McPHERSON and McPHERSON & Anor (No 2)

[2019] FamCA 297

FAMILY COURT OF AUSTRALIA

MCPHERSON & MCPHERSON AND ANOR (NO. 2) [2019] FamCA 297

FAMILY LAW – PRACTICE AND PROCEDURE – Summary dismissal – Where the husband and second respondent seek summary dismissal of the wife’s claim involving the second respondent – Where the husband alleges that the proceedings should be struck out because it is difficult to discern a cause of action in the wife’s points of claim – Where there are serious factual and legal questions arising out of the wife’s points of claim to be determined at trial – Where the Court was not satisfied that the wife’s application had no reasonable likelihood of success – Application dismissed.

FAMILY LAW – COSTS – SECURITY FOR COSTS – Where the respondents sought an order for security of costs if the summary dismissal application were to be dismissed – Where the respondents submitted that the wife's case was weak – Where the Court found the wife's application had a reasonable likelihood of success – Where the Court found no reason to doubt the genuineness of the wife's application – Where it is conceded that an order for security for costs will stifle the litigation – Application dismissed.

FAMILY LAW – REVIEW OF REGISTRAR’S DECISION – SPOUSAL MAINTENANCE – Where interim orders were made by consent – Where the husband seeks a review of the order regarding spousal maintenance – Where both parties have re-partnered – Where the review was sought in response to the wife’s disclosure of pregnancy – Where the wife’s new partner did not have an obligation to support her – Where it was reasonable for the husband’s personal expenses to have priority over his obligation to support the wife – Where the onus is on the wife to prove she was unable to support herself adequately – Where the onus was not discharged – Application granted.

Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 80, 82, 90SE, 90SF
Family Law Rules 2004 (Cth) rr 10.12, 10.14, 19.05

F & F (1982) FLC 91-214
Breedon & Bonser [2013] FamCAFC 168
Lindon & the Commonwealth(No. 2) (1996) 136 ALR 251
McGarey & Stancati [2013] FamCA 366
Montoya & Montoya [2017] FamCA 667
Patterson & Patterson [1979] FamCA 37; (1979) FLC 90-705
Woden & Silver(No. 2) [2015] FamCA 1108
Stein & Stein [2000] FamCA 102; (2000) FLC 93-004

APPLICANT: Ms McPherson

RESPONDENT: Mr McPherson

SECOND RESPONDENT: Ms Goode

INDEPENDENT CHILDREN’S LAWYER: Mr Blumberg

FILE NUMBER: SYC 4540 of 2016

DATE DELIVERED: 5 April 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Loughnan J

HEARING DATE: 28 March 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Batey

SOLICITOR FOR THE APPLICANT: Horton Rhodes Legal

COUNSEL FOR THE RESPONDENT: Mr Sansom SC

SOLICITOR FOR THE RESPONDENT: Abrams Turner Whelan

COUNSEL FOR THE INTERVENOR: Mr Levy SC

SOLICITOR FOR THE INTERVENOR: Broun Abrahams Burreket

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Mr Blumberg

Orders

1. The applications of the husband and the second respondent for summary dismissal of the orders sought at paragraphs 1 and 2 of the wife’s property settlement claims in her Second Further Amended Initiating Application (Family Law) filed 20 February 2019 and that her points of claim at annexure B to that application, be struck out, including that relief contained in the Response to an Application in a Case filed on behalf of the husband on 26 March 2019 are dismissed.

2. The applications for security for costs made by the husband and the second respondent including that relief contained in the Response to an Application in a Case filed on behalf of the husband on 26 March 2019 are dismissed.

3. The order for interim spousal maintenance made on 9 January 2018 is discharged as at the date to which it stands paid.

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 McPherson & McPherson 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 SYDNEY

FILE NUMBER:  SYC4540 of 2016

Ms McPherson

Applicant

And

Mr McPherson

Respondent

REASONS FOR JUDGMENT

1. The substantive proceedings are proceedings for parenting orders and property settlement between Ms McPherson and Mr McPherson.  They are divorced, but for convenience, I will refer to them as the husband and the wife.  The substantive proceedings have been expedited but have yet to be fixed for trial.

2. Before the Court are a number of interlocutory proceedings.  The husband and the second respondent, his new partner, seek the summary dismissal of the wife’s claim against and involving the second respondent, that claim arising in the property settlement proceedings between husband and wife.  The husband and the second respondent also seek security for costs in relation to those claims.  The wife opposes all of those applications.

3. The husband seeks a review of orders made by consent on 9 January 2018 for interim spousal maintenance payable by him to the wife at the rate of $500 per week.  In the hearing enlivened by his review, the husband seeks that the order be discharged as at the date to which it stands paid, and the wife seeks that the order continue and that the rate be increased to $1,454.93 per week.

4. There were interim parenting issues in relation to the daughter of the husband and the wife, X.  Those issues were determined on 28 March 2019, and reasons for judgment were given on that day.  There are also issues between the parties arising from objections to subpoenas and an application for photocopy access to documents produced on subpoena that could have been resolved depending on the summary dismissal outcome.  For that reason, the subpoena issues were stood over generally, with liberty to restore.

