Kidd & Kidd
[2013] FCCA 684
•28 June 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KIDD & KIDD | [2013] FCCA 684 |
| Catchwords: PRACTICE AND PROCEDURE – Observations on the lack of necessity for compliance checks in the Federal Circuit Court – practitioners should not expect to be “spoon-fed”. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79, 79A, 80, 121 |
| Strahan & Strahan (Interim Property Orders) [2009] FamCAFC 166; (2009) 241 FLR 1; (2011) FLC 93-466 |
| Applicant: | MR KIDD |
| Respondent: | MS KIDD |
| File Number: | SYC 5925 of 2012 |
| Judgment of: | Judge Scarlett |
| Hearing date: | 17 June 2013 |
| Date of Last Submission: | 17 June 2013 |
| Delivered at: | Sydney |
| Delivered on: | 28 June 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gould |
| Solicitors for the Applicant: | York Family Law |
| Counsel for the Respondent: | Mr Lloyd SC |
| Solicitors for the Respondent: | Reid Family Lawyers |
ORDERS
UNTIL FURTHER ORDER
The parties must forthwith do all things and sign all necessary documents and give all authorisations to cause the sum of $95,000.00 to be released to the husband from the account that is in the name of the Respondent wife and which holds the proceeds of sale of the parties’ former matrimonial home being an account with (omitted) Bank account number (omitted) such sum to be paid into or a bank cheque made payable to “York Law – Law Practice Trust Account”.
The Response to an Application in a Case filed on 2 May 2013 is dismissed.
Any application for costs must be made within twenty-eight (28) days from the date of these orders by way of a written submission setting out the amount of costs sought and the basis upon which an order for costs is claimed and any submission in opposition to the application for costs is to be filed and served within a further period of fourteen (14) days.
IT IS NOTED that publication of this judgment under the pseudonym Kidd & Kidd is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 5925 of 2012
| MR KIDD |
Applicant
And
| MS KIDD |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the husband for an interim distribution from the proceeds of sale of the former matrimonial home. It is opposed by the wife, who is the Applicant in substantive proceedings seeking parenting and property orders.
In his Amended Application in a Case filed on 13 June 2013, the husband seeks the following orders:
1. That the parties forthwith do all things and sign all necessary documents and give all authorisations to cause the following sums to be released from the account that is in the name of the wife and which holds the proceeds of sale of the parties’ former matrimonial home being an account with (omitted) Bank account number (omitted):
1.1 To the wife the sum of $50,000; and
1.2 To the husband the sum of $110,000 with this sum to be paid into or the bank cheque be made payable to “York Law – Law Practice Trust Account.”
2. That the Husband be granted leave to rely upon the affidavit and financial statement filed contemporaneously with this application.
3. That leave be granted to serve short notice of this application.
4. That the Wife pay the Husband’s costs of an incidental to this Application.
The wife’s Response initially sought a number of injunctive orders, but Senior Counsel for the wife told the Court that the only order now sought was the dismissal of the husband’s Application.
Background
The parties were married on (omitted) 1997 and separated on (omitted) 2012, when the husband left the matrimonial home.
There are three children, two girls and a boy, who live primarily with their mother. The girls were born on (omitted) 1999, and (omitted) 2005, which makes them 13 and 8 years old. The parties’ son was born on (omitted) 2001, so he is 11 years old.
The parties have sold the former matrimonial home and the net proceeds, amounting to approximately $1,499,000.00, have been placed in an interest bearing account. The wife is applying the income towards the rent on her current accommodation.
The wife commenced proceedings for parenting and property orders on 4 October 2012. The Application included an application for permission of the Court to relocate with the children to Brisbane. Senior Counsel for the wife has now informed the Court that his client no longer seeks to relocate.
The parties attended a Child Dispute Conference on 24 January 2013. No agreement was reached.
The parties attended a Conciliation Conference with a Registrar of the Court on 18 March 2013. Again, no resolution was reached.
