Mawson & Mawson (No 2)
[2021] FedCFamC1F 268
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mawson & Mawson (No 2) [2021] FedCFamC1F 268
File number(s): ADC 433 of 2020 Judgment of: BERMAN J Date of judgment: 14 December 2021 Catchwords: FAMILY LAW – PROPERTY – Interim distribution – Where the wife seeks a lump sum interim distribution for her legal fees and to assist in establishing a home for her and the child – Consideration of the property interests of the parties – Where the husband would have to refinance the former matrimonial home on an interim basis – Where there is no proper basis for an order to be made.
FAMILY LAW – PROPERTY – Litigation funding – Where the wife seeks litigation funding – Where the husband opposes the application – Consideration of the parties’ financial circumstances – Where the husband has been able to meet his legal fees – Where the wife has only been able to meet her legal fees by borrowing money from family – Where there should be a level playing field – Orders.
Legislation: Family Law Act 1975 (Cth) ss 80(1)(h), 79
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.06
Cases cited: Klearchos & Klearchos and Ors [2015] FamCAFC 217
Medlow & Medlow (2016) FLC 93-692
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Division: Division 1 First Instance Number of paragraphs: 46 Date of hearing: 24 November 2021 Place: Adelaide Counsel for the Applicant: Mr Bowler Solicitor for the Applicant: Clelands Lawyers Adelaide Counsel for the Respondent: Mr Jordan Solicitor for the Respondent: Jordan & Fowler Family Lawyers ORDERS
ADC 433 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MAWSON
Applicant
AND: MS MAWSON
Respondent
ORDER MADE BY:
BERMAN J
DATE OF ORDER:
14 DECEMBER 2021
THE COURT ORDERS THAT:
1.The husband do pay to the wife the sum of FIFTY THOUSAND DOLLARS ($50,000) by way of litigation funding or in the alternative that he transfer to the wife the D Pty Ltd shares currently held by him on or before 20 January 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mawson & Mawson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BERMAN J
INTRODUCTION
By Further Amended Response to Initiating Application filed 28 September 2021, Ms Mawson (“the wife”) seeks that Mr Mawson (“the husband”) pay to her the sum of $250,000 by way of interim property settlement or in the alternative the sum of $50,000 by way of litigation funding.
At the hearing of the interim application, the wife’s solicitor abandoned an application that the Court make a “dollar for dollar” order by way of litigation funding.
By Amended Reply filed 22 November 2021, the husband seeks that the application for interim property settlement or litigation funding be dismissed.
The proceedings are listed for final hearing on 30 May 2022.
COSTS OF EACH OF THE PARTIES
Pursuant to r 12.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) each of the parties and the Court have been provided with a written notice setting out matters relevant to the legal fees and costs both incurred and anticipated to the conclusion of the proceedings.
The total estimate of the husband’s costs is between $156,370.75 to $168,370.75 of which $60,000 to $70,000 plus GST and disbursements represent the anticipated costs of trial.
The total estimate of the wife’s costs is between $173,462.69 to $183,462.69 of which $50,000 to $60,000 plus GST and disbursements represent the anticipated costs of trial.
Each of the parties have paid a significant proportion of costs incurred to date sourced from income or family.
It is an unfortunate observation that the combined total of the legal costs and disbursements of the parties may exceed $350,000.
INTERIM PROPERTY SETTLEMENT
The wife seeks the sum of $250,000 by way of interim property settlement. The application is supported by the wife’s affidavit filed 4 November 2021. The basis for the wife’s application is able to be readily understood from a consideration of the following paragraphs:
12. I have no assets besides my car and no way to fund my future legal fees.
13.Jordan & Fowler are not able to carry a debt relating to my legal fees until the conclusion of this matter. Jordan & Fowler require payment on an ongoing basis. The Cost Agreement signed by me obliges me to pay my legal fees as and when they are due.
14.I wish to retain Jordan & Fowler as my legal representation in these proceedings.
