KLEARCHOS & KLEARCHOS

[2014] FamCA 1049

FAMILY COURT OF AUSTRALIA

KLEARCHOS & KLEARCHOS [2014] FamCA 1049

FAMILY LAW – COSTS – Interim Costs – Where the wife seeks orders for an interim distribution of $1million or a “dollar by dollar” preliminary costs order to enable her to pay past and anticipated legal costs in the current proceedings – Where the wife makes her application in the alternative under both s 80(1)(h) and s 117 of the Family Law Act 1975 (Cth) – Where the husband opposes the order – Where the wife has been engaged in significant litigation with companies previously associated with the husband – Where the wife has significant outstanding legal fees – Where there is a disparity between the financial circumstances of the wife and those of the husband – Where the husband claims that he does not have the financial capacity to meet the order sought by the wife – Where the husband continues to lead an affluent lifestyle – Where an injustice would occur if the wife was not provided funds to assist her to pay her litigation costs – Where the requirements for the exercise of the Court’s discretion to make an interim costs order pursuant to s 117(2) of the Act are met – Where it is just that an interim costs order be made in favour of the wife on a “dollar by dollar” basis.
FAMILY LAW – SPOUSAL MAINTENANCE – Where the wife seeks an order that the husband pay her interim spousal maintenance in the sum of €10 000 per month – Where the wife has the primary care of the children – Where the wife does not have any capacity to support herself – Where the wife has sold several assets to fund her legal costs – Where the wife does not have any other source of funds – Where the husband had previously paid the wife €10 000 per month – Where the husband reduced his payments to $6000 per month – Where an order is made that the husband pay the wife $AUD10 000 per month.

Family Law Act 1975 (Cth) – s 72(1), s 74(1), s 75, s 79; s 80(h); s 117

Paris King Investments Pty Limited v Rayhill [2006] NSWSC 578
Poletti and Poletti (unreported, Family Court of Australia, 2 March 1990)
Strahan & Strahan (2010) 42 Fam LR 2013
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Zschokke & Zschokke (1996) FLC 92-693; 20 Fam LR 766

APPLICANT: Ms Klearchos

RESPONDENT: Mr Klearchos

FILE NUMBER: SYC 2977 of 2013

DATE DELIVERED: 13 November 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 5 May 2014 and 1 & 2 September 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr White (5 May 2014) and Mr Bell (1 & 2 September 2014)

SOLICITOR FOR THE APPLICANT: Neville & Hourn Legal

COUNSEL FOR THE RESPONDENT: Mr Lloyd, SC

SOLICITOR FOR THE RESPONDENT: Barkus Doolan

Orders

1. That pending further order, the husband pay to the wife by way of spousal maintenance the sum of $AUD10,000 per month, commencing from 1 January 2014.

2. That in addition to the above sum, pursuant to s 117(2) of the Family Law Act 1975 (Cth) the husband pay to the wife such sum as the husband and second, third and fourth respondents (in the substantive proceedings) collectively pay for legal fees on a “dollar by dollar” basis, with payments made monthly.

3. That the sums referred to in order 2 be paid to the wife’s solicitors’ trust account (Neville and Hourn Legal Trust Account), on account of legal costs and outlays anticipated as being incurred by the wife in these proceedings and to be used solely for such purposes.

4. That the above payments be taken into account by the Court in the substantive proceedings in such manner as the Court considers appropriate.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Klearchos & Klearchos has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2977 of 2013

Ms Klearchos

Applicant

And

Mr Klearchos

Respondent

REASONS FOR JUDGMENT

1. These are interlocutory proceedings.

2. The parties are Mr Klearchos and Ms Klearchos.  For convenience I shall refer to them as “the husband” and “the wife”.

3. The wife seeks orders to the following effect.

   (a)That pending further order, the husband pay to her by way of spousal maintenance the sum of 10 000 Euros per month.

   (b)      That in addition to the above sum the husband pay to her:

   (i)       the sum of $1 000 000 by way of interim distribution; or

   (ii)in the alternative, such sum as the husband and second, third and fourth respondents (in the substantive proceedings) collectively pay for legal fees on a “dollar by dollar” basis, with payments made monthly.

