Jepson & Jepson (No 2)

Case [2022] FedCFamC1F 913

Federal Circuit and Family Court of Australia

(DIVISION 1)

Jepson & Jepson (No 2) [2022] FedCFamC1F 913

File number(s): SYC 2100 of 2016
Judgment of: MCCLELLAND DCJ
Date of judgment: 22 November 2022
Catchwords: FAMILY LAW – PROPERTY – Where applicant husband seeks an urgent partial property distribution to fund legal representation in criminal and family law proceedings – Where estimated total legal costs are grossly disproportionate to the amount of matrimonial property in dispute – Applicant has failed to establish financial unevenness of playing field – Application dismissed – Matter administratively set down for final hearing.
Legislation:

Family Law Act 1975 (Cth) ss 79, 80

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68.

Federal Circuit and Family Court of Australia, Central Practice Direction: Family Law Case Management paragraph 3.9(b)
Cases cited:

Iphostrou & Iphostrou and Ors [2011] FamCA 20

Jepson & Jepson and Ors [2017] FamCA 1013

Jepson & Jepson [2022] FedCFamC1F 45

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466, [2011] FamCAFC 126
Division: Division 1 First Instance
Number of paragraphs: 34
Date of hearing: 7 November 2022
Place: Sydney
Counsel for the Applicant: Mr Todd
Solicitor for the Applicant: Powe & White Family Lawyers
The First Respondent: Litigant in person
Counsel for the Second Respondents: Mr Walker
Solicitor for the Second Respondents: Gillis Delaney Lawyers
The Third Respondent: Submitting Notice filed 2 November 2022
The Fourth Respondent: Did not participate

ORDERS

SYC 2100 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MR JEPSON

Applicant
AND:

MS JEPSON

First Respondent

MR OAKLEY & MR HAIGHT

Second Respondents

MS B JEPSON (and another named in the Schedule)

Third Respondent

order made by:

MCCLELLAND DCJ

DATE OF ORDER:

22 November 2022

THE COURT ORDERS THAT:

1.The applicant’s Application in a Proceeding filed 24 October 2022 is dismissed.

2.The matter be listed for final hearing by inclusion in the Sydney Registry Rolling List to commence at 9.30 am, 6 March 2023 with an estimated hearing time of three (3) days.

3.The matter be listed for a Trial Management Hearing before Deputy Chief Justice McClelland at 4.00 pm, 16 December 2022.

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

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AGLC
Jepson & Jepson (No 2) [2022] FedCFamC1F 913
Case
[2022] FedCFamC1F 913
Decision Date

CaseChat Overview and Summary

In the matter of Jepson & Jepson (No 2), the husband, Mr Jepson, sought an order for partial property distribution to assist him in meeting legal costs associated with protracted family law and criminal proceedings. The wife, Ms Jepson, opposed the application. The case involved the distribution of the proceeds from the sale of family properties and the resolution of outstanding fees incurred by the receivers. The court had to determine whether the application for partial property distribution was appropriate and in the interests of justice.

The key legal issues the court had to decide were whether the husband had shown a sufficient basis for an order for partial property distribution and whether it was just and equitable to make such an adjustment of the parties' property. The court needed to consider the disparity in the financial resources of the parties, the likelihood of the husband receiving more than the amount sought in the interim proceedings, and the appropriateness of an order to assist the husband in meeting legal expenses.

The court considered the arguments presented by both parties and concluded that the legal costs incurred by both parties were grossly disproportionate to the issues remaining in dispute. The court was not satisfied that the parties had made a genuine attempt to resolve the matter without incurring further legal expenses. The court held that the husband had not demonstrated a sufficient basis for an order for partial property distribution as he had not shown that it was just and equitable to make such an adjustment of the parties' property.

The court dismissed the husband's application for partial property distribution and made no order as to costs.