15.I have been informed by my solicitor that they estimate that I will incur further legal fees and disbursements of approximately $60,000 to $70,000 (depending upon the issues which remain in dispute) if the matter proceeds to trial.
16. …
17.I therefore seek an interim property settlement of $250,000 so that I may continue to make payment of my legal fees as and when they are due, and to establish a home for myself and X, noting that X and I are currently living with my mother and have done so since separation.
It is immediately apparent that the wife’s estimate of her anticipated legal fees to the conclusion of the proceedings is supported by the solicitor’s costs statement. It is a sum not dissimilar to the amount as considered necessary to complete the proceedings by the husband’s solicitors.
The balance of the sum of $250,000 is to assist the wife in establishing a home for herself and the subject child.
No other information is provided by the wife which would support an order for interim property settlement.
There are essentially two stages to the consideration of an application for interim property orders:[1]
(a)The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case triggers the Court’s power to invoke s 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act) to make an order for interim property settlement before a hearing. At this stage “the “overarching consideration” is the interests of justice”[2];
(b)The second stage is the “substantive step” where the provisions of s 79 of the Act must be considered and applied but with limitations, given that it is not a final hearing.
[1] see Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466
[2] Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [132].
In Medlow & Medlow (2016) FLC 93-692 the Full Court confirmed that the starting point in respect of any property application, including an application for interim property orders, is the identification of the parties’ property and their interests in it.[3]
[3] Medlow & Medlow (2016) FLC 93-692 at [69]
In circumstances where a party seeks interim property orders, the onus is upon the applicant to establish that there are sufficient assets available for an interim distribution to be made.
The very nature of an interim hearing is such that the Court is not in a position to properly evaluate the evidence and accordingly, the Court should take a conservative approach, including in respect of determining whether there is likely to be sufficient resources of the parties available at the final hearing to accommodate what could be considered an adjustment.
The wife sets out the assets and liabilities available for division between the parties at paragraph 18 of her affidavit filed 4 November 2021.
Given that the husband agrees with the wife’s assessment, I set out the assets and liabilities of the parties as follows:
Assets
Asset Ownership Value G Street, Suburb H Joint $930,000 Motor Vehicle 1 Wife $30,000 Motor Vehicle 2 Husband $30,000 2135 ordinary D Pty Ltd shares (“D Pty Ltd Shares”) Husband $49,596 Savings Joint Nil Savings Husband $6,125 Savings Wife $800 Furniture & effects Husband Nominal Furniture & effects Wife Nominal Total Assets $1,046,521 Liabilities
Liability Ownership Value F Bank loan Joint $145,123 F Bank loan Joint $46,103 F Bank loan Joint $34,212 Total Liabilities $225,438 Net non-superannuation Asset Pool $821,083
It is apparent that the principle asset of value held by the parties is the Suburb H property with a net value of approximately $700,000.
The husband seeks to retain the Suburb H property and asserts that on the basis of the orders he seeks, namely a division of the property 65/35 per cent in his favour, he is able to refinance the property and should there be a shortfall, his family are prepared to assist him.
For her part, the wife seeks that the adjustment should be 65/35 but in her favour.
Without the need to determine the competing claims of the parties, the wife argues that even on the husband’s case, 35 per cent of the property pool would represent a figure in excess of $250,000.
The husband counters the argument by confirming that he has the ability to refinance the property to include the current secured loans, together with the settlement sum payable to the wife, but that he cannot be certain that he would be able to borrow money on an interim basis and should the final order be more generous to the wife, he may need to make a further finance application.
In the circumstances of the case, I do not consider that it would be reasonable to require the husband to refinance the Suburb H property to obtain a further $250,000. There are a number of difficulties with such a proposition. The property is in the joint names of the parties and there is no certainty that a bank would be prepared to refinance the property given that it would be on an interim basis. The potential exists that notwithstanding the husband’s best endeavours, a bank or other lending institution may ultimately not find favour with his application for finance.