The Current Application
The husband seeks an order releasing some of the funds to the parties:
a)$50,000.00 to the wife; and
b)$110,000.00 to him.
The wife does not want the funds to be released, as they are in an account earning interest, which she uses to pay the rent for herself and the children.
The husband wants the release of $110,000.00 to him to meet his legal costs of the forthcoming proceedings. Whilst he has previously had the assistance of a barrister on a direct brief, he has now instructed a firm of solicitors to act for him. His solicitor, Mr Wahab, has sworn an affidavit on 13 June 2013 in which he sets out his calculation of the necessary costs required for a defended hearing, which he anticipates would take not less than four days.
In his affidavit, Mr Wahab deposes:
I estimate that the hearing time in this matter will be not less than four days and I am of the view that there are certain complexities in the matter and in particular the parenting matter which would make this matter complex and should be transferred to the Family court. However, given that I have only just recently started acting for Mr Kidd, I reserve my client’s rights to make an Application in due course in relation to the transfer of the proceedings to the Family Court.[1]
[1] Affidavit of N. Wahab 13.6.2013 at paragraph [7]
In paragraph [8] of his affidavit, Mr Wahab sets out in detail his estimate of fees, based on his assumption that the final hearing will proceed for four days. His estimate includes:
a)Interim hearing for this Application $5,000.00
b)Preparation for final hearing (40 hours): $22,000.00
c)A further preparation for final hearing (5 hours): $2,750.00
d)Appearance at compliance check (2 hours) $1,100.00
e)Conferences $2,200.00
f)Attendance at final hearing (4 days) $17,600.00
g)Reviewing and settling Case Outline Document $1,100.00
h)Other work to get ready for hearing (25 hours) $13,750.00
i)Counsel’s fees for trial (6 days) $39,930.00
j)Conduct money, service fees, photocopying $4,400.00
Total$109,830.00
The wife opposes the Application.
Submissions
Counsel for the husband, Mr Gould, submitted that, consistent with the decision of the Full Court of the Family Court in Steicke[2], the husband seeks in effect a share of monies which the Court will find to be his in order to prosecute his applications before the Court. He submitted that it is almost inconceivable that the husband will not receive at least $110,000.00 of the monies held on trust for the parties. The husband is seeking approximately 7.3% of the liquid funds.
[2] [2009] FamCAFC 166
The superannuation asset pool includes the husband’s superannuation, estimated at about $1,212,586.00, and the wife’s superannuation, which the wife deposes in her affidavit of 2 October 2012 to be $103,089.00.[3] Mr Gould submitted that the husband was seeking by way of property orders that 60% of the assets should go to the wife and that there should be a superannuation splitting order under s. 90MT of the Family Law Act. It would hardly be just and equitable for a Court to order that the wife should receive the entire liquid asset, namely the amount of approximately $1,499, 000.00 consisting of the net proceeds of the sale of the home.
[3] Affidavit of Ms Kidd 2.10.2012 at paragraph [30]
In any event, even though the wife is currently using the interest on the proceeds to pay her rent, it is not an issue that the rent for her current accommodation is about $450.00 per week less than it was.
Senior Counsel for the wife, Mr Lloyd SC, told the Court that although matters of this type were rarely defended, this is not such a case. His submission was that, to be successful, the husband would need to show that:
a)There is a likelihood of an order being made in the husband’s favour equal to or more than the amount sought;
b)That there would be no prejudice to the wife if such an order were made; and
c)That there had been a full and complete financial disclosure.
The submission is that none of those conditions has been met. When the parties sold their house, there was an agreement that the net proceeds were to be utilised so that the interest was used to pay for the accommodation of the wife and the parties’ three children, who live with her.
Mr Lloyd submitted that the husband had failed to show a likelihood that he would receive any proportion of those funds currently on deposit.
The husband is a (omitted) with (omitted) who earns over $6,000.00 per week. It is inconceivable that the wife would receive less than 55% of the total pool. The parties have three children, all of whom live with the wife. She is the only contender for the residence of the children. An adjustment under s. 75(2) of the Family Law Act 1975 (Cth) would be likely to result in her receiving in excess of 55%, because of the disparity in earning capacity.