5. As to the hearing, it proceeded on 28 March 2019 on the basis of written evidence and submissions.  At the conclusion of the hearing, the following orders were made:

   1.Unless the parents otherwise agree in writing orders are made in terms of paragraph 1 of Exhibit 5, as amended as set out hereunder:

   1.The child shall spend time with the father as follows:

   a.in each alternative week from Friday at 2.00 pm to Saturday at 4.00 pm for a period of four weeks.

   b.after four weeks of the date of these orders for a period of twelve weeks:

   i.in each alternative week from Friday at 2.00 pm to Saturday at 4.00 pm.

   ii.in the other week from 2.00 pm on Wednesday until 2.00 pm on Thursday until the child starts school.

   c.after sixteen weeks of the date of these orders:

   i.in each alternative week from Friday at 2.00 pm to Sunday at 4.00 pm.

   ii.in the other week from 2.00 pm until 6.00 pm on Wednesday until the child starts school.

   I should interpose there.  I think the author of that document meant alternate rather than alternative.  The second order:

   2.Unless the parents otherwise agree in writing, orders are made in terms of exhibit 6, as set out hereunder:

   And exhibit 6 starts with paragraph 2:

   2.For the purposes of handovers in Order 1 above, the father to collect the child from day care on day care days or school on school days, or the mother’s residence otherwise and on overnight time the mother shall collect the child from the father at an agreed point halfway between the mother’s and father’s residences at the end of time.

   NB:  The reference to school pick-ups does not mean the father is restrained from seeking such further time as may be available when the child starts school.

   3.The mother is permitted to remove the child from the Commonwealth of Australia and that the orders made today in relation to the living arrangements for the child with the father are suspended for a period of up to 23 days for the purposes of a holiday for the mother and child in the County N in June or July 2019.

   4.As to disputes between the parties in relation to subpoenas, those disputes are stood over to be restored to the list after judgment is delivered in the summary dismissal application.

   5.Judgment is reserved in relation to summary dismissal, security for costs and interim spousal maintenance and the parties are excused on delivery of judgment.

SUMMARY DISMISSAL

1. I turn to the summary dismissal application.  By orders sought at paragraphs 6 and 7 of a response to an application in a case filed on 26 March 2019, the husband seeks that the wife’s points of claim be struck out and, secondly, that paragraphs 1 and 2 of the wife’s second further amended initiating application family law so far as it related to property or cause of action be struck out / summarily dismissed.  That is the end of the orders the husband seeks.

2. It follows that the husband also seeks a summary dismissal of paragraph 4 of the wife’s second further amended initiating application family law insofar as that order is sought against the second respondent.  I was taken to no formal response to the wife’s application by the second respondent, but by her written submissions, the second respondent also seeks summary dismissal of the wife’s claim against her in the substantive proceedings.

3. By her second further amended initiating application dated 20 February 2019, the wife seeks the following declarations and orders in respect of property:

   (1)The Court declares that the second respondent holds 100 per cent of the shares of the companies in the P Group on constructive trust for the husband.

   (2)The Court declares that the husband holds a beneficial interest in 100 per cent of the shares in the group of companies known as the P Group.

   (3)The property of the husband and the wife be distributed to the wife as to 60 per cent and to the husband as to 40 per cent.

   (4)In order to give effect to order 3, the husband and/or the second respondent pay to the wife the sum of $1 million or 60 per cent of the value of the shares in the companies known as the P Group, whichever amount is greater.

   There is no paragraph 5 –

   (6)The parties otherwise retain all assets in their names and indemnify each other in respect of any liabilities in their respective names.

   (7)In the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the registrar of the Court be appointed pursuant to section 106A of the Family Law Act to execute such deed, document or instrument in the name of the said party and to do all acts and things necessary to give validity and operation to the deed, document or instrument upon the registrar being provided with verification of such refusal or failure by way of affidavit.

   (8)That the husband and the second respondent pay the wife’s costs.

4. The application identifies the P Group to mean the following group of companies:

   (a)P2 Proprietary Limited;

   (b)P4 Proprietary Limited;

   (c)P5 Proprietary Limited;

   (d)P6 Proprietary Limited;

   (e)P7 Proprietary Limited;

   (f)P8 Proprietary Limited;

   (g)P9 Proprietary Limited;

   (h)Goode Proprietary Limited;

   (i)P10 Proprietary Limited;

   (j)P11 Proprietary Limited;

   (k)P12 Proprietary Limited.

5. As to the relevant legal provisions, Part 10 of the Family Law Rules 2004 provides for ending a case without a trial. Subrule 10.12 provides application for summary orders:

   A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that (a) the Court has no jurisdiction; (b) the other party has no legal capacity to apply for the orders sought; (c) it is frivolous, vexatious or an abuse of process, or (d) there is no reasonable likelihood of success.

6. Subrule 10.14 provides what the Court may do under this part:

   (a) dismiss any part of the case, (b) decide an issue, (c) make a final order on any issue, (d) order a hearing about an issue or fact or (e) with the consent of the parties, order arbitration about the case or part of the case.

   The note to the rule says:

   This list does not limit the powers of the Court.  The Court may make orders on an application, or on its own initiative (see rule 1.10).

7. In the High Court decision of Lindon & the Commonwealth No. 2 (1996) 136 ALR 251, Kirby J set out the principles governing summary dismissal applications in the following terms:

   The approach to be taken by the Court to the Commonwealth’s application for summary relief is not in doubt:

   (1)It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests.  This is why relief, whether under order 26 rule 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided.[1]

   (2)To secure such relief, the party seeking it must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action[2] or is advancing a claim that is clearly frivolous or vexatious.[3]

   (3)An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination.[4]  Even a weak case is entitled to the time of a Court.  Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.

   (4)Summary relief of the kind provided for by order 26 rule 18, for the absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer.[5]  If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.

