Julien & Perrin
[2023] FedCFamC2F 841
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Julien & Perrin [2023] FedCFamC2F 841
File number(s): SYC 8105 of 2022 Judgment of: JUDGE JENKINS Date of judgment: 8 June 2023 Catchwords: FAMILY LAW – application for review – periodic spousal maintenance – interim property payment – litigation funding – de facto relationship Legislation: Family Law Act1975 (Cth) ss 90SE, 90SF, 90SM, 114, 117 Cases cited: Artinos & Artinos [2023] FedCFamC1F 314
Brown & Brown [2007] FamCA 151
Elei & Dodt [2018] FamCAFC 92
Foley & Foley [2016] FCWA 68
Hakim v Salim [2022] FedCFamC1A 21
Salvage & Fosse [2020] FamCAFC 144
Stanford v Stanford [2012] HCA 52
Strahan & Strahan (2011) FLC 93-466
Wilson & Wilson (1989) FLC 92-033
Division: Division 2 Family Law Number of paragraphs: 62 Date of last submission/s: 8 June 2023 Date of hearing: 8 June 2023 Place: Adelaide Solicitor for the Applicant: Ms Morozov from Barkus Doolan Winning Solicitor for the Respondent: Mr Milevski from Milevsi Family Lawyers ORDERS
SYC 8105 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PERRIN
Applicant
AND: MS JULIEN
Respondent
order made by:
JUDGE JENKINS
DATE OF ORDER:
8 JUNE 2023
THE COURT ORDERS THAT:
1.Order 1 of the orders of the Senior Judicial Registrar made 30 March 2023, be varied such that the Respondent de-facto husband pay maintenance to the Applicant de-facto wife in the sum of one thousand, three hundred and ninety two dollars ($1,392) per week with such payment to commence from Friday 9 June 2023.
2.Order 2(d) of the orders made on 30 March 2023 be discharged.
3.The Applicant de-facto wife retain the funds paid to her by the husband in the sum of one hundred and twenty seven thousand, seven hundred and twelve dollars ($127,712) with such sum to be characterised as lump sum spousal maintenance.
4.The husband’s Application for Review filed on 19 April 2023 be otherwise dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
(EX TEMPORE)JUDGE JENKINS
These reasons were delivered orally and have been corrected and edited from transcript. I have endeavoured to correct grammatical errors, clarify any citations and generally make my oral reasons easier to read.
INTRODUCTION
This is an Application for a Review from the decision of the Senior Judicial Registrar (“the SJR”) on 30 March 2023 (“the interim orders”). Being an Application for Review, it is a hearing de novo. The de facto husband is the applicant in the review and the de facto wife is the applicant in the substantive matter. As such, in this judgment the parties shall be referred to as the husband and the wife to avoid confusion.
The interim orders subject of the review are:
·Order 1: periodic spousal maintenance to the wife (“the periodic maintenance”); and
·Order 2(d): an interim property payment to the wife to maintain the running costs of the wife’s business B Pty Ltd (“the business funding”).
In response to the husband’s review application, the wife seeks a further interim payment for the purposes of litigation expenses (“the litigation funding”). The parties also proposed that all payments under order 2 be characterised at trial and I will return to that shortly.
BACKGROUND
By way of brief background, the husband is 53 years old and the wife is 44 years old. The parties met in late 2018. The parties are in dispute about the commencement date for the de facto relationship, with the wife asserting it commenced in late 2018 and the husband in late 2019. The husband asserts separation occurred in either January or February 2022 and the wife August 2022. There are no children of the relationship.
The husband is engaged in various roles as a professional and has substantial wealth estimated to be in excess of $30 million. The wife runs the B Pty Ltd business (“the business”). At the time of the hearing it was running at a loss. She has non-superannuation assets of about $220,000. This is largely, if not entirely, as a result of payments made pursuant to the interim orders.
COMPETING PROPOSALS
In terms of the proposals, the husband seeks to vary the interim order made for periodic maintenance to $1,000 per week and to have the business funding payment made pursuant to those orders refunded to him.
