Jakubik & Jakubik
[2023] FedCFamC1F 415
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)Jakubik & Jakubik [2023] FedCFamC1F 415
File number(s): BRC 4270 of 2021 Judgment of: CAREW J Date of judgment: 24 May 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE –Registrar – Review of decision – Where a Senior Registrar dismissed the wife’s application in a proceeding relating to the sale of the former matrimonial home and distribution of sale proceeds – Where the wife sought a review of that order – Where the husband proposes to make a number of payments from the sale proceeds which he contends fall within circumstances authorised by a previous court order – Where the wife contends that the sale proceeds are the only remaining asset of any real value and if the husband proceeds to pay the debts identified by him, her claim for property settlement will be defeated – Where part of the wife’s application (for spouse maintenance and repayment of funds already disbursed) is adjourned to trial – Where wife’s application for litigation funding dismissed – Order made permitting particular debts proposed to be paid from sale proceeds by the husband, with the balance of sale proceeds to be retained in the wife’s solicitors trust account pending trial.
FAMILY LAW – PROCEDURAL – Oral application made by the wife to amend the order sought in her Application in a Proceeding and subsequent Application for Review to the order sought in her case outline – Where circumstances changed following the filing of the Application in a Proceeding such that if an order were to be made in the terms sought, it would be largely otiose – Application granted.
Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Biltoft and Biltoft (1995) FLC 92-614
Breen & Breen (1990) 65 ALJR 195
Collins & Collins (1985) FLC 91–603
Harris and Harris (1993) FLC 92–378 603
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93–143
Kryiakos & Kryiakos (2013) FLC 93-528
PBF (as child representative for AF (Legal Aid Commission of Tasmania)) & TRF & LKL (2005) 33 Fam LR 123
Penfold v Penfold (1980) 144 CLR 311
Rakete & Rakete (2012) FamCA 267
Re JJT: Ex parte Victoria Legal Aid (1998) 195 CLR 184
Stanford v Stanford (2012) 247 CLR 108
Strahan & Strahan (Interim Property Orders) (2011) FLC 93–466
Wilson & Wilson (1989) FLC 92–033
Zschokke & Zschokke (1996) FLC 92–693
Number of paragraphs: 119 Date of hearing: 12 May 2023 Place: Brisbane Counsel for the Applicant: Mr Alexander Solicitor for the Applicant: Mills Oakley Lawyers Counsel for the Respondent: Mr Hackett Solicitor for the Respondent: Hirst & Co ORDER
BRC 4270 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JAKUBIK
Applicant
AND: MR JAKUBIK
Respondent
order made by:
CAREW J
DATE OF ORDER:
24 MAY 2023
THE COURT ORDERS THAT:
1.Paragraph 6 of the order made on 6 April 2023 is set aside.
2.The oral application to amend the order sought in the application in a proceeding filed 16 March 2023 and the application for review filed 11 April 2023, by substituting the order sought in the wife’s case outline filed 5 May 2023, is granted.
3.Paragraph 1(d) and (e) of the order sought in the wife’s case outline, in which the wife seeks the payment of arrears of spouse maintenance and lump sum spouse maintenance is adjourned to trial.
4.Paragraph 2 of the order sought in the wife’s case outline, in which the wife seeks the repayment by the husband of $77,093.76 is adjourned to trial.
5.Paragraph 9 of the order sought in the wife’s case outline for the husband’s solicitors to produce particular documents is dismissed.
6.From the net proceeds of sale held in trust by V Lawyers the following sums be paid:
(a)To Mr B in payment of his fees for the preparation of an updated family report the sum of $7,920;
(b)To C Pty Ltd the sum of $60,000;
(c)D Pty Ltd the sum of $92,252.54;
(d)To E Bank the sum of US$38,000 (estimated AUD $57,350) (being the debt attributable to the date of separation);
(e)To F Company the sums of $481.55 and $2,253.90;
(f)To G Company the sum of $4,147;
(g)To J Company the sum of $4,478.20;
(h)To the Australian Taxation Office the sum of $121,228.10.
(i)To V Lawyers the sum of $28,525.06;
(j)The balance to be held on trust for the parties jointly by Mills Oakley Lawyers, Brisbane pending trial.
7.Paragraphs 1 and 2 of the order made on 12 April 2023 are set aside.
8.All outstanding applications for interim orders are otherwise dismissed.
IT IS NOTED THAT:
A.There is no Court by the name “Federal Circuit and Family Court of Australia”. This Court was formerly known as the Family Court of Australia and is now known as the Federal Circuit and Family Court of Australia (Division 1).
B.The design of the seal affixed to this Order issued by the Federal Circuit and Family Court of Australia (Division 1) was determined by the Attorney-General pursuant to the undated Federal Circuit and Family Court of Australia (Seal) Determination 2021 signed by the Attorney-General.
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 Jakubik & Jakubik has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAREW J:
After a marriage of some 15 years, Mr Jakubik and Ms Jakubik, separated on 24 January 2021. To assist with the anonymisation of these reasons I will refer to Mr Jakubik as ‘the husband’ and Ms Jakubik as ‘the wife’. The husband and wife have two children aged 15 and 14 years respectively who live with the husband and have spent no time with the wife since separation.
There are pending substantive proceedings between the parties concerning parenting and property issues which are now listed for trial for five days commencing on 11 December 2023. The husband is the applicant in the substantive proceedings but the respondent to the current application by the wife to review the order of a Senior Registrar dated 6 April 2023.
The parties are in dispute about how the net proceeds of sale of their former matrimonial home (“the home”) should be dispersed. The wife contends that the proceeds of sale are likely to be the only remaining asset of any real value and if the husband proceeds to pay the debts identified by him, her claim for property settlement will be defeated. The husband contends that the parties’ debts exceed their assets by $301,563 and that the debts he proposes to pay are permitted under an existing order.
For the reasons which follow, some of the relief sought by the wife (arrears of spouse maintenance, lump sum spouse maintenance, and repayment of funds already dispersed by the husband) will be adjourned to trial. Particular debts proposed to be paid from the sale proceeds by the husband are permitted payments under an earlier order and the balance will be retained in the wife’s solicitor’s trust account pending trial.
RELEVANT PROCEDURAL BACKGROUND
It will be of assistance in this particular case to set out the relevant procedural background.
Application in a Proceeding filed 16 March 2023
On 16 March 2023, the wife filed an application in a proceeding in which she sought the following order (summarised):
(1)
Procedural;
(2) – (6)
Appointment of independent children’s lawyer, facilitative provisions to assist in appointment, preparation of family report by private report writer;
(7) – (10)
Sale of former matrimonial home, process for sale, distribution of sale proceeds including litigation funding for wife;
(11) – (16)
Alternative sum for litigation funding from which a ‘dollar for dollar’ order to be made, procedure for payments if ‘dollar for dollar’ order made, treatment of litigation funding payments in property proceedings adjourned to trial judge;
(17)
Liberty to apply.
