Malloy & Stopford Malloy

[2019] FamCA 986

FAMILY COURT OF AUSTRALIA

MALLOY & STOPFORD MALLOY [2019] FamCA 986

FAMILY LAW – PROPERTY – Where the wife asserts that there are unpaid present entitlements due to be paid to the husband as a beneficiary under a number of trusts of which some of the third respondents’ companies are trustees – Where the wife seeks to identify the entities that presently hold the unpaid present entitlements – Where the husband is in arrears for spouse maintenance payments to the wife – Where orders were made by Bryant CJ to appoint receivers – Where from those orders the father appealed – Where the Full Court found that the enforcement orders appointing receivers should not have been made – Where the receivers seek an order that the husband pay their fees – Where established principle that receivers are entitled to their fees from the assets under the receivership – Where the court is satisfied that the effect of the Full Court’s orders is not to disentitle the receivers from remuneration for their work – Where the husband seeks that the wife indemnify him for any sum recovered in respect of the receivers’ fees – Where the court is satisfied that r 20.51 does not provide a sufficient basis to order the wife to be made responsible for the receivers’ remuneration – Order that the husband pay the fees and costs of the receivers – Whether a receiver should be appointed – Where Malloy and Ors & Stopford Malloy (2017) FLC 93-804 applied – Where the court declines to appoint receivers – Where the wife seeks a dollar-for-dollar order – Where disparity between the parties’ financial positions – Where merit in the wife’s case – Order for litigation funding order

Acts Interpretation Act 1901 (Cth) s 13
Evidence Act1995 (Cth) s 75
Family Law Act 1975 (Cth) (1975) ss 80, 83 and 117
Legislation Act 2003 (Cth) s 13
Family Law Rules 2004 (Cth) rr 1.12, 5.09, 9.08, 15.52, 20.47 and 20.51

Barnes v Addy (1874) LR 9 ChApp 244
Battenberg v Union Club (2005) 215 ALR 696
Boehm v Goodall [1911] 1 Ch 155
Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220; [1935] HCA 45
D Pty Ltd and Ors & Sadler and Ors (2016) FLC 93-736; [2016] FamCAFC 187
Fuller and Anor & Sadler and Anor (2017) 56 Fam LR 495; [2017] FamCA 243
Harman v Home Department State Secretary [1983] 1 AC 280
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
Kachmarik & Gebel [2019] FamCAFC 224
Malloy and Ors & Stopford Malloy (2017) FLC 93-804; [2017] FamCAFC 204
Mellor v Mellor [1992] 1 WLR 517
National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386
Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 5 NSWLR 227
Paris King Investments Pty Ltd v Rahill [2006] NSWSC 578
Re Application of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25
Sinclair v Glatt & Ors [2009] EWCA Civ 176
Strahan & Strahan (Interim property orders) (2011) FLC 93-466; [2009] FamCAFC 166
UBS AG v Tyne [2018] 92 ALJR 968; [2018] HCA 34
Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590; [1981] HCA 13
Zschokke & Zschokke (1996) FLC 92-693; [1996] FamCA 79

APPLICANT: Mr Malloy

FIRST RESPONDENT: Ms Stopford Malloy

SECOND RESPONDENT: Mr Q Malloy

THIRD RESPONDENT: The Malloy Group

FILE NUMBER: ADC 2595 of 2015

DATE DELIVERED: 13 December 2019

PLACE DELIVERED: Townsville

PLACE HEARD: Adelaide, Cairns (by video link to Adelaide) and Townsville by (Video link to Adelaide)

JUDGMENT OF: Tree J

HEARING DATES: 6 December 2018, 5 and 11 April 2019, and 30 May 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Wells QC and Mr McGinn

SOLICITORS FOR THE APPLICANT: Piper Alderman

COUNSEL FOR THE RESPONDENT: Mr Whitington QC, Mr Richards, and Mr Bullock

SOLICITORS FOR THE RESPONDENT: Howe Jenkin

COUNSEL FOR SUBPOENAED COMPANIES: Mr Harris QC and Ms Kari

SOLICITORS FOR SUBPOENAED COMPANIES:	Barnes Brinsley Shaw Lawyers
SOLICITORS FOR THE RECEIVERS:	Crawford Legal

Orders

Arising from Application in a Case filed 16 November 2017

1. The Receivers are granted leave to intervene in this Action as a party.

2. The Receivers’ remuneration for acting as joint and several receivers of the income and the property of the Respondent Husband pursuant to the orders made in this Honourable Court on 5 September 2016 (Orders of Appointment) be approved in the sum of $34,640.93 including GST.

3. The Receivers’ expenses and legal costs for acting as Court appointed joint and several receivers pursuant to the Orders of Appointment be approved as follows:

   3.1expenses in the sum of $644.73 including GST; and

   3.2legal costs for acting as Court appointed joint and several receivers in the sum of $15,093.14 including GST.

   being a total of $15,737.14 (including GST).

4. A declaration that the Receivers are entitled to be indemnified from the property of the Respondent Husband in respect of their remuneration, expenses and costs.

5. A declaration that the Receivers have a lien over the property of the Respondent Husband as security for payment of their remuneration and proper expenses, together with costs of and incidental to the Application in a Case filed by the Receivers on 16 November 2017 in the Action and of the reasonable costs and expenses of enforcing their right of indemnity.

6. That otherwise the Application in a Case filed 16 November 2017 and Amended Response filed 19 July 2018 be dismissed.

Arising from Application in a Case filed 11 July 2017

1. That the trustees of the Malloy Trust and the FF Management Trust produce to the wife’s solicitors un-redacted versions of their financial accounts as previously provided in a redacted form (“the accounts”).

2. That the publication or inspection of the accounts be restricted only to the wife’s legal advisors from time to time, and any expert accountant retained by her solicitors.

3. That otherwise the Applications in a Case filed 11 July 2017 and 2 November 2017 be dismissed.

Arising from Application in a Case (for enforcement) filed 21 September 2018

1. The wife’s Application in a Case filed 2 May 2019 be dismissed.

2. That the husband do all things and execute all documents necessary to cause to be delivered up to the wife’s solicitors:

   11.1the husband’s Rolex watch;

   11.2the husband’s white gold and diamond wedding ring; and

   11.3all and any documents to permit the wife to sell the said watch and ring within fourteen (14) days and so cause the net proceeds of each of such sales to be applied in respect to the arrears of spouse maintenance owing to the wife.

3. That in the event that the husband fails to deliver up or cause to be delivered up the said watch and/or ring within fourteen (14) days, the husband, in the event of an insurable event (such as, but not limited to, loss, damage, or theft) having occurred or having likely to have occurred, then shall execute all documents and do all things necessary to cause an insurance claim to be made in respect of the said watch and/or ring and to case the net proceeds of such claim to be paid to the wife in respect of the arrears. 

4. That the husband:

   (a)Attend an enforcement hearing to answer questions on a date to be fixed by this Honourable Court; and

   (b)The husband make, file and serve upon the wife at least seven (7) days before the time fixed for the enforcement hearing, as fixed pursuant to paragraph 13(a) herein, a financial statement setting out the husband’s financial circumstances.

5. That otherwise the wife’s Application in a Case filed 21 September 2018 (seeking enforcement) be dismissed.

6. That the husband’s Response to Application in a Case filed 12 December 2018 be dismissed.

Arising Application in a Case (for litigation funding) filed 21 September 2018

1. Pursuant to s 117 of the Family Law Act 1975 (Cth), from the date of these orders and within seven (7) days after the payment by or on behalf of the husband any monies in payment of accounts:

   16.1rendered by solicitors or counsel for the husband in connection with these proceedings;

   16.2rendered by accountants engaged by the husband or the solicitors for the husband, or on his or their behalf, to value or express an opinion or comment on the interest of the husband and/or the wife in any business, company, trust or entity or the husband’s income or loan accounts or unpaid present entitlements of the husband or to examine any document for the purposes of these proceedings; and

   16.3rendered by any expert engaged by the husband or the solicitors for the husband, to report on the interest the husband has in any business, company, trust or entity in which he has an interest or to express an opinion or comment on the interest of the husband and/or the wife in any business, company or trust or entity or the husband’s income or loan accounts or unpaid present entitlements of the husband or of any associated entity or examine any document for the purposes of these proceedings;

   the husband pay or cause to be paid the same amount/s to the trust account of the solicitors for the wife, to be applied to her legal costs and expenses in connection with these proceedings.

2. Within twenty-four (24) hours after the payment by or on behalf of the husband of any amount/s referred to in order 16, the husband cause to be given to the wife’s solicitors a memorandum stating the amount or amounts so paid to the solicitors or accountants or expert/s.

3. The husband instruct his solicitor that all monies paid to them including on his behalf, as referred to in order 16, should be held in trust by them and not applied in payment of any outstanding legal fees until such time as the same amount has been paid by or on behalf of the husband to the solicitors for the wife on the court record from time to time in these proceedings.

4. In the event that the payment to the wife referred to in Order 16 is not made within seven (7) days thereafter, the husband is to instruct his solicitor to pay 50 per cent of whatever amounts have been received by them (as referred to in order 18 and held by them in trust) to the solicitors for the wife on the court record from time to time in these proceedings.

5. That the wife instruct her solicitor that the amounts paid, or caused to be paid by the husband to the solicitors for the wife pursuant to the preceding orders be applied by the solicitors for the wife in payment of the legal costs and disbursements incurred or to be incurred by the wife in the conduct of these proceedings, including but not limited to the reasonable costs and disbursements:

   20.1rendered by the solicitors or counsel for the wife;

   20.2rendered by accountants (engaged by the wife or the solicitors for the wife), to value the interests of the husband in any business, company, trust or entity or comment upon the husband’s income, loans, or unpaid present entitlements; or

   20.3rendered by valuers (engaged by the wife or the solicitors for the wife) to report on and value the real and personal property relevant in these proceedings and the income and loan accounts or unpaid present entitlements of the husband relevant in these proceedings.