   (c)That the sums referred to in paragraph 3(b) above be paid to the wife’s solicitors’ trust account (Neville and Hourn Legal Trust Account), on account of legal costs and outlays anticipated as being incurred by the wife in these proceedings and to be used solely for such purposes,

   (d)That the said sums be taken into account and be appropriately characterised by the trial judge at the final determination of this matter.

   (e)      That the husband pay the wife’s costs of this application.

4. The husband opposes the orders sought.  He seeks an order to the effect that the wife’s application be dismissed and that she pay his costs on the basis that he undertakes to the Court on a without admissions basis and pending further order, to pay an amount of $6000 per calendar month to the wife by the third business day of each month (it being noted that the September payment has been paid).

Background

1. The brief background facts are as follows.

2. The husband was born in 1950 and the wife was born in 1970.  They married in 2000 having commenced cohabitation approximately six months prior thereto.  They separated in August 2010.

3. There are two children of the marriage, B born in 2000 and C born in 2003. 

4. The husband was born in Mediterranean country D and has dual D and Australian citizenship.  The wife is an Australian citizen having been born here.

5. After their marriage the parties moved to live in London and resided there, subject to a period of less than a year living back in Sydney in approximately 2004, until 2006 when they commenced living in southern Europe. 

6. Since the parties’ separation the wife and children have lived in Australia at a home at Suburb G purchased by a company E Pty Limited.  I shall refer to E Pty Ltd again below.  The husband has remained living in southern Europe.  Since separation the husband has made numerous visits to Australia on which occasions he has spent time with the children.

7. On 5 May 2014 I heard an application by the wife for orders that the husband make a preliminary payment to her either pursuant to s 117(2) or s 79(1) of the Family Law Act 1975 (Cth) (“the Act”). This application was in anticipation of a hearing listed for 1 and 2 September 2014 to determine a dispute between the parties about whether the forum for hearing the proceedings should be in Australia or southern European country J.

8. Just prior to my being in a position to publish judgment in the proceedings heard on 5 May 2014, I was notified that the parties had resolved the forum issue in favour of Australia.  I was also informed that the wife wished to preserve the hearing dates of 1 and 2 September 2014 and to use such dates for a hearing of her application for orders that the husband pay her a preliminary payment and interim spousal maintenance.  In these circumstances I declined to deliver judgment and make orders following the 5 May 2014 hearing.  I proceeded to hear the wife’s application on 1 and 2 September 2014.

Preliminary Costs

1. The submissions on behalf of the wife were as follows.

2. The wife seeks orders to assist the funding of her litigation.

3. The wife has been involved in eight interlocutory hearings although several of these related to E Pty Ltd.

4. The wife has become liable for a very high level of legal costs, her total costs being in excess of $636 717 including an unpaid $55 000 from a forensic accountancy firm LL Firm who prepared a financial report for her.  There is outstanding to her solicitors Neville Hourn Legal $299 454.  There is $18 718 yet to be billed as well as money owing to Mr Bell of counsel.  Pearson Family Lawyers previously acted for the wife and she has a liability to them for legal costs and disbursements in the sum of $97 106. 

5. Given the global nature of the matrimonial pool of assets and complex corporate trust structures involved in the proceedings, the wife has engaged a range of professionals.  These include lawyers in both the United Kingdom and Country J, forensic accountants, numerous members of the Senior and Junior Bar, a French interpreter, a Country J law expert and a forensic computer expert. 

6. The Court has power under either s 79 with s 80(h) of the Act or s 117(2) of the Act. An exercise of power under s 79 involves, broadly, two steps as observed by the Full Court in Strahan & Strahan (2010) 42 Fam LR 203 at paragraph 118. The first step is to determine whether to exercise the power before a final hearing. If so determined, the second step involves the exercise of that power. The Full Court said at paragraph 133 that an example of a circumstance where it may be appropriate to exercise the power is where a party requires funds to assist in defraying litigation costs without which funds an injustice may be caused.

