Jepson & Jepson (No 7)

Case [2024] FedCFamC1F 363

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Jepson & Jepson (No 7) [2024] FedCFamC1F 363

File number(s): SYC 2100 of 2016
Judgment of: ALTOBELLI J
Date of judgment: 29 May 2024
Catchwords: FAMILY LAW – PROPERTY – Where the husband and the second respondent seek an interim property distribution to pay legal fees and prepare for final hearing – Where the final hearing is in July 2024 – Where the wife has access to a majority of the matrimonial asset pool – Where the wife asserts the husband will not be entitled to any property adjustment at final hearing and that he has wasted their assets – Order for the husband and the second respondent to each receive $140,000 from monies held in trust – Where it is in the interests of justice to do so.  
Legislation: Family Law Act 1975 (Cth) s 79
Cases cited:

Jepson & Jepson (No 5) [2024] FedCFamC1F 51

Jepson & Jepson (No 6) [2024] FedCFamC1F 290
Division: Division 1 First Instance
Number of paragraphs: 29
Date of hearing: 20 May 2024
Place: Sydney
Solicitor for the Applicant: Powe & White Family Lawyers
Counsel for the First Respondent: Mr Watkins (direct brief)
The Second Respondent: Litigant in person

ORDERS

SYC 2100 of 2016

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

MR JEPSON

Applicant
AND:

MS JEPSON

First Respondent

MS B JEPSON

Second Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

29 MAY 2024

THE COURT ORDERS THAT:

1.Within seven days of the date of these orders, the Applicant Husband and the Second Respondent each receive the sum of $140,000, being from the monies held on trust by JJ Lawyers, by way of partial property settlement.

2.The money referred to in Order 1 is to be applied only towards the preparation and conduct of the final hearing of this matter, including counsel’s fees.

3.Any costs incidental to the Applicant Husband’s Application in a Proceeding filed 10 May 2024 are reserved to the final hearing.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Jepson & Jepson has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

ALTOBELLI J:

INTRODUCTION

  1. These reasons for judgment explain the orders the Court has made for an interim distribution of property by way…

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AGLC
Jepson & Jepson (No 7) [2024] FedCFamC1F 363
Case
[2024] FedCFamC1F 363
Decision Date

CaseChat Overview and Summary

In the case of Jepson & Jepson (No 7), the Federal Circuit and Family Court of Australia was called upon to make an interim property distribution order to assist the husband and his paternal grandmother in meeting the costs of the final hearing in this matter. The wife opposed the application, asserting that the husband would not be entitled to any property adjustment at final hearing and had wasted their assets. The court had to decide whether to grant the application for interim distribution of property and, if so, the amount to be distributed. The husband sought $350,000, while the second respondent sought $350,000 as well. The court considered the complex litigation history, the disproportionate ability of the parties to litigate, and the need for all parties to have independent legal representation. The court also had to consider section 79 of the Family Law Act 1975 (Cth) and whether there were sufficient assets to satisfy the order without prejudicing the wife’s claim.

The court found that the application for interim property distribution was appropriate due to the complex nature of the case, the disproportionate ability of the parties to litigate, and the need for all parties to have independent legal representation. The court also found that the wife’s contention that she should receive almost the entirety of the asset pool must be treated with caution, given the shifting goalposts and the number of unanswered questions in the case. The court adopted a conservative approach in applying section 79 of the Family Law Act 1975 (Cth), exercising appropriate scepticism and noting that the husband and second respondent have the right to be legally represented at the hearing. The court also found that there are sufficient assets to satisfy the order without prejudicing the wife’s claim.

The court ordered that the husband and the second respondent each receive $140,000 from the monies held in trust by JJ Lawyers, by way of partial property settlement. The money is to be applied only towards the preparation and conduct of the final hearing of this matter, including counsel’s fees. Any costs incidental to the husband’s application are reserved to the final hearing. This decision ensures that all parties can effectively participate in the proceedings, while also considering the complex nature of the case and the need for appropriate legal representation.

Orders

Orders of the court

SYC 2100 of 2016

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MR JEPSON

Applicant

AND:

MS JEPSON

First Respondent

MS B JEPSON

Second Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

29 MAY 2024

THE COURT ORDERS THAT:

1. Within seven days of the date of these orders, the Applicant Husband and the Second Respondent each receive the sum of $140,000, being from the monies held on trust by JJ Lawyers, by way of partial property settlement.

2. The money referred to in Order 1 is to be applied only towards the preparation and conduct of the final hearing of this matter, including counsel’s fees.

