Jess and Jess

[2007] FamCA 345

FAMILY COURT OF AUSTRALIA

JESS & JESS [2007] FamCA 345

FAMILY LAW - PROPERTY - Litigation funding order - Interim restraining order - s 121

Family Law Act 1975 (Cth)

APPLICANT: MRS JESS

RESPONDENT: MR JESS

FILE NUMBER: MLF 3444 of 2006

DATE DELIVERED: 17 APRIL 2007

PLACE DELIVERED: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 17 APRIL 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR ACKMAN QC with MS MacMILLAN

SOLICITOR FOR THE APPLICANT: KENNA TEASDALE

COUNSEL FOR THE RESPONDENT: MR CROFTS

SOLICITOR FOR THE RESPONDENT: CAREW COUNSEL

Orders

1. THAT the husband and the wife and the children of the marriage N born … February 1990 and E born … December 1992 attend upon Mr V or such other appropriately qualified psychologist as agreed upon by the parties for the preparation of a report to address the issues in dispute and in particular to ascertain the wishes of the children.

2. THAT the report referred to in paragraph 1 hereof to be paid for at first instance by the husband and the question of the responsibility for the payment of the report be reserved for the determination of the trial Judge of further order.

3. THAT until further order the husband pay or cause to be paid to the wife the sum of $28,000 per month the first payment to be made 10 May 2007 and monthly thereafter.

4. THAT paragraph 5 of the orders of this Honourable Court made 21 December 2006 be varied by deleting the words commencing “That until further Order” in the first line to the end of sub paragraph 5(b) and inserting in lieu thereof the words –

   “ 5.  That until further order the husband and the wife by their servants and/or agents and in their  positions as trustee, appointor or director of any corporate or related entity in which he or she holds a position of power be restrained from:

   a.selling, alienating, encumbering or dealing with any assets standing in their name whether solely or jointly with another person;

   b.taking out or extending any borrowings or other liabilities in their name whether solely or jointly with another person;”

5. THAT paragraph 5 of the orders of this Honourable Court made the 21 December 2006 be further varied by deleting the words commencing from the end of sub paragraph 5(c)(xx) to the commencement of sub paragraph 5(d) and inserting in lieu thereof the words –

   “(items i –xx collectively “the [Y] Group”);

   xxi.T Pty Ltd

   xxii.L Pty Ltd

   xxiii.H PROPERTY INVESTMENTS PTY LTD whether in its own capacity or as trustee for the H Property Trust

   xxiv.THE H TRUST

   (items i – xxiii ‘the entities”)”

6. THAT paragraph 5 (d) of the orders of this Honourable Court made 21 December 2006 be varied by deleting the words “the [Y] Group” and inserting the words in lieu thereof “the Entities”.

7. THAT paragraph 5(e) of the orders of the Honourable Court made 21 December 2006 be varied by deleting the words “the husband’s interest in the [Y] Group including but not limited to” and inserting the words in lieu thereof “the Entities”.

8. THAT the husband and the wife have leave to issue subpoenae.

IT IS FURTHER ORDERED BY THE COURT

1. THAT until further order the husband and the wife, their servants and agents, financial advisers and family members be and are hereby restrained from approaching any media outlet and from advising, discussing, communicating or disseminating any fact or document and information of or related to proceedings in this Court to any such media outlet.

2. THAT the husband pay or cause to be paid the sum of $200,000 to the trust account of Kenna Teasdale, the solicitors for the wife, to be applied to the wife’s costs and disbursements.  Such payment to be made:

   a.as to $75,000 by not later than 30 April 2007.

   b.as to $125,000 by not later than 1 July 2007

3. THAT until further order the payments pursuant to paragraph 3 of these orders be paid or caused to be paid to the wife’s ANZ Sunbury account No … .