Order made on 30 March 2023
On 30 March 2023, an order was made by consent appointing Mr B as a single expert to prepare a family report with the payment of his fees to be paid from the sale proceeds of the home, and listing the application in a proceeding filed 16 March 2023 for hearing on 6 April 2023.
Amended Application in a Proceeding filed 4 April 2023
On 4 April 2023, the wife purported to amend her application in a proceeding filed 16 March 2023. Rather unhelpfully, the amended application carries on the numbering from the previous application (although misnumbers many of the paragraphs that are struck through) and includes paragraphs underlined in red that are not in fact amended. The following amended order is sought (summarised):
(1) – (23)
(misnumbered) struck through
(24) – (26)
appointment of independent children’s lawyer, facilitative provisions (same as (2), (3),(4) of the application filed 16 March 2023);
(27)
Leave to particularise parenting order after release of family report (same as (6) of the application filed 16 March 2023);
(28)
Distribution of proceeds upon completion of sale, including litigation funding, in different terms to that contained in the application filed 16 March 2023, in particular adding provisions for payment of arrears of spouse maintenance and future lump sum spouse maintenance;
(29) – (31)
Provisions to facilitate settlement of sale (similar to (8), (9), (10) of the application filed 16 March 2023);
(32) – (37)
Alternative sum for litigation funding and ‘dollar for dollar’ order, procedure for payments if ‘dollar for dollar’ order made, treatment of litigation funding payments in property proceedings adjourned to trial judge (similar to (11) – (16) of the application filed 16 March 2023);
(38)
Liberty to apply (same terms as paragraph (17) of the application filed 16 March 2023);
(39)
A new provision seeking an injunction to restrain the husband from entering into any agreement etc. with any third part that “disburses the proceeds of sale”;
(40)
A new provision seeking an order against the husband’s solicitor to produce particular documents.
Order made by Senior Registrar on 6 April 2023
It is common ground that the wife’s application to rely upon an amended application filed 4 April 2023 was dismissed although no order to that effect is included in the order made by the Senior Registrar.
In disposing of the Application filed 16 March 2023, the Senior Registrar made the following order (summarised):
(1) – (5)
independent children’s lawyer appointed, facilitative provisions to assist in appointment;
(6)
Paragraphs (7) – (10) (sale of former matrimonial home, process for sale, distribution of sale proceeds including litigation funding for wife) of the wife’s application dismissed;
(7)
The wife’s application for a ‘dollar for dollar’ order and consequential orders as set out in paragraphs (11) – (16) of her application were adjourned for hearing to a Judge of this Court on a date to be fixed;
(8)
“All extant applications are continuing to the Directions Hearing” listed on 17 April 2023.
Apparently, the Senior Registrar gave reasons for the decision but they were not reduced to writing and there is no transcript of the hearing.
Application for review filed by the wife on 11 April 2023
At the time of filing of the application for review (of the order made on 4 April 2023), on 11 April 2023 no order had issued from the Court, however the wife stated her intention to review the order in its entirety “save for the orders with respect to the appointment of the independent children’s lawyer”.
The application was said to be urgent as “orders are sought to restrain the husband from dealing with the net proceeds of sale of a property which is due to settle on 13 April 2023”.
In the event that the application for review succeeded, a different order was sought in the application for review to that set out in the application in a proceeding filed 16 March 2023 (and different in some respects to the order sought in the purported amended application filed 4 April 2023). The following order was sought “in place of those to be reviewed” (summarised):
(1)
Procedural;
(2)
Leave sought to rely upon the amended application in a proceeding filed 4 April 2023, an affidavit by the wife filed 5 April 2023 and a further affidavit yet to be filed as at the date of the application;
(3)
Distribution of proceeds upon completion of sale, including litigation funding, in the same terms to that contained in paragraph (28) of the purported amended application filed 4 April 2023, save in one respect, namely and significantly, the addition of the following - “(and Order 18 of the Orders of 22 November 2021 to be discharged, varied or stayed only as is necessary to give effect to the below distribution of the proceeds)”;
(4) – (14)
Largely in the same terms as paragraphs (29) – (40) of the purported amended application filed 4 April 2023.
Order made on 12 April 2023
On 12 April 2023, a Judge of this Court made the following order:
1.The balance proceeds of sale of the property situate at [K Street], [Suburb L] in the State of Queensland be preserved on behalf of the parties in the trust account of [V Lawyers] after payment of any mortgage, outstanding rates and other utilities and reasonable costs and disbursements on the sale together with the removal of the Caveat lodged by [M Pty Ltd].
UNTIL FURTHER ORDER
2.The matter remain listed before a Judicial Registrar of the Federal Circuit & Family Court of Australia at Brisbane at 11.00am on Monday 17 April 2023 where upon IT IS DIRECTED that the wife’s interim and interlocutory application, together with any anticipated application by the husband for interim or interlocutory orders be listed together as priority for interim and interlocutory hearing before a Judge of either Division 1 or Division 2 of the Federal Circuit & Family Court of Australia at Brisbane.
3.Costs of each of the parties of and incidental to list of the Review Application today are noted and reserved for the trial judge.
It is common ground that:
(a)As the Judge was about to start a trial, there was insufficient time to determine the application for review;
(b)There were no reasons provided for the order made (no issue is taken about that by the parties);
(c)The placement of the words “until further order” is an error and they should appear before the first paragraph;
(d)Paragraph 1 of the order was intended to preserve the funds pending determination of the application for review (although the wife also seems to suggest, incorrectly in my view, that an application would be required to set the order aside).
Paragraph 2 of the order made on 12 April 2023 is a curious order. There is of course no court called the ‘Federal Circuit & Family Court of Australia’. On 1 September 2021, the name of the Family Court of Australia was changed to the Federal Circuit and Family Court of Australia Division 1.[1] The name of the Federal Circuit Court of Australia was changed to the Federal Circuit and Family Court of Australia Division 2.[2] There was no merger of the courts as the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) makes abundantly clear.[3] Each court has its own distinct jurisdictional limitations.[4] This Court is a superior court of record and the other is a court of record.[5] There is provision for one to have a Chief Justice and the other to have a Chief Judge[6] and when the positions are occupied by different persons, they are required to cooperate[7] in the efficient operation of the two courts. It is a great pity that the administration of the courts has been hived off to a separate ‘entity’ over which the heads of jurisdiction exercise very little control.[8] It is perhaps understandable how some Judges and others might be led into error given the misrepresentations that continue the myth of the merger, as demonstrated by the incorrect name of the courts on the forms filed in the courts, the incorrect seal attached to orders that issue from the courts and the combined website for the courts. As a matter of law, once a matter is in this Court it cannot be heard in the other court unless it is transferred by order of the Chief Justice.[9]
[1] Federal Circuit and Family Court of Australia Act 2021 (Cth) s 8(1).
[2] Ibid s 8(2).
[3] Ibid ss 9, 10, 11, 16, etc.