6. The question of how payment of costs to the wife pursuant to these orders are to be treated at the final hearing be a matter for determination by the trial judge.

7. That otherwise the wife’s Application in a Case filed 21 September 2018 (seeking litigation funding) and the husband’s Response filed 12 December 2018 be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE AND CAIRNS AND TOWNSVILLE

FILE NUMBER: ADC 2595 of 2015

MR MALLOY

Applicant

And

MS STOPFORD MALLOY

First Respondent

And

MR Q MALLOY

Second Respondent

And

THE MALLOY GROUP

Third Respondent

REASONS FOR JUDGMENT

INTRODUCTION  

1. This litigation is amongst the most complex in this court.  It involves an application for property settlement between Ms Stopford Malloy (“the wife”) and Mr Malloy (“the husband”). Also parties to the proceedings are the husband’s father, and no less than 48 companies which, by way of shorthand, are collectively referred to as “the Malloy Group.”  However I should make it plain that those additional parties were only joined on 11 April 2019, a time subsequent to the hearing of some of the applications from which this judgment arises.

2. It is said that Mr Malloy Senior is a very wealthy man.  On the other hand, the husband claims to have very few assets.  The wife does not accept that, and believes that assets of the husband are held by the other respondents.

3. At the heart of the wife’s case, are unpaid present entitlements (“UPEs”) said to be due and payable to the husband as a beneficiary under a number of trusts, of which some of the Malloy Group companies are trustees.  She says that, to the extent that those trustees no longer have funds to satisfy the payment of those UPEs, their dealing with those funds is a traceable breach of trust, and to that end, seeks to identify the entities which presently hold them, so that they may be recovered, presumably now that the Malloy Group have been joined as parties, in these proceedings themselves.

4. The proceedings have a most complex history.  They were commenced by the wife as long ago as 14 July 2015, and since then many orders have been made in them by a variety of judicial officers.  In about 2016, given the complexity of the matter, it became judicially case managed, and after I assumed that role, I heard a number of applications, some of them spread over lengthy periods of time.  There were a number of decisions which I reserved, including some evidentiary rulings from time to time.  On other occasions, I made rulings, but reserved my reasons for them.

5. It is convenient to now deliver my several outstanding reserved decisions, and my reserved reasons, in one judgment.  I would not want doing so to conceal the very considerable delay which has attended my provision of judgment in relation to some of the matters.  For that delay, I apologise to the parties, and express my regret. 

GENERAL BACKGROUND

1. The wife was born in 1981 and hence is presently 38 years of age.  The husband was born in 1969 and hence is presently 50 years of age. The parties commenced their relationship in 2010, started cohabitating in 2011, and married in 2013.  The only child to their relationship was born in 2014.  It is not in dispute that during cohabitation, the parties enjoyed a high standard of living.  The parties then separated in March 2015, although they remained living under the same roof for a time.

2. The husband had been previously in a de facto relationship. It appears as though in the ensuing property proceedings, the husband claimed to have little in the way of assets, and hence unable to pay amounts due to his previous partner under a Binding Financial Agreement.  In large part, that was because in 2012, a number of companies which he controlled, are said to have fallen into financial difficulty associated with the global financial crisis, in consequence of which, pursuant to securities which members of the Malloy Group held over those corporations, they left the husband’s control, and such remaining assets as they had were, it seems, largely used to satisfy their liabilities to the Malloy Group.  The wife now says that those events were contrived so as to defeat the claim of the husband’s de facto wife. 

3. The wife commenced these proceedings on 14 June 2015, but some time after that, the parties briefly reconciled, albeit later finally separated.

THE RECEIVERS’ APPLICATION FOR COSTS

Relevant facts

1. On 19 October 2015, Dawe J made orders by consent which provided that the husband pay interim spouse maintenance to the wife in the sum of $2,000.00 per week, together with a further $650.00 per week towards the wife’s rental costs, and the payment of any bond required of her for that lease.

2. On 18 March 2016, the husband filed an application seeking to reduce the payments of spouse maintenance to, in effect, $7,400.00 per month.  On 22 April 2016, Dawe J dismissed that application, but varied the previous consent order so that the payment of $650.00 per week by way of rent was instead to be paid to an account nominated by the wife’s solicitors, so as it could be applied towards the payment of her mortgage. No appeal was brought from that decision.

3. Whilst it is unclear precisely when the husband fell into arrears in meeting his obligations for spouse maintenance payments, by 13 May 2016, when the wife brought an application for enforcement of the spouse maintenance orders, it was said that the arrears were significant, and by the time that application was heard by Bryant CJ on 15 June 2016, were calculated at $20,547.00.  By then however, on 9 June 2016, the husband had filed a further application for variation of the maintenance orders, which was also heard by Bryant CJ on 15 June 2016.

4. For reasons delivered on 5 September 2016, on that day her Honour made orders as follows:

   1.That pursuant to r 20.46 of the Family Law Rules 2004 (Cth) (“the Rules”), Mr R and Mr S of T Accountants are appointed as joint and several receivers (“the Receivers”) of the income and property of Mr Malloy (“the husband”) so as to give effect to Order 1 of the Orders of the Honourable Justice Dawe made on 19 October 2015 and as varied on 22 April 2016 (“the Orders”).

   2.        In particular, that the Receivers be appointed to receive the following:

   a.        the husband’s jewellery;

   b.        the husband’s household contents;

   c.        the properties of which the husband is the registered proprietor at:

   i.U Street, Suburb E, South Australia (Suburb E) and

   ii.        V Street, Suburb B, South Australia (Suburb B)

   3.That pursuant to r 20.47(3) of the Rules, the Receivers are authorised to do (in the Receivers’ name or otherwise) anything the husband may do.

   4.That pursuant to r 20.47(4) of the Rules the Receivers’ powers operate to the exclusion of the powers of the husband during the receivership in relation to compliance with the Orders.

   5.That the Receivers’ remuneration be paid from the financial resources of the husband and such remuneration be calculated in accordance with the standard rates effective from time to time as set out in Annexure “M-7” to the wife’s affidavit sworn 7 June 2016.

   6.        That no security be given by the Receivers.

   7.        That the husband is to co-operate with the Receivers and shall:

   a.Provide all such documents, financial records, bank statements/books, tax records and any other financial documents as required by the Receivers within twenty-four (24) hours of the request by the Receivers;

   b.Provide full details to the Receivers within twenty-four (24) hours of request of the names and address of any employer or entity controlled by the husband which has received remuneration within the last seven (7) days;

   c.Provide any other information sought by the Receivers which relates to income or property of the husband.

   8.That, in particular, the Receivers may sell any assets collected by them pursuant to Order 2 upon such terms and conditions as they shall see fit and after payment of the costs and expenses of sale and payment of  registered encumbrances are to apply the net proceeds of such sale:

   a.in payment of the Receivers’ fees and the costs and expenses of such sales;

   b.in payment to the wife of such sum or sums as shall be outstanding from time to time pursuant to the Orders;

   c.in payment of any order for costs in favour of the wife made in these proceedings;

   d.the balance, if any, to be held as security for and applied to the payment of spousal maintenance pursuant to the Orders.

   9.That the husband is directed and an injunction is granted directing the husband to deliver up to the Receivers and/or make available for collection by the Receivers in good order and repair the husband’s jewellery and household contents upon such date and at such time as the said Receivers shall advise him in writing delivered to U Street, Suburb E, in the State of South Australia.

   10.That the husband do, and an injunction is granted directing the husband to do, all things, provide all documents and authorities, and execute all documents necessary to cause any credit provider or any person providing financial accommodation to the husband to pay any monies or the money equivalent of any accommodation to the Receivers.

   11.That the Receivers submit accounts to the following parties on a three (3) monthly basis for work done pursuant to these orders:

   a.        The wife; and

   b.        The husband.

1. Her Honour further ordered that the husband’s application for variation of the maintenance orders be dismissed.

2. From those orders the husband appealed.  On 4 October 2016, by Application in a Case, the husband sought a stay of the orders dealing with the receivers, pending the resolution of his appeal, which application was granted by Bryant CJ on 7 December 2016.

3. On 5 October 2017 the husband’s appeal was allowed, and relevantly order 7 of the Full Court provided:

   7. Orders (1)-(12) made on 5 September 2016 be set aside and the application filed by the respondent wife on 13 May 2016 to the extent that those orders were sought therein be dismissed.

4. The Full Court found that the enforcement orders appointing receivers should not have been made, and therefore it was unnecessary to remit the wife’s application for rehearing.[1]

   [1]Malloy and Ors & Stopford Malloy (2017) FLC 93-804 (“Malloy & Stopford), at [174].

5. Acting in reliance upon the orders appointing them, between 5 September 2016 and shortly after the stay was ordered, the receivers undertook work.  It is not disputed that the value of that work, including expenses incurred, is $50,378.00, however the receivers have not been paid any part of that sum.  By Application in a Case filed 16 November 2017, they now seek an order that, amongst other things, the husband pay those fees, and a declaration that they have a charge over the husband’s property for them.

6. The husband opposes any such orders.

The issues

1. The husband says that the effect of the orders of the Full Court, in the circumstances of this case, deprived the receivers of any right to remuneration, not from the date when the appeal was allowed, but from the date of their appointment on 5 September 2016. In the alternative, if that argument is rejected, he says that the wife should be obliged to indemnify him in relation to the receiver’s costs, because those costs were only incurred in respect of an application brought by her, which ultimately proved unsuccessful.