7. The husband has and exercises relative financial strength.  He has been able to fund his own legal costs.  The wife’s solicitor has estimated the costs of a two week trial as likely to be between $748 000 and $847 000 inclusive of GST.

8. But it might be premature to order costs for a trial which might not occur for the reason that the parties might be able to arrive at an agreement in relation to the substantive proceedings.  Such an order could be prejudicial to the husband.

9. Accordingly, the Court might consider making an order in an amount less than that sought by the wife and this could be revisited at some future point. 

10. The Court might consider it preferable to make an order pursuant to s 117(2) of the Act particularly if it thought it appropriate to require the husband to borrow money to make a preliminary payment to the wife. All the requirements for such an order as set out in Paris King Investments Pty Limited v Rayhill [2006] NSWSC 578 are satisfied.

11. The husband has the capacity to meet a costs order.

12. The case is complex and not easily prepared.  A “dollar by dollar” order would not cause any hardship to the husband.

13. On the other hand, the submissions on behalf of the husband were as follows. 

14. The amount sought is extraordinarily high. 

15. Nowhere in the wife’s evidence is there shown to have been any attempt to break down the costs associated with the part of proceedings which involves the husband as against those costs of the wife involved in proceedings associated with the administrators of the company E Pty Ltd and other entities. 

16. There has been no analysis of what would appear to be outstanding costs to Pearsons Lawyers.  The wife has not given a full account of how she has funded amounts paid to date to her solicitors. 

17. There is no issue that the Court has power to make an order for a preliminary payment including under s 117(2) of the Act. In its exercise of power under s 117(2) of the Act the Court is required to consider the conduct of the parties. So far as the wife’s conduct in relation to the proceedings is concerned the case seems to be exceptional in terms of the quantum of costs incurred prior to the parties even participating in a financial conciliation conference. The wife engaged accountants in Hong Kong at enormous expense and sought to have the report admitted into the evidence in circumstances where there had been no compliance with the Family Law Rules 2004 (“the Rules”) about expert evidence. It should have been clear to the wife and her representatives from the outset of these proceedings that what should have occurred is that the parties would have engaged a single expert in accordance with the Rules.

18. Such a high level of expenditure has been incurred by the wife in circumstances where the husband has borrowed funds to pay his own legal costs.  There has not even been any attempt by the wife to endeavour to prepare a balance sheet.  While it is conceded that this might be a difficult exercise the husband proposes to enter into orders for appointment of a single expert and he would be borrowing funds to pay that expert.

19. The Court would not exercise its powers pursuant to s 79 of the Act. To make a partial property settlement order there would need to be some analysis of, and identification of, property against which any such order could be made. The wife is unable to point to any property or financial resource against which such an order could be made.

20. The husband has given disclosure in his financial statement.  While matters referred to therein will require some exploration, this is a task which ultimately would best be attended to by the joint expert.

21. The husband does not have any interest in the company E Pty Ltd.

22. There is no basis for a preliminary payment or costs order in circumstances where in a few months time a report will be able to be available from a single expert.  At that time, if necessary, the wife’s application could receive further consideration.  In all the circumstances the appropriate course is to stand over the wife’s application for preliminary payment at least to that point in time. 

The Applicable Law – Preliminary Costs

1. There is no issue that the Court has jurisdiction to make an order such as that sought by the wife.

2. The Full Court said in Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466 as follows at page 85,631:

   79. The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: Blueseas Investments Pty Ltd v Mitchell [1999] FamCA 745; (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).

   80.      In Poletti and Poletti (unreported, Family Court of Australia, 2 March 1990) Nygh J, when describing an application for “interim costs”, referred to the reasons of the Full Court in Wilson and Wilson (1989) FLC 92-033 (“Wilson”) and said it is a “situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case”: see also In the Marriage of Polletti (1990) 15 Fam LR 794 (“Polletti”) at 796 per the Full Court (Ellis, Strauss and Butler JJ). The Full Court in Zschokke at 83,220 made a number of relevant remarks about the “desirability of legal representation for both parties in family law proceedings”.