[4] Ibid ss 25, 26, 29, 131 – 134.
[5] Ibid s 9(1)(a) and s 10(1)(a).
[6] Ibid s 9(2)(a) and s 10(2)(a).
[7] Ibid s 70.
[8] Ibid s 78 and s 245. Prior to 2016 the administrative powers of the Chief Justice were far more extensive.
[9] Ibid s 52.
The ‘freezing order’ made on 12 April 2023 was made in circumstances where the wife was, at that time (but is no longer), seeking an order in her application for review, in the following terms:
13. That until further order an injunction issue pursuant to s114(e) of the Family Law Act restraining the husband from entering into any agreements, deeds of settlement or any other instrument with any third party that disburses the proceeds of sale of the [Suburb L] property other than as provided for at paragraph 3 of the orders sought in this application.
Order made by Registrar on 17 April 2023
On 17 April 2023, a Registrar ordered that the wife’s application for review filed on 11 April 2023 be listed for hearing before me on 12 May 2023. The wife was ordered to file one consolidated affidavit to be relied upon at the hearing and the husband was ordered to file any further affidavit to be relied upon at the hearing. Both parties were ordered to file a case outline setting out, among other things, “the precise terms of the orders sought at the hearing”.
While it is common practice to order the parties to set out a minute of order in their case outline, it does not override the requirements relating to amendment of applications as contained in the relevant rules of court. Self-evidently, a case outline is not an application.
Case Outline filed by the wife on 5 May 2023
On 5 May 2023, the wife filed a case outline in which she sought to rely upon her application for review filed 11 April 2023, her purported amended application in a proceeding filed 4 April 2023 and the following order is sought (summarised):
(1)
Distribution of proceeds of sale, including payment of Mr B’s fees ($7,920), litigation funding ($192,244.84 for past legal fees and $120,000 for future legal fees), and in different terms to that contained in the application filed 16 March 2023 by the addition of provisions for payment of arrears of spouse maintenance ($24,300) and future lump sum spouse maintenance ($13,500), but in substantially the same terms (some of the sums are changed) as the order sought in the application for review and the purported amended application in a proceeding filed 4 April 2023 but with the inclusion of the following - “(and the Order 18 of the Orders of 22 November 2021 to be discharged, varied or stayed only as is necessary to give effect to the below distribution of the proceeds” which first appeared in the application for review filed 11 April 2023);
(2)
The repayment by the husband of $77,093.76 paid by him to third parties (this is a new provision but not pressed at this hearing and will be adjourned to trial);
(3) – (8)
Alternative sum for litigation funding and ‘dollar for dollar’ order, procedure for payments if ‘dollar for dollar’ order made, treatment of litigation funding payments in property proceedings adjourned to trial judge (substantially the same as paragraphs (11) – (16) of the application filed 16 March 2023, and to (32) – (37) of the purported amended application filed 4 April 2023, and to paragraphs (7) – (12) of the application for review);
(9)
Production of documents by husband’s solicitors (not pressed and will be dismissed).
There is no injunction sought against the husband as previously sought in paragraph (39) of the purported amended application filed (without leave) on 4 April 2023 and paragraph (13) of the application for review.
MISCELLANEOUS
Since the filing of the wife’s application in a proceeding on 16 March 2023, the sale of the home has settled and the balance proceeds of sale of $681,291.10 are held in trust by V Lawyers.
V Lawyers were granted leave to be heard on the application currently before the Court. In essence, they seek their legal fees of $28,525.06 to be paid from the proceeds of sale and Mr H from V Lawyers, was granted leave to rely upon an affidavit[10] and make submissions on this point. Payment of their fees is opposed by the wife. V Lawyers contend that in accepting the retainer to act on behalf of the husband to negotiate with various creditors, they relied upon paragraph 18b of the 2021 order which permitted the husband to pay legal fees from the sale of assets.
[10] Exhibit 1.
The wife’s submission that the husband not be heard in circumstances where he is allegedly in contravention of an order to pay spouse maintenance made on 22 November 2021 is not pressed. The minute of order attached to Counsel’s written outline is not relied upon.
AMENDMENT OF APPLICATIONS
Rule 2.50 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”) relevantly permits amendment:
(a)…
(b)For an Application in a Proceeding:
(i)At or before the first court date; or
(ii)At any later time, with the consent of the other parties or by order; and
(c)For all other applications – at any time, with the consent of the other parties or by order.
The process for amendment when permitted, is set out in r 2.52 as follows:
(1)To amend a document, a party must file a copy of the document:
(a) with the amendment clearly marked;
(b)and if the document is amended by order—endorsed with the date of the order and the date of the amendment.
(2)If the court gives permission for a party to amend a document, the permission is taken to be given by court order.
(3)An amendment may be made by:
(a) placing a line through the text to be changed; and
(b)underlining the new text or using a different typeface to indicate the new text.
(4)…
The wife requires leave to amend, whether that be leave to amend the application filed 16 March 2023 and/or the application for review filed 11 April 2023. There seems little purpose in granting leave to amend the application in a proceeding filed 16 March 2023 in terms of the amended application filed 4 April 2023 as circumstances have moved on since then. To make an order in terms sought in the application filed 16 March 2023 would be otiose to at least a significant degree, as the home has been sold and certain disbursements already made. For completeness the provisions of the order made on 6 April 2023 dismissing part of the wife’s claim will be set aside, as a different order is now sought.
An application for review contains provision for an applicant to set out the order sought in place of the one being reviewed. The form of the amendment now sought, is as set out in the case outline but it does not comply with the requirements of r 2.52.
However, more importantly, the application for review adds new claims that were not in the original application in a proceeding filed 16 March 2023 e.g. variation of paragraph 18 of the order made 22 November 2021, a claim for arrears of spouse maintenance, and a claim for lump sum spouse maintenance. In my view, an application for review is not the place to seek entirely new claims. If the wife is to be permitted to proceed with the new claims in addition to what are truly amendments to her application in a proceeding filed 16 March 2023, it is necessary for her to seek leave to amend that application. While this was not formally done, it is apparent, in my view, that it was the intention of counsel for the mother to seek whatever leave was necessary to proceed with the order sought by the wife in her case outline. I intend to treat the oral application for leave to amend the application for review as also an application to amend the application in a proceeding filed 16 March 2023.
Should leave be granted to amend the Application in a Proceeding and the Application for Review?
The husband opposes leave being granted. The husband contends that he has only answered the application in a proceeding filed 16 March 2023 and would be prejudiced if the wife is granted leave at this late stage to amend. The husband also raises a threshold issue that as the existing order, made by consent on 22 November 2021, permits the husband to “deal with his interests in property and utilise the sale proceeds pursuant to … paragraph 18” of that order, the wife would firstly need to have that provision discharged or varied. If leave were granted the application would, it is argued, have to be dismissed anyway as the wife has failed to address the requirement that there has been a material change in circumstances.
