and cash. The husband is responsible as the sole shareholder and director for the corporation’s debt to the ATO.
The expert opines as to an approved restructuring plan entered by the husband and the ATO whereby a personal contribution by the husband as director of $130,000 will satisfy the outstanding ATO liability. The net value of D Pty Ltd at -$253,106 as at 30 June 2023 is grounded from the assumption that the husband has paid the $130,000 required for the restructure.
The husband has consistently maintained throughout the proceedings that D Pty Ltd, by virtue of the ATO debt, is close to insolvent and that it was always a necessity for him to sell the Suburb C property to satisfy that debt.
The husband sold the Suburb C property in 2023 for $2,050,000. After discharging the mortgage and paying selling costs, the husband received $848,050. He has applied these funds to meet his legal costs in these proceedings including the costs of expert evidence. As at the hearing 4 March 2024, a sum of $625,897 remains. The husband did not give any particularised evidence as to how much of the approximately $220,000 he has spent on legal costs from the proceeds of sale, or otherwise.
An injunctive order made by Smith J on 4 April 2022 restrains the husband from accessing any interest in real property to pay an ATO liability:
7.Pursuant to s 114 of the Family Law Act 1975 (Cth), and until further order of the Court, the Applicant Husband is hereby restrained by injunction from refinancing any real property owned by him, or from using any interest in any real property owned by him to pay his debt to the Australian Taxation Office.
The only apparent source for the payment of $130,000 to the ATO is from the proceeds of sale of the Suburb C property.
The wife opposes the husband using any of his property (including the proceeds of the Suburb C sale) to meet that $130,000 payment for the restructure to complete.
The affidavit of the single real property expert Mr Q, valuing the property at F Street, Suburb G (“the Suburb G property”), owned by the H Pty Ltd, was filed 13 February 2024. The expert opined that the value of that property as at early 2023, was $3 million.
Each of the parties have filed their own affidavit evidence and lay affidavit evidence for the purposes of the forthcoming trial.
Doing the best I can, it appears the property of the parties for adjustment at trial is as follows:
ASSETS Description Value ($) Husband’s proceeds of sale of the Suburb C property in K Bank account $620,897 less $130,000 to be paid to ATO 490,897 Husband’s other cash savings 28,705 Husband’s Hopkins Group Pty Ltd 180,266 Husband’s D Pty Ltd (253,106) Husband’s D Pty Ltd loan 145,663 Husband’s furniture 1,000 Husband’s superannuation 186,000 Wife’s cash savings 25 Wife’s motor vehicle 100 Wife’s superannuation 1,940 Total assets 781,490 LIABILITIES Wife’s credit card loans 51,680 Husband’s directors loan 39,387 Husband’s other taxation liabilities to the ATO 50,504 Wife’s personal loans for living expenses post-separation and legal fees 192,544 Wife’s HECS debt 145,806 Total liabilities 479,921 TOTAL ASSETS – LIABILITIES 301,569
It appears that the wife may be additionally indebted by way of outstanding legal fees in the range of $125,000.
The torturous history of this proceeding is self-evident. It has been characterised by the wife failing and neglecting to comply with directions and making multiple applications as to the same subject matters. Each party contends the other has failed to comply with their obligations of disclosure. The wife makes many serious allegations, absent current persuasive evidentiary foundation. One is that the husband affected a “fire sale” of the Suburb C property for $495,000 less than its market value. The single real property valuer opined that the property had a value of $1.95 million in early 2023. The husband sold it for $2.05 million.
The wife puts into issue the integrity of the published financial statements of the husband’s corporate entities and says that he has “lied” in his financial statements and that he has “moved money around” by way of directors’ loans, in order to hide it. She contends that he has misled the Court “from day one”, and that his conduct has corrupted prior defended determinations, such that discretion has miscarried. Her complaints ignore the substantial liability due to the ATO. The conduct of her case is handicapped by her refusal to accept the reality of this liability.
The wife submits that if she had the benefit of a legal representative over the course of the proceedings, the injustices of which she complains would not have occurred. This submission ignores the fact as to the wife’s legal representation (often with counsel appearing) in both this Court and the Supreme Court of NSW until mid-2023.
It would be inappropriate to entertain an interlocutory application seeking identical orders to those sought on a final basis in circumstances where the matter is listed for final hearing this month. The opportunity for testing the evidence and findings of fact will present itself at that hearing.
Extensive trial directions were made on 5 September 2023. The matter reading for hearing and is listed to commence in the Sydney Rolling List commencing 11 March 2024. I am mindful as to the mandatory provisions identified in the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) in that the Court has a responsibility to ensure that management of litigation and its workload occurs, according to law, as efficiently and as inexpensively as possible. There is absolutely no doubt that an adjournment of this trial will occasion further substantial costs, including the necessity to recast expert and lay evidence. The Court is required to efficiently use its judicial and administrative resources and to exercise its business to ensure the disposal of all proceedings in a timely manner that is proportionate to their complexity. So that it is clear, there is nothing particularly complex or unusual about this matter. In the event the Court does not allocate its resources to hear this matter as allocated on 18 March 2024, it is important to take into account:
(a)The fact that the Court would not be able to allocate further hearing dates for this matter until 2025, a delay of a further 12 months; and
(b)The deleterious effect not only on these parties but all the other litigants and stakeholders to which the Court becomes an integral part.