Further, it is submitted that the husband has not made a full and frank disclosure of his financial situation. In paragraph [31] of the husband’s affidavit dated 10 June 2013 he refers to having sold some shares to help pay legal fees. He paid legal fees to a barrister of $10,000.00 on 1 May 2013 but still owes the barrister approximately $17,000.00.
The husband claims to have no borrowing capacity but Mr Wahab deposed in his affidavit that the husband deposited the sum of $10,000.00 into his firm’s trust account on or about 12 June 2013. He has now paid the other $17,000.00 odd owed to his barrister. This money apparently came from some back pay he received from his employer, which answers his assertion that he has no financial resources available. The receipt of this money is not recorded in any affidavit.
If any money were to be deducted from the amount of money held on deposit, the amount of interest which the wife would receive would fall and, therefore, she would be short of money to pay the rent.
Interestingly, Mr Lloyd submitted that, in any event, the husband does not need the sum of $110,000.00. There is now no real issue about parenting and, consequently, there will be no need for a report to be prepared. There is no complication in relation to the issue of residence and the wife has now abandoned her relocation application.
The property proceedings, he submitted, will be relatively simple. There is no issue of valuation.
In his view, there will be no likelihood that the final hearing of the matter could not be contained within four hearing days or less and a transfer to the Family Court would not be required.
Thus, the husband will not require the amount of $110,000.00 to cover his reasonable legal costs.
The relative lack of complexity was such, Mr Lloyd submitted, that the property side of the matter, at least, could “almost be done on submissions”.
In reply, counsel for the husband told the Court that the money that the husband had received from his employer by way of back pay had only been received very recently. Hence, there was no failure to make a full and complete financial disclosure and the husband had come to the court with “clean hands”.
The Law to be Applied
Counsel for the husband referred the Court to the decision of the Full Court of the Family Court known as Strahan & Strahan (Interim Property Orders). [4] That case dealt with an application for an interim property order to put her in funds to enable her to meet her legal costs of continuing the litigation in which the parties were involved.
[4] [2009] FamCAFC 166; (2009) 241 FLR 1; (2011) FLC 93-466
The principles which apply are that:
132. …(W)hen considering whether to exercise the power under s. 79 and s. 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power.
133. … Another example is where, as in this case, one party requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.[5]
[5] Ibid at [132]-[133] per Boland and O’Ryan JJ
It was submitted in that case that it is relevant to consider whether an order would give the applicant “more than they would be indubitably entitled to on a final hearing” or alternatively “would it give them so much that it could not be adjusted on a final hearing?” (Strahan at [136]).
Their Honours said:
We accept the submission and observe that this matter is relevant because the discretion conferred by the power in s 79 is to make such order as the Court considers appropriate provided it is just and equitable to make the order in circumstances where the power will not be exhausted by the interim order…(T)he interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal.[6]
[6] Ibid at [136]
Once the Court proceeds to exercise the power in s 79 of the Act, it is required to undertake consideration of the matters in s 79(4) including by reference to s 79(4)(e) the matters in s 75(2) so far as they are relevant. Consideration of such matters may be brief.
Further, it was held that an applicant should have at least an arguable case for substantive relief which deserves to be heard. There may be need for evidence of the applicant’s likely costs of litigation, but it is not an essential precondition that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis.
It was also held by Boland and O’Ryan JJ at [146] that if there is any concern about the way in which the litigation is conducted, that can properly be addressed through procedural directions. The proper way is not to limit the available funds of one of the parties and leave the party in control of the funds to spend such funds at their entire discretion.
Conclusions
In this case, although it is clear that the husband has a far greater earning capacity than the wife, he does not have access to the funds necessary to provide his lawyers with the wherewithal to manage his parenting and property litigation. In the interests of justice, the husband needs to have access to a lump sum of money in order to continue the litigation.