The husband contends that the payments proposed to be made by him from the net proceeds of sale are permitted by paragraph 18 of the 2021 order.
The husband argues that the order now sought by the wife substantially alters the relief originally sought by her in the application filed 16 March 2023, which is the application that was dealt with on 6 April 2023 and from which review is sought. When the application for review was set down on 17 April 2023 for hearing on 12 May 2023, the wife did not seek to rely upon the amended application in a proceeding filed 4 April 2023 (nor does she seek to do so now). The husband contends that the application he answered was the application in a proceeding filed 16 March 2023. He argues that he has not, for instance, responded to the application for arrears of spouse maintenance, lump sum spouse maintenance or discharge or variation of paragraph 18 of the 2021 order, because the wife did not have leave to amend.
The wife does not concede that the proposed payments by the husband from the net proceeds of sale are permitted by the 2021 order, but has included a provision in her proposed order if necessary, to discharge or vary paragraph 18 of the 2021 order.
Counsel for the wife clarified that the wife was only seeking a discharge or variation of paragraph 18 of the 2021 order, if such an order is determined to be necessary. The wife argues that as the 2021 order itself contemplates the Court making a further order at paragraph 18d, there is no need to discharge or vary the order.
Conclusion on whether leave to amend should be granted
In my view, the wife should be granted leave to amend both her application in a proceeding filed 16 March 2023 and the order sought in her application for review in accordance with the order sought in her case outline filed 5 May 2023.
The husband has been on notice since at least 11 April 2023, that if, as contended by him, the 2021 order needs to be varied or set aside, the wife intends that to be part of her application. If, as argued by the husband, the wife does have to establish a change in circumstances and has failed to do so, I do not see that he is prejudiced thereby. The husband has also been on notice since 4 April 2023 that the wife is seeking payment of arrears of maintenance and lump sum spouse maintenance. However, as the husband filed on 12 April 2023 a further amended Initiating Application seeking to discharge the spouse maintenance order at paragraph 23 of the 2021 order on the grounds of fraud, it would seem that the competing spouse maintenance issues will need to be determined at trial. The husband has not as far as I am aware particularised the grounds of fraud but counsel for the wife accepts that such an allegation would not have been made on the husband’s behalf without a proper basis.
Although the wife has not complied with rr 2.50 and 2.52, the Court may, in the interests of justice, dispense with compliance or full compliance with any of the Rules (r 1.31). In my view, dispensing with compliance with the Rules is justified in this case to enable the dispute to be determined.
In taking this approach I am also mindful of s 43 of the FCFCOA Act which is in the following terms:
In every matter before the Federal Circuit and Family Court of Australia (Division 1), the Court must grant, either:
(a) absolutely; or
(b) on such terms and conditions as the Court thinks just;
all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by a party in the matter, so that, as far as possible:
(c) all matters in controversy between the parties may be completely and finally determined; and
(d) all multiplicity of proceedings concerning any of those matters may be avoided.
REVIEW APPLICATION
Legislative provisions
Prior to 1 September 2021, pursuant to s 123 of the Family Law Act 1975 (Cth) (“FLA”), all Judges of this Court, or a majority of them, had the power to make rules of court, not inconsistent with the FLA, providing for or in relation to the practice and procedure to be followed in a court exercising jurisdiction under the FLA. For the period 1 September 2021 until 1 March 2023, the rule making power resided with the Chief Justice of this Court alone but reverted to all Judges or a majority of them on 1 March 2023.
Prior to 1 September 2021, pursuant to s 37A of the FLA, the Judges, or a majority of them, had the power to make rules of court delegating to the registrars all or any of the powers of the Court. Section 37A was repealed on 1 September 2021.
Section 4 of the FLA defines “registrar” in relation to this Court as “a Senior Registrar or Registrar”.
From 1 September 2021 until 1 March 2023, pursuant to s 76 of the FCFCOA Act, the Chief Justice of this Court alone had the power to make rules of court, not inconsistent with the FCFCOA Act, providing for or in relation to, among other things, the practice and procedure to be followed in a court exercising jurisdiction under the Act. After 1 March 2023, the power to make rules of court, rests with Judges of this Court, or a majority of them.
From 1 September 2021 until 1 March 2023, pursuant to s 98 of the FCFCOA Act the Chief Justice of this Court alone had the power to make rules of court delegating any of the powers of this Court, with certain limited exceptions, to a delegate or a prescribed class of delegate. After 1 March 2023, the power to delegate, rests with Judges of this Court, or a majority of them.
Delegate is relevantly defined in s 7(1) of the FCFCOA Act as the Chief Executive Officer or a Senior Registrar or Registrar of this Court.
The Rules purport to create a new definition of a delegate, namely, that of a ‘Judicial Registrar’ which is defined in r 1.05, for the purposes of this Court, as ‘a Senior Registrar or Registrar of the Court’ other than in Chapter 14 where it has a narrower meaning. In that Chapter, a Judicial Registrar is defined as ‘a Registrar’ of this Court and another new delegate identified, namely a ‘Senior Judicial Registrar’ which is defined as ‘the Chief Executive Officer’ or ‘a Senior Registrar’ of this Court. Historically, Judicial Registrars were appointed pursuant to the FLA for a fixed term of five years and had other statutorily protected entitlements. Neither the FLA (any longer) nor the FCFCOA Act create a statutory position of ‘Judicial Registrar’.
It might be suggested that to create new named delegates, i.e. Judicial Registrars and Senior Judicial Registrars, that are not mentioned in either the FLA or the FCFCOA is ultra vires the rule making power which limits the rule making power to one that is not inconsistent with those Acts. In the absence of any submissions in relation to this issue, I simply make the observation.
Pursuant to s 100 of the FCFCOA Act a party to proceedings in which a delegate has exercised any of the powers delegated pursuant to s 98, may apply to the Court for review of that exercise of power, within the time prescribed by the Rules.
An exercise of power, referred to in the table in clause 2 of Schedule 4 of the Rules, by a Senior Registrar or Registrar is reviewable by filing an application for review and a copy of the order or decision sought to be reviewed within 21 days after the order or decision is made (r 14.05(1)).
A sealed copy of the application must be served on the other party not later than seven days after it is filed (r 14.05(2)). The application is required to be listed for hearing as soon as possible and, unless it is not practicable to do so, within 28 days after the date of filing (r 14.05(3)).
Rule 14.07 sets out the procedure required to be applied by the Court when hearing an application for review as follows:
(1) A court must hear an application for review of an exercise of power by a Senior Judicial Registrar or Judicial Registrar as an original hearing.
(2) The court may receive as evidence:
(a) any affidavit or exhibit tendered in the first hearing; or
(b) with the leave of the court, any further affidavit or exhibit; or
(c) the transcript (if any) of the first hearing; or
(d)if a transcript is not available—an affidavit about the evidence that was adduced at the first hearing, sworn by a person who was present at the first hearing.