IT IS NOTED:

A.THAT the wife consented to paragraph 9 of these orders.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Young delivered this day will for all publication and reporting purposes be referred to as Jess & Jess.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3444 of 2006

MRS JESS

Applicant

And

MR JESS

Respondent

REASONS FOR JUDGMENT

1. The matter of Jess is before the interim defended list on various financial, property and injunctive issues.  Mr Ackman, one of her Majesty's counsel, and Ms MacMillan appear for the wife.  Mr Crofts of counsel appears for the husband.  The experienced solicitors of both parties have been in court throughout the proceedings, as have been the husband and wife.

2. The existing financial order is that of Mushin J made by consent on 7 February 2007 where the husband is to pay on or before the 10th of each month the sum of $28,000 to the wife's nominated National Australia Bank account.  Those payments were ordered to be paid in the months of February, March and April only and the ongoing payment is a matter before me this day. 

3. The parties have filed various applications and responses and thereafter amendments of each of those documents.  The most recent amended application of the wife is currently document 22 on the court index but it does not bear a stamp of the court or filing date, though it has been served and there is no objection taken to the court dealing with that document.  The husband has filed an amended response on 13 April 2007, document 25 on the court index, and the various financial orders and other orders sought by him are detailed therein. 

4. The most recent affidavits of the parties are the substantial affidavit of the wife filed 5 April 2007 with the many exhibits thereto.  There is also an affidavit of that date by her solicitor, Mr Gregory, filed in support of the litigation funding order.  The most recent and substantial affidavit of the husband is filed 13 April 2007 together with its many and varied exhibits.  I have read both of those affidavits and in the course of submission, counsel for both parties have taken me to various paragraphs thereof.

5. Both parties have filed updated financial statements.  The initial Form 13 of the wife was filed on 18 December 2006.  Subsequently, the husband filed his Form 13 financial statement on 2 February 2007.  To some degree, although in no way in any complete form, the parties have updated their financial circumstances and in particular various liabilities in their continuing affidavits filed with the court.  I have an understanding of the income, assets and liabilities declared in those financial statements and likewise they have been addressed by counsel in various submissions this day.  I have also had the opportunity to read, and counsel have identified, earlier paragraphs from prior affidavits of both parties. 

6. The background history, in brief form, to this case is that the wife is 39, the husband 77.  Cohabitation commenced in November 1986.  The parties married in January 1988 and separated in November 2006 after a marriage approaching 19 years and a cohabitation including marriage in excess of 20 years.  There are three children of the marriage and their ages are almost 19 years, 17 and 14. 

7. The two younger children, N and E, reside with the wife.  C, the eldest child, was living independently of the parties in rural NSW but, in accordance with the husband's most recent affidavit, is now living in his substantial home and property at R.  The court was advised that there will be some consent orders prepared in respect of the two younger children and they will shortly be presented to the court and will deal with ongoing issues of residence and the time to be spent with the two younger children by the husband. 

8. The particular issues that have occupied submissions from counsel throughout much of the day relate to the financial and injunctive orders sought by or on behalf of both parties.  Perusing first the wife's application, there are orders sought in the terms of paragraphs 9, 10 and 12 thereof and in addition an order for the husband to pay or resume payment of all mortgage and outgoing payments in respect of the property at R.  Otherwise, Mr Ackman informed the court that there are in place orders for the payment of other interim outgoings and of course I have already touched upon the current interim spousal maintenance order.

9. In the husband's Form 2A response document there were orders sought in relation to the children and other specific orders in relation to financial disclosure to be made by the wife on a continuing and updated basis and also in respect of various restraining orders and injunctions and detailed orders in respect of the wife's access to and use of credit cards and in respect of some financial relief.  To the extent that counsel have foreshadowed matters that have been arrived at by consent, those orders are to be presented to the court on Friday of this week.

10. There are several real and significant disputes, and in no particular order I identify those major areas of financial conflict, or disagreement between the parties, as including:

    i)the payment of the wife's credit card debts;

    ii)the settlement of the purchase of three apartments in Western Australia;

    iii)the payment of debts in relation to the acquisition, management and operation of Y franchises at K and S and in furtherance of Supreme Court orders; and

    iv)in payment of a litigation fund to the wife of $200,000.

