Min & Orton
[2021] FamCA 502
•12 July 2021
FAMILY COURT OF AUSTRALIA
Min & Orton [2021] FamCA 502
File number(s): SYC 1579 of 2021 Judgment of: REES J Date of judgment: 12 July 2021 Catchwords: FAMILY LAW – INTERIM FINANCIAL RELIEF – Application by the wife for spousal maintenance and a “dollar for dollar” order against the husband – Where the wife did not satisfy the threshold of being unable to support herself – Consideration of Salvage & Fosse – Where the Court was not satisfied the wife held “no real prospects of obtaining justice without an order for costs being made” – Applications dismissed.
FAMILY LAW – PRACTICE AND PROCEDURE – Application for summary dismissal – Where the husband seeks to rectify a financial agreement between the parties –Consideration of Karlsson & Karlsson – Where the Court was not satisfied the husband’s case held “no reasonable prospects of success” – Application dismissed.
Legislation: Family Law Act 1975 (Cth) ss 45A(2), 45A(3), 90UB, 90UJ(3), 117 Cases cited: Karlsson & Karlsson [2020] FamCAFC 207
Salvage & Fosse (2020) 61 Fam LR 45; [2020] FamCAFC 144
Number of paragraphs: 44 Date of hearing: 8 July 2021 Place: Sydney Solicitor for the Applicant: Mr Brown, Browns The Family Lawyers Counsel for the Respondent: Mr Richardson SC Solicitor for the Respondent: Clinch Long Woodbridge Lawyers ORDERS
SYC 1579 of 2021 BETWEEN: MS MIN
Applicant
AND: MR ORTON
Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
12 JULY 2021
THE COURT ORDERS:
1.That the wife’s application for interim spousal maintenance filed 8 March 2021 is dismissed.
2.That the wife’s application for summary dismissal of the husband’s response filed 17 May 2021 is dismissed.
3.That the wife’s application for “dollar for dollar” litigation funding is dismissed.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Min & Orton has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
Ms Min (“the wife”) and Mr Orton (“the husband”) entered into a Financial Agreement (“the agreement”) on 1 August 2013. That agreement was expressed to be a “Part VIIIAB financial agreement under Section 90UB of the Family Law Act 1975 (Cth)” (“the Act”).
Section 90UB of the Act makes provision for parties who contemplate entering into a de facto relationship to enter into a binding financial agreement.
Relevantly, for present purposes, the agreement provided for the payment of the sum of $50,000 to the wife on separation and dealt with her rights to spousal maintenance.
Section 90UJ(3) provides:
A Part VIIIAB financial agreement ceases to be binding if, after making the agreement, the parties to the agreement marry each other.
The parties married in 2014 and separated on 2 September 2020.
The husband paid the wife $50,000.
On 8 March 2021, the wife filed an application seeking a division of the property pool of the marriage. By way of interim relief, she also sought an order for interim spousal maintenance in the sum of $1,090 per week.
On 17 May 2021, the husband filed a response to the wife’s Initiating Application, seeking rectification of the financial agreement so that the agreement also referred to both Part VIIIA and s 90B of the Act.
The husband’s contention is that the agreement was intended to refer both to the contemplation of a de facto relationship and the contemplation of marriage.
On 11 June 2021, the wife filed an Application in a Case seeking a “dollar for dollar” costs order against the husband and summary dismissal of his response.
The issues to be determined on an interim basis are therefore:
·The wife’s application for spousal maintenance
·The wife’s application for summary dismissal of the response
·The wife’s application for a litigation funding order.
The husband’s primary position was that the wife’s applications should be adjourned until such time as his substantive application for rectification has been heard and determined.
I declined to grant an adjournment.
Unless rectified, as the husband seeks, the agreement executed on 1 August 2013 is not, by virtue of the provisions of s 90UJ(3), binding and the jurisdiction of the Court to hear and determine the wife’s interim applications is unaffected.