(3) The court may determine an application for review in the absence of the parties without an oral hearing if:
(a)the parties to the application consent to the making of the decision in their absence without an oral hearing; and
(b)the court considers it appropriate to make the decision in the absence of the parties without an oral hearing.
An ‘original hearing’ is a hearing otherwise known as a hearing de novo and means that when reviewing the order or decision, the Court proceeds to hear the application as if hearing it for the first time.[11] The Court is not limited to the evidence and issues at the first hearing but may receive evidence relied upon at the first hearing or with the leave of the Court any further evidence including a transcript of the first hearing.
[11] Harris v Caladine (1991) FLC 92–217 at 78,486.
In the present case, there is no issue raised about the filing or service of the application for review.
The relief sought in the application in a proceeding filed 16 March 2023 has effectively been before the Court, at either directions hearings or for determination, on five separate occasions. That is hardly desirable and certainly does not appear to meet the Court’s obligation to deal with matters as expeditiously and efficiently as possible.
Is it necessary to discharge of vary paragraph 18 of the 2021 order?
Whether or not paragraph 18 of the 2021 order needs to be discharged or varied depends on the nature of the payments proposed to be paid by the husband. The husband contends the payments proposed to be made by him fall within those permitted by paragraph 18 of the 2021 order. The wife disagrees.
Rule 10.13 (1)(c) of the Rules relevantly provides that the Court may, at any time, vary or set aside an order, if it is interlocutory. The exercise of the power is discretionary. The power to vary or set aside an interlocutory order has generally required the establishment of “new facts” or “changed circumstances”.[12]
[12] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178.
Are the payments proposed to be made by the husband permitted under the 2021 order?
The husband proposes to make a number of payments which he contends fall within those authorised by subparagraph 18a, b and c of the 2021 order.
On 22 November 2021, the following order was made by consent:
…
18. That until further Order or written agreement otherwise, the applicant in his personal capacity and his servants and agents be and are restrained from causing any disposition, transaction, transfer, grant, cancellation of, or a variation of the interests of the parties any assets either personally or through any corporate entity or trust of which either of them have an interest to any third parties save and except for:
a. to meet ordinary living expenses;
b. to meet legal fees;
c. in the ordinary course of business;
d. by Order of the Court; or
e. With the respondent’s knowledge and consent.
The husband proposes to pay the following from the sale proceeds:
(a)Debt to C Pty Ltd in the sum of $60,000;
(b)Debt to D Pty Ltd in the sum of $92,252.54;
(c)Debt to the Australian Taxation Office (“ATO”) in the sum of $121,228.10;
(d)Debt to E Bank in the sum of US$41,947.72 (AUD$61,764.58);
(e)Debts to F Company in the sum of $481.55 and $2,253.90;
(f)Debt to G Company in the sum of $16,700;
(g)Debt to J Company in the sum of $4,478.20;
(h)Debt to Ms N in the sum of $29,000;
(i)Debt to V Lawyers in the sum of $28,525.06
Total: $416,683.93
The wife opposes the payment of any of the sums proposed to be paid by the husband on the basis that “whether or not those liabilities are matrimonial liabilities and whether they should be paid from the net proceeds of sale are trial issues and I seek the opportunity to test [the husband’s] evidence about those issues”. An opportune time to provide evidence within her knowledge about any contentions she had about those liabilities would have been in her affidavit. The wife argues that the husband on his own admission has had the use of at least $33,665 per month up until April 2022 from which he should have met the liabilities he now proposes to pay. The wife also argues that the husband has had the use of the sale proceeds of all of the properties sold by him after separation totalling in excess of $1,000,000 whereas she has received only about $130,000 (and the payment of some of her legal fees). The wife contends that the husband’s payment of legal fees from matrimonial funds exceed the sum she has been able to pay by some $232,057. To date the wife has paid legal fees and disbursements of $189,560 and the husband has paid $364,553. The wife owes $192,244 to her lawyers. The wife contends that if the husband pays the sums proposed it will defeat her property claim.
Debts to C Pty Ltd and D Pty Ltd
The husband contends that during the marriage and while their businesses were profitable, he and the wife enjoyed the use of multiple luxury vehicles purchased by way of finance in the name of either O1 Pty Ltd or the P Trust (part of the ‘Jukubik Group’) with loans guaranteed personally by the husband in his capacity as director of O1 Pty Ltd or as director of P1 Pty Ltd as trustee for P Trust.
In 2014 or 2015, the husband contends that he purchased Motor Vehicle 1 through P Trust and financed that purchase through C Pty Ltd. The husband no longer has a copy of the contract to purchase.
In 2015 or 2016, the husband contends that he purchased Motor Vehicle 2 for the wife’s use, through P Trust which was also financed through C Pty Ltd. The husband no longer has a copy of the contract to purchase.
In 2019, the husband contends that he and the wife decided to buy new motor vehicles and to trade in Motor Vehicle 1 and Motor Vehicle 2 and the loans associated with the vehicles include provision for a balloon payment at the end of the contract, which remained owing after the trade in.
With the onset of the Covid-19 pandemic in March 2020, the husband contends that cash flow for P Trust was significantly affected and he obtained a three month moratorium on payments from late 2020, and at that time the debt to C Pty Ltd was $66,823.07 and $11,017.68. Throughout 2021, the husband contends that he negotiated further moratoriums on repayments to C Pty Ltd and entered into a payment arrangement in late 2021, which was disclosed to the wife on 31 January 2022. In early 2022, the husband received a final notice of demand from C Pty Ltd.
The motor vehicles purchased in 2019 with the assistance of the trade in of Motor Vehicle 1 and Motor Vehicle 2 were Motor Vehicle 3 acquired for the husband’s use and Motor Vehicle 4 acquired for the wife’s use. The purchase was made through O1 Pty Ltd with finance provided by D Pty Ltd and Q Limited. At the time of separation the wife retained Motor Vehicle 4 but returned the vehicle to the husband in late 2021. O3 Pty Ltd was, up to that time, meeting the repayments on that vehicle together with three other vehicles. The husband then traded in Motor Vehicle 3, Motor Vehicle 4 and two other motor vehicles previously used by employees of O1 Pty Ltd to acquire one D Pty Ltd motor vehicle with sufficient value to carry the remaining debt owing from Motor Vehicle 3 and Motor Vehicle 4 namely, $44,386.54. In doing so the husband was able to reduce the monthly repayments from approximately $11,000 to approximately $4,000. The husband agreed to the repossession of the remaining two vehicles owned by O1 Pty Ltd in early 2022 which left a sum of $123,003.39 owing to D Pty Ltd.
The sums outstanding to C Pty Ltd were negotiated, with the assistance of V Lawyers, to a reduced sum of $60,000 on the understanding that the debt would be paid from the net sale proceeds. The debt to D Pty Ltd was negotiated to a reduced sum of $92,252.54 on the understanding that the debt would be paid from the net sale proceeds.