   (5)If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleading.[6]  A question has arisen as to whether order 26 rule 18 applies to part only of a pleading.[7]  However, it is unnecessary in this case to consider that question because the Commonwealth’s attack was upon the entirety of Mr Lindon’s statement of claim.

   (6)The guiding principle is, as stated in order 26 rule 18(2), doing what is just.  If it is clear that proceedings within the concept of pleadings under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.

   [1]General Streel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 123 at 128f;

   Dyson v Attorney-General (1911) 1 KB at 418.

   [2]Munnings v Australian Government Solicitor (1994) 68 ALJR 169 at 171f per Dawson J;

   118 ALR 385 at 388f.

   [3]Dey v Victorian Railways Commissioners (1949) 78 CLR 62 at 91.

   [4]Coe v The Commonwealth (1979) 53 ALJR 403; 24 ALR 118; Wickstead v Browne (1992) 30 NSWLR 1 at 57.

   [5]Coe v The Commonwealth (1979) 53 ALJR 403 at 409; 24 ALR 118 at 132.

   [6]Church of Scientology v Woodward (1980) 154 CLR 25 at 79.

   [7]Northern Land Council v The Commonwealth (1986) 161 CLR 1 at 8.

8. The rules referred to by Kirby J were the relevant High Court rules.  As is generally the case with rules of Court, they are prepared for the guidance of those who use the Court, can usually be dispensed with and rarely represent the limits of the Court’s power.  The latter proposition is particularly the case in respect of a superior Court, whether of general or limited jurisdiction, that has inherent or at least ancillary or incidental powers.

9. There was no suggestion from the parties’ submissions in the matter before me that there is any controversy about the applicable principles.  As was the situation before the High Court in Lindon, unless the wife’s case is clearly frivolous or vexatious, the respondents need to establish that the wife has no reasonable likelihood of success, and in the published version, I will make a reference to a decision of Bretton & Bondi in that regard in respect of the claim under challenge.

10. The respondents are required to make their case on the face of the wife’s documents.  This application is being determined prior to the making of trial directions and, therefore, before the evidence-in-chief of the parties has been filed and served.  That leaves the respondents to establish that the wife’s claim has no reasonable likelihood of success no matter what evidence she might adduce, hence the focus on her pleadings.  Even then, as is referred to in the passage cited above from Kirby J in Lindon, if, notwithstanding the defects in the pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings.

11. The wife’s claim against the second respondent is that she has the legal title to property of the husband and, therefore, should be deemed to hold some or all of that property on trust for him. She further seeks that there be an accounting to her for funds by reason of her claims against the husband under s 79 of the Family Law Act 1975 (Cth) (“the Act”). On 19 January 2019, the wife was ordered to amend her points of claim. At annexure B to her second further amended initiating application family law, the wife sets out very extensive points of claim. Relevantly, the wife asserts:

    ·That the husband registered P1 Pty Ltd on 4 June 2008.  That is point of claim number 16. 

    ·That company was the vehicle for the husband’s allied health business called P, which I have referred to as P1, point of claim number 18.

    ·The wife and her husband commenced their relationship about 2009, number 2. 

    ·In about December 2010, the wife ceased her own allied health business and commenced working in P1 and in operations and management, numbers 20 and 21. 

    ·The wife contributed to the development and growth of P1 both financially and non-financially, 22 and 23. 

    ·The wife was neither a director or shareholder of P1.  In 2012, the husband and wife invested $200,000 into P1 for the purchase of equipment, 26. 

    ·In about September 2012, P1 opened a centre in, Sydney, in premises it leased, 27 and 28.

    ·The wife ceased working full-time in P1 in late 2012 in anticipation of having a child, 29. 

    ·X was born in 2013, 5. 

    ·In about 2013, the husband and second respondent commenced their relationship, 12. 

    ·The husband and wife separated first in December 2013, attempted a reconciliation in March 2014, and their final separation was on 4 July 2014; 6, 7 and 8. 

    ·In about August 2014, the husband and the second respondent commenced living together, 13.

    ·From 2015, the husband established a group of companies under the banner P Group, 30. 

    ·From 6 March 2015, the husband registered P2 Proprietary Limited, and he is the sole director and holds 100 ordinary shares but is not registered as holding the shares beneficially; 31, 32 and 33. 

    ·Also on 6 March 2015, P3 Proprietary Limited was registered with the second respondent and the husband as the directors and shareholders, 34 and 35.

    ·In October 2015, P1 went into voluntary liquidation, 90. 

    ·In October and November 2015, the following companies were registered with the second respondent as the sole director, shareholder and secretary, 37 to 63 inclusive: 

    ·P4 Proprietary Limited, P5 Proprietary Limited, P6 Proprietary Limited, P7 Proprietary Limited, P8 Proprietary Limited, P9 Proprietary Limited, Goode Proprietary Limited, P10 Proprietary Limited, P11 Proprietary Limited.  All of those steps were intended by the husband to defeat the wife’s claims for property settlement, 77. 

    ·The second respondent was aware or should have been aware of that fact, 78.

    ·On 10 December 2015, P1 contracted with P13 Proprietary Limited to sell the P1 intellectual property (website, domain name, brand and associated trading names, email marketing database and social media platforms on Facebook, Instagram, YouTube and Twitter), all done to reduce the matrimonial property pool, 79 to 82 inclusive. 

    ·On or before January 2016, P1 sold its plant and equipment to the P Group for $7,350.  That was not an arms-length transaction nor was it for value.  Again, it was intended to reduce the matrimonial pool; 86, 87, 88 and 89.