   And at page 85,633:

   90.      In Zschokke at 83,217 the Full Court said that “whether the matter was determined as an interim property settlement order under s.80(1)(h), or as an interim costs (or security for costs) order under s.117(2), or indeed even a maintenance order”, three matters would all be relevant, namely:

   1.a position of relative financial strength on the part of the respondent;

   2.a capacity on the part of the respondent to meet his or her own litigation costs;

   3.an inability on the part of the applicant to meet his or her litigation costs. 

Discussion

1. As indicated above, the wife makes her application in the alternative under both s 80(1)(h) and s 117 of the Act.In my view, it would be preferable for this Court to exercise its broad powers pursuant to s 117(2) of the Act to make any litigation funding order in favour of the wife, that is, pursuant to the costs power rather than some other power. The husband has asserted consistently that his liabilities exceed the value of his property. This is not clear to the wife or to the Court at this time. One would anticipate that this situation will become much clearer once a single expert has been able to prepare a report about the husband’s financial circumstances.

2. The relevant matters are as set out in s 117(2A) of the Act.

3. The first matter is the financial circumstances of each of the parties. The wife has a very different view about the husband’s financial circumstances from that presented by his financial statement.  She has asserted that on one occasion the husband informed her that his wealth was in the vicinity of $200 000 000 and on another occasion that it was $99 000 000.  He said that she is wildly wrong about these assertions and that his current financial circumstances are as set out in his financial statement referred to below, that is that his liabilities exceed his assets.  I shall refer to the parties’ financial circumstances again below.

4. Neither of the parties is in receipt of Legal Aid.

5. The next matter is the conduct of the parties in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters. 

6. It is fair to say that each of the parties has made some complaint about the conduct of the other in respect of the preparation of the proceedings.  As indicated above, the husband has complained that the wife has incurred an “enormous” level of liability for legal costs particularly at such an early stage of proceedings as indicated above. 

7. As also indicated above, the husband is very critical of the wife having incurred liability in excess of $55 000 for her expert’s report which really is of little assistance in the proceedings. 

8. On the other hand the wife made numerous complaints about what she asserted was a lack of financial disclosure by the husband.

9. I must say that it appears that the wife has incurred a very high level of legal costs to date.  But the husband’s financial circumstances are complex and she has been involved in litigation against companies which have been involved with the parties previously.

10. In my view the other relevant matters pursuant to s 117(2A)(g) are as follows.

11. Firstly, the circumstances referred to by Nygh J in Poletti (above).  That is, that the husband in these proceedings “controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties”.

12. Secondly, the relevant matters referred to by the Full Court in Zschokke also referred to above.  These are a position of relative financial strength on the part of the respondent, a capacity on the part of the respondent to meet his own litigation costs and an inability on the part of the applicant to meet her litigation costs.

13. Taking the last matter first, in my view it has been established clearly that the wife has no capacity to fund her outstanding or further legal costs and disbursements.  I shall refer to this below and it is the case that she has gone into significant debt to pay part of her legal costs and disbursements. She is without a source from which the balance can be paid, let alone any future costs.

14. On the other hand, the husband has been able to meet his own costs of the litigation.  He said that he has only been able to do this by borrowing money.  He has borrowed $100 000 from a friend in Country J which funds were paid to his solicitors.

1. In my view, the wife has an arguable case for substantive financial relief.  There is a marriage of substantial duration which has produced two children.  The parties own property notwithstanding that the husband says that the liabilities exceed the value of the assets.

2. It is the case that the wife’s solicitors appear not to have declined to continue to act for her unless their fees are paid.  But in Strahan it was said (at paragraph 141, page 85,647) that this is not an essential precondition for exercise of the discretion to make an order.