The wife disputes the debt owing to D Pty Ltd or C Pty Ltd relate to motor vehicles obtained during the marriage. The wife contends that the debt relates to the purchase by the husband of two motor vehicles, Motor Vehicle 5 purchased on or about early 2021 and Motor Vehicle 6 purchased on or about late 2021.
The only documentary evidence in relation to the debts to D Pty Ltd and C Pty Ltd establish the following:
(a)The debt of $66,823.07 owing to C Pty Ltd as at early 2022 related to contract number … being a contract for salvage for Motor Vehicle 1 with the customer being the husband as trustee for P Trust, P1 Pty Ltd;
(b)The debt of $132,338.17 owing to D Pty Ltd as at early 2023 related to:
(i)Contract number … being an Asset Loan Agreement – Chattel Mortgage (business purpose only) in the name of O1 Pty Ltd with the husband as guarantor for Motor Vehicle 5 engine number …; and
(ii)Contract number … being an Agreement – Chattel Mortgage (business purpose only) in the name of O1 Pty Ltd with the husband as guarantor for Motor Vehicle 6 engine number ….
(c)Guarantees were executed by the husband in early 2021 and late 2021.
O1 Pty Ltd, P1 Pty Ltd, and P2 Pty Ltd as trustee for P Trust, are part of the ‘P Group’ being a group of businesses operated by the husband during the marriage and subsequent thereto and were specifically mentioned by the husband in his affidavit filed 19 November 2021 i.e. prior to the 2021 order.
The husband’s 2021 affidavit also anticipates that O1 Pty Ltd and P Trust may not be able to pay their debts due to ongoing cash flow problems.
The husband’s 2021 affidavit also stated that the husband was endeavouring to establish alternate revenue sources in the accounting industry through the establishment of a full-service financial services business.
The husband’s 2021 affidavit presents a fairly dire financial situation for the husband arising as a result, at least in part, of the pandemic, on his businesses.
I am satisfied that the debt owing to C Pty Ltd is a debt incurred in the ordinary course of a business in operation as at the time of the 2021 order and is a permitted payment under paragraph 18 of the 2021 order. In any event, it appears to relate to the balloon payment for Motor Vehicle 1 acquired during the marriage in or about 2014 or 2015.
I am further satisfied that the debt owing to D Pty Ltd is a debt incurred in the ordinary course of business in operation as at the time of the 2021 order and is a permitted payment under paragraph 18 of the 2021 order. I remain of that view despite the date of the guarantees which appears to be where the wife obtained the information that the debt to D Pty Ltd relates to the purchase of two motor vehicles, one in early 20201 and one in late 2021. The husband traded in Motor Vehicle 3 and the wife’s motor vehicle in late 2021 and purchased one motor vehicles which fits with the guarantee signed in late 2021. The debt owing on Motor Vehicle 3 and the wife’s motor vehicle at that time was $44,386.54. The debt owing on the late 2021 guarantee as at mid-2022 was $72,172.78. Interest accrued on that debt of $5,477.22 for the period mid- 2022 to early 2023. The debt has not been paid. While it is not clear why another motor vehicles was purchased by the husband in early 2021, it was purchased by O1 Pty Ltd at a time that the business was still in operation and still had employees and at least one other ‘partner’, Mr R. The finance contracts entered into by the husband on behalf of O1 Pty Ltd were chattel mortgages for business purposes only and as such were incurred in the ordinary course of business.
The debt to the Australian Taxation Office
The husband is responsible for a debt owing by O2 Pty Ltd to the ATO of $121,228.10. In mid-2022, the husband received a Director Penalty Notice from the ATO for a superannuation guarantee charge totalling $243,377 for periods from late 2018 – late 2021. A copy of the Director Penalty Notice was provided to the wife on 11 August 2022. The husband contends that the employee superannuation payments were not able to be made for periods between 2018 and 2021 as O2 Pty Ltd was not in a financial position to do so, particularly following the commencement of the Covid-19 pandemic which significantly impacted the operation of the business. The husband contends that he has worked with his accountants and lawyers (V Lawyers) to substantially reduce the debt to $121,228.10 which the husband proposes to pay from the sale proceeds. I note that the total debt for the relevant period was $216,077.71 and that the debt incurred up to the date of separation appears to have been a sum of $155,819.68. In those circumstances, while part of the debt may have crystallised after separation, it relates to businesses operated at the time of the 2021 order and the major part of the debt was incurred prior to separation. I am satisfied that the debt was incurred in the ordinary course of business in operation prior to separation and is a permitted payment under paragraph 18 of the 2021 order.
The debt to the E Bank
During the marriage, the husband carried out business in the United States of America and accordingly the husband obtained a credit card from E Bank. The credit card was used during the marriage for both business and personal expenses for the husband and the wife. At separation in January 2021, the debt owing on the credit card was US$38,000 (AUD $57,350 as at mid-2023). The husband contends that after separation he used the E Bank card sparingly, to meet costs such as the private school fees for the children. The husband has received a demand for payment of the debt of US$41,947.72 (AUD$61,764.58) and proposes to pay it from the net proceeds of sale of the home. The debt up to the date of separation is a permitted payment in part incurred in the ordinary course of business and in part by way of ordinary living expenses. To the extent that there is a dispute about the debt incurred for personal expenses post separation that can be determined at trial.
The debt to F Company
In late 2022, the husband engaged a plumber to carry out repairs to a toilet at the home and to replace a rainwater pump at the home. The husband proposes to pay the two invoices outstanding to F Company in the sum of $481.55 and $2,253.90. I regard these debts to be ordinary living expenses and as such are a permitted payment under paragraph 18 of the 2021 order.
The debt to G Company
The husband’s animal recently fell ill and the husband contends that veterinary fees incurred for the animal prior to him being put down were $16,700. The husband proposes to pay $16,700 to G Company. The invoice annexed to the husband’s affidavit supports a debt of only $4,147. As the animal was owned personally by the husband I consider the veterinary fees of $4,147 are an ordinary living expense and as such are a permitted payment under paragraph 18 of the 2021 order.
The debt to J Company
The husband has used the services of J Company since late 2022 but has been unable to meet the fees in recent months. The husband proposes to pay the debt of $4,478.20 from the net sale proceeds. The husband proposes to cause the sale of the one remaining animal as soon as possible so that any sum over and above the $4,478.20 can be paid from those proceeds of sale. It is unclear to me that the husband and wife had any animals at the time of separation or that it was contemplated that the husband would commence a business involved with animals. Given the modest sum however I find that the sum owing is appropriately characterised as ‘ordinary living expenses’ and is a permitted payment.
The debt to Ms N
The husband entered into a loan agreement with his de facto partner, Ms N, in late 2022 to assist him to meet the mortgage payments on the home and for his living expenses. As at early 2023 the husband owed Ms N $10,000. The husband contends he now owes Ms N $29,000 and proposes to repay the debt from the proceeds of sale. The husband contends that he used the funds to meet expenses including motor vehicle registration, transport hire (in relation to his failed business), moving costs (after sale of the home), Telstra accounts, insurance payments, rent, groceries and the children’s tuckshop account. The husband contends that he has disclosed the relevant bank accounts supporting such payments and the receipt of the loan funds. It may be that the loan is the subject of an order at trial but at this stage, there is no immediacy for repayment and it is not accepted by the wife that the funds borrowed were utilised as claimed or that the loan was necessary.