It is certainly not the case that the amount sought by the husband would be more than he would expect to receive at a final hearing. Whilst the wife opposes any order that would touch the funds held on deposit that are earning interest that goes to her for the purpose of paying her rent, I am not satisfied that the situation is so crucial that any diminution of the amount currently held would cause her hardship so that she could not continue to meet her rental payments.
As Mr Gould submits, the amount of $110,000.00 represents only about 7.3%[7] of the liquid funds. The likelihood that a court would order at a final hearing that the husband should receive none of that money is perhaps not high. The current arrangement seems to be rather ad hoc and it is presumed that more structured and permanent arrangements would be proffered to the Court (whichever Court it may be) at a final hearing.
[7] It is about 7.34%
One of the difficulties here is that there is no agreement between the parties as to whether the substantive application should stay in this Court or be transferred to the Family Court. It is certainly the case that the Federal Court is the court more suited for shorter and less complex matters, whilst matters of greater length and complexity should more properly be heard in the Family Court.
The Protocol for the Division of Work between the Family Court of Australia and the Federal Circuit Court of Australia provides that a matter should ordinarily be heard in the Family Court of Australia if judicial resources permit:
8. If the matter proceeds to a final hearing, it is likely it would take in excess of four days of hearing time.
The husband’s application appears to be predicated upon the assumption that the parenting and property matters between the parties may take in excess of four days of hearing time. The estimate of costs certainly appears to be based on that eventuality. However, the husband reserves his rights to make an application for transfer to the Family Court in due course.
By comparison, Senior Counsel for the wife submits that the matter lacks complexity and the need for a lengthy hearing, which are the preconditions for a transfer to the Family Court. The advice given by Senior Counsel that the wife no longer pursues her relocation application came as news to the Court, although the husband may already have been aware of it.
If it is the case that the parenting proceedings do not call into question with whom the children should live, bit only the amount of time that they should spend with their father, then the parenting proceedings by themselves would not appear to require more than a couple of days’ hearing time. Such matters are routinely heard in this Court. Whether or not a report in the nature of a Family Report is required is another matter, but if a report were to be required, it seems to me that the parties would have the financial resources available to them to obtain their own Report rather than waiting for a Family Report to be ordered through the Court.
It is perhaps with some scepticism that I asked Senior Counsel for the mother why, if the parenting issue was now so uncomplicated, why had it not been resolved. His reply was that that was a good question, but neither he nor Mr Gould appeared to have the answer.
It would certainly be to the parties’ benefit, not to mention the more important consideration of the best interests of the children, if the parties were able to apply their minds to the question of resolution of the parenting issues between them.
Senior Counsel for the mother also pointed out that there are no valuation issues in the property proceedings and their resolution, even if the matter could not be heard on purely on submissions, would be unlikely to be lengthy.
At this stage, as there is no application to transfer the proceedings to the Family Court and no information that would lead to a transfer of the Court’s own motion, the question of the estimated costs of the proceedings should be considered on the basis that the proceedings will remain in this Court and will not exceed four days of hearing time.
As was said in Strahan, there must be a consideration of the matters under s.79(4) of the Act, including the matters in s.75(2). This consideration can be brief. In my view, it would be inappropriate for the Court to go into the minutiae of the evidence to be adduced but should necessarily confine itself to broad generalities. It must be quite clear that the Court is not in any way attempting to prejudge the case, as that is a matter for evidence and submissions at a final hearing.
It is uncontroversial that the parties were married in October 1997 and separated in March 2012, a period of over fourteen years. The husband’s income was the greater of the two, as he is and was an (omitted). There are three children of the marriage and the evidence would appear to show that the wife made a greater contribution as mother and homemaker. The children will remain living with her but will spend time with their father. The husband will retain his earning capacity. He is aged 52 years and apparently in good health.
Taking all of those matters into account, it is hard not to agree with the submission by Senior Counsel for the wife that her entitlement is likely to exceed 55% of the asset pool.