11. I have had submissions on these issues from Mr Ackman and partially from Mr Crofts.  By way of procedure I elected to interrupt the continued hearing of this matter as it is close to 4.00 p.m.  I am unable to continue the matter on Wednesday or Thursday of this week as I am the duty list judge with busy lists on each of those days.  Insofar as there are matters outstanding or the subject of further consideration, I propose to stand over on a part-heard basis before myself to Friday in this list those further issues.

12. I have raised with counsel the adequacy of the financial information and other documentation and evidence before the court.  Mr Ackman has with some vigour submitted that, in adversarial proceedings, the court should take the evidence as it is presented and make orders on the basis of that evidence.  In particular, Mr Ackman highlighted the significant caveats and qualifications contained within the husband's Form 13 financial document, page 12 paragraph (o) thereof, and further and more recently expressed within paragraph 45 of the affidavit of the husband filed 13 April 2007.

13. I am significantly troubled by the extent of those caveats and on one view it is almost as if the husband does not know of his own management, assets and financial resources, nor know and currently understand or comprehend the commercial structure of his various businesses.  Indeed, very much the issue may turn out to be whether in fact they are his businesses and what level of control or management he exercises.  I am mindful of the husband's age but otherwise I make no further finding on this issue but highlight what I have said to counsel during the hearing.

14. It is also proper to record that Mr Crofts highlighted significant inadequacies, as he alleged, in the content of the wife's material such as in relation to the investment vehicle identified as H Property Investments Pty Ltd and significantly where that entity or at least a reference to "[H]" is the substituted purchaser for two of the three Western Australian apartments which are shortly due to settle and which were purchased at respective prices of $575,000, $380,000 and $233,000, an all-up total purchase price of $1,178,000 which, together with fit-out costs of $78,600, totalled $1,256,600.

15. The purchase of those properties, the entity in which they are purchased and the source of moneys to facilitate the settlement of purchase is and remains a live issue which I specifically adjourn to another day.  The issues which I am comfortable in dealing with this day and which I have asked counsel specifically to concentrate upon and where I record Mr Crofts limited his submissions to are as follows:  (1) the requirement for the husband to immediately resume payment of the National Australia Bank mortgage and all repayments on the R property.  This is, or may be, a complex issue having regard to the content of paragraphs 3-8 (inclusive) of the wife's most recent affidavit and the husband's response thereto.

16. I as yet do not understand wholly if the husband's submission is that he did not sign documents or that his signature to documents was obtained by duress, undue influence or fraud.  Those matters need to be clarified.  What I do understand is that the husband and his financial advisers have a meeting with the National Australia Bank arranged for 10.30 a.m. tomorrow.  That meeting is in the absence of the wife.  I will permit the husband to attend that meeting but I emphasise to his legal practitioners that it is on the basis that there is to be no concluded agreement entered into by the husband at that meeting and any outcome is to await the resumption of this hearing on Friday and the conclusion then being submitted to the court, if any, and being ratified by myself in these part-heard proceedings.

17. That position has been expressed to Mr Crofts, and the husband and his financial advisers who are in court have heard that scenario and that matter will need to be fully disclosed to the court on Friday and then stand any further submission or consideration.  Therefore I will not be making any order this day but I will not be dismissing or otherwise dealing with the wife's application and that matter can simply await Friday.

18. The second matter is that the ongoing payments of $28,000 per calendar month are to resume and continue to be paid on an ongoing basis on the 10th of each month, commencing 10 May 2007.  If there is to be any final date of payment, that matter can be the subject of argument on Friday.  The payments are to be made to the ANZ bank account nominated by the wife and an amending order will be drawn by counsel including the particular account number and address of the ANZ bank and presented to the court on Friday.  That order is not a consent order but I will pronounce that order upon the motion of the court.

19. The third matter and the most significant of the interim matters that I will now deal with is the litigation funding order.  On behalf of the wife, Mr Ackman sought $200,000.  I have read the affidavit material of the wife's solicitor and whilst there is a reference to a sum of $200,000-$300,000, Mr Ackman contained his submission to the lesser of those sums; that is, $200,000.  On behalf of the husband, Mr Crofts primarily argued against any funding order being made but ultimately if there was to be a litigation funding order pronounced, then its quantum should be limited to $25,000.