The High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 (“Aon Risk”) said:
114…delay and costs are undesirable and that delay has deleterious effects, not only upon the party to the proceedings in question, but to other litigants… It was significant that the effect of its delay in applying would be that a trial was lost and litigation substantially recommenced. It would impact upon other litigants seeking a resolution of their cases.
The decision of the High Court in Aon Risk provides authority for courts to take into account case management principles when exercising discretion in procedural applications to adjourn a trial such as this, even to the prejudice of a party to a particular proceeding. Specific reference was made in Aon Risk as to the role courts must play in ensuring the disposal of litigation. The High Court emphasised that it is not sufficient just to pursue just and procedural outcomes merely by reference to the interests of the parties to the particular proceeding.
The effects of the adjournment of the trial as sought by the wife fails to take into account the notion that parties to a proceeding are not entitled to consume a unlimited amount of public resources in the pursuit of their own interests. The wife has not explained why she has delayed in seeking a vacation of the trial until the eleventh hour. The wife ought to be bound by the case she has constructed to this time, including omissions.
The wife’s application to vacate the trial dates will be refused. She will have adequate opportunity to test the material the husband relies upon at trial.
A REAL PROPERTY VALUATION EXPERT WHO IS NOT A SINGLE EXPERT
The husband’s evidence confirms that he has attempted to implement the orders of Rees J to update the single expert real property valuation evidence for the Suburb G property owned by H Pty Ltd of which Hopkins Group Pty Ltd holds 14 per cent of the issued units, and that the wife has frustrated that updating process.
The wife has not established any evidentiary foundation to ground an exercise of discretion pursuant to r 7.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). Her scandalous allegation as to the integrity of Mr Q, the single expert of R Valuers, are not supported by a scintilla of evidence. They do her little credit.
Her relief to adduce evidence as to the value of the Suburb G property, other than from a single expert, will be refused. The early 2023 valuation of the Suburb G property of Mr Q will not be updated for the trial.
INJUNCTIONS FOR THE PRESERVATION OF PROPERTY
The relief as sought by the wife for the preservation of property in the period awaiting final trial was broad and not particularised. The husband resists the relief as sought by the wife.
The principles applicable to determine an application for an injunction to preserve the status quo are well known. The wife must establish both an arguable case with sufficient likelihood of success to justify the preservation of the status quo, and that the balance of convenience favours the grant of the injunction, in that there is a danger or risk of dissipation of, or dealings with assets which will frustrate any judgment in favour of the wife (see Tsiang & Wu and Ors (2019) FLC 93-911).
The relevant subject matter of the litigation is the wife’s right to claim orders for property adjustment under Pt VIII of the Act, particularly s 79, and the pool of assets the subject of that claim, of which the proceeds would form a part. The most recent formulation of the wife’s claim is articulated is to receive a property adjustment of $975,416, being greater than the value of the current pool of property of the parties.
The wife submitted that the injunctive order made by Smith J on 4 April 2022 restrained the husband from selling the Suburb C property. The husband submitted that no such order was made by Smith J or at any other time over the course of the litigation, and that he had always placed the wife on notice as to his intention to sell the property to rationalise debt and liabilities. At the hearing the wife acknowledged the tenor of the husband’s case over the course of the litigation, but was critical as to his failure to disclose the fact of the sale of the Suburb C property and its terms until after that disposal had completed. A finding on these subject matters cannot be made in an abridged summary interlocutory hearing process. Whether the husband was required to dispose of the property to lever himself from his contended financial quagmire will be a matter for trial.
It is against this background that the wife’s claims to preservation of the subject matter of the litigation should be understood. That is, the wife argues for some broad ranging need to preserve the asset pool.
During the course of the hearing, the husband conceded that if the trial were maintained, he would not be prejudiced in preserving the proceeds of sale of the Suburb C property, provided he could meet his legal fees for the conduct of the trial. He did not seek to discharge the injunctive order made by Smith J on 4 April 2022, confirming that he will prosecute relief to pay the $130,000 to the ATO as part of the s 79 determination.
The wife has demonstrated some merit to maintain the status quo as to preserving the proceeds of sale of the Suburb C property for the less than three weeks until the possible end of the week of the trial. The balance on convenience favours the making of an injunction preserving those proceeds until 4.00pm on the last day of the Rolling List, broadly, on the terms proposed by the husband. His estimate as to legal costs to complete the trial was in the range of $55,000. The value of the property of the parties and the issues for trial do not appear to justify expenditure to that sum. All the evidence has been filed. The husband will be permitted to draw $30,000 from the Suburb C proceeds to pay his legal costs to complete the trial. He will not suffer any other prejudice on the construction of his case. He will have the balance of those monies available after paying the s 79 adjustment to the wife.