The wife seeks periodic maintenance be increased to $3,011 a week. She resists the discharge of the business funding order and the return of that payment. Moreover, the wife seeks a further litigation funding payment in addition to the interim orders, being an additional $284,900. This is opposed by the husband.
As I have already stated, the parties both agreed the payments referred to in order 2 of the interim orders be characterised at trial. However, I note in the case of Hakim v Salim [2022] FedCFamC1A 21, the Full Court determined the primary judge at first instance fell into error in reserving the characterisation of the payment to be as agreed or at the final hearing. Accordingly, any orders for payments that I make will be characterised in accordance with the power that I exercise in each case.
As I was not addressed as to why I should re-make orders 2(a) to (c) under a different head of power, they shall remain characterised pursuant to the interim orders as interim property payments.
MATERIAL RELIED UPON
In terms of the material relied upon, the parties have each filed extensive material. On 7 December 2022 at the interim hearing before the SJR, an order was made that each party file and serve one consolidated supporting affidavit of no longer than 15 pages in length and with no more than five annexures for the interim hearing. The orders provide for outlines of no more than five pages in length.
At this hearing, the wife sought leave to rely on an additional affidavit. This was opposed by the husband and I reserved the question of whether that leave should be granted to this judgment.
Having now reviewed all of the material it is readily apparent that neither party complied with the orders of 7 December 2022. Furthermore, at the hearing for this matter, the husband sought to rely on additional documents contained in a tender bundle.
In light of the husband’s failure to comply with orders regarding the limitations on his own affidavit and case outline, that he was allowed to rely on yet further material by way of tender documents and noting the husband’s counsel did not claim any prejudice from allowing the wife’s reliance on her affidavit, I propose to grant that leave to the wife to rely on the affidavit filed 24 May 2023 and to rely on the submissions based on that material.
PERIODIC MAINTENANCE
Section 90SF of the Family Law Act1975 (Cth) (“the Act”) provides that the Court must apply the principle that a party to a de facto relationship must maintain the other party to the de facto relationship:
(a) Only to the extent that the first mentioned party is reasonably able to do so; and
(b) Only if the second mentioned party is unable to support himself or herself adequately.
There is no doubt in this matter that the husband is reasonably able to pay the maintenance sought by the wife. He has a surplus income on his own Financial Statement of some $66,000 per week. What is in contention is whether the wife is unable to support herself adequately.
In that regard I have taken into account the matters contained in s 90SF(3), although I may not specifically address each one.
The wife currently operates a business which she ran in its current incarnation throughout the relationship. It is common ground this business ran at a loss throughout the relationship and that the husband injected significant funds into it.
The husband says that the funds were initially intended to be an investment and other funds were loans however over time it became clear to him the business was not viable. He now says, essentially, “enough is enough” and it is the wife’s choice to continue to run the business which is destined to fail when she could otherwise be earning an income by way of employment. Further to this, he ought not be required to continue to inject funds into the doomed enterprise.
It was argued for the husband that the wife has various qualifications, which on her own evidence include degrees in primary industry. He says she could use those degrees to obtain employment, that she has had a significant employment history and that she has failed to provide the Court with any evidence of her attempts to obtain such employment. However, I accept the submission for the wife with reference to Elei & Dodt [2018] FamCAFC 92 that failure by the wife to lead evidence of attempts to obtain employment is not necessarily fatal to her application. I also note in that case Ryan J also observed at [20] that the applicant ought:
…not be required to look for work that bore no relationship to the type of work and standard of living she engaged in while the parties lived together.
It is therefore important when assessing whether the wife should be expected to seek outside employment, for the Court to consider the whole of the circumstances.
In this case, the wife has not worked in paid employment since 2011 but rather has been self-employed. The husband has supported the wife in running her business. Indeed, on his case he provided significant funds to assist her to do so. She was entirely reliant upon him for financial support during the relationship and post separation until the husband ceased her access to her credit card in September 2022.
It is evident that as a result of the manner in which the parties conducted their relationship that the wife came to rely upon the husband for support. Nonetheless, the husband now says the Court should draw a line in the sand and the wife should now abandon the business and immediately attempt to find employment.