    ·In January 2016, the husband resolved to wind up P1, and on 19 January 2016, liquidators were appointed.  Prior to the appointment of liquidators to P1, it had ceased to trade; 91, 92 and 93. 

    ·As at 19 January 2016, the plant and equipment of P1 were shown in its accounts as having no value, whereas in the 30 June 2015 accounts, they were shown at $141,509, 84 and 85. 

    ·At some point, R Proprietary Limited became known as P12 Proprietary Limited, and since 23 April 2016, the second respondent has been the sole director and secretary.  She is the sole shareholder but is not registered as holding the shares beneficially, 64 to 69 inclusive.

    ·On 21 March 2017, liquidators reported that there were anomalies in relation to P1 and its liquidation, including a loan owing by P1 to the husband of nearly $500,000.  That was not consistently disclosed in the company accounts.  There were other discrepancies in the accounts and a pre-appointment sales agreement that did not appear to be at arms-length and may have been voidable, 94. 

    ·The P Group has continued to operate the P1 business with P1 intellectual property and plant and equipment out of the same Sydney Street premises used by P1, as well as out of new premises at Suburb M, all using the P2 trading name and logos.  The P Group business is a continuation of the P1 business, 95 to 101 inclusive.

    ·In late 2016 or early 2017, P2 sold the business operated at the Sydney premises for US$800,000, 102. 

    ·The second respondent and/or P2 benefited from that payment, 103. 

    ·Despite the purported sales, the husband continues to represent himself as being the founder and CEO of the P2 Business from “2008 to the present”, with roles associated with “the strategic growth and management of the team overall”, 106. 

    ·The second respondent is listed as business development manager on the business website, 108. 

    ·Therefore, the ownership of P2 is a sham intended to reduce the matrimonial funds available for distribution between the husband and the wife.  The second respondent must have known that, and therefore, she holds her interest in shares in the group companies on trust for the husband, 116 and 117.

1. There were further points of claim set out in a letter dated 26 March 2019, which is exhibit 3, from the solicitors for the wife to those for the husband, but I do not think that I need to summarise them here.  Apart from a complaint that there are too many points of claim, it is submitted on behalf of the husband that they should be struck out because it is difficult, if not impossible, to discern which of the points of claim gives rise to a cause of action leading to the relief sought.  One could argue with the wording of the points of claim and the associated particulars, but in my view, the contentions of the wife are plain.

2. An earlier complaint about the recent pleading was responded to on behalf of the wife by the letter dated 26 March 2019, which is said to raise issues under Part VIIIAA of the Act. It is noted that none of the companies named have been joined in the proceedings. That is so, but the wife’s claim is apparently not against them but against a shareholder, the second respondent. Although apparent from the wife’s application, that is confirmed in the letter.

3. The wife seeks the payment she does from the second respondent because she contends that so as to defeat her matrimonial property claims, the assets of the business established by the husband and built up by him and the wife during their marriage have been fraudulently transferred to the second respondent’s companies.  At one point, what might have been just some of those assets were sold for US$800,000.

4. For the second respondent, it is submitted that there is no evidence that there was a valuable asset in P1.  Reference was made to the liquidator’s report about P1 and their finding of a deficiency of over $1.6 million and that the business ran at a loss over the years since 2016.  That last fact, it is submitted, accounts for the liquidator’s finding that there was no good will in the company.

5. It is implicit in the wife’s case that there was value in P1 and that there is value in the P companies.  She will be obliged to establish those propositions.  There is no evidence before me about the status of the debts proved in the P1 liquidation.  One of them was an ambiguous loan owing to the husband.  I say ambiguous because, although a debt to the company, it would represent an asset of the marriage.

6. For the wife to succeed, there would need to be a net value in the second respondent’s P2 company shares and/or in her other assets.  The fact that the husband publishes material that asserts that the current business is a continuation of an earlier business and that he is its founder and CEO is revealing and may tend to support the wife’s case.

7. I am very conscious of the importance of the summary dismissal decision.  If the wife’s claim is allowed to proceed but is unsuccessful, then she and the other parties will be put to costs that, as I am presently advised, could never be recovered.  Those costs could be substantial.  In other words, if the wife’s claim has no reasonable likelihood of success, it would be as much a kindness to her as it would to the respondents, for it to be dismissed.  That said, as the authorities make plain, the Court should not likely interfere with a person’s right to present a genuine claim for judicial determination.

8. Of course, the wife might not be able to make her case.  She alleges that she is the victim of fraudulent conduct by the husband and that, ultimately, the second respondent has unjustly received assets to which she has a claim.  There are practical factual issues facing the wife, as identified by Mr Levy on behalf of the second respondent.   However, as was noted in Lindon above at page 256, the advantages and opportunity of a trial “will sometimes turn an apparently unpromising cause into a successful judgment”.

9. In my view, the circumstances outlined in the points of claim raise very serious factual and legal questions, and there should continue to be an opportunity to have them determined at a trial.  The respondents have not established that the wife’s case has no reasonable likelihood of success.  The applications for summary dismissal will be dismissed.

SECURITY FOR COSTS

1. Turning to the application for security for costs.  By order sought in a response to an application in a case filed 26 March 2019, the husband seeks at paragraph 8 – that in the event that the wife is permitted to re-plead a case as to the imposition of a constructive trust as between the first and second respondent or to continue the present claim if her points of claim and relief sought are not struck out, that the wife provide to the first respondent by way of security for costs pursuant to s 117 and rule 19.05 the sum of $100,000.