SPOUSAL MAINTENANCE
The wife seeks an order for payment of $1,090 per week by way of interim spousal maintenance.
That order is opposed by the husband on whose behalf it was submitted that she does not meet the threshold test of being unable to support herself. On behalf of the husband, his capacity to pay was conceded.
Further, senior counsel for the husband contended that the wife’s expenses were exaggerated.
The wife is 51 years old and she has not been employed for the past seven years. She has experience and qualifications as a technician and speaks five languages, including English. She also has qualifications and experience in education including a Certificate III and Diploma.
The wife deposed that she is currently receiving training in computer skills and will finish that training in late July or early August 2021.
There is no evidence of her having applied for employment in either of the fields for which she has qualifications.
When the wife swore her financial statement on 8 March 2021, she deposed to having cash in the bank of $287,830. The majority of those funds, some $273,004 was held in B Bank. A further $14,826 was held in other banks. The B Bank statement dated 25 May 2021 showed that the wife, at that date, had $271,328 in B Bank. There is no evidence that the amount of $14,826 had been depleted. I therefore find that the wife has cash available to her of $286,154.
The wife owns an unencumbered home unit which is tenanted and for which she receives net rent of $343. For reasons which she did not explain, she has chosen not to live in her unit but pays $500 per week for rented accommodation. For the purpose of this determination, I will disregard the rent which the wife receives and also disregard the rent which she pays.
The wife deposed that she pays her sister $115 per week. The wife deposed that she borrowed $100,000 from her sister in 1998 for the purchase of her unit. She gave no evidence of the terms of the borrowing. There is no evidence that, after some 23 years, her sister has sought repayment of the loan or that there is any legal requirement for the wife to make repayments. I propose to disregard those payments.
I will also disregard the claimed credit card repayments of $45 per week. To allow those payments would be to “double dip” as the wife’s living expenses will be taken into account and the credit card expenses are, I infer, payments of her living expenses.
The wife’s estimate of her Part N expenses is $780. That estimate includes $35 per week for “time share”. No interest in a time share is declared as an asset. That amount will be deducted from her expenses, leaving a claimed amount of $745 per week.
Whether that claim is accurate is doubtful. Between 8 March 2021 when she swore her financial statement and 25 May 2021, her bank accounts were reduced by $1,676 despite the fact that she paid $9,953 off her credit card. The credit card statements show that between 11 March 2021 and 1 June 2021, the wife’s credit card balance was paid in full each month from her B Bank account. Those discrepancies are not addressed by her receipt of JobSeeker Allowance of $453 per week.
I am not satisfied that the wife has demonstrated that she meets the threshold test of being unable to support herself and her application for spousal maintenance will be dismissed.
SUMMARY DISMISSAL
The provisions of subsections 45A(2) and (3) of the Act, which are reproduced below, govern the application:
No reasonable prospect of successfully prosecuting proceedings
(2)The court may make a decree for one party against another in relation to the whole or any part of a proceedings if:
(a)the first party is defending the proceedings or that part of the proceedings; and
(b)the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
When there is no reasonable prospect of success
(3)For the purposes of this section, a defence or proceedings or part of proceedings need not be:
(a) hopeless; or
(b) bound to fail;
to have no reasonable prospect of success.
In determining the application for summary dismissal, I am required to accept the husband’s evidence at its highest.
The husband’s case is that, when the parties entered the agreement, it was intended that the agreement would be both in contemplation of their entering into a de facto relationship and in contemplation of their marrying.
The husband asserts that there is some support for that contention in the agreement and the surrounding circumstances. He relies on the following evidence:
·A file note prepared by the husband’s solicitor on 27 May 2013 records, “She wants to get married but [the husband] not so keen”.
·The husband deposed that prior to executing the agreement, he discussed with his solicitor “the fact that [the wife] and I intended to marry”.
·Recital O of the agreement refers to the parties wishing, “to define their financial rights and responsibilities during the relationship and marriage and subsequently…”
·Recital Q of the agreement refers to “resolving the financial issues consequent upon the breakdown of the relationship and marriage”.