The wife’s evidence is that despite four years of what appears to be increasing losses, the business is now on the verge of turning around and should make a profit within about 12 months. She attests to a number of recent events in support of that assertion including signing a service agreement with C Law Firm which is annexed to her affidavit. The Court cannot, of course, test that evidence at an interim hearing, however the wife at least has an arguable case that the business will be profitable in the foreseeable future and will ultimately provide her with an income stream.
In all of the circumstances, I do not accept that it is reasonable to expect the wife to immediately abandon the business and attempt to find employment. The wife’s evidence is that if the business is not profitable within her timeframe of about 12 months, then she will abandon it. The strength of any application to extend maintenance beyond that time is a matter for another judicial officer.
Nonetheless, that is not to say that the wife has no capacity to contribute to her own support whilst continuing to run the business. The wife attests in her affidavit filed 18 January 2023 that she is now certified to pursue other employment which are regularly paid positions and she intends to start applying for roles which may provide her with an income of between $40,000 and $70,000 per year.
In addition, she says she will also shortly be certified to apply for roles as a professional which are also regularly paid positions. Despite that evidence in her affidavit filed 18 January 2023, at the time of this hearing there was no further evidence as to any attempts she has made to obtain these paid positions.
I conclude on the wife’s own evidence she has capacity to earn a minimum of $40,000 per year or $769 a week.
Wife’s expenses
I accept that in the circumstances of this case, it is not appropriate to undergo some sort of forensic analysis of the wife’s spending and pursuant to cases such as Foley & Foley [2016] FCWA 68, where the parties are wealthy, the Court should not take a nit-picking approach. I also accept as per Wilson & Wilson (1989) FLC 92-033 that it is appropriate in this case to take a reasonably broad-brush approach. I have also considered the principles as summarised by the Full Court in Brown & Brown [2007] FamCA 151.
In this case, whilst not aiming for parity, the wife’s expenses should be seen in the light of the parties’ previous lifestyle and the husband’s current expenses. In that respect I note the husband’s expenses in Part N of his Financial Statement amount to about $4,500 which does not include his mortgage of about $3,000 per week and other expenses.
Although I do not have the reasons from the interim hearing before the SJR, it seems readily apparent that the SJR accepted the quantum of the wife’s expenses as set out in her Financial Statement filed on 18 January 2023, less the business expenses. Being a hearing de novo, I am, of course, not in any way bound by that. However, without ‘nit-picking’, including attempting to analyse any possible double count for inclusion of the credit card debt, the figures contained in the wife’s January 2023 Financial Statement, in all of the circumstances of this case seem reasonable. Furthermore, those expenses, taking into consideration the parties’ former lifestyle and comparable expenses of the husband do not appear to be excessive.
However, the wife’s evidence is that since filing her Financial Statement in January 2023, her expenses (other than the business expenses) have increased from $2,161 to $3,011. She says in her latest affidavit that this was to reflect the cost of living increases, using her words, “experienced by all Australians” and also includes expenses she had initially deferred. The husband takes issue with a number of those expenses in his Case Summary. He also submits that the wife has not provided any source documents to support her assertions and points out that she was required to put those before the Court under the Rules.
Taking this all into account, I am not satisfied on the evidence before the Court that the wife’s expenses have increased to the extent claimed in such a relatively short period of time and find that the expenses that are reasonably necessary to support the wife are in line with those assessed by the SJR at $2,161 per week.
However, having found that the wife has some capacity to support herself, being at least $769 per week, the order I intend to make and which is otherwise proper in this matter is the husband pay the wife $1,392 per week for 12 months, being expenses assessed at $2,161 less the $769.
LITIGATION FUNDING
Pursuant to the interim orders, the wife received a payment of $138,533.85 as an interim property payment for the purpose of litigation funding. She now seeks a further payment for her legal costs of $284,900.
The husband argued that, as this was only raised on 24 May 2023, the wife required leave to run that application and opposed that leave being granted. In circumstances where the husband did not claim to be disadvantaged, the wife was permitted to pursue that application, and I formally grant leave for her to do so.