20. The relevant facts are that the husband is able to meet his own legal fees.  The evidence that I have before me by way of an admission, on instructions, from counsel for the husband is that his client has paid $50,000 in legal fees.  No doubt his legal fees are ongoing with these and/or other proceedings.  Mr Ackman sought to establish by reference to the financial documents in the affidavit of the husband that there is a substantial pool of assets.

21. Accepting the arithmetic of counsel for the wife, the assets disclosed by the husband in his own financial statement totalled approximately $20 million, though that included an alleged $15 million in jewellery for the wife.  Including that jewellery at a lesser value of $4 million and allowing for an estimate of value of the property registered in the sole name of the husband in M, Mr Ackman's submissions proceeded on the basis that there is a minimum value of $9 million.

    MR ACKMAN:   I don't wish to interrupt your Honour.  That's not what I said and that's not what I mean.  The figures are $20 million less liabilities.  I haven't added in [the M property].  That comes to $9 million but it only includes the figures in the husband's Form 13, nothing else, but I've substituted 4 million for 15.  There's no reference there to [the M property].  If I indicated otherwise, I fell into error.  $9 million including jewellery at $4 million, your Honour.

    HIS HONOUR:   Those comments from Mr Ackman can be included within these extempore reasons. 

22. What it does is to highlight that there is, on the submissions of the wife, a pool of no less than $9 million even if the M property is to be left to one side.  I need qualify that submission by the reference to the wife's affidavit where she has earlier expressed a more substantial schedule of assets, and that is contained at paragraph 18 of her affidavit filed 18 December 2006.

23. The alleged valuation of assets is not there totalled but they include an allegation of the value of the trading name and good will of the Y companies at $100 million, historic memorabilia at $10 million, a P property at $5.5 million, D Property at $15 million and significant other real estate and personal assets and corporate interests of very real value.  At this stage and for the purposes of any litigation funding order, I do not accept nor do I need to accept the accuracy or validity of the wife's submissions in that paragraph. 

24. I am aware of the husband's ownership of the R property, of the M Property, though each of them are subject to significant liabilities.  There is no specific admission by the husband as to the wife's allegation of assets and indeed I, in the interest of balancing both arguments, should identify that in paragraph 17 of the husband's affidavit of 2 February 2007 he specifically denied both the assets and the values as identified by the wife in that affidavit and with the qualifying words that they were "to the best of my knowledge".

25. The litigation funding orders, known in this state as a Barro order, have been the subject of Full Court decisions.  There are many decisions both as to the powers of the court to make those orders but that has not been in issue in this case.  There are, however, decisions as to the circumstances and criteria required to be considered in the making of these orders.  The matter of Zschokke (1996) FLC 92-693 is a decision of the Full Court where these matters were substantially considered. The Full Court there identified (in summary) the following criteria for an order to be made:

    i)a position of financial strength by the respondent;

    ii)the respondent's capacity to meet his litigation expenses; and

    iii)an inability by the applicant to meet her litigation expenses.

26. In the context of this case, on the general basis of assets and liabilities of the parties, on the admissions made by the husband in his financial statement, I have no hesitation in concluding there are considerable assets.  I make no comment upon the ultimate net value of those assets.  I am clearly aware that the husband has paid and proposed to continue to pay his legal expenses. 

27. The issue that does need to be carefully considered and evaluated is whether the wife has any ability to meet her litigation expenses.  I have in that regard carefully perused her Form 13 financial statement.  There may be some issue as to her half-ownership with her sister in the venture known as H, but given this lengthy marriage, given the financial lifestyle of the parties, given the assets that have been accumulated, given the expenses that have been part of their day‑to‑day lifestyle, given the value of jewellery acquired by the husband and wife for the wife and otherwise given the assets that I have read in all of the documentation before the court, it is clear that there has been a very extravagant but - in the context of the alleged assets of these parties – perhaps a not unreasonable lifestyle.  I approach this case on a practical commonsense basis of understanding the legal complexities in the case, of considering the wife's financial circumstances and available and immediate liquid assets.  I am satisfied that a litigation funding order is required and is proper. 