3. In relation to the submission on behalf of the husband that it would be unfair to attribute to him any part of the costs in the litigation between E Pty Ltd and the wife, I note that the husband had been a director of E Pty Ltd during the marriage and until he resigned from this position after the parties separated.  The parties had enjoyed the use of various properties owned by E Pty Ltd during their marriage.  Even after separation, the husband’s influence concerning E Pty Ltd has been such that the wife and children have been able to live in the G property provided to them for this purpose by E Pty Ltd.  I shall refer to E Pty Ltd again below.

4. In my view, the wife meets the criteria for a preliminary costs order if the Court can be satisfied that it would be reasonable to make such an order against the husband.

5. The husband has maintained that he does not have the financial capacity to meet an order in favour of the wife.  I shall consider his financial capacity below.

Spousal Maintenance

1. As indicated above, the wife is seeking an order that pending further order the husband pay to her by way of spousal maintenance the sum of 10 000 Euros per month.  This is the equivalent of approximately $AUD14 256 per month.

The Applicable Law

1. Sub-section 74(1) of the Act provides that in proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with Part VIII of the Act.

2. Sub-sections 75(1) and (2) of the Act require the court to take into account those of the many enumerated matters therein which are relevant.

3. Sub-section 72(1) of the Act provides that a party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

   ·By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   ·By reason of age or physical or mental incapacity for appropriate gainful employment; or

   ·For any other adequate reason

   having regard to any relevant matter referred to in s 75(2).

Discussion

1. There is no issue that the wife has the primary care of the children.  At the time the parties met the wife was working in the media industry for approximately 10 years.  The wife has not worked in paid employment since the birth of the parties’ elder child B in 2000.  She has supported the husband in business and particularly as hostess of his social and networking functions. 

2. In all the circumstances, in my view, the wife does not have any capacity to support herself at this point in time.

3. When the proceedings were before Fowler J in July 2013 his Honour ordered the husband to use his best endeavours to cause E Pty Ltd to pay various expenses associated with the wife and children residing at the company’s G property.  His Honour noted that payment of such expenses was “to be additional to the sum of 10 000 Euros per month paid by the husband to the wife”.  This payment was reduced to AU$8000 per month in October 2013 and then to $6000 per month from April 2014.

4. The wife received a letter from the husband’s solicitors informing her that the reduction was as a consequence of the husband experiencing a substantial deficiency of income as against outgoings on a monthly basis.  It was said that Mr MM of S Company. had made a formal demand against the husband for repayments at the rate of GBP10 000 per month on an outstanding loan.  It was also said that the husband was very concerned by the threat of personal bankruptcy made against him by Mr MM on behalf of S.

5. The husband has also reduced the amounts he previously paid for educational expenses for the children.

6. In the immediate proceedings, it was submitted on behalf of the wife that her application was reasonable in that payment of 10 000 Euros per month would simply restore what the husband had been paying to her before reduction and that what this level of maintenance would achieve would be “keeping the ship afloat”.

7. The wife said that during their marriage she, the husband and the children enjoyed a “very luxurious” lifestyle.  Features of this lifestyle were said to have included the wife having unlimited credit, receipt of expensive gifts including a Cartier watch and furs, use of a farm in New South Wales, an apartment in London, an apartment in southern Europe, a yacht (together with full time captain), marina berth in southern Europe, a villa in France, regular fine dining including the husband hosting expensive lunches and dinners and international travel including first class travel.

8. To celebrate the husband’s 60^th birthday and the wife’s 40^th birthday the husband had available for use by the parties, one of the largest motor yachts in the world. 

9. In addition, the parties employed a full time housekeeper and staff for after school assistance when required.  It was very common for not only the family but also many guests of the husband to dine at fine restaurants.

10. The wife has also had the benefit of being able to live with the children in the property at Suburb G which had been purchased for this purpose by E Pty Ltd since separation.

11. E Pty Ltd had been meeting many of the expenses of the wife and the children including household utilities and the costs of servicing the wife’s motor vehicle.  In April 2014 it ceased paying such costs.

12. To fund legal costs in these proceedings the wife sold the prestige motor vehicle she had in Country J.  She has also applied the following borrowed funds towards her legal costs:

    ·$90 000 from Ms KK

    ·$70 000 from NN Pty Limited

    ·60 000 Euros from a friend.