There was no evidence as to the husband proposing a disposal of the units in the H Pty Ltd or his superannuation. Insofar as the wife’s relief extends to preserving this other property of the husband, it is refused.
LITIGATION FUNDING
As to her relief that the husband be ordered to pay $100,000 for litigation funding, the wife implicitly relied on the costs power pursuant to s 117 of the Act.
Before an order as to costs can be made, the Court must be satisfied that the order is, in the circumstances, just (s 117(2) of the Act). Until that point, there is no power to make an order departing from the general rule that each party pays their own costs (s 117(1)). Once enlivened, the discretion to make an order as to costs is governed by the considerations contained in s 117(2A) of the Act. There is no authority that contends that more than one of the factors in s 117(2A) need be present. Indeed, any one factor may be determinative.
In Salvage & Fosse (2020) FLC 93-966, the Full Court identified that litigation funding orders have a long history and are made to alleviate the obvious unfairness of a party with control of the assets being able to marshal them to pay lawyers, leaving the other party to attempt to pursue the proceedings without being able to resort to property that might subsequently be transferred to them. That said, each application must be looked at according to its own particular facts and circumstances.
The principles relevant to the making of a litigation funding order were identified by the Full Court in Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”) being:
(a)A position of relative strength on the part of the respondent;
(b)A capacity on the part of the respondent to meet his or her own legal costs; and
(c)An inability on the part of the applicant to meet his or her legal costs.
The Full Court in Zschokke also identified that it may well be necessary for the Court to have regard to whether, in the circumstances of the particular case, it will be possible to take into account in the final proceedings any sum that might be payable under an order grounded from s 117 of the Act.
The evidence of the wife in support of her application for litigation funding directed little attention to the statutory and jurisprudential integers of that relief. It was little more than a litany of complaints and allegations. Allowance is made for the wife’s disadvantage of being without legal representation.
The funds paid pursuant to s 117 of the Act need not be capable of claw back. The husband, by his final relief sought, concedes that the wife has an arguable case for substantive relief to the value of $150,000 less her payment of his Supreme Court costs as ordered (said to be about $30,000) and her contribution to half of the single real property experts’ costs (said to be $2,000). It is therefore possible take into account in the final s 79 proceeding sums payable by way of a litigation funding order in favour of the wife.
The wife had received a summary estimate of $22,000, absent particulars, from a forensic accountant to commence investigative work (implicitly, the expert did not have the benefit of Ms L’s report) and a rapacious “estimate” of $300,000 from lawyers to progress the proceeding to trial. The wife’s estimates of future litigation expenses to the conclusion of the trial in the circumstances a attract little weight. They are grossly disproportionate to the value of the property of the parties.
The husband’s financial resources are superior to those of the wife. He is in a position of relative strength, using the property of the parties to fund his legal fees.
I am of the view that the circumstances justify the husband paying to the wife $30,000 by way litigation funding pursuant to s 117 of the Act. This will allow the wife to retain lawyers to prepare for and to conduct the forthcoming trial, taking into account that the evidence has been filed. The justice of this case requires the landscape of the future litigation playing field to level somewhat so as to permit the wife to prosecute her relief for property adjustment under the Act with the focus being the identification of contested issues to expeditiously and efficiently finalise the financial dispute at the forthcoming trial. As was evident in the hearing before me, the wife will encounter grave difficulties in conducting the financial trial without legal representation. The only available source of the funding on the evidence to date is the proceeds of sale of the Suburb C property.
As to the quantum of the order, the wife has not adduced sufficient evidence to justify funding for the forensic audit or investigation proposed. Those costs, if incurred, would soon dwarf the value of the existing identified available property of the parties. The wife can cross examine Ms L at trial on relevant subject matters if she considers it appropriate. I am mindful of the current obligation of the husband to comply with the ATO arrangement to reduce the value of a liability in the range of $730,000 at a cost of $130,000 and the impact if he does not. In the event the husband is prevented at trial by the wife from completing this agreement, the value of liabilities will exceed the value of property, neutering the s 79 enquiry.
The litigation funding order will be framed to protect the parties from any risk of injustice arising from the way the funds are expended, by requiring the funds to be paid to solicitors instructed by the wife and applied only to the costs incurred in these proceedings from the date of these reasons going forward.
I am satisfied that a consideration of the evidence justifies the making of the litigation funding orders in favour of the wife on the above terms, and such orders are just.
Other procedural orders will be made in terms as canvassed during the hearing.
For all the above reasons, orders are made as set out in the forefront of these reasons.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 5 March 2024
1
3