2. I was taken to no formal application or response on behalf of the second respondent, but by her written submissions, she also seeks security for her costs in relation to the wife’s claims against her.  Her counsel advised that she, too, seeks an order against the wife for $100,000 by way of security for costs.  The summary dismissal application will not be granted, and therefore, these applications remain on foot.

3. As to the legal position, subrule 19.05 deals with applications for security for costs, including matters to which the Court may have regard in determining those applications.  The subrule provides as follows:

   (1)A respondent may apply for an order that the applicant in the case give security for the respondent’s costs.

4. There is a note to the rule:

   Chapter 5 sets out the procedure for making an application for interim, procedural, ancillary or other incidental orders.  (2)  In deciding whether to make an order, the court may consider any of the following matters:  (a) the applicant’s financial means, (b) the prospects of success or merits of the application, (c) the genuineness of the application, (d) whether the applicant’s lack of financial means was caused by the respondent’s conduct, (e) whether an order for security for costs would be oppressive or would stifle the case, (f) whether the case involves a matter of public importance, (g) whether a party has an order, in the same or another case, including a case in another court, against the other party for costs that remains unpaid, (h) whether the applicant ordinarily resides outside Australia, (i) the likely costs of the case, (j) whether the applicant is a corporation, (k) whether a party is receiving legal aid.

5. The parties have provided cost notices.  The husband’s cost notice does not disaggregate the costs of the property proceedings from those for the balance of the case and is not as helpful in this context as it might be.  However, the notice provided for the second respondent reveals costs to date of $84,984 and an estimate to the conclusion of the hearing of a further $117,525.  The wife is impecunious.  She receives an income of $1,829 and spends $2,149 each week.  Her property has an estimated value of $32,393, and her debts amount to $187,907.  The wife’s superannuation has a value of $46,571.  If the wife’s property settlement claims succeed, she will have the benefit of that settlement.

6. It is submitted on behalf of the husband and the second respondent that if not having no reasonable likelihood of success, the wife’s case is, nevertheless, weak.  I am not sure about defining further grades of viability of the wife’s claim. Suffice it to say that the wife’s claim has a reasonable likelihood of success.  There is no reason to doubt the genuineness of the wife’s application.  The claim against the second respondent aside, it cannot be asserted that the wife’s lack of financial means was caused by the respondent’s conduct.  It is conceded that the making of an order for security for costs will stifle the litigation.  There is no issue of public importance.  There are no unpaid costs.  What I know about the likely costs is referred to above.  There is no legal aid.

7. On balance, there should be no order for security for costs.  Albeit that the wife’s case is not a strong one, she has a prospect of success.  Security for costs is likely to stifle the litigation, as the wife is impecunious.

INTERIM SPOUSAL MAINTENANCE

1. Turning now to the application to review an order for interim spousal maintenance.  The husband’s application in a case filed 12 January 2018 seeks a review of a decision of a registrar made on 9 January 2018 for interim spousal maintenance.  A review proceeds by hearing de novo.  The original order was made by consent.  It follows from the review application that the husband no longer consents to pay interim spousal maintenance; therefore, I have before me contested proceedings in which the husband seeks that the order made on 9 January 2018 be discharged as at the date to which it stands paid.  That is not entirely clear from the husband’s response filed 26 March 2019 but was made clear by his learned senior counsel in submissions.

2. As to the wife’s claim, the written submissions suggest that she simply seeks that the order not be discharged.  She had originally sought $975 per week by an application made on 15 December 2017.  That was the application before the Court when the consent orders were made.  However, as learned senior counsel for the husband noted in his submissions, by way of interim order sought in the second further amended initiating application family law, the wife’s claim is for $1,454.93 per week; therefore, the husband seeks that the order be discharged as at the date to which it stands paid, and the wife seeks that it be varied by increasing the rate to $1,554.93.

3. As to the legal position, s 72 and s 74 identify the Court’s jurisdiction in relation to spousal maintenance.  Section 72 relevantly provides:

   A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether by reason of having the care and control of a child of the marriage who has not attained the age of 18 years or by reason of age, physical or mental incapacity for appropriate gainful employment or for any other adequate reason. –

   … 

4. All of those matters are to be determined having regard to any relevant matter referred to in subsection 75(2).

5. Section 74, the power of the Court in spousal maintenance proceedings:

   (1)In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.

   (2)If:

   (a)an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and

   (b)either of the following subparagraphs apply to a party to the marriage:

   (i)when the application was made, the party was a bankrupt;

   (ii)after the application was made but before the proceedings are finally determined, the party became a bankrupt; and

   (c)the bankruptcy trustee applies to the court to be joined as a party to the proceedings; and

   (d)the court is satisfied that the interests of the bankrupt's creditors may be affected by the making of an order under this section in the proceedings;

   the court must join the bankruptcy trustee as a party to the proceedings.

   (3)If a bankruptcy trustee is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the bankrupt party to the marriage is not entitled to make a submission to the court in connection with any vested bankruptcy property in relation to the bankrupt party.

   (4)The court must not grant leave under subsection (3) unless the court is satisfied that there are exceptional circumstances.

   (5)If:

   (a)an application is made for an order under this section in proceedings between the parties to a marriage with respect to the maintenance of a party to the marriage; and

   (b)either of the following subparagraphs apply to a party to the marriage (the debtor party ):

   (i)when the application was made, the party was a debtor subject to a personal insolvency agreement; or

(ii)after the application was made but before it is finally determined, the party becomes a debtor subject to a personal insolvency agreement; and

(c)the trustee of the agreement applies to the court to be joined as a party to the proceedings; and

(d)the court is satisfied that the interests of the debtor party's creditors may be affected by the making of an order under this section in the proceedings;

the court must join the trustee of the agreement as a party to the proceedings.