13. The wife has also sold an item of jewellery which produced $55 000 which she used to repay most of a loan from Mr YY, which money she had applied to payment of legal costs.

14. The wife does not have any other source of funds. 

15. As at April 2014 the wife had a credit card liability of approximately $3635.

16. The wife provided some estimates about what she asserted were her reasonable living expenses.  But these were extraordinarily high and of no assistance in determining a proper level of maintenance.  In the difficult circumstances presented by this case, in my view, all the Court can do is to take a broad view of the standard of living enjoyed by the wife during the marriage which was very high on any account, the standard of living enjoyed by the husband and give consideration in all the circumstances to what is reasonable.

17. While the wife has a residence in Suburb G made available to her and therefore does not have to pay rent, and while the husband pays children’s educational expenses of $4500 per month and $1000 per month for other expenses relating to the children, I accept the wife’s assertion that she cannot make ends meet on a payment of $6000 per month.  After all, this is $1384 per week.

18. In my view, this amount falls far short of what would be required for the wife to have a standard of living that in all the circumstances is reasonable as required by s 75(2)(g) of the Act. As I have said, it is relevant to consider the wife’s standard of living by comparison with that of the husband and as enjoyed by the parties previously.

19. I am unable to undertake a detailed analysis of what would be required by the wife on an item by item basis because the case was not presented in such manner.  But the wife is seeking the equivalent of $14 256 per month which appears to me to be high in all the circumstances.  Yet on the other hand, I accept that $6000 per month is not a proper level of support.  Doing the best I can in these somewhat difficult circumstances, in my view the proper amount of maintenance would be $10 000 per month.

20. The issue then becomes whether the husband is reasonably able to pay this amount.

The Husband’s Financial Circumstances

1. The husband’s financial circumstances are complex.  He has been in control of property in Australia and overseas.  He is a beneficiary of the Klearchos Family Trust the other beneficiaries being his brother Mr ZK and their children.  Mr ZK is the appointor of the Trust.

2. The Trustee of this Trust is a company Q Pty Limited.  The current directors of this company are the husband’s brother Mr ZK and the husband’s accountant Mr HH.  They are also its shareholders.  The husband had been a director and shareholder previously.

3. Q Pty Ltd wholly owns E Pty Ltd.  E Pty Ltd’s directors are Mr ZK and Mr HH.  The husband had been a director and the former company secretary until 31 October 2010 when he resigned.  These companies are parties in the substantive proceedings. 

4. E Pty Ltd owns subsidiary companies GF Pty Limited and R Pty Limited.  It also has an interest in PP Pty Limited. 

5. The financial position of E Pty Ltd has changed significantly since separation.  Whereas the financial report for the company for the financial year ending 30 June 2012 indicated that the company would be able to pay its debts when due and payable, the company is now in administration.  As indicated above, the company owns shares and property in Australia.

6. The husband says that the assets and liabilities of E Pty Ltd and its subsidiaries are as follows:

Assets	$
Suburb G property	8,250,000
Suburb OO property	2,500,000
Sydney CBD property	750,000
Town I farm	3,700,000
Retail arcade, Town QQ	5,000,000
Shares in PP Pty Limited	900,000
GF Pty Ltd loan to RR Partners	4,440,000
DD PLC shares	18,500
E Pty Ltd loan to RR Partners	4,594,111
Share portfolio	130,000
Cars	205,000
Sydney CBD furniture	5,000
_____________
$30,492,611

Liabilities	$
S Group mortgage	9,157,566
RR Partners	87,400
National Australia Bank first mortgage	5,851,033
S Group	2,561,000
S Company	3,638,461
RR Partners	2,016,941
DG Business	4,765,303
_____________
$28,077,704

1. The husband also says that he and the wife own a company, EU Company, which owns a villa in France in which he says there is net equity of approximately 400,000 Euros.