There are two sources of power that are relied upon under this heading. They are s 90SM and s 117. Although s 114 was relied upon in the case summary, the wife’s counsel did not pursue the injunctions power at the hearing.
It is well established that the purpose of litigation funding, whether made under s 90SM or s 117, is to level the playing field. I have no difficulty with finding the husband is in a relatively strong position, or an extremely strong position, with respect to being able to pay his legal fees, whilst the wife is not.
Section 90SM
I accept the summary of the principles to be extracted from Strahan & Strahan (2011) FLC 93-466 as set out in the husband’s Case Outline. I also accept the assessment requires a two-stage process. Firstly to consider whether it is appropriate to exercise the power and secondly, if so, to consider how to exercise that power, noting that the Court should act conservatively and that, in the ordinary course of events, it should only exercise a property division once.
In regard to the first step, I accept there is no evidence the wife would be unrepresented if she does not receive the funding. I also agree the evidence of actual costs is of a limited nature, essentially, the costs notice and that the funds sought are not necessarily required at this stage of the proceeding. However I must balance these considerations against the fact that the husband is in a position of strength and that this matter potentially involves complex financial arrangements. I must also consider whether such an order could be reversed at the final hearing.
The husband’s case is that, at final hearing, there be no further adjustment of the parties’ property pursuant to Stanford v Stanford [2012] HCA 52 (“Stanford”). The wife’s case is that there is no reasonable prospect that the husband’s Stanford argument will be successful. Indeed, the wife’s counsel argued that the husband had conceded she had an entitlement, by virtue of an earlier agreement to pay her significant funds, and, therefore, his Stanford argument was doomed to fail. However, as I advised the wife’s counsel in the course of the proceedings, in my view, there are a myriad of reasons a party may agree to pay money during the relationship, post-separation or at an earlier stage in a proceeding, which do not amount to a concession the party has a case. These may be entirely unrelated to the merits of the case and could, for example, be based on emotional reasons. In any event, the husband had not had legal advice and, despite having been involved in previous family law proceedings, may not have understood he could argue there be no division.
The agreement aside, the wife’s case was that she has a very real prospect of securing an order for property settlement which, she says, would be in excess of the interim property payments already made and any further payments she seeks pursuant to this application. It was argued on her behalf that her evidence contains significant contributions made during the relationship and other factors which would support justifying an adjustment under s 90SF(3).
Following the Full Court in Salvage & Fosse [2020] FamCAFC 144, I need not determine whether the wife’s case is strong or persuasive.
The consideration should be whether the case to be raised by the applicant is sufficient in all of the circumstances as to its nature and prospects to justify an interim order.
The wife’s evidence is that her contributions included directly increasing the asset pool through advising the husband in regard to investment decisions, buffering poor decisions and facilitating the husband to obtain lucrative positions. She also attests to assisting the husband with his mental health and alcohol issues, enabling him to continue his financial endeavours and protecting his representation, and says that these contributions were made more arduous as a result of the husband’s alcohol abuse and conduct and also meant she did not pursue valuable commercial opportunities herself.
However, it appears to me there are some apparent difficulties with the wife’s case including that the husband was highly successful prior to meeting her, with assets of some $20 million. In addition, on her case he managed to amass those assets whilst having mental health issues for at least 20 years and alcoholism for at least 10 years.
Further to this, any contributions made by the wife, including others such as the renovations of the Suburb D property, will be considered amongst the myriad of other contributions in this case, including the substantial financial support provided by the husband to the wife during the relationship on a day-to-day basis as well as to her business.
There are also difficulties with the wife’s argument that she is likely to receive a further adjustment at final hearing based on considerations under s 90SF(3). These include her argument that the relationship negatively impacted her earning capacity, because if I accept the wife’s evidence, she expects her business to be profitable within 12 months and attests to anticipating revenue of $200,000.