Orders

Orders of the court

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Background

Background to the litigation

This matter concerns an Application in a Proceeding filed by Mr Jepson, (“the husband”) on 24 October 2022, seeking an order for partial property distribution of the parties’ property in order to assist him to meet legal costs associated with protracted family law proceedings that have been ongoing since 2016, as well as criminal proceedings that currently remain on foot. I have dismissed the application in circumstances where the legal costs incurred by both parties are grossly disproportionate to the issues that remain in dispute and I am not satisfied that the parties have, to date, made a genuine attempt to resolve the matter without incurring yet further legal expenses. Background The background of this matter has been extensively canvassed in decisions of, firstly, Loughnan J in his decision dated 14 November 2017,[1] and my earlier decision dated 8 February 2022.[2] In those circumstances, I provide the following brief outline of background insofar as it is relevant to the issues I am required to determine in these proceedings.[1] Jepson & Jepson and Ors [2017] FamCA 1013.[2] Jepson & Jepson [2022] FedCFamC1F 45. The husband and wife, Ms Jepson (“the wife”), were married in 1998 and separated in November 2015. They have two children who are now adults. In April 2016, the wife commenced proceedings in the Supreme Court of New South Wales seeking interlocutory orders for the restoration of possession of the family home and a holiday house, both of which were, at the time, registered in her name, together with ancillary relief. The outcome of that litigation was that the parties agreed to orders that would have trustees appointed to affect the sale of both properties. Those properties, located in the suburbs of Suburb R and Suburb P in New South Wales, were eventually sold and the proceeds of sale for the Suburb P property, being the sum of $2,139,812, is being held in a solicitor’s trust account pending completion of this litigation.[3][3] Affidavit of Mr Jepson filed 24 October 2022, paragraph 54. The trustees are both the second respondents in these proceedings. They contend that, as result of difficulties they experienced in dealing with the parties, they incurred substantial fees which total, as at this date, a sum of $1,298,071 outstanding as at 27 October 2021.[4] Both the husband and the wife contend those fees are excessive and, whilst acknowledging a responsibility to pay the receivers, they dispute the quantum. To resolve that issue, the parties have agreed to appoint a referee to advise on the reasonableness of the fees rendered by the receivers. Regrettably, the person so appointed as referee has yet to provide his opinion to the parties or the Court. Understandably, the receivers wish to remain parties to these proceedings until the issue in respect to their outstanding fees is resolved.[4] Affidavit of Mr Oakley & Mr Haight filed 1 November 2022, paragraph 21. An additional complicating factor has been the fact that the husband is the subject of criminal charges. The husband describes the charges as approximately 98 alleged offences “relating to company banking transactions that occurred in 2013.”[5] While the circumstances are not entirely clear, the wife contends that the husband has also been charged with offences relating to a substantial and valuable collection, which the husband contends is worth an estimated value of $1.5 million.[5] Affidavit of Mr Jepson filed 24 October 2022, paragraph 43.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Further, relevant to the contentions of the husband in this case, an applicant for orders for partial property distribution is required to show more “than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.”[7][7] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [139] (“Strahan”).Consideration For the purpose of this application, the parties agreed that the Court, at final hearing, would likely find that the total assets of the parties was $4,767,812, from which would be deducted liabilities of $2,245,083, leaving a balance of net assets available for distribution between the parties of $2,522,729. The parties acknowledge, however, that from that amount, they are jointly responsible for meeting the fees of the referee in the sum of $55,000. This reduces the net pool, as agreed to by the parties for the purpose of these proceedings, to the amount of $2,467,729. On that basis, the amount of $375,000 as sought by the husband by way of partial property distribution would represent approximately 15.2 per cent of what the parties have agreed for the purpose of these proceedings to be the anticipated net property pool at final hearing. I accept, on the basis of those figures, as agreed for the purpose of these proceedings, it could reasonably be anticipated that the husband would receive, by way of final orders for property adjustment, an amount in excess of the sum he is seeking in these interim proceedings. On that basis, the test adumbrated by the Full Court in Medlow is satisfied. In terms of the second test adumbrated in Strahan, I have had regard to the affidavits of the parties in which they have set out, by way of summary, relevant s 79(4) considerations that would likely be taken into consideration by the Court in determining that it is just and equitable to make an adjustment of the parties’ property pursuant to s 79(2). In terms of the first test adumbrated in Strahan, I also accept that an order for partial property distribution may be appropriate and in the interests of justice in order to assist a party to meet legal expenses which they are likely to incur in the proceedings. This is particularly the case where there is a disparity in the financial resources of the parties with the consequent comparative ability to fund their case. In that respect, the authorities are quite clear that, wherever possible, the Court should endeavour to even out the playing field between litigants where one party has predominant control of and access to the matrimonial property pool: Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [60] and Strahan at [79]–[80]. In that respect, the husband contends that there is an unevenness in the playing field in this matter, in circumstances where he is currently unemployed and the wife remains in employment. That contention, however, needs to be seen in context. The wife contends that the husband has been unemployed since 2014 only as a result of an unwillingness on his part to exploit his substantial earning capacity. This is in circumstances where the husband acknowledges that, as a result of applying his business skills, he built up a substantial business raising a gross turnover of between $70–$90 million per annum. The wife’s contention regarding the husband’s potential earning capacity is clearly a matter that will require determination at final hearing.