The debt to V Lawyers
V Lawyers were retained by the husband to carry out work in relation to the following:
(a)Dealing with the liquidator of O4 Pty Ltd, a company within the ‘Jukubik Group’ of which the husband was director in relation to potential claims against the husband that had been raised by the liquidator;
(b)Disputing various debts claimed by parties and seeking to resolve them, including:
(i)C Pty Ltd;
(ii)D Pty Ltd;
(iii)ATO; and
(iv)M Pty Ltd.
The husband provided V Lawyers with a copy of the 2021 order and in the knowledge that property owned by the husband was being sold, undertook the work on the basis that their fees would be paid when the property sold and creditors could also be paid.
V Lawyers succeeded in having the debt owed to C Pty Ltd reduced by $11,149.14, and the debt owed to D Pty Ltd reduced by $40,085.63. Their fees for this work total $28,525.06.
It seems to me that the work undertaken by V Lawyers was directly related to the business previously operated by the husband during the marriage and for a period thereafter. The reduction in the debt is to the mutual benefit of the parties and the payment of legal fees for such purpose is a permitted payment under the 2021 order.
Conclusion – nature of payments
In my view, as the majority of the payments (with the possible exception of the loan from Ms N, part of the debt to E Bank and part of the alleged debt to G Company) fall within the payments authorised by paragraph 18 of the 2021 order, it is necessary for the wife to establish a change in circumstances justifying the discharge or variation of paragraph 18.
Should paragraph 18 of the 2021 order be varied or discharge?
As I have determined that paragraph 18 of the 2021 order requires variation or discharge, the wife argues that the following changed circumstances justify doing so:
(a)The husband has failed to pay spouse maintenance since 27 April 2022;
(b)There are few assets now available for distribution between the parties such that if the husband disposes of the balance proceeds there may be nothing left, thus rendering any trial nugatory;
(c)The husband has unilaterally obtained finance to acquire motor vehicles and now seeks to pay the legal costs of trying to negotiate a reduction in the debt thereby created;
(d)The husband proposes to pay debts from sale proceeds of properties that are not in the ordinary course of business;
(e)The husband proposes to pay debts incurred after the establishment of new businesses that were not contemplated at the time of the 2021 order and the businesses have failed;
(f)The husband established a business on the one remaining real property without the consent of the wife and allegedly this affected the value of the property;
(g)The husband’s own financial circumstances have deteriorated.
The husband responds to the wife’s suggestion of changed circumstances as follows:
(a)The dire financial circumstances of the parties was well known prior to the 2021 order as set out in the husband’s affidavit filed on 19 November 2021 including the husband’s proposals to establish new businesses in an attempt to produce an income, and the likely discontinuance of receipt of a salary from existing sources;
(b)The husband’s evidence in that affidavit was that he had a shortfall of income ($3,769 per week) over expenses ($4,450 per week);
(c)The husband ceased receiving an income in or about early 2022 and could not afford to pay spouse maintenance, and in any event the husband alleges that the original spouse maintenance order was obtained by fraud;
(d)The debts proposed to be paid by the husband fall within those permitted by paragraph 18 of the 2021 order.
In my view, the wife has failed to establish circumstances that warrant a variation or discharge of paragraph 18 of the 2021 order. This is because the dire financial circumstances of the husband were well known at the time of the 2021 order, the vast majority of the payments proposed to be made come within paragraph 18 (as explained earlier in these reasons), and while there may not be a significant sum remaining after the payment of debts, delay in payment as suggested by the wife is not justified.
I come to the conclusion that of the sums proposed to be paid by the husband, as adjusted to $370,716.35, come within the sums authorised by the 2021 order. This would leave a balance of about $310,574.75 to be held on trust pending trial.
THE DEBT TO MR B
An order was made on 30 March 2023 for the preparation of an updated family report by Mr B and for the fees to be paid from the net sale proceeds of the home. Interviews are to take place on 19 May 2023. In the absence of an application to discharge the order made on 30 March 2023, Mr B’s fees will be met from the sale proceeds. This will reduce the sum to be held on trust to about $302,654.75.
LITIGATION FUNDING
The wife seeks the payment of $192,244.84 by way of litigation funding for legal fees and disbursements already incurred and an additional $120,000 for future legal fees, or in the alternative a ‘dollar for dollar’ order to be paid out of the $192,244.84. The wife’s primary argument for the payment of litigation funding as sought by her is that it is necessary in order to provide a “level playing field”.
The wife argues that since separation the husband has had the use of $1,000,000 from the sale of the parties’ various properties and an annual income of at least $340,380, while the wife has received $259,521.21 of which $189,560.47 has been paid to her lawyers. The husband has paid his own lawyers $364,553.27. The wife contends that the husband has been derelict in meeting his disclosure obligations which has added to her costs in having to issue numerous subpoenas in order to ascertain the property pool. Further, the wife points to the husband’s failure to comply with the spouse maintenance order.
The husband resists any order for litigation funding, submitting that while he received the sale proceeds of various properties, and received a salary up until February 2022, he has utilised those funds as follows:
(a)Legal costs of $364,554.27 including meeting the entire cost of mediation and the first family report (the husband contends that his legal costs have been unnecessarily increased by the wife’s conduct including seeking to enforce a financial agreement that she subsequently abandoned);
(b)Additional legal costs of $71,323 in defending the wife’s protection order application which was eventually settled on the basis of mutual protection orders without admission;
(c)Payment to the wife of $259,521.21;
(d)Payment for the wife’s dental work of $19,800;
(e)Payment of $73,868.53 to S Financial Services to meet outstanding joint credit card liabilities;
(f)Payment of $17,796.95 per month in mortgage payments until the sale of a property (U Street) which initially reduced the monthly payments to $9,885.53 but which increased to $10,419 and then $13,972.49 until the sale of the home;
(g)Payment towards marketing costs of properties of $5,011.90, $5,560.40, and furniture staging $10,020 and outstanding rates of $8,546,50;
(h)Maintenance, cleaning and repair costs for properties now sold;
(i)Private school fees for the children since separation of over $90,000 (the children are now attending a State High school);
(j)Day to day living expenses for the children (currently $1,348 per week, the wife contributes a nominal sum) which also included (until recently) psychologist fees of $270 (out of pocket) per visit, child minding fees of $105 to $570 per week (when the husband was still engaged in employment).