Consequently, there is a risk that having assessed all of the contributions and the factors under s 90SF(3), the Court dealing with the final hearing may find that the wife’s entitlement has already been satisfied by the funds she has already received, pursuant to orders 2(a), (b) and (c) of the interim orders, and that it is not just and equitable to make any further adjustment.
Therefore, the wife’s application for a further interim property payment to fund her litigation is refused.
Section 117
Under s 117, the Court has power to make costs orders if it considers it is just in the circumstances of the case.
In January 2023 the wife sought a payment for legal fees assessed up and until the completion of the mediation. The wife now seeks funds to cover her until the end of trial as it has now become clearer to her that the matter is unlikely to settle beforehand. She also asserts that the initial assessment of costs to mediation has risen, in any event, including the addition of this hearing.
The wife has filed a costs notice setting out the basis for her costs. It is evidenced from that costs notice that those costs are not based on scale. As was identified by Strum J in Artinos & Artinos [2023] FedCFamC1F 314, the only conclusion to be reached is that the order the wife is seeking is akin to an indemnity costs order. Furthermore, I was not addressed on the costs on scale in order to be able to determine how much of a departure that would be nor were any other submissions made as to why the Court should deviate from the ordinary course and make an order for indemnity costs.
In such circumstances, the Court is unable to determine whether such an order would be just or not, and the wife’s application under that head of power must also fail.
BUSINESS FUNDING
Order 2(d) of the interim orders provided for the wife to receive $127,712 by way of partial property settlement to maintain the running of the business for the next 12 months. The husband’s position is that order ought not to have been made, and those funds should be reimbursed. The wife opposes that order.
Again, I must identify the head of power. The husband says there can only be one, and that is an interim property order. It was argued for the wife in the course of submissions that it could also be spousal maintenance. The counsel for the husband argued it was not proper to amend a position midway through submissions however conceded he was ready to meet the argument.
In terms of any further orders for interim property, I have already determined that there is a risk the Court making the final determination in this matter may find the wife’s entitlement has already been satisfied by the funds she has already received pursuant to the interim orders. This is, of course, just as applicable to the business funding. There does not appear to be any other way in which those funds could be, to use the vernacular, clawed back. Accordingly, in the interests of justice in this case, the wife’s application for business funding under that head of power must also fail.
Section 90SE and 90SF
Finally, turning to the power under s 90SE, it was argued for the husband that the express wording of s 90SE and s 90SF precludes the making of such an order where the money is, effectively, to financially support a company and not the wife herself. However, when considering the precise wording of s 90SF(3)(h), this situation appears to fall squarely within that subsection, namely:
(h) The extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or, otherwise, to obtain an adequate income.
It seems clear that the funds sought are to increase the earning capacity of the wife by enabling her to establish, or in this case, continue to establish herself in a business. Consequently, I am satisfied that I have the power to make this lump sum payment to the wife under s 90SE.
I have already determined it is reasonable, in all of the circumstances, that the wife be able to continue, at least in the short term, to endeavour to see if she can make the business profitable. Having already factored in the wife’s earning capacity for the purpose of her periodic payments, it is clear she is not capable of otherwise funding the business on a weekly basis. Again the husband has the capacity to meet the payment, and, indeed, the payment has already been made.
In terms of the quantum sought, I accept there is limited evidence before the Court, other than the wife’s Financial Statement, and that her assertions as to the business expenses have also increased between November and January without significant explanation. However, I was not specifically addressed on the reasonableness or otherwise of the business expenses figure. It appears the objection was primarily based on the futility of putting more funds, no matter the quantum, into a business which the husband asserts, and which appears on the face of it, to be continuing to make losses and may well be trading insolvent. However, again, the husband seemed content to do so during the relationship.
If I accept the wife’s evidence at its highest, the business now has significant opportunities that were not previously available. In such circumstances, and for all of these reasons, I find that it is proper the wife retain the business funds and that they be characterised as lump sum spousal maintenance. To give effect to this, the order of the SJR will be discharged and remade under the new head of power.
For all of the foregoing reasons, I make the orders as set out above.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the ex-tempore Reasons for Judgment of Judge Jenkins. Associate:
Dated: 20 July 2023
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