1. I pause there to reflect on the further criteria outlined by the Full Court both as to the complexity of the financial affairs and the need for an expert investigation into all such financial affairs.  I have no hesitation in finding that there are complex financial circumstances in this case.  That is the outcome not merely of the list of corporate entities identified by or on behalf of the husband but the husband's own caveats and disclaimers as to his own understanding of the knowledge and financial workings of all of the trusts and companies.

2. In due course there will need to be, though today I am not prepared to nominate, an independent single financial expert.  It may be that that can be taken up by counsel in discussion out of court but clearly there will have to be both an identification of assets, an understanding of the corporate structure, of all taxation issues, of all ownership issues and, significantly, of valuation issues.  All of those matters will await another day. 

3. A question that I must be satisfied of in determining whether a litigation order is appropriate is whether the tests laid out by the Full Court have been met.  I am wholly and indeed completely satisfied in this case that it is appropriate to make a litigation funding order.  I also intend that the order not be a partial property order, and to that extent I would propose that paragraph 10(d) of the wife's amended application be struck out upon the making of an order pursuant to paragraph 9. 

4. The litigation funding order will be in the sum of $200,000 and those moneys will be paid by the husband to the trust account of the solicitor for the wife.  As to the time period in which the money is to be paid, I will invite submissions from counsel on Friday on that issue.  I intend the payments to be made in the near future but I leave open the actual timing pending submissions from both counsel on Friday.

5. The remaining issue that I intend to touch upon this day is in relation to the orders sought in paragraph 12 of the wife's application where she sought that the husband be restrained from communicating, directly or indirectly, with any media outlet regarding the subject matter of these or other proceedings involving the husband and wife or their corporate entities.  The intent of the wife in seeking that order, and as Mr Ackman freely acknowledged, is to restrict the husband from approaching any media outlet for any proceedings, be it in this court or any Magistrates Court, or indeed not even in respect of court proceedings but generally in respect of the financial dealings or issues of the children of and between the husband and wife.

6. I was referred to the wife's affidavit alleging past behaviour of the husband, although those affidavits, the paragraphs therein, were somewhat incomplete in their drafting and outcome.  Nevertheless, I well understand the orders sought by the wife.  In contrast, Mr Crofts has objected to any such order, presumably on the basis that the husband is to be free, as is the wife on his approach, to discuss any matter with media and to obtain any perceived advantage that might be received therefrom. 

7. I am going to limit my order to proceedings in this court. I am particularly conscious of, and I have reread now in court, section 121 of the Family Law Act 1975 and on restrictions of publication of court. I propose to restrain each of the husband and wife from approaching any media outlet, whether it be print, radio or television, and from communicating to any such media outlet any fact or document or information of and related to proceedings in this court. By its very nature, and because all financial and children's proceedings are now before the court, that would generally seem to cover the field of conflict or potential disclosure by either party.

8. Each of the husband and wife, I am satisfied, are aware of the matters that they have through their solicitors placed before the court.  Both of them are aware that financial issues, debts, liabilities and borrowings are before the court and will be controlled by this court and they will therefore not speak by themselves or their delegated agents or family members to any press media outlet; and that, as I indicated, is in the widest definition of media outlet. 

9. To breach that order will mean, subject to required proofs, that they leave themselves open to be dealt with by this court.  I say that in their presence so they can well and truly hear and understand what I say, and in any event their experienced solicitors are in court to further reinforce to each of them what is meant by that.  Accordingly, there will be such an order pronounced on Friday, but - and I want to emphasise this - it is and will have immediate effect.  There will be no discussion with media outlets of matters within the domain of this court from this moment henceforth, and I specifically charge both solicitors to inform their clients in detail of that upon the arising of this court so there will never be any confusion of what is intended.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate: 
Date: 24 April 2007