2. The husband also says that he has the following property:

$
1.       Interest in land in Country D	50,000
2.       Funds in financial institutions	112,168
3.       Various investments	3,200,423
4.       Various motor vehicles	90,000
5.       Funds in solicitors’ trust account	70,828
6.       Interest in business RR Partners (The husband says this is a deficiency of 4,438,338)	-4,438,338
7.        Superannuation	3,072
_____________
$-911,847

1. The husband also says that he has the following financial resources:   

$
1.       Flat in London (in which he only has a right to reside until such time as the outstanding liability to S Company is discharged)	2,405,000
2.       The motor yacht “…”, moored in Country CN	1,224,000
3.       Mooring berth in Country CN	612,000
4.       Country J apartment (subject to liabilities to the … Bank and to the S Group)	15,300,000
_____________
$19,541,000

1. The husband had a loan account in E Pty Limited with a value of approximately $2 500 000.  The husband assigned his loan account to S Company and received an initial payment of $500 000.  The husband had borrowed $75 000 from a business associate Mr JJ and this was repaid from the $500 000.  There is a further $2 000 000 still to be paid to the husband subject to him repaying certain debt obligations.  It was submitted that this represents a financial resource available to the husband. 

2. In addition, on 28 November 2013 the company RR Partners, which is owned by the husband, disposed of shares with a value of GBP230 991.  It is not clear to me.

3. The husband also sold a motor vehicle for 90 000 Euros.  The husband also transferred proceeds from a public company share portfolio previously held in the HSBC Bank with a value of approximately 1 650 000 pounds to S Company.

4. The husband says that he does not know the total extent of his liabilities but that these would exceed the value of all his assets, financial resources and superannuation.

5. In relation to the husband’s income, in his financial statement the husband said that this consists of $8930 per week which is derived pursuant to agreements for the provision of services between RR Partners Inc, a private company owned by the husband and two corporations, K Ltd and DD PLC.  The husband is the Executive Chairman of K Ltd.

6. In addition, the husband said that the business expenses incurred by him on behalf of these corporations are either paid directly by them or he is reimbursed for amounts paid by him for such expenses.

7. The husband said that his weekly personal expenditure, including funds paid to the wife for the support of her and the children, much of which is for mortgage and loan repayments, is a total of $21,085. This is a deficiency of $12,155 per week.

8. The husband also has signatory rights in respect of accounts for his company RR Partners Inc and E Pty Limited although the latter company is now in administration.

9. It is impossible for the wife to test the husband’s assertions about his financial circumstances at this still early stage of the proceedings. But a number of matters are clear.  The husband has conducted business apparently successfully over the entirety of the parties’ marriage.  The husband was able to fund an apparently very affluent lifestyle for himself, the wife and their children during their marriage.  The husband appears still to be able to enjoy some of the hallmarks of such a lifestyle, such as first class international travel. He is able to influence the directors of E Pty Ltd to continue to provide benefits for the wife and the children. On his own account he has been able to persuade various corporations as well as personal friends to extend him credit. As indicated, he has been able to pay his own legal costs.

Conclusion

1. In all the circumstances, I find it more probable than not that the husband would be able to arrange his admittedly complex financial circumstances in such a manner as to enable him to pay the wife interim costs and interim spousal maintenance in an appropriate amount.  His assertions about his relatively impoverished state stand in marked contrast against the affluent lifestyle he continues to enjoy.  And in all the circumstances as I have expressed them to be above, in my view it would be just for him to be required to do so, even if this meant that he borrowed funds to do so.  There would be nothing new about the husband borrowing money because on his own evidence he has a demonstrated capacity to borrow considerable amounts for business purposes.

Order

1. Accordingly, in my view, it is just in all the circumstances that an interim costs order be made.  This will have the effect of putting the wife in funds to enable “a more level playing field” for her in her litigation against the husband.

2. In addition in my view an interim spousal maintenance order requiring the husband to pay to the wife pending further order the sum of $10 000 per month payable as from 1 January 2014 is proper.  This amount has been determined on the basis that the husband will continue to pay the children’s educational costs in the amount of $5500 per month.

I certify that the preceding one hundred (100) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 13 November 2014.

Associate:     

Date:              13 November 2014