3. Any costs incidental to the Applicant Husband’s Application in a Proceeding filed 10 May 2024 are reserved to the final hearing.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

These reasons for judgment explain the orders the Court has made for an interim distribution of property by way of, and for the limited purpose of, meeting the costs of the final hearing of this matter for the applicant husband (“the husband”) and the second respondent paternal grandmother (“the second respondent”).BACKGROUND This is the third judgment delivered in this matter this year. Matters of background are adequately set out in the judgment of McClelland DCJ on 9 February 2024 (Jepson & Jepson (No 5) [2024] FedCFamC1F 51 at [5]–[14]) (“Jepson & Jepson (No 5)”)) and that of Campton J on 2 May 2024 (Jepson & Jepson(No 6) [2024] FedCFamC1F 290 at [3]–[21]).ISSUES By way of an Application in a Proceeding filed 10 May 2024, the husband seeks, in effect, an order for interim distribution of property in the sum of $350,000. By way of a Response to an Application in a Proceeding filed 16 May 2024, the first respondent wife (“the wife”) asks the Court to dismiss the husband’s application. By way of a Response to an Application in a Proceeding filed 16 May 2024, the second respondent supports the husband’s application, and seeks an order in her favour in the sum of $350,000. The second respondent also sought an order that the wife be restricted to only utilise $350,000 for costs in the present proceedings, from funds she received by way of inheritance from her late parents. I declined to deal with this order, on the basis that the second respondent could have raised this issue in the proceedings before Campton J referred to above but did not. Each of the specific orders sought by the parties are reproduced in the first schedule to these reasons.THE EVIDENCE BEFORE THE COURT In support of his case, the husband relies on the following material:(a)Application in a Proceeding filed 10 May 2024;(b)His affidavit filed 10 May 2024;(c)His affidavit filed 6 October 2023 (paragraphs 29 to 105 only);(d)Outline of Case Document filed 16 May 2024; (e)Y Company Deed of Settlement;(f)Financial Statement filed 21 May 2024; and(g)Costs Notice filed 21 May 2024. In support of her case, the wife relies on the following material:(a)Response to an Application in a Proceeding filed 16 May 2024;(b)Amended Response to Initiating Application filed 11 December 2023;(c)Her affidavit filed 9 October 2023, paragraphs 68, 126, 137 and 328;(d)Exhibit to her affidavit filed 9 October 2023, page 509 (paragraph 75 of the KK Company report “[Y Company] Forensic Investigation”);(e)Her tender bundle dated 10 October 2023, page 447, paragraph 32;(f)The husband’s affidavit filed 24 October 2022, paragraphs 19 and 126;(g)The husband’s affidavit filed 6 October 2023, paragraph 226;(h)Affidavit of Mr DD filed 16 November 2021, pages 26–30, 34 and 75;(i)Affidavit of Ms B Jepson filed 22 October 2023, paragraphs 41 and 46;(j)The husband’s Costs Notice filed 25 October 2023;(k)The husband’s Costs Notice filed 7 November 2022;(l)Financial Statement filed 23 May 2024; and(m)Costs Notice filed 21 May 2024.

Evidence

Evidence Before The Court

By way of an Application in a Proceeding filed 10 May 2024, the husband seeks, in effect, an order for interim distribution of property in the sum of $350,000. By way of a Response to an Application in a Proceeding filed 16 May 2024, the first respondent wife (“the wife”) asks the Court to dismiss the husband’s application. By way of a Response to an Application in a Proceeding filed 16 May 2024, the second respondent supports the husband’s application, and seeks an order in her favour in the sum of $350,000. The second respondent also sought an order that the wife be restricted to only utilise $350,000 for costs in the present proceedings, from funds she received by way of inheritance from her late parents. I declined to deal with this order, on the basis that the second respondent could have raised this issue in the proceedings before Campton J referred to above but did not. Each of the specific orders sought by the parties are reproduced in the first schedule to these reasons.THE EVIDENCE BEFORE THE COURT In support of his case, the husband relies on the following material:(a)Application in a Proceeding filed 10 May 2024;(b)His affidavit filed 10 May 2024;(c)His affidavit filed 6 October 2023 (paragraphs 29 to 105 only);(d)Outline of Case Document filed 16 May 2024; (e)Y Company Deed of Settlement;(f)Financial Statement filed 21 May 2024; and(g)Costs Notice filed 21 May 2024. In support of her case, the wife relies on the following material:(a)Response to an Application in a Proceeding filed 16 May 2024;(b)Amended Response to Initiating Application filed 11 December 2023;(c)Her affidavit filed 9 October 2023, paragraphs 68, 126, 137 and 328;(d)Exhibit to her affidavit filed 9 October 2023, page 509 (paragraph 75 of the KK Company report “[Y Company] Forensic Investigation”);(e)Her tender bundle dated 10 October 2023, page 447, paragraph 32;(f)The husband’s affidavit filed 24 October 2022, paragraphs 19 and 126;(g)The husband’s affidavit filed 6 October 2023, paragraph 226;(h)Affidavit of Mr DD filed 16 November 2021, pages 26–30, 34 and 75;(i)Affidavit of Ms B Jepson filed 22 October 2023, paragraphs 41 and 46;(j)The husband’s Costs Notice filed 25 October 2023;(k)The husband’s Costs Notice filed 7 November 2022;(l)Financial Statement filed 23 May 2024; and(m)Costs Notice filed 21 May 2024. In support of her case, the second respondent relies on the following material:(a)Response to an Application in a Proceeding filed 17 May 2024;(b)Her affidavit filed 17 May 2024;(c)Her affidavit filed 22 October 2023;(d)Financial Statement filed 21 May 2024; and(e)Costs Notice filed 9 November 2023.THE APPLICABLE LAW The applicable law is set out at [35] of the judgment of McClelland DCJ (Jepson & Jepson(No 5)). I respectfully adopt the same. WHY REVISIT THE ISSUE OF INTERIM PROPERTY DISTRIBUTION? Counsel for the wife quite correctly raised the issue of the appropriateness of this Court yet again considering the husband’s application for interim distribution of property in order to meet his legal costs. Indeed, counsel suggested that the application was an abuse of process.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