2. I will consider those issues individually.

Did the orders made by the Full Court deprive the receivers of a right to remuneration from the time of their appointment

1. Ordinarily, receivers:

   ·are entitled to be indemnified for their fees out of the assets the subject of the receivership[2];

   ·are not, absent order, entitled to look to the applicant who sought their appointment for their fees[3]; and

   ·are entitled to remuneration, even if their appointment is subsequently terminated.[4]

   [2] Boehm v Goodall [1911] 1 Ch 155 at 161; Re Application of Central Commodities Services Pty Ltd [1984] 1 NSWLR 25.

   [3]Boehm v Goodall [1911] 1 Ch 155.

   [4] Mellor v Mellor [1992] 1 WLR 517; Nationwide News Pty Ltd v Samalot Enterprises Pty Ltd (No 2) (1986) 5 NSWLR 227; Sinclair v Glatt [2009] EWCA Civ 176 at [1].

2. However in his written submission filed 20 September 2018, counsel for the husband identified that he opposed the orders sought by the receivers on three grounds, arising from the unique circumstances of this case, namely:

   (a)A single judge of the court (Bryant CJ) has already made an order with respect to the receivers’ remuneration, which was set aside on appeal by the Full Court and accordingly, the issue has already been heard and determined, and expressly not remitted, adversely to the receivers;

   (b)In the alternative, the receivers are limited to recourse for their costs to the assets under receivership, yet the Full Court has determined that, at the time that the order was made appointing the receivers, there was no basis to conclude that those assets had any net value, and that any attempt to realise value from those assets would be prejudicial to the husband; and

   (c)In light of the first and second matters, any order that the husband remunerate the receivers would be inconsistent with, and undermine, the orders and findings of the Full Court.

3. In the husband’s written submissions, those arguments were developed, and specifically it is said that it is now not open to a single judge of the court “to effectively re-make order 5 of [the orders of] 5 September 2016.”  Further it is said that “the receivers elected not to be heard on the appeal notwithstanding that they were fully aware of the fact of the appeal and the possibility that it would affect their entitlement to remuneration.” Particularly, reliance was placed upon the decision of the Full Court of the Federal Court in Valuestream Investment Management Ltd v Richmond Management Pty Ltd [2012] FCA 914 at 109, where the court set aside orders for the appointment of receivers, but expressly preserved their entitlement to remuneration for work performed to date. It is said that “in contrast, the Full Court here set aside an existing order for remuneration and expressly declined to make any further order in relation to the appointment of receivers”.

4. In their submissions in reply, the receivers said that the Full Court “did not determine that the receivers were not entitled to receive any remuneration at all and no such determination is apparent from the Full Court’s reasons.”  It is further said that, by reference to common law principles elaborated in those submissions, “specific orders would be required to disentitle the receivers of their remuneration…”  At [17] the submissions continue:

   Properly construed, the Full Court overturned paragraph 5 of the appointment orders because, having terminated that appointment of the receivers, there was no need for an order dealing with their remuneration going forward  (Emphasis in original).

5. The submission continues that “absent express orders to the contrary, the mere overturning of the appointment orders did not deprive the receivers of their entitlement to remuneration for services performed in accordance with the appointment orders while they were in force.”

6. Additionally, the receivers say that their application is not seeking the remaking of an order, but rather “involves the fixing of the value of remuneration and expenses pursuant to an order that was legitimately relied upon by the receivers.”

7. It is therefore necessary to consider the effect of the Full Court’s orders, and to consider its reasons, with a view to determining whether or not I am, as contended by the husband, bound by its decision in such a way that it is now not open to me to accede to the receivers’ application.

8. I have already recited order 7 of the orders of the Full Court, which, amongst other things, set aside order 5 of Bryant CJ. The paragraph of their Honours’ reasons which underpin setting aside those orders was paragraph 174, which provides as follows:

   174. Having found merit in Grounds 4 and 5, we consider that the appropriate course is to set aside orders (1) – (12), and dismiss the application filed by the wife on 13 May 2016 insofar as that application sought those orders. As a result of the passage of time, and the fact that there would inevitably be a need for further evidence, which we anticipate would be controversial, it would not be appropriate to attempt to re-exercise the discretion. Nor, given our findings to the effect that those orders should not have been made, is it necessary to remit the proceedings for rehearing.

9. As I understand their Honours’ reasons, ground 4 of the husband’s appeal encompassed several sub-grounds, but essentially succeeded on the basis that in appointing a receiver, Bryant CJ did not address the issue of proportionality between, on the one hand, the amount of arrears, and on the other, the potential dislocation to the husband’s affairs.  Also relevant was the prospect of the receivers’ costs “being substantial.”[5]

   [5]Malloy & Stopford, at [132].

10. At [135] their Honours said:

    Thus, there is little obvious benefit to the wife but a real risk of severe prejudice to the husband arising out of the orders, and that is without even considering order (10) made by her Honour, and which is the subject of Ground 5. It must not be forgotten that courts should be extremely cautious in appointing Receivers (National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386) and particularly where, as here, the Receivers are to take control of all of the assets of the husband in circumstances where there is serious doubt that sufficient funds will be able to be generated to pay the arrears.

11. Ground 5 dealt with an injunction ordered by the primary judge, and therefore does not bear upon this issue.

12. Counsel for the husband referred to a decision of Cleary J in Fuller and Anor & Sadler and Anor (2017) 56 Fam LR 495. There, her Honour was dealing with an Application in a Case by former court appointed receivers for the approval of certain payments to them. Part of the background to that application was, like this case, a successful appeal from orders appointing the receivers, which orders were set aside by the Full Court.

13. In that appeal[6] the relevant order of the Full Court was order 3, made in the following terms:

    The appeal be allowed and orders 1 to 10 made by Cleary J on 21 July 2016 be set aside.

    [6]D Pty Ltd & Anor & Sadler & Anor [2016] FamCAFC 187.

14. At [74] their Honours said:

    We accept the submission that the primary judge misapprehended the role and the significance of receivers being appointed.  As her Honour also misapprehended the nature of the risk to third parties of the appointment of the receivers it follows that the exercise of discretion in taking these two factors into consideration miscarried.

15. Their Honours went on to re-exercise the discretion and dismissed the application insofar as it sought the appointment of receivers.

16. Contrary to the submissions advanced by the husband, it can therefore be seen that the form of the orders in that case was remarkably similar to the form of orders in this case.

17. In dealing with the subsequent application for the receivers’ costs, at [12] Cleary J said:

    On behalf of the applicants it was properly submitted that the setting aside by the Full Court of the original order appointing the receivers did not adversely affect or invalidate the entitlement of the receivers to claim for remuneration, expenses, and costs incurred during the period of the receivership and afterwards. Court appointed receivers are entitled to look to the court for appropriate orders to be made in that respect.

18. The husband further contends that there is a distinction between order 5 of the orders made by Cleary J on the one hand, and order 5 of the orders made by Bryant CJ on the other.  The former reads:

    That the receivers’ remuneration be calculated in accordance with the standard rates effective from time to time of J Consulting, Newcastle.

19. On the other hand the latter says:

    That the receivers’ remuneration be paid from the financial resources for the husband and such remuneration be calculated in accordance with the standard rates effective from time to time as set out in annexure “M-7” to the wife’s affidavit sworn 7 June 2016.

20. Specifically the husband contends that the effect of the discharge of order 5 in this case is to deprive the receivers of an entitlement to remuneration.

21. To this the receiver says:

    ·There was no ground of appeal which challenged the receivers’ right to remuneration historically;

    ·Unsurprisingly therefore, the receivers were not made a party to the appeal as r 22.04 of the Family Law Rules 2004 (Cth) (“the Rules”) would have otherwise required;

    ·In any event, they attempted to file an application in the appeal, but this was refused by a Registrar;

    ·No part of the Full Court’s reasons purport to consider, much less determine, that the receivers’ accrued entitlement to remuneration was intended to be destroyed by the discharge of order 5;

    ·That the parties should be presumed to have been conducting their case by reference to the otherwise established principle that receivers are entitled to their fees from the assets under the receivership, and no challenge to that established principle was raised in the appeal.

22. In my view, the receivers submissions are compelling.  Particularly, I am satisfied that the mere discharge of order 5 did not affect the receivers’ accrued rights, and in order to divest them of their entitlements to fees, specific orders would have been required.  Such orders were neither sought nor made.  The apparent purpose behind the discharge of order 5 was prospective in operation, not retrospective.  Correctly, the receivers’ point to many authorities which establish the general principle that the setting aside of an order operates to remove the then existing lawful justification for further action pursuant to the order, but up until then the order stands and action taken in reliance upon it is lawful: see Wilde v Australian Trade Equipment Co Pty Ltd (1981) 145 CLR 590 at [13]; Battenberg v Union Club (2005) 215 ALR 696 ; Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 225 and 227-8.

23. Moreover, as the receivers emphasise, their position is sound on a policy basis, in that if a receiver’s entitlement to remuneration under orders which, until their discharge, remain effective, and compel them to do work, was at risk by virtue of subsequent appeals, there would be a marked disinclination for such persons to accept appointment.  Additionally, I accept the receivers’ argument that whilst the Full Court identified that the potential prejudice to the husband from the appointment of receivers told against their appointment in the first place, it does not tell against the receivers being entitled to accrued entitlement to remuneration from the assets within their receivership.

24. Whilst I accept that, as the husband contends, I am bound by the Full Court’s decision discharging the orders of Bryant CJ, I am satisfied that the effect of those orders and decision is not to disentitle the receivers from remuneration for work properly undertaken by them, at least prior to the stay of the receivership order (noting that some incidental work would have been required to have been undertaken after that time, and that quantum of the receivers’ remuneration is not in dispute by the husband).

25. Further, I accept the receivers’ submissions that this present application does not seek to reinstate order 5 of Bryant CJ.  It seeks to fix the value of their vested right to remuneration.