(6)If the trustee of a personal insolvency agreement is a party to proceedings with respect to the maintenance of a party to a marriage, then, except with the leave of the court, the party to the marriage who is the debtor subject to the agreement is not entitled to make a submission to the court in connection with any property subject to the agreement.

(7)The court must not grant leave under subsection (6) unless the court is satisfied that there are exceptional circumstances.

(8)For the purposes of subsections (2) and (5), an application for an order under this section is taken to be finally determined when:

(a)the application is withdrawn or dismissed; or

(b)an order (other than an interim order) is made as a result of the application.

1. Among other things, s 80 of the Act permits orders to be made until further order. The review proceedings were brought about by the wife’s indirect disclosure to the husband one day after the interim maintenance order was made by consent, that she was pregnant to her current partner, Mr D.

2. It falls to the wife to demonstrate that she is unable to support herself adequately and that there is an adequate reason for that fact.  If she can do that, the Court may order the husband to provide support to the extent that he is reasonably able to do so.

3. The determination of those matters is to be undertaken by reference to the matters in s 75(2), which are relevantly as follows.  The wife is 41 years of age, and the husband is 36.  Neither of the parents raises any relevant issue about their health.  I have referred earlier to the wife’s financial circumstances.  According to her financial statement, her weekly income of $1,828.75 is said to be broken up as follows:  wages as an employee, $200; Centrelink benefits, $680; child support for X, $48.75; spousal maintenance, $500; child support for Y, $200.  Those amounts only add up to $1,628.75.

4. In respect of two entries in item 13 about X’s child support and the spousal maintenance paid by the husband, the financial statement is endorsed “(see note)”.  I was unable to find a relevant note.  As to child support, the husband deposes that the current assessment is for $258.85 per month or $59.50 per week.  It is not clear why the wife receives less than the assessed amount or, indeed, why she receives less than the husband is paying.  In her affidavit, at paragraph 51, the wife deposes that the husband is in arrears with spousal maintenance by $4,000.

5. For the purposes of my present inquiry, I must ignore the Centrelink benefits received by the wife as a result of s 75(3) of the Act. I will also ignore the spousal maintenance that is being paid. I am not to conflate the issues of X’s child support and spousal maintenance for the wife (see Stein & Stein [2000] FamCA 102; (2000) FLC 93-004).  For a similar reason, I will not conflate the issues of Y’s support and that for the wife.  That leaves the wife with an income, for present purposes, of $285.75 per week.

6. The wife’s claimed expenses amount to $2,149.  If I deduct the expenses for the children; the wife’s expenses, which are her fixed expenses; and her portion of the living expenses set out at part N of her financial statement, they total about $1,655 per week.  That leaves the wife with a weekly shortfall of about $1,369.

7. One of the largest fixed expenses of the wife is her rent.  She says she currently spends $806.93 per week on rent.  The notes to the wife’s financial statement suggest that that figure might represent 90 per cent of her rent because of a tax deduction; however, in the same document, the wife says she pays no tax.  I cannot make any sense of that.  I also note that in the wife’s Centrelink income is an unidentified amount for rental assistance.

8. As to the wife’s earning capacity, a note the wife’s financial statement in part O in respect of item 11 includes, “The wife has temporarily ceased her allied health business due to the birth of Y.”  That makes the demands of Y’s care relevant to these proceedings.  Suffice it to say that the impact of Y’s birth and of her care did not arise from the parties’ marriage.

9. The wife alleges that the husband has sought to interfere with her securing work in the same industry, and the husband disputes those claims.  That would not seem to be a relevant issue for the purposes of the current proceedings.  The conduct complained of was in 2016, and there is no suggestion that if she was otherwise ready to increase her work, she could not do that through her longstanding and current employer or through her own business, for example.

10. As to the other possible sources of support, one might expect that the obligation for the wife’s support might have changed now that she has re-partnered. There is no evidence suggesting that the wife and Mr D intend to marry. That would be relevant because an order with respect to the maintenance of a party to a marriage ceases to have effect upon the remarriage of the party unless, in special circumstances, a Court, having jurisdiction under the Family Law Act, otherwise orders. And that is a reference to s 82(4) of the Act.

11. The wife says that she is receiving financial support from Mr D but only for their daughter Y.  In addition to payments for particular purchases related to Y, Mr D pays the wife $200 a week for Y’s support.  The wife deposed that Mr D is Y’s father; that he is her partner; that he resides in England and is self-employed in the City J area.  However, the wife deposed that after a relocation to England, she would not be required to have paid work and that “Mr D’s income is able to provide for the family”.

12. Mr D confirms at paragraph 7 of his affidavit the wife’s evidence about his current financial support for X.  He confirms the plans that he and the wife have for her to relocate to England and to live.  Mr D works in the City J area, but in the event that the wife is permitted to relocate, X, he and the wife will, it is proposed, live in a small town near City M.  Mr D would transition his work from the City J area to the City M area, where he worked some years ago.

13. Importantly, neither the wife nor Mr D gave detailed evidence about his financial circumstances nor about his ability to provide financial support to the wife beyond what he pays for Y.  There is absolutely no obligation on Mr D to provide that disclosure in these proceedings, but the wife has the onus of establishing that she requires support from the husband. That means she is required to give evidence about other potential sources of support.