A more fundamental issue is that there is scant evidence from the wife that would support an order to be made by way of partial settlement of property. An application for interim property settlement does not have to satisfy a threshold test that the amount sought is for a compelling purpose but there does need to be some evidence presented which would satisfy the Court that there is a proper basis for an order to be made.
I do not consider that the wife has satisfied that hurdle. In any event, the application was not pressed with any vigor by the applicant’s solicitor.
LITIGATION FUNDING
The wife’s alternative position is that an order should be made that the husband cause to be paid to her solicitors’ trust account the sum of $50,000 by way of litigation funding pursuant to s 117(2) of the Act.
The quantum as sought by the wife is not contentious. The husband acknowledges that he intends to sell the D Pty Ltd Shares to assist in the payment of his anticipated legal fees “if necessary”.[4]
[4] Affidavit of the husband filed 22 November 2021, paragraph 24.
The husband’s opposition to the wife’s application is not as to quantum. As considered, he implicitly accepts that the wife may well be required to place her solicitors with funds sufficient to ensure continuity of legal representation. His opposition is that over and above the D Pty Ltd Shares, there are no other funds available to make a payment to the wife.
In Klearchos & Klearchos and Ors [2015] FamCAFC 217 the Full Court confirmed that a trial judge, in considering an interim application for costs, is required to consider the matters as set out in s 117 and, specifically, s 117(2A) of the Act.
Section 117(2A)(a) requires that the Court consider the financial circumstances of each of the parties to the proceedings.
It is likely that if the wife cannot pay her solicitors a significant proportion of the anticipated fees to be incurred up to and including the completion of the final hearing, then she will be a self-represented litigant.
There are significant matters of complexity not just in respect of property matters but of greater moment, relating to the inability of the parties to reach agreement as to the future parenting arrangements for the child.
If the husband is either able to fund his future legal fees from his income or from the D Pty Ltd Shares then the position would be that the husband would be represented whereas the wife would not.
In the circumstances of this case, a relevant consideration is that there should be a level playing field as between the parties.
The husband does not state unequivocally that without access to the D Pty Ltd Shares, he would be without legal representation.
To date, the husband has been able to pay for his legal fees as and when they fall due.
It is also relevant that the husband seeks to retain the principal asset of the parties. He is not required to do so. There is no competing claim of the parties in respect of the Suburb H property. The husband concedes that on any reasonable assessment of the proceedings, the amount as now sought by the wife by way of litigation funding is significantly less than the amount ultimately she should receive.
The husband acknowledges the following:
(1)That he has secured pre approval to make a payment to the wife in the sum of $250,000 consistent with his application;
(2)That the husband’s father is willing to assist him with funds to meet any shortfall between a settlement sum and the amount that he is able to obtain by finance;
(3)That to date whilst difficult against the background of his relatively modest income, he has nonetheless been able to meet his legal fees on an ongoing basis.
The wife has only been able to meet her legal fees by borrowing money from family.
Whilst there is some challenge by the husband to the extent to which he does not consider the wife has genuinely sought employment, I am not able to make such a finding.
CONCLUSION
I find that given the husband has the resource of the former matrimonial home, a resource not available to the wife and has been able to meet his legal fees from his income and loans from family members on an ongoing basis, there is more likelihood that the husband will be able to maintain his legal representation without recourse to the D Pty Ltd Shares.
It is also relevant that given the wife’s application is for litigation funding, the amount sought by her will likely be considered as an addback thereby reducing the eventual settlement sum that the husband acknowledges he will be required to pay to her.
In those circumstances and acknowledging the difficulties that each of the parties will sustain up to the conclusion of the proceedings, I consider that I should make the order as sought by the wife following a consideration of the financial circumstances of the parties and as presenting the best chance of both parties being represented.
I make the order as appears at the commencement of these reasons.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 14 December 2021
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