Husband’s claim for indemnity from wife

1. The husband contends that, because the wife sought and obtained the appointment of the receivers, which the Full Court subsequently determined should never have been appointed, she should therefore indemnify him in relation to any sum which may be recovered in respect of their fees from his assets or other property.  He specifically relies upon three potential bases for such an order; firstly, under the rules dealing with receivership; secondly, under the courts’ powers in property and spouse maintenance proceedings; and thirdly, under the court’s powers to make orders for costs.

2. His essential argument is that at all times he has acted reasonably and, as it ultimately transpired, correctly, by resisting the appointment of the receivers, seeking a stay of the order appointing them, and appealing that order.  He therefore contends that a consideration of whose conduct was at fault informs who should bear the costs caused by that fault.

3. In response, the wife says that the time for making any order in relation to the receivers’ costs being borne by the wife has long past, because the relevant rules relating to costs either operated at the time when Bryant CJ initially appointed the receiver, or at the time when the appointment of the receiver was set aside. Although the latter argument is less sound, I nonetheless accept both of those submissions. I say the latter argument is less sound because r 20.51 of the Rules is less clear than r 20.47(2) of the Rules, as to the time for making an order as to costs, but nonetheless, accepting that marginal notes may be had regard to in construing subordinate legislation (s 13(1)(a) of the Legislation Act 2003 (Cth) and s 13 of the Acts Interpretation Act 1901 (Cth)), I am satisfied that r 20.51(b) of the Rules would require the court setting aside the appointment of the receiver to make any ancillary order about whether the wife should be responsible for the receivers’ remuneration. Further, I accept that r 20.51 of the Rules does not provide a sufficient basis to order a person such as the wife to be made responsible for the receivers’ remuneration. I accept that using such an order to allocate responsibility to the wife would be, in effect, a property settlement order.

4. As to the husband’s claim that an order could be made under s 80(1) of the Family Law Act 1975 (Cth) (1975) (“the Act”) requiring the wife to pay or indemnify him in relation to the receivers’ costs, I am not satisfied that the material before me would enable me to properly, on an interim basis, exercise any such discretion. Even if it were, I would not accede to the husband’s application, as I am not satisfied that any such order would be just and equitable, given the lack of clarity in relation to the parties financial positions, and particularly whether there is any prospect that any such interim property division could be “clawed back.”

5. Finally, as to the husband’s argument in relation to the costs power, I am not satisfied that receivers’ remuneration are costs of the proceedings, which plainly is what s 117 of the Act deals with. Particularly, construing s 117 as a whole, I am satisfied that the reference in sub-section (1) to “his or her own costs” informs that the exercise of a discretion under s 117 relates to the parties’ costs, rather than the costs of officers of the court. Their costs do not form part of a party’s costs, albeit that they may reduce the parties’ property.

Conclusion

1. For these reasons there will be orders that the husband pay the fees and costs of the receivers (the quantum of which were not in dispute) together with the ancillary orders sought by the receivers. The husband’s application, as made in his Amended Response to Application in a Case filed 19 July 2018, will be dismissed.

THE SUBPOENA DISPUTE

Overview

1. As long ago as 2 May 2017, the solicitors for the wife issued a tranche of subpoenae to a number of companies.  Some of the recipients thereafter filed Notices of Objection.  On 11 July 2017, an Application in a Case was filed by the solicitor for three subpoenaed companies, seeking orders that the subpoenae directed to them be set aside.  As it transpired, that application was out of time, and accordingly, when that Application in a Case first came before me on 26 October 2017, I made orders for a timetable for the filing of a further Application in a Case seeking to extend time for the bringing of the 11 July 2017 application, and for the filing of further material. 

2. Although it was anticipated that the matter would then proceed on 15 December 2017, it did not, but rather that date was varied by a Registrar’s order of 5 December 2017 to 1 March 2018.  However on 26 February 2018 I acceded to an application that that date be vacated in the light of the late provision of material by the wife, and adjourned the hearing to 18 May 2018.  But yet again, material was filed late by the wife, to which the subpoenaed companies wished to respond.  The matter was then set for hearing on 21 June 2018, although by then documents had commenced to be provided by the subpoenaed companies, albeit in a redacted form, and without prejudice to their Notices of Objection or applications to set the subpoenae aside. To accommodate ongoing discussion between the parties, the matter was then adjourned to 26 October 2018, on which occasion consent orders were made, in light of the continued negotiations between the parties, that the matter be listed for hearing again on 6 December 2018.

3. By then, the matters in dispute between the parties had markedly narrowed.  On that day I heard relatively brief oral submissions in relation to the remaining issues, and reserved my decision.

1. I should say that it seems likely that the subsequent joinder of the Malloy Group companies may well have overtaken the subpoena dispute, but no party has formally raised that with the court. It therefore seems that it is still incumbent upon me to determine the slender matters remaining then in dispute.

Relevant facts

1. The 2 May 2017 subpoenae all followed a similar formula in relation to the material which they sought.  As I have already indicated, much of that material has now been provided. Ultimately it was only subpoenae addressed to the FF Management Trust and the Malloy Trust which remained contentious.  Before me were the financial reports for the Malloy Trust between the financial year ended 30 June 2010 and 30 June 2017, and for the FF Management Trust from the financial years ending 30 June 2011 to 30 June 2017.  Those documents are in a significantly redacted form, with only totals and individual line items relating to companies associated with the husband being revealed.  The balance of the entities are identified, but no individual figures attributable to them are disclosed.  Likewise, whilst individual components of income statements are identified, only totals, rather than individual amounts, are revealed.

2. It is not in dispute that, according to the financial records of a number of Malloy Group companies, the husband has UPEs owing to him by them.  However it is said that those companies do not have funds or assets sufficient to pay those sums, or even if they do, that there are offsetting claims sufficient to wholly or substantially defeat the UPEs.  In part, that is because receivers have been appointed to some of those companies, pursuant to powers contained within securities held by other Malloy Group companies, and exercising their powers, the receivers have realised assets of those companies and discharged the liabilities.

The issue

1. As I have indicated, albeit without prejudice to their Notice of Objection and application to set aside the subpoena, in fact considerable, albeit redacted, material has already been made available by the subpoenaed companies to the wife.  Although strictly speaking, the application for an extension of time in which to bring the applications to set aside the subpoena remains live, as does the primary application, and indeed a question of whether or not the subpoena should be permitted to be amended, both counsel for the wife and the subpoenaed companies adopted a pragmatic approach, which distilled the issue for resolution to a narrow one, namely whether the special purpose financial reports for the Malloy Trust and the FF Management Trust should be required to be produced in an un-redacted form. 

2. If so, then the next issue for determination was the manner by which the release of the further material should occur.  The first argument of the subpoenaed companies was that I should appoint an expert accountant to determine which of the line items should be revealed.  In the alternative, they invited me to examine the accounts in an un-redacted form (which were provided to me in a sealed envelope) so that I could determine for myself what additional items should be revealed. 

3. The wife resisted both of those alternatives, but conceded that, given the potential sensitivity of the information in the accounts, the un-redacted versions should only be made available to her legal advisors, and any expert accountant retained by them to examine the accounts.

4. I will consider those two matters in that order.

Should any further production be required at all

1. At present, the accounts that have been made available to the wife only disclose totals, but no individual amounts other than those attributable to the husband or companies associated with him.  It is said that the remainder is unnecessary to be revealed, because it has no relevance to the proceedings.

2. However, as counsel for the wife correctly identified, the wife’s case is far broader than simply seeking to identify monies paid to, or owing to, the husband or companies he controls, or previously controlled.  Rather, a major focus of her case is in relation to tracing the husband’s UPEs.

3. Her argument commences with the terms of the deeds of the trusts in which the husband is shown as having UPEs.  For instance, in relation to the AD Trust, clause 3.6 of the trust deed provides that:

   Any amount set aside under 3.2 shall not form part of a trust fund but is held by the trustee as a separate trust fund upon trust for the person entitled for the benefit of it.

4. Her argument then, is that the receivers appointed to the trustee companies could not deal with the monies held under the trust of the UPEs established under clause 3.6, because they were not assets to which the trustee could have recourse by way of indemnity against general trust assets.  Subject to the beneficiary having acted in way so as to allow that occur – as to which there is no evidence – that argument seems likely correct.  Therefore what the wife seeks to do, is to look at the accounts of the two trusts, so as she can determine where any funds dealt with in breach of trust presently lie, or at least identify the next line of inquiry in tracing them.  She says, and it was not controversial, that under the doctrine articulated in Barnes v Addy (1874) LR 9 ChApp 244, where funds are received that are known to be the result of a breach of trust, then they are held under a remedial constructive trust in favour of the original beneficiary. She says therefore, that she is seeking to identify actual beneficially owned assets of the husband, and hence the movement of funds derived from any dealing with monies impressed with the sub-trust is relevant. 

5. At the time of the argument in relation to this issue before me, counsel for the subpoenaed companies correctly identified that none of the Malloy Group had been joined as parties, and hence asserted that the wife was prepared to wound but not strike. Since then, of course, the wife has joined those parties.  However, even absent their joinder, it seems to me as though the wife’s case, insofar as it was seeking to ascertain assets of the husband and their location, did not necessarily require those parties to be joined.  That is because, as I explored with counsel for the wife, even absent those companies joinder, the wife could seek to have, as part of her property division, the transfer to her of the choses in action which the husband’s rights to trace would represent, and thereafter, consistent with that assignment, she could commence proceedings in the husband’s name against the entity which presently controls the asset impressed with the constructive trust.  That, to my mind, is clearly a legitimate forensic purpose in obtaining the information which the subpoenae seek in an un-redacted form.

6. I am therefore satisfied that the present level of redaction, which is restricted only to the husband or his current or former companies, is a demonstrably inadequate answer to the subpoenae.