14. The husband offers a very positive view about the nature and extent of Mr D’s business, apparently based on published reports of Mr D’s activities around the world.  The husband’s evidence is of little probative value, but it is distracting that no effort has been made by the wife to address Mr D’s inclination or capacity to support her.

15. Mr D says that if the wife is able to relocate, the plan is for him and the wife to live in an apartment he owns.  As to the wife’s suggestion that if she is permitted to relocate, she would not be required to have paid work, and that Mr D’s income is able to provide for the family, Mr D did not confirm or challenge that evidence; however, he deposed that if the relocation is permitted, he would be able to assist the wife to obtain work, which begs the question, would it be financially necessary for the wife to engage in paid employment in those circumstances?

1. The wife told the author of the family report, Ms E, that in the event that she is not permitted to relocate with X to England, she will remain living in Suburb B, and Mr D would commence the process of applying to immigrate to Australia.  She said that they had consulted an immigration lawyer about that prospect.  The wife told Ms E that she and Mr D had been advised that the likelihood of success of such an application by Mr D was 48 per cent.  She said that if successful, Mr D would not be able to work – I assume she means not be able to engage in paid employment – for a substantial period.

2. The wife and Mr D both told Ms E that they were also concerned that it would be difficult for Mr D to work in the same industry in Australia because of what they assert will be the malign influence of the husband.  The wife says that she has managed by using moneys borrowed from her father.  She owes her father over $144,000.  There is no indication of there being any limit to that source of funds.

3. As to what would be reasonable for the husband to provide, if anything, the husband declares a weekly shortfall in his budget of $3,187.  He deposes to a current income of $1,923 a week but says that his accountant has told him that by the end of this financial year, his income will be $2,300 per week.  The husband estimates his property to have a value of $65,005 and his debts to amount to $344,178.  The husband has no superannuation.  Again, if the wife’s property settlement claim succeeds, he will have the benefit of the balance of any matrimonial assets in that settlement.

4. The husband deposed that the second respondent bought the property they occupy at Suburb S in the state of New South Wales in her sole name.  The husband says at paragraph 201 of his affidavit that the second respondent receives $80,000 from a director’s wage.  He says that she receives additional income from dividends, loan repayments and other sources, but he does not know the specifics of those additional amounts.

5. As to the husband’s weekly liabilities, they total $5,110.  He says he has $2,110 in fixed expenses, which includes $1,000 per week to repay a company associated with the father of the second respondent for moneys borrowed for the husband’s legal fees in these proceedings, as well as $251 per week for child support and related payments for the benefit of X.

6. The balance of the husband’s liabilities total $2,000 per week, which he apportions as to $600 for his expenses, $620 per week for the four children and $780 per week for the second respondent.  I apprehend that at least some, if not most, of the expense for children relates to the three children of the second respondent.

7. The question becomes whether it is reasonable that those expenses have priority over the husband’s obligation to support the wife.  In order to identify a surplus in the husband’s weekly budget, it would be necessary to make very serious inroads into his current expenditure.  Indeed, his fixed expenses, which were not the subject of any challenge, together with his own living expenses, would exceed his income by more than $200 a week.  Notwithstanding the declared shortfall on the husband’s weekly budget, it was fairly conceded in the husband’s case that he has been able to make the payments under the current order at $500 a week.

8. As to whether either party has the care and control of a child of the marriage, the parents share the care of X, with the main parenting load falling to the wife.  As to the commitments that are necessary for the parties to support themselves or others, the parties’ financial statements set out the details of their weekly expenditure.  As I have set out earlier in these reasons, each of them spends substantially more than their income.  The parties have not specifically addressed in their evidence the necessity for any particular payment.

9. As to the responsibilities of either party to support any other person, s 90SF of the Act contains a similar obligation to maintain between parties to a de facto relationship, as is established by s 72, for the parties to marriages. However, unlike the wording of s 72, the principle in s 90SF is expressly limited to a Court exercising jurisdiction under s 90SE and only after being satisfied of the matters limiting that jurisdiction, including the timing and geographical requirements in the legislation. Further, unlike the wording of s 72, the principle in s 90SE in respect of de facto relationships is expressly limited to circumstances after the breakdown of the relationship in question.

10. Arguably, while there is an obligation of support between parties to a marriage, a similar obligation between parties to a de facto relationship only exists upon the breakdown of that relationship and for the purposes of competent proceedings under the Family Law Act. That would mean that whereas the husband has an obligation to support the wife in certain circumstances, save in respect of support for Y, Mr D has no such obligation.

11. I have referred to the evidence about the wife’s Centrelink income.  There is no evidence before me about the relevant standards of living.  As to s 75(2)(h), as I understand the evidence, each of the parties had training and experience in the industry prior to the commencement of their relationship.  There is no evidence about the wife planning to undertake further study.  There is no indication that the wife plans to embark on a new business.  On one view, it seems to be the wife’s expectation that she will not be required to have paid employment following a relocation to England.

12. As to 75(2)(j), the scope of the husband’s income and property is the subject of substantive proceedings before the Court.  The extent of the financial resource available to each of the parties from their current partners has not been fully revealed in the evidence.  As to (k), the marriage endured for nearly four years.  There is no assertion that the marriage itself affected the earning capacities of either the husband or the wife.

13. As to the need to protect a party who wishes to continue that party’s role as a parent: the birth of Y in July 2018 adversely affected the wife’s involvement in paid employment.  I have referred above to the wife’s apparent expectations about paid employment if she relocates to England.  She has continued with some work in Australia.  I do not recall any evidence about her intentions in that regard in the short term.