This Court concludes in the affirmative. The orders made by Campton J on 2 May 2024 granted to the wife access to over $1 million for the purposes of litigating the present claim. The husband presents as being impecunious. The second respondent likewise presents as impecunious. They both owe significant legal costs. The ability of the wife to litigate on the one hand, and that of the husband and the second respondent on the other, is clearly disproportionate. The litigation is complex. Given the litigation history of this matter, the prospects of settlement would be negligible if the parties lack independent, professional, and experienced representation. It is in the interests of justice that orders be made to facilitate all parties’ effective participation in the proceedings.CONSIDERATION OF S 79 OF THE ACT The highly litigious and contentious nature of the present long-running, highly expensive matter compels the Court to adopt a conservative approach in the application of s 79 of the Family Law Act 1975 (Cth) in the present context. Appropriate scepticism must be exercised. After coming to this case for the first time, I am far from satisfied that all relevant facts have been placed before the Court. None of the serious allegations made by the wife have been tested in cross-examination. Indeed, the seriousness of the allegations accentuates the need for them to be properly tested at a hearing by cross-examination in a context where all parties are properly represented by skilled counsel. Whereas the husband may well need to provide answers about the circumstances in which the parties’ business empire met its demise, perhaps the wife will need to provide answers about the disposition of assets, as well as the extent of her knowledge about the husband’s business dealings. Both the husband and the wife may well have given inadequate consideration to what appears to be the vast financial contribution provided by the second respondent. There are far more unanswered questions about this case than answered ones. In the circumstances, the wife’s contention that she should receive almost the entirety of the asset pool is a contention that must be treated very carefully indeed. The suddenly shifting goalposts of her proposed orders cannot be ignored in the present context, even if she was entitled to change her mind. Seemingly within a matter of weeks, the wife went from conceding that the husband should receive $320,000 to asserting that he should receive nothing. The goalposts shifted, but not, it would seem, the underlying basis of her claim. How can that be so? The position of the second respondent is slightly different. She may, or may not be a creditor, depending on findings of fact. Even if she is not a creditor, her evidence about financial contribution will be significant. She too will both have questions to ask, and to answer in this case. Both the husband and the second respondent have the right to be legally represented at the hearing. They both seek $350,000. In response to a question from the bench about how she came up with the figure of $350,000, the second respondent said she could not remember, but that she had been helped by the husband when preparing for this matter. The solicitor for the husband conceded that on his own evidence, the amount that he actually needs to run a final hearing from the date of his affidavit (10 May 2024) to the end of a five-day hearing would be about $140,000 GST inclusive. It is accepted that the husband owes his solicitors more than $140,000, and that the difference between this amount and the amount sought was attributable to costs rendered but unpaid. Of course, the solicitor is potentially protected by a fruits-of-the-litigation lien, as well as any other security that may have been taken. In a case which is as fraught with uncertainty as the present one, from the Court’s perspective, there is a significant difference in terms of impact on the balance sheet between $140,000 and $350,000, particularly if that is multiplied by two. If an order for interim property distribution is made, it will be at the lower figure, and it will be strictly conditional on the application of the funds towards preparation and conduct of the final hearing, including counsel. The Court notes that the wife’s estimated costs to prepare and conduct the final hearing are between $77,000 and $147,000 (depending on whether a solicitor is required).ARE THERE SUFFICIENT ASSETS TO SATISFY THE ORDER WITHOUT PREJUDICING THE WIFE’S CLAIM?