How should further production be required

1. Being satisfied that some further production is required, the question then becomes how should that be done, so as to adequately protect the sensitivity of the information contained within the subpoenaed documents.  Whilst neither counsel precisely articulated the sensitivity issues, plainly the accounts are likely to potentially disclose personal wealth and income details for the husband’s father, to say nothing of the financial position of a number of private companies which he controls, the details of whose financial position would not normally be available to strangers. 

2. Moreover, it is plain that there must be some information, and indeed probably much presently redacted information, that is genuinely irrelevant to the wife’s claim.  As but a more colourful example, counsel for the subpoenaed companies identified that one of the recipients of an unspecified sum of money from one of the trusts was Country AH sports club, apparently in relation to equipment which had been donated to it.  Inferentially, it was being suggested that the wife was unlikely, even if she could show that those funds were derived from the sub-trust, to pursue sporting equipment in Country AH.

3. The first solution proffered by the subpoenaed companies was to require an expert accountant to examine the un-redacted financial statements, to determine what is, or is not, relevant.  However not only is there a potential constitutional issue, in that there is a prospect that that accountant may be exercising judicial power of the Commonwealth, but further, as Mr Wells QC points out, that accountant necessarily will not have the picture which the wife’s forensic accountants will have, nor likely be equipped with any legal knowledge in relation to tracing claims.  To my mind, those matters seem unarguable.  Therefore I am not satisfied that there should be an order for the appointment of an expert accountant, as the subpoenaed companies contend.

4. The next alternative proffered was that I should examine the un-redacted accounts, to determine for myself what fell within the scope of a legitimate forensic purpose.  However, not only am I bereft of any accounting skills, much less forensic accounting skills, but I do not have any proper understanding of the matters essential to determining the relevance or otherwise of individual entries.  I therefore decline to examine for myself the un-redacted version.

5. The only other solution proffered was that suggested by the wife, namely that the un-redacted version should be made available to her, but its publication expressly restricted to her legal advisors and any experts who they may appoint to assist in relation to advising them.  Correctly, counsel for the wife identified that an express injunction is unnecessary, given the Harman[7] undertaking which attaches to materials produced under compulsion in litigation, but as I understood it, he was content to have orders crafted in a way that nonetheless explicitly protected the Malloy Group from highly sensitive information being made known other than to professionals who need to know about it for the purposes of this litigation.

   [7] Harman v Home Department State Secretary [1983] 1 AC 280; Hearne v Street (2008) 235 CLR 125 at [107]-[108].

Conclusion

1. Therefore I am satisfied that un-redacted versions of the financial statements should be made available to the legal representatives of the wife, but not made available by them to any person other than accountants retained for forensic purposes associated with this litigation.

THE WIFE’S ENFORCEMENT APPLICATION

Overview

1. On 21 September 2018, the wife filed an Application in a Case seeking a suite of orders designed to enforce the payment by the husband of significant arrears of spouse maintenance that had accrued pursuant to the orders of Dawe J of 19 October 2015 and 22 April 2016.  The matter was listed for hearing before me on 5 April 2019, although proved incapable of concluding on that day.  It then resumed on 11 April, but still proved incapable of conclusion, and accordingly a timetable for the delivery of written submissions was ordered. 

2. However, although not previously foreshadowed, by Application in a Case filed 2 May 2019 the wife sought leave to rely upon a further affidavit in those enforcement proceedings, which application was opposed by the husband.  I therefore heard the parties in relation to that application on 30 May 2019, and again reserved my decision.  The parties were agreed that, if that application were allowed, then the matter would need to be re-listed for further directions, as the husband wished to put on further material and make additional arguments in response to the new material relied upon by the wife.  On the other hand, in the event that application were dismissed, then there only remained the delivery of my decision in relation to the wife’s enforcement application.

3. Additionally, during the course of the hearing of the wife’s enforcement application, I made a number of rulings and determinations, but reserved my reasons.  It is convenient in the context of determining the wife’s application, to now publish those reasons.

Relevant facts

1. I have already noted earlier in these reasons, that on 19 October 2015 Dawe J made orders requiring the husband to pay the wife spouse maintenance in the total sum of $2,650 per month, which were subsequently varied by her Honour on 22 April 2016.

2. In conjunction with the wife’s application for enforcement that was listed before Bryant CJ on 15 June 2016, her Honour also heard the husband’s Application in a Case seeking to have the orders of Dawe J discharged. Before the Chief Justice it was not in contest (seemingly at least) that the source of the funds for the payment of spouse maintenance was the husband’s father, who had determined not to make funds available to the husband to meet that expense (apart from the weekly $650 component) going forward. Bryant CJ was of the view that was reasonably foreseeable by the husband at the time he entered into the consent orders on 19 October 2015, and therefore there was no change in circumstance sufficient to warrant discharge of the orders under s 83(2) of the Act. Her Honour therefore dismissed the husband’s application. The appeal which the husband brought from that decision did not succeed, and hence the maintenance orders remained in force.

3. Since then, there has been continued default in payment of spouse maintenance, and before me there was no dispute that as at March 2019, the arrears were in the sum of $337,965.02.  As at the time of the hearing before me, there was an application by the husband’s Response for variation of the spouse maintenance and the discharge of all arrears, but that application was not pressed before me.

Reasons for rejection of Mr AG report on 5 April 2019

1. On 5 April 2019 I refused to admit into evidence paragraph 3.43.6 of an affidavit of the husband filed 11 December 2018, for reasons to be published in due course.

2. Paragraphs 3.43.6 of the husband’s affidavit reads as follows:

   3.43.6. I refer to the affidavit of Mr AG of T Accountants filed on 26 March 2018 in these proceedings which asserts that at the very highest the UPES could be worth between $268,233.00 - $312,698.00.

3. Ordinarily, hearsay material is admissible interim proceedings (Evidence Act1995 (Cth) s 75). However Queen’s Counsel for the wife contended that there was a positive prohibitory rule which applied, namely, that in making his statement of opinion, Mr AG was acting as an expert and hence evidence of that character was governed by Division 15.5.3 of the Rules. Particularly it was said that r 15.52(1) of the Rules was engaged. That Rule provides:

   A party may seek permission to tender a report or adduce evidence from an expert witness by filing an Application in a Case.

4. It was conceded that no Application in a Case to lead any evidence derived from Mr AG had been made. Therefore an oral application was then made by counsel for the husband, together with an application under r 1.12 of the Rules, for general dispensation of the application of the balance of the requirements of Division 15.5.3.

5. The matters which the court is obliged to have regard to when considering whether to give permission to adduce evidence from an expert witness (except a single expert witness) are set out at r 15.52(3) of the Rules as follows:

   When considering whether to permit a party to tender a report or adduce evidence from an expert witness, the court may take into account:

   (a)  the purpose of this Part (see rule 15.42);

   (b)  the impact of the appointment of an expert witness on the costs of the case;

   (c)  the likelihood of the appointment expediting or delaying the case;

   (d)  the complexity of the issues in the case;

   (e)  whether the evidence should be given by a single expert witness rather than an expert witness appointed by one party only; and

   (f)  whether the expert witness has specialised knowledge, based on the person’s training, study or experience:

   (i)  relevant to the issue on which evidence is to be given; and

   (ii)  appropriate to the value, complexity and importance of the case.   

6. The first matter that I am obliged to consider is the purpose of Part 15.5 of the Rules, which, amongst other things, is to ensure that if practicable, and without compromising the interests of justice, expert evidence is given on an issue by a single expert witness, rather than an adversarial expert. Otherwise it was plain that few of the matters in r 15.52(3) of the Rules were established on the evidence before me, and no legitimate basis for dispensing with the application of that Rule was established.

7. On that basis I refused to dispense with the application of Division 15.5.3, and dismissed the oral application under r 15.52(1) of the Rules.

8. However, that was not the end of the husband’s attempts to put in Mr AG’s report, in that by letter dated 2 April 2019, the husband’s solicitors identified that the affidavit of Mr AG sworn 26 March 2018 and the report annexed to it, were also sought to be relied upon.

9. Later on 5 April 2019, in the course of seeking the admission of Mr AG’s report, counsel for the husband conceded that Mr AG was an adversarial expert, and that there was no material before me which would satisfy the requirements of r 15.52 of the Rules.

10. In the context of this debate I was told, firstly, that there had been a previous application by the husband for the appointment of a single expert to value the husband’s UPEs, which was rejected by Austin J on 20 July 2018.  Secondly, I was told that the wife had commissioned her own expert valuation of the husband’s UPEs, by a Mr NN, albeit it was now some three years out of date.  In effect, the husband argued that any prejudice that the wife might suffer by admitting the adversarial expert material of the husband, could be cured by letting her own adversarial expert’s material in as well.  However not only is Mr NN’s opinion now stale, but it does not deal with all of the matters raised by Mr AG, and particularly the likely level of pushback and resistance from the Malloy Group in the event that the husband sought to recover his UPEs, which would impact upon their recoverability.  Therefore, if I were to have allowed the Mr AG evidence in, there would have inevitably been an adjournment of the hearing to enable Mr NN to update his material, which would have led to significant further dislocation of the interim hearing.

11. I was satisfied that permitting the reliance upon the Mr AG affidavit would indeed have led to further fracturing of the hearing and greater delay in its disposition.  I therefore determined to exclude it. 

Reasons for refusing adjournment on 11 April 2019

1. By the time the hearing of the wife’s enforcement application and litigation funding application as resumed on 11 April 2019, the wife had filed an Amended Initiating Application joining the husband’s father and the Malloy Group as parties to these proceedings.  However counsel for the husband was initially unaware of that, but upon it being drawn to his attention, contended that the hearing could not continue without those parties being given an opportunity to be heard.  A second basis advanced for its adjournment was that the husband, in light of the new Initiating Application which seeks to impugn the 2012 transactions, needed to consider his position vis-à-vis the appointment of a receiver.  I refused to adjourn the hearing of the wife’s application, for reasons to be published.