The husband contends that he has been forced to borrow from his current partner, Ms N, in order to meet day to day living expenses and that he is being pursued by numerous creditors. The husband contends that the parties have a shortfall of expenses over property of at least $301,563 as particularised in his affidavit filed 2 May 2023 (including the legal fees currently owed by the wife to her lawyers of $192,244.84 and by the husband to his lawyers of $60,936). The husband disputes the wife’s claim that he has not complied with his disclosure obligations and contends that the spouse maintenance order was obtained by fraud.
Applicable principles
When considering an application for litigation funding it is necessary to identify the source of power relied upon to make such an order.[13] The power generally relied upon to make such an order is found in ss 79 and 80(1)(h) of the FLA (the interim property power) or in s 117(2) (the costs power).
[13] Kryiakos & Kryiakos (2013) FLC 93-528 at 86,937, [37].
The legal principles to be applied in making an order for interim property settlement are well settled.[14] In summary, those principles are:
(a)The discretion to make an interim property order must be exercised within the parameters of s 79 although not as thorough a consideration is required as would be the case if the Court were determining the matter on a final basis;
(b)It is preferable to make only one order (a final order) in the exercise of the s 79 discretion;
(c)The fact that it is an interim order requires a degree of caution;
(d)An applicant for an interim property order need not establish compelling circumstances;
(e)It is insufficient to establish merely that a property order of the type sought will be made at trial;
(f)A significant factor is whether or not any interim order is capable of reversal;
(g)If made, an order need not limit the use to which the sum ordered may be put.
[14] Harris and Harris (1993) FLC 92–378, Strahan & Strahan (Interim Property Orders) (2011) FLC 93–466; Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93–143 and Stanford v Stanford (2012) 247 CLR 108.
In circumstances where the parties’ remaining property may be limited to the balance of the sale proceeds, and the husband contends that the parties’ debts will exceed that sum, it is not open, in my view, to make the litigation funding order pursuant to the interim property power. There would be no prospect of the reversal of such an order.
An alternative source of power to make a lump sum litigation funding order is s 117 of the FLA.[15]
[15]Re JJT & Ors; ex parte Victoria Legal Aid (1998) 195 CLR 184; Wilson & Wilson (1989) FLC 92–033; Zschokke & Zschokke (1996) FLC 92–693.
Although each party generally bears their own costs in this jurisdiction (s 117(1)), the Court has a broad discretion[16] to make such order as to costs as the Court considers just, where there are circumstances that justify it in doing so (s 117(2)), although this does require a “clear or exceptional case before justifying circumstances exist”.[17]
[16] Collins & Collins (1985) FLC 91–603 at 79,877.
[17] Rakete & Rakete [2012] FamCA 267 at [42].
An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances”.[18]
[18] Penfold v Penfold (1980) 144 CLR 311 at 315.
In the exercise of the discretion to award costs, regard must be had to the factors set out in s 117(2A) of the FLA, so far as they are relevant.
Those factors are as follows:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the Court considers relevant.
It is sufficient for one factor in s 117(2A) to be present.[19]
[19] PBF (as child representative for AF (Legal Aid Commission of Tasmania))& TRF & LKL (2005) 33 Fam LR 123 at 130, [41].
On the material before me, neither party is in a strong financial position. Each party alleges the other has engaged in conduct which has increased the other’s legal costs and the wife’s allegation that the husband has failed to meet his disclosure obligations is disputed. While the husband is in breach of the spouse maintenance order, he contends the maintenance order was obtained by fraud.
The husband has paid a greater proportion of his legal fees from the property that would otherwise have been available for distribution between the parties. That is a factor that may justify a payment to the wife’s lawyers at least to equalise the payments made for legal fees. However, the husband contends that there are other creditors who have not received notice[20] of the order sought by the wife, and if her legal costs were paid it would leave insufficient funds for those debts to be paid e.g. …formerly T Pty Ltd (which ceased trading at the outset of the Covid-19 pandemic) has a liability to the ATO of $371,074 for which the husband is personally liable.
[20] Biltoft and Biltoft (1995) FLC 92-614.
In the circumstances, I am not satisfied that the litigation funding order should be made pursuant to s 117(2), either as a lump sum or a ‘dollar for dollar’ order, as proposed by the wife.
An alternative power seemingly relied upon by the wife to support the lump sum order is s 74 of the FLA. In Wilson & Wilson[21] (“Wilson”) the Full Court rejected the notion that legal costs could be ordered pursuant to the maintenance power. Although the Full Court in Zschokke & Zschokke[22] (“Zschokke”) said in obiter dicta that in light of Breen& Breen[23] (“Breen”) (a special leave application to the High Court that failed), the question of whether there is power to make such an order under s 74 should be regarded as remaining open, Zschokke did not overturn Wilson. In Breen, Brennan J (as he then was) said:
The order made in this case may be unusual but it cannot be said to be beyond jurisdiction of the Family Court under either s 117(2) or under s 74 of the Family Law Act 1975 (Cth). It is unnecessary to determine whether the power to make the order falls under s 117(2) rather than s 74 …[24]
[21] (1989) FLC 92-033.
[22] (1996) FLC 92-693 at 83,215.
[23] (1990) 65 ALJR 195.
[24] Ibid at 195.
In Re JJT: Ex parte Victoria Legal Aid[25] Gaudron J also observed in obiter dicta:
3. Doubtless, the power to award maintenance under s 74 of the Act also extends to orders that a party to the marriage provide the other with funds to conduct proceedings under the Act.
[25] (1998) 195 CLR 184 at [3] cf Kirby J at [41].
By contrast Kirby J said:
41. …The suggestion that such orders represent a form of "spousal maintenance", supported by s 74 of the Act, although expressly reserved by this Court in Breen v Breen, is unconvincing.
(footnote omitted)
Until reconsidered by the Full Court I consider I am bound by the decision in Wilson that the maintenance power does not support the making of an order for litigation funding.
Lastly, the wife relies upon s 114 (the injunction power). In the absence of any submissions directed to this exercise of power I am not satisfied that the litigation funding order should be made pursuant to this head of power.
Conclusion – litigation funding
I am not satisfied that a litigation funding order is justified under any of the identified heads of power.
SUMMARY
The wife has been granted leave to amend her application in a proceeding filed 16 March 2023 and her application for review filed 11 April 2023 by substituting the order sought in her case outline filed 5 May 2023.
Paragraph 6 of the order made on 6 April 2023 and paragraphs 1 and 2 of the order made on 12 April 2023 will be set aside.
As the vast majority of the payments proposed to be made by the husband from the net sale proceeds are sums permitted pursuant to paragraph 18 of the 2021 order, and I do not propose to discharge or vary that order, the payments, as specified in the proposed order will be permitted.
The applications for arrears of spouse maintenance, lump sum maintenance and repayment by the husband of $77,093.76 will be adjourned to trial.
The application for litigation funding will be dismissed as the wife has failed to establish the payment is justified under an identifiable head of power.
As the payment to Mr B is the subject of an existing order, that payment will be made from the net sale proceed.
I certify that the preceding one hundred and nineteen (119) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carew. Associate:
Dated: 24 May 2023
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