14. As to the circumstances of cohabitation in 75(2)(m), the husband lives with the second respondent.  They share various household and living expenses.  The second respondent benefits from his expenditure and vice versa.  There is no evidence of the detail of any particular payment by either of them.  Although the extent of their cohabitation has not been spelled out, I gather that, at times, the wife and Mr D have cohabited.  The threshold concerned in the proceedings relates to the wife’s need.  She has a partner who she says will fully support her if she is permitted to relocate to England.  According to the wife and Mr D, his current support is only provided towards the expenses associated with their daughter Y.

15. In F & F (1982) FLC 91-214, Fogarty J determined interim proceedings for child and spousal maintenance, in an era before the Child Support Scheme, when the Court had unfettered jurisdiction in relation to child maintenance. His Honour dismissed the spousal maintenance application of the wife’s claim and referred to the fact of her having a new partner. The issue was addressed in the following terms starting at paragraph 16 of the judgment:

    The last matter raised by the husband relates to Mr T.  It appears from the evidence of the wife and Mr T that they had known each other and had formed some association shortly prior to the wife leaving her husband in June 1981.  Mr T is in the Australian Regular Army.  He appears to be free on most weekends.  Immediately after the wife separated, the practice was for Mr T to live with the wife each weekend that he was on leave from Friday night to Sunday night, and as it turned out, that has been virtually every weekend up to the present time.  In addition, he had about five weeks leave over the Christmas period, four weeks or so of which he spent with the wife and the balance visiting his parents.  It was also clear that the question of marriage is in contemplation between them, although no decision has been formed about it.

    I would conclude that they were living in what might be described as an ordinary de facto relationship, subject only to the requirements of his employment.  However, neither of them would countenance that suggestion at all.  It was the evidence of both the wife and Mr T that Mr T makes no financial contribution to the wife or her household.  This was explained on several bases — partly his financial responsibility to the extent of $80 per week to his estranged wife and children and partly because he did not consider it necessary or appropriate to do so because of the absence of any “commitment” between himself and the wife.

    No doubt the wife and Mr T are entitled to make any personal or financial arrangements between them which are suitable to both of them.  That, however, does not mean that the wife may continue to impose upon her husband the responsibility for her support in those circumstances.

    Section 75(2)(m) provides that the Court may take into account the following:  “If the party whose maintenance is under consideration is cohabiting with another person — the financial circumstances relating to the cohabitation.”  In my view, in a special case such as this, the term “the financial circumstances relating to the cohabitation” is not confined to any actual financial arrangements between the relevant persons.  It may also include financial arrangements which would be appropriate in those circumstances.  That is, the Court is entitled to take “this potential into account”, as Wood SJ pointed out in Patterson & Patterson (1979) case.

    It would, in my view, be quite inappropriate for a wife to live in a completely de facto relationship with another person, who contributes nothing to that household although able to do so, and still expect the husband to pay maintenance for her and that household.  The husband is obliged to pay maintenance for the children (which includes a portion of the overall expenses of the household, such as rental) but is not obliged to contribute to the support of Mr T and, in my view, is not obliged to contribute to the wife’s maintenance.

    If it were necessary to do so, I would conclude that, in any event, the facts and circumstances of this case are such that the justice of the case requires them to be taken into account.  That’s within section 75(2)(o).

    Different considerations may apply where the association is a transitory personal or sexual one or where the other person concerned has no financial capacity to contribute.  However, that is far from the case here.

    In my view, the husband is not obliged to contribute to the maintenance of his wife.  That may mean that the wife may be entitled to receive a pension.  That is up to the Department of Social Welfare to determine by an application of its criteria to the facts of the case, a matter about which I feel it inappropriate for me to express a view.

16. The circumstances of the wife and Mr D appear to have some similarities with those of the wife and Mr T in F & F; however, dictated by their main residences being on different sides of the globe, the cohabitation of the wife and Mr D is significantly less extensive than the situation in the earlier case.  That said, they clearly plan to live together.

17. There have been a number of other first instance decisions (See Montoya & Montoya [2017] FamCA 667; Woden & Silver (No 2) [2015] FamCA 1108; and McGarey & Stancati [2013] FamCA 366, involving the maintenance of a former spouse who is living in a new relationship. I accept that none of the decisions referred to establish a binding principle about the issues before me.

18. As to the child support, as I have set out above, there is conflicting evidence about the current child support assessment.  I do not recall evidence about the date of the assessment or the period for which it applies.  As to (o) in s 75(2), it is relevant to note that despite the wife’s failure to advise him in advance that she was pregnant to Mr D, the husband has substantially complied with the order since January 2018.  It is also relevant to note that the husband does not seek the discharge of the order as from the date it was made but as from the date to which it stands paid.  In my view, although perhaps appropriate, each of those concessions by the husband is a generous one.

19. The spousal maintenance inquiry commences with the wife establishing an inability to adequately support herself.  In my view, she has not discharged that onus.  She has left unaddressed the scope for her support from Mr D.  Even if she satisfied the Court about that issue, it is unlikely that the Court would find that it was reasonable that the husband provide the required support save for the concession in his case that he has the capacity to provide at least the support he has been providing.

20. Of course, in the broader context of the proceedings, there may be an issue about the financial viability of the wife’s household in Australia, where the parties have a common interest for the medium term.  That is more a matter for the parties than it is for the Court.

21. In conclusion, the wife cannot satisfy the Court that she is unable to adequately support herself, and therefore, her application must fail.

I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 5 April 2019.

Associate: 

Date:  9 May 2019