2. Generally speaking, matters should proceed on their allocated hearing dates, unless the interests of justice require them to be adjourned.  I was not satisfied that the interests of justice required the opportunity for the freshly joined parties to be heard in relation to potential enforcement of spouse maintenance arrears of the husband.  The fact that they had recently been joined as parties to the proceeding effected no material change to their position.  Whilst it is true that the appointment of receivers may have adversely impacted upon some, or perhaps even all, of the Malloy Group, any receiver would be court appointed, and hence subject to direction of the court from time to time, which could be sought to be invoked by the parties who had been recently joined.  There was no other prejudice to them in the matter proceeding on 11 April 2019.

1. Further, it was difficult to see how the fact that the wife was now seeking to impugn transactions in 2012, could have required the husband to consider his position in relation to the enforcement of spouse maintenance arrears.  True it is that there was the possibility that any receiver that may be later appointed would seek to investigate those transactions, to see whether or not by reference to them, assets of the husband might be able to be brought within their receivership, but I was not satisfied that the interests of justice required the hearing to then be aborted.  I therefore declined to accede to the application for an adjournment.

Reasons for not determining husband’s 10 April 2019 Application in a Case in advance of the wife’s enforcement application

1. On the day prior to the intended resumption of the hearing of the wife’s enforcement application on 11 April 2019, the solicitors for the husband filed an Application in a Case seeking the appointment of a single expert witness to value the realisable value of the husband’s UPEs in the four relevant trusts.  Then, on 11 April 2019, the husband sought to defer the further hearing of the wife’s enforcement applications, so as to have his Application in a Case determined ahead of them.  I rejected that application, for reasons to be later published.

2. In support of his proposal, the husband said, in substance, that the central issue raised by the wife’s enforcement application was the recoverability of the husband’s UPEs and that I could not sensibly “determine whether to appoint a receiver until [I had] the assistance of an independent expert’s advice, respond as to the structure of the assets, the interaction and interlocking nature of the assets and what assets the husband might have in that structure and the recoverability.”  Further, it was said that “all this would be done in an independent way under the auspices of the court and, we surmise, far more cheaply than having two receivers roam who-knows-where and how-far-and-wide through who-knows-what material without any real control.”

3. However, as I raised with Mr Whitington QC, making an order appointing a single expert valuer of the husband’s UPEs inter partes the husband and wife, would not thereby bind the recently joined parties to any valuation that was obtained.  Further, as counsel for the wife argued, the appointment of a single expert will not assist the wife in recovering the unpaid spouse maintenance, and that the “extraordinary value of the receiver” was that they can seize and realise assets and apply the proceeds to the discharge of a debt.  It was further said that appointing the expert would merely delay the whole process of actually achieving enforcement.

4. Further, counsel for the wife identified that the process of briefing the expert, and achieving a final report, would itself be likely extremely cumbersome.

5. I was satisfied that the wife would be considerably prejudiced by further deferral of the hearing of her enforcement application.  She was correct to have identified that a determination by an expert as to the value of the UPEs will not likely see her with one dollar in her pocket, and in that sense, she has legitimate interests in seeking to recover the amounts owing to her, and ought not be impeded in the prosecution of that by the appointment of a single expert, or at least by her application being deferred pending the resolution of that application.

6. For those reasons I refused to hear the husband’s Application in a Case filed 10 April 2019 in advance of the determination of the wife’s enforcement application.

Reasons for refusing husband leave to rely upon further affidavit on 11 April 2019

1. Also by the husband’s Application in a Case filed 10 April 2019, he sought to rely upon a further affidavit of his, filed contemporaneously with that application, and sought dispensation of the application of r 5.09(a) of the Rules, which restricts a party to only one affidavit of theirs being relied upon in an interim or procedural application. The new affidavit sought leave to adduce a further 12 sets of financial reports of various entities, because it was said they needed to be had regard to, so as to determine “the flow of assets and liabilities in order to realise the repayment (if any) of” the husband’s UPEs. Further, the husband sought to put into evidence various security agreements and notices of demand, and a deed of guarantee and indemnity. He said that the latter material evidences that entities associated with his father have appointed receivers to four relevant corporations.

2. The wife opposed the husband being able to rely upon that material.  I refused leave for the husband to rely upon his further affidavit, for reasons to be published later.

3. In his submissions in support of the husband’s application, his counsel accepted that the purpose of the tender of the material was to demonstrate that the recoverability of the husband’s UPEs is fraught, and therefore the appointment of a receiver may prove futile.  He said that the purpose of the material was to provide an evidentiary basis for an aide memoire which he had previously provided to the court.  He further argued that the material sought to be introduced had been previously discovered to the wife, that it had been contained within the Mr AG report (although I had ruled against its admission) and further, that the wife’s material did not deal with the likely recoverability of the UPEs.

4. In his submissions, counsel for the wife said that this was nothing more than an attempt by the husband to provide material in substitution for the rejected Mr AG report, and that if I were to admit it into evidence, he would want the opportunity to put on other material in response to it, which would mean that the wife’s enforcement application would necessarily go off.  Further, the wife said that, even if I were to make an order for costs against the husband as the quid pro quo for acceding to his application, it was a futile exercise, because he never pays them.  Additionally, he said that because of the late service of the affidavit, he had not seen it until that morning, and in any event, it was not incumbent upon me to make a finding of fact as to the amount likely to be recovered, but merely that I needed to be satisfied whether there was a sufficient prospect of recovery to justify the appointment of a receiver.

5. During the course of argument, counsel for the wife also raised the fact that, ordinarily, an affidavit must be filed two (2) clear days prior to the commencement of the hearing, and therefore dispensation from that requirement would also be required.

6. In reply, counsel for the husband did not accept the wife’s contention that it was unnecessary to make a finding of fact as to the likely extent of recovery, but conceded that if the material did not enable me to make such a finding, that was the wife’s problem, not his.

7. As something of a fall-back position, counsel for the husband suggested that any prejudice to the wife could be accommodated by her having an opportunity to put on written material after the hearing had continued, which proposal was obviously not attractive to the wife.

8. I was not satisfied that the fall-back position of the husband, namely that the wife could put on additional written material at the conclusion of the hearing, was a just solution.  The reality is that putting the additional material into evidence would have seen the hearing of the wife’s application go off yet again, perhaps for some considerable time.  Further, the matter had already consumed a full day of hearing, and the prospect of it being further dislocated was most unattractive, both from the point of view of efficient use of judicial resources, and from case management principles generally. 

9. For those reasons I therefore declined to permit the husband to read his further affidavit into evidence.

The wife’s application to adduce further evidence

1. After the evidence had closed in the hearing of her enforcement application, on 2 May 2019, the wife filed a further Application in a Case seeking orders permitting her to rely upon an affidavit of her solicitor filed contemporaneously, which annexed to it a trust deed under which the LE Trust was created on 20 November 1995, together with a deed of variation, and the trust deeds of various dates under which the AB Group, the AD Trust, and the AE Trust were created.  The affidavit also sought leave to tender copies of financial statements making reference to the husband’s UPEs.  That Application in a Case was heard by me on 30 May 2019.

2. The husband’s opposition to the wife’s Application in a Case was advanced both by written submissions filed 29 May 2019, and by oral submissions made the following day.  In essence the husband contends that:

   ·Rule 9.08 of the Rules requires affidavits to be filed at least two (2) days before the date fixed for the hearing. He contends that it would therefore be an abuse of process, and manifestly unjust, to permit the wife to rely upon the new affidavit;

   ·In the past, counsel for the wife had forcefully opposed the husband being able to put on additional material during the course of the hearing of the enforcement application;

   ·The new material is now only sought to be introduced after the husband had concluded his submissions in relation to the wife’s enforcement application;

   ·If leave was granted to the wife to rely upon the additional material “the husband will suffer prejudice as it must follow that he be provided with an opportunity to file material in response, causing additional costs and further delay as to the substantive initiating proceedings before this Honourable Court”;

   ·Despite the question of the recoverability of the husband’s UPEs being clearly raised by the husband in his material, it therefore must have been “a conscious forensic choice by the wife to put on no evidence.  Further, there is still no evidence from the wife seeking to explain that forensic choice or her belated change in forensic strategy”;

   ·The absence of these materials was specifically adverted to during the course of submissions on 11 April 2019, and particularly counsel for the husband agreed with my observation that “I don’t have the material from which I can discern that that is held under a sub-trust rather than under the terms of the primary trust.”

   ·The affidavit of the wife’s solicitor was filed in breach of r 5.09 of the Rules, which permits only one affidavit by each party in an interim application, and requires that evidence which can be given by a party not be given by another witness. Further he says that r 9.07 of the Rules, which deals with affidavits in relation to a Response to an Application in a case, is not engaged here;

   ·Given the recent joinder of the Malloy Group companies, and the husband’s father, there may be a requirement to provide notice of any further hearing of the wife’s Applications in a Case to them; and

   ·That the wife’s application is inconsistent with modern case management, which requires just, quick and efficient resolution of litigation (UBS AG v Tyne [2018] 92 ALJR 968 at [45]).

3. Whilst I am conscious that much of the delay which has attended the resolution of the wife’s Application in a Case filed in September 2018 must lie at my feet, the reality is that the hearing of the wife’s Application in a Case seeking enforcement orders has now consumed considerable time, having not been able to be completed within two (2) days, with the prospect that if I were to permit the additional material, a third day, and perhaps further time, would be required, and inevitably the resolution of the application will be even further, and considerably, delayed.

4. Additionally, the husband is correct to say that the question of the trust deeds, and more particularly their absence in evidence before me in this particular application, was raised during the course of the hearing, and there is still no explanation of that absence proffered in the new material.  Absent an explanation, it does seem open to infer that it must have been a deliberate, rather than an accidental, omission, and it is correct to say that, generally speaking, parties should be contained within their forensic choices.