It does not necessarily follow, however, that the property proceedings would necessarily lead to orders that the husband were to retain his superannuation untouched and the wife would retain all of the proceeds of sale of the former matrimonial home. Such an outcome appears to be so simple as to be simplistic, and, as Mr Gould submitted, the Court would need to be satisfied that such an outcome was just and equitable. That may be the case, but I would only be able to make such a decision after hearing the evidence and submissions.
If the Court were to be satisfied that a lump sum payment should be made to the husband by way of an interim property distribution, with a view to assisting him to fund his litigation, it would have to be such that such a sum was not one that would give the husband more than he was indubitably entitled to on a final hearing and must be capable of variation or reversal at any time without resort to s.79A or appeal.
I am satisfied that in the interests of justice it is appropriate to exercise the Court’s power under s.79 and s.80(1)(h) to make an interim property order in favour of the husband.
That said, it does not necessarily follow that the husband should receive the full amount that he claims. It is clear from his solicitor’s affidavit that the estimate of costs is based on a four day hearing in the Family Court. In my view, the costs should only be considered on the basis that the matter remains in this Court, which means that it will necessarily be confined to a final hearing that is contained within four days.
It appears to me that the husband’s estimate of costs is based on a rather generous scale. I am not aware whether counsel charge less per day to appear in this Court than they do to appear in the Family Court.
I note that an estimate of $1,100.00 is given for an “Appearance at compliance check (2 hours)”. It is certainly not my practice to conduct compliance checks in this Court, whether in this jurisdiction or the Court’s general federal law jurisdiction. Where parties are represented by competent and experienced practitioners, as these parties are, my view is that the Court makes directions and the practitioners abide by them. If parties fail to comply with the Court’s directions, then their case will suffer and the Court may well impose appropriate sanctions, which may include an order for costs. Practitioners should not expect to be “spoon-fed” in this Court.
It may, of course, be quite appropriate for the Family Court to conduct compliance checks, but that Court is normally dealing with matters of greater length and complexity than this Court does.
I note with interest that the husband’s solicitor estimates that an amount of $5,000.00 is required for an appearance “at interim hearing in relation to this application”. However, Mr Wahab deposes at paragraph [6] of his affidavit that:
On or about 12 June 2013 Mr Kidd deposited the sum of $10,000.00 into York’s Trust Account on account of costs and disbursements including Counsel’s fees in relation to the appearance at Court on 17 June 2013.[8]
[8] Affidavit of N. Wahab 13.6.2013 at [6]
It appears that there may have been an inadvertent double counting and the husband’s solicitors have already been put in funds for this Application. Consequently, they will not need another $5,000.00.
Again, there appear to be two entries for preparation for final hearing, one seeking $22,000.00 for 40 hours work and another, without explanation, seeking another $2,750.00 for another 5 hours work. I cannot see why this second unexplained preparation is at all necessary.
I am also of the view that the estimate of the relative lack of complexity of the proceedings given by Senior Counsel for the wife does not accord with the relatively large amount of $13,750.00 required for “other work” necessary to get this matter ready for hearing, even if neither the parenting nor the property matters should settle beforehand. This figure appears to me to be based on the amount of work required to prepare more complex matters for hearing in the Family Court.
It is not my intention to attempt to control the conduct of the husband’s case in this Court by denying the necessary funds. However, in my view the husband is unlikely to require the sum of $109,830.00 to cover his anticipated litigation costs.
I propose to make an order that a sum of $95,000.00 should be released to him. As it appears clear that the wife does not wish any sum to be paid out of the funds held in the (omitted) Bank account to her, I will not order the payment of $50,000.00.
It follows that the husband’s Application in a Case has been successful and the Response to the Application in a Case filed on 2 May 2013 will be dismissed.
Costs
The husband in his Application in a Case seeks an order for costs. If he wishes to pursue that application, he will need to file and serve a written submission in support of that application within 28 days. I will allow another 14 days for any submission in reply.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Judge Scarlett
Date: 28 June 2013