5. I therefore decline to permit the wife to rely upon the additional material which she seeks to put before me in support of her Application in a Case filed 21 September 2018.  It follows then that the wife’s Application in a Case filed 10 April 2019 will be dismissed.

Abuse of process

1. The husband contends that, by bringing a second application for enforcement of the arrears of spouse maintenance, insofar as she seeks an appointment of a receiver, the wife is abusing the process of the court.  Particularly he says that it was always foreseeable at the time that she made, and succeeded, in her first application (albeit overturned on appeal) that the husband’s arrears would continue to accrue.  He therefore says that there is no sufficient change in circumstances so as to justify the second application.

2. As to this, the wife says that the increased arrears, and the discovery of significant UPEs, is a sufficient change in circumstance.  She says that the existence of the sizable UPEs was only discovered by the receivers during the course of their receivership.  Whilst it might be the case that disclosure of documents from which UPEs could have been discerned had taken place by the time of the receivers’ appointment, it plainly was not a significant aspect of the basis for their appointment, which related principally to houses and chattels.

3. I am satisfied that there has been a sufficient change in circumstance since the time of the first application for the appointment of receivers, so as to not make this present application an abuse of process.

Should a receiver be appointed

Overview

1. The primary enforcement remedy which the wife seeks in relation to the husband’s arrears of spouse maintenance is the appointment of a receiver over the husband’s assets.  The husband claims to have little by way of assets, and hence a significant purpose behind the appointment of a receiver would be to attempt to realise the UPEs.

Relevant statutory provisions and legal principles

1. Receivership is dealt with by Part 20.6 of the Rules. Relevantly r 20.47 of the Rules provides as follows:

   (1)  In considering an application under subrule 20.46(1), the court must have regard to:

   (a)  the amount of the debt;

   (b)  the amount likely to be obtained by the receiver; and

   (c)  the probable costs of appointing and paying a receiver.

   (2)  When appointing a receiver, the court must make orders about:

   (a)  the receiver’s remuneration, if any;

   (b)  the security to be given by the receiver;

   (c)  the powers of the receiver; and

   (d)  the parties to whom, and the intervals or dates at which, the receiver is to submit accounts.

   (3)  The court may authorise a receiver to do (in the receiver’s name or otherwise) anything the payer may do.

   (4)  The receiver’s powers operate to the exclusion of a payer’s powers during the receivership.

   (5)  The court may, on application by an interested person, make procedural orders about the powers of the receiver.

2. Although one source of statutory power for that Rule is s 80(1)(k) of the Act, which permits a court to make any order “which it thinks is necessary to make to do justice” that is not the only source of power underpinning the power to appoint receivers (Malloy & Stopford at 106).

3. Also in Malloy & Stopford at [133] the Full Court said:

   131. We note at this point that the wife suggests that the prospect of there being no equity in the properties is not an impediment to the making of the orders, because it is up to the Receivers to decide whether to sell or not. That is true, but it is difficult to see the rationale of appointing Receivers if sale of the properties was not contemplated; we ask, where else was the money to come from to meet the arrears? The evidence of the husband was that he had no income, and if it was from the sale of his personal effects, we query the need to look to the real estate given the amount of the arrears.

   132. As to the third factor, her Honour had before her details of the hourly rates that the Receivers would charge (wife’s affidavit filed 13 May 2016, annexure “M-7”), but no estimate was provided of what their total costs would be. Plainly though there was the prospect of those costs being substantial. We also note that her Honour ordered that the Receivers’ fees be paid “from the financial resources of the husband”, in circumstances where there was serious doubt as to whether the husband had any resources to meet that payment.

   133. In any event, it can immediately be seen that there was an issue of proportionality present. In other words, given the amount of the debt, the amount likely to be obtained by the Receivers, and the probable costs of appointing and paying Receivers, was it necessary, appropriate, or proper to make the order? In addition, there is the effect on the husband of the appointment of Receivers; in the discretion of the Receivers all of his assets and any of his income would be received by them. Then, again in the discretion of the Receivers, any or all of those assets could be sold by them. Certainly, any actions by the Receivers would be subject to supervision by the court, but that cannot necessarily ameliorate the effect on the husband of the order.

4. I do not read that statement as laying down a general principle of proportionality needing to be met in all cases.  Rather it may arise in an individual case, and be a relevant consideration in informing the determination of whether it was necessary appropriate or proper to appoint receivers.

5. A little later in Malloy & Stopford at [135] the Full Court said this:

   135. Thus, there is little obvious benefit to the wife but a real risk of severe prejudice to the husband arising out of the orders, and that is without even considering order (10) made by her Honour, and which is the subject of Ground 5. It must not be forgotten that courts should be extremely cautious in appointing Receivers (National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386) and particularly where, as here, the Receivers are to take control of all of the assets of the husband in circumstances where there is serious doubt that sufficient funds will be able to be generated to pay the arrears.

6. Before me there was argument as to whether the Full Court sufficiently adverted to the fact that the case it referred to in that paragraph, National Australia Bank v Bond Brewing Holdings Ltd [1991] 1 VR 386 (“Bond Brewing”), was a most unusual case involving a receiver being appointed other than under a statutory power, was appreciated by their Honours.  I am not persuaded that their Honours were not advertent to the different source of power in appointing the receiver in Bond Brewing.  Rather, what their Honours were indicating is that the appointment of a receiver has the potential to have serious consequences, which need to be recognised when considering whether to appoint a receiver or not.

Rule 20.47(1) considerations

(a) The amount of the debt

1. The amount of the debt is not in contention.  As at 29 March 2019, it was agreed to be $337,965.02.  It will thereafter have continued to accrue, and will ever do so unless and until it is discharged.  Therefore not only is the debt extant, but it is prospective as well.  It is a significant amount of money.

2. It also convenient under this sub-heading to deal with the wife’s suggestion that the husband’s non-compliance with the court’s orders is “flagrant.”  It is flagrant in the sense that, although he is paying $650.00 per week (albeit via one of the Malloy Group companies) his breach is otherwise continuing, and there is no suggestion of any attempt to purge his non-compliance.  However the husband has proffered an explanation as to why he is unable to meet spouse maintenance, which does not seem to be in dispute, namely that his father is no longer prepared to make monies available to him sufficient to discharge his obligations to pay all of the spouse maintenance. 

1. Further, the husband has sought to have the spouse maintenance order discharged, but that was rejected by the Chief Justice on the basis that it was reasonably foreseeable at the time the husband entered into the consent order, that his father would withdraw continued funding so as to meet his obligation, which determination was not disturbed on appeal.  Whilst I express no view as to the correctness or otherwise of the Chief Justice’s decision in that respect, in the sense of whether or not I would make the same decision, appraised of the same facts, it cannot be said that the husband is wilfully refusing to use means demonstrably at his disposal to discharge his obligations to pay spouse maintenance.  In that sense, he is not acting in flagrant breach of the spouse maintenance orders.

2. In making this observation I do not overlook evidence before me, comprising a letter from AJ Accountants to AC Pty Ltd dated 27 August 2015.  In it, they record that they act for the husband and the Malloy Group.  Having done so, they then said:

   Based on information provided by the Malloy Group of companies we confirm that for the 2015 financial year [the husband] received disposable income via drawing [from] the Malloy Group of companies totalling $901,844.

3. Leaving aside the vintage of the representation, which pertains to 1 July 2014 – 30 June 2015, it does seem clear that the husband’s lavish lifestyle is met by drawings, reflected in loan accounts, from various Malloy Group entities.  But there is no sound reason to think that the decision whether to permit a particular drawing lies with the husband, rather than his father as the husband asserts.

(b) The amount likely to be obtained by the receiver

1. This is the true battleground between the parties.  The wife points to the book entries in the various accounts, demonstrating UPEs owed to the husband by Malloy Group entities.  However she does not say that those sums are likely to be wholly recovered, and indeed cannot say the extent of any likely recovery.  The attempts by the husband to quantify recoverability were strongly and successfully opposed by the wife.  Correctly, counsel for the husband identified that the wife’s submissions boiled down to the fact that recoverability could be a little, or it could be a lot.

2. I cannot determine the amount likely to be recovered by the receiver. Whilst I am not satisfied that I need to make a finding of fact as to the amount likely to be obtained, I must nonetheless, pursuant to the Rules (and there was no application to dispense with them) have regard to an amount, the quantum of which I cannot determine, even within a likely range.

(c) The probable costs of appointing and paying a receiver

1. The receivers estimated fees were said to be $140,000 - $180,000, of which their own fees were estimated as between $80,000 - $100,000, and legal fees as between $60,000 and $80,000.  That said, their estimates were highly caveated, and by no means capped.

2. If there is one thing that this litigation demonstrates, it is that the wife has faced implacable resistance at every turn.  There is no reason to think that that resistance would not also be experienced by any receivers appointed.  Indeed on the last occasion that the receivers were appointed, within only a short space of time, they charged costs of $34,640.93, and incurred legal fees of $15,737.87, although as I understand, not so much as a single dollar was recovered by virtue of that work.

3. Whilst there is no competing estimate of the costs of appointing and paying the receivers advanced by the husband, that does not mean that I cannot view the estimate provided by the wife with some scepticism.  I do view it with scepticism.  I think that the amount is likely to prove a significant underestimate, but I cannot determine by how much.

(d) Other discretionary considerations

1. One of the significant matters relied upon by the husband in opposing the appointment of receivers, was that the appointment was not merely with a view to recovering assets sufficient to discharge the arrears of spouse maintenance, but rather it was a backdoor method to investigate, and potentially undo, a range of transactions, particularly the 2012 transactions.  As to that, Queen’s Counsel for the husband relied upon submissions made by the wife to the Full Court in the earlier appeal, recorded at paragraph [136] the Full Court’s decision as follows:

   136. We pause to note that in support of her Honour’s orders the wife submits that a significant reason for the appointment of Receivers was the ability of the Receivers “to identify and extract the [husband’s] interest and entitlement in a complex corporate and trust structure” (the wife’s summary of argument filed 6 February 2017, at paragraph 29(c)). However, as will be seen, that was not a reason proffered by her Honour for making the orders.

2. Before me he asserted “that remains a principal object of [the wife’s] present application.”

3. The material could not possibly persuade me that there is some ulterior purpose behind the appointment of the receivers which goes beyond the recovery of the very considerable sum due in spouse maintenance, by seeking to recover the husband’s UPEs.  I am not so satisfied.

Exercise of discretion

1. The following points favour the appointment of a receiver:

   ·The arrears of spouse maintenance are now very considerable, and unless the order is discharged, are unlikely to be paid and likely to further accrue;

   ·Unless he is successful in having the arrears, or the ongoing liability for spouse maintenance, discharged, it is plain that the husband does not intend to make any effort whatsoever to make any payment towards the spouse maintenance arrears to the wife;

   ·There is some prospect that efforts by receivers to realise payment of the husband’s UPEs would be successful, and even if not in a sufficient sum to wholly discharge the arrears, then perhaps to partially discharge them.

2. On the other hand the following points tend against the exercise of the discretion in favour of appointing receivers:

   ·I cannot gauge the extent of likely recovery of the husband’s UPEs, even within discernible margins;

   ·I entertain real scepticism as to whether the receivers’ fees would remain within the range they contemplate, or indeed be less than amounts recovered, in which case the appointment of the receivers would be, in effect, futile, if it did not see realisation of assets beyond their fees;

   ·It is likely that appointment would significantly impact on the affairs of the husband and others, in a likely irremediable way.

3. Weighing those matters in the balance tells against the exercise of the discretion to appoint receivers, and I decline to do so.

The application for delivery up of chattels

1. In the alternative, if a receiver was not appointed, the wife sought an order for delivery up of specific chattels said to be in the husband’s possession, comprising a Rolex watch, and a gold and diamond wedding ring (together with documents necessary to permit the wife to sell them).  In the event that the husband does not do so, but asserts that there has been an insurable event in relation to those items, then she seeks orders that the husband “do all things necessary to cause an insurance claim to be made in respect of the said watch and/or ring” and then to pay proceeds of any insurance claimed to the wife.

2. The husband says that he may have mislaid his Rolex watch in Country AH when he was on holidays at his father’s property or yacht there.  That said, he does not really seem to be sure about it.  He thinks he will have a look for it when next in Country AH, but is not sure when that might be.  It is said that at the time it was mislaid, it was probably insured.  However the husband has made no insurance claim.

3. The situation in relation to a wedding ring is a little less clear.

4. The husband’s approach to the payment of the arrears is, at least, very casual.  At worst, it is contemptuous.  There must be some response by the court to aid the wife in recovery.  I am satisfied that there should be orders as sought by the wife, and will pronounce them.

Household contents

1. The wife also sought an order that the husband’s household contents be delivered into her possession, so as she can sell them and use the proceeds to meet the spouse maintenance arrears.  Presumably she contemplates that it would not be merely items of value, but knives, forks, toothbrushes, pillows and the husband’s personal clothing.

2. To so state the breadth of the operation of such order, sufficiently explains the reason why I decline to make it.

Enforcement hearing

1. The wife also sought that there be orders that the husband attend an enforcement hearing, preceded by him filing a financial statement seven (7) days earlier.

2. In circumstances where the husband continues in non-compliance with a court order, it seems to me that such orders are appropriate, and I will make them.

Other observations

1. Although no issue was raised by the wife in the hearing before me as to the husband being permitted to be heard in relation to his applications for orders, notwithstanding his non-compliance with the spouse maintenance orders, such an application was at least open to her (Kachmarik & Gebel [2019] FamCAFC 224). I express no view as to whether such a doctrine extends to deny audience to those who aid and abet non-compliance with orders.

Conclusion

1. There will therefore be orders substantially in accordance with those sought by the wife in paragraphs 3, 4, 6 and 8 of her Application in a Case filed 21 September 2018.

THE WIFE’S LITIGATION FUNDING APPLICATION

Overview

1. The wife, by separate Application in a Case filed 21 September 2018 sought what is commonly referred to as a dollar-for-dollar order in relation to the husband.  Such an application was opposed by the husband.

Relevant statutory provisions and legal principles

1. There are at least three sources of power to make litigation funding orders, however in this instance, the wife relies only upon the court’s power to make costs orders under s 117 of the Act. It relevantly provides as follows:

   117(1) Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118 each party to proceedings under this Act shall bear his or her own costs.

   117(2) If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.

   117(2A) In considering what order (if any) should be made under subsection (2), the court shall have regard to:

   (a)the financial circumstances of each of the parties to the proceedings;

   (b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

   (c)the conduct of the parties to the proceedings 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;

   (d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   (e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   (f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   (g)such other matters as the court considers relevant.

   …

2. Many cases have now emphasised the importance in applications such as this of identifying the relevant source of power for the proposed order, as that determines the necessary preconditions and relevant considerations for making the order.[8]  However irrespective of which power is in play, there are three relevant matters common to each source of power, namely:[9]

   ·A position of relative financial strength on the part of the respondent;

   ·A capacity on the part of the respondent to meet his or her own litigation costs; and

   ·An inability on the part of the applicant to meet his or her litigation costs.

   [8]Zschokke & Zschokke (1996) FLC 92-693; Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (“Paris King”) and Strahan & Strahan (Interim property orders) (2011) FLC 93-466 at [84] (“Strahan”).

   [9]Zschokke (1996) FLC 92-693 at 83,217, Paris King at [30], and Strahan at [90]-[91].

3. However when s117 of the Act is under consideration, other matters arise, particularly:[10]

   ·An applicant should have “at least an arguable case for substantive relief which deserves to be heard”;

   ·There should be evidence of the applicant’s likely costs of the litigation;

   ·It is not an essential precondition that the applicant’s legal representatives will continue to act unless the costs are paid or secured on an ongoing basis;

   ·An order may make a provision for litigation expenses at a rate that appears reasonable in all the circumstances;

   ·An order can be made in respect of costs already incurred as well as future costs;

   ·Whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs be incurred, may be relevant to the discretion to make an order, and its quantum; and

   ·Any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended, and this may be done by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the court at the time of the exercise of its discretion in the substantive property proceedings or the final determination of the issue of costs.

   [10]Strahan at [96] quoting from Paris King at [30] and [31], with relevant citations omitted.

Evaluation

1. It is not in contention that the husband continues to lead an extravagant lifestyle of luxury housing and expensive, exotic cars.  On the other hand, the wife is in receipt of social security and the $650.00 weekly payment made by the husband, and only has the benefit of legal representation because her solicitors are prepared to act for her, seemingly on a no-win no-fee basis.  Her counsel have similarly agreed to act for her, but have not necessarily agreed to continue to do so at any trial.

2. The following points tell in favour of a litigation funding order in the wife’s favour:

   ·So long as the husband remains legally represented, there will not be a completely level playing field, in that the wife is dependent upon solicitors acting without any guarantee of reward, whereas the husband’s solicitors are guaranteed of payment;

   ·Despite the husband being without income, he plainly has his lavish lifestyle funded by his father’s largesse, albeit structured by way of drawings, with a corresponding entry in his loan accounts with various entities associated with his father;

   ·The husband’s loan accounts disclose they have been utilised to pay the husband’s father’s legal fees as well.  Whilst that may have been at the instigation of those who undertake book keeping for the relevant entities, it nonetheless shows the flexibility of the husband’s arrangements;

   ·In light of the above, it is self-evident that the husband’s financial position is vastly superior to the wife’s, and can be legitimately be regarded, as counsel for the wife suggests, as unlimited;

   ·Even though the husband claims that his father will not provide funding for legal costs if a litigation funding order as sought by the wife is made, there is no reason to think, especially now that the husband’s father and the Malloy Group are parties, that the husband’s interests will really, in any practical way, be prejudiced if that occurs;

   ·The wife’s case for substantive relief is arguable, and deserving of being heard;

   ·The ferocity of the resistance to the wife’s case inevitably means her costs will be significant going forward.  Already both parties have accrued fees exceeding $1million; and

   ·A dollar-for-dollar order, if the husband remains represented, will ensure something like parity in legal resources.

3. On the other hand the following points tell against an order for litigation funding as sought by the wife:

   ·She does presently have excellent legal representation, which will continue until at least the eve of trial; and

   ·If the husband’s father does cease to fund the husband’s legal costs, it might see the wife represented, but the husband not.  However as discussed above, the joinder of the husband’s father and the Malloy Group probably will wholly, or at least substantially, mitigate that.

4. Weighing those matters in the balance tells strongly in favour of a litigation funding order.  I particularly give weight to the enormous disparity between the reality of the parties’ financial positions, and the arguable merit of the wife’s case.  I therefore will make orders as sought by the wife.

OUTSTANDING APPLICATIONS

1. In the event that I did not determine to deal with the husband’s Application in a Case filed 10 April 2019 in advance of the wife’s enforcement application, the husband accepted that it should be adjourned off indefinitely.

2. To the extent that there was relief sought by the parties in their respective Applications in a Case which was not the subject of argument before me, I do not regard myself as part heard in relation to those aspects.  I therefore, by these reasons, intend to dispose of all extant applications that were heard by me.

3. For the above reasons, there will be orders as set out at the commencement of this judgment.

I certify that the preceding one hundred and sixty (160) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 13 December 2019.

Associate:

Date: 13 December 2019