·Recital R refers to the agreement precluding claims by one party against the other, “in the event that:
(a)the relationship ends;
(b)the marriage irretrievably breaks down and terminates; or
(c)one of the parties dies”.
·Recital Z of the agreement defines “separate property” to include property which is, “acquired before the relationship and or/marriage or after separation” and also property acquired by gift or inheritance from a relative, “…who is not a relative of the party merely as a result of the intended marriage”.
·The husband purchased an engagement ring on 26 November 2013, a little over three months from the date of execution of the agreement.
·On 10 July 2014, the husband wrote to his solicitor advising that he and the wife would marry in 2014 and asking, “what is involved in ‘updating’ the pre nup?” The solicitor responded:
I do not think your pre-nup needs to be updated. You executed it last year (it is dated 1 August 2013) a document which was a pre-cohabitation agreement but one which was meant to cover the future, including a marriage or a separation. It will remain effective, notwithstanding your marriage.
I am conscious that other correspondence, and file notes of the husband’s solicitor, contain material which supports a contrary intention to that asserted by the husband and that other parts of the agreement also support the contention that the agreement was intended to be an agreement pursuant to s 90UB.
I am also conscious that the husband has not been asked to plead his case and that no order has been made for the filing of trial affidavits. It cannot be assumed that all relevant evidence is before the Court.
The principles relating to summary dismissal were recently restated by Ainslie-Wallace J sitting as the Full Court in Karlsson & Karlsson [2020] FamCAFC 207 in the following terms:
38.The power to summarily dismiss an action must be rarely and sparingly used (see Pelerman v Pelerman (2000) FLC 93-037). The Full Court discussed the power of the court to summarily dismiss proceedings in Bigg v Suzi (1998) FLC 92-799 at 84, 974–84, 975 and adopted the articulation of the principles of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 (“Lindon”) at 544–545, which may conveniently be summarised thus:
•it is a serious matter to deprive a party of access to the courts and the power to do so should be rarely and sparingly used;
•the party seeking summary dismissal must show that it is clear on the face of the other party’s documents that the other party lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;
•that a case appears weak and unlikely to succeed is of itself not sufficient to satisfy summary dismissal;
•if there is a serious legal question to be tried, then it should ordinarily be determined at a trial of the issues;
•where, notwithstanding a defect in the pleadings, if it appears that a party may have a reasonable cause of action which has not been put in proper form, a court will ordinarily allow that party to reframe the pleadings; and
•the “guiding principle” is doing what is “just”. In Lindon, Kirby J said at [545]:
If it is clear that proceedings within the concept of the pleading 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.
…
40.Indeed, recent authority has preferred to apply the test of “no reasonable likelihood of success” rather than “doomed to fail” (see Spencer v Commonwealth of Australia (2010) 241 CLR 118 where the High Court discussed the “bound to fail” test and Bretton & Bondai [2013] FamCAFC 168 at [59]–[60]).
41.That is not to say that the power should not, as Lindon said, be exercised sparingly and rarely, but that it will be exercised where it is clear that there is no real question to be tried (see Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd (2013) 42 VR 27 at [35]).
I am not able, at this time, to find that the husband’s case, whatever its present weaknesses, has no reasonable prospects of success and the application will be dismissed.
LITIGATION FUNDING
The application is made pursuant to the provisions of s 117 of the Act.
The wife does not seek an interim property order or an order for the provision of litigation funding by way of spousal maintenance.
The Full Court considered the making of orders for lump sum costs pursuant to s 117 in
Salvage & Fosse(2020) 61 Fam LR 45; [2020] FamCAFC 144 where the majority stated:
7.The introduction of s 79 of the Act, followed by s 90SM and, the acceptance of the making of appropriate orders dealing with only part of the property in advance of the final hearing, saw these sections relied upon to support orders for the transfer of funds for the purpose of paying legal fees to be incurred in those proceedings. Where there are assets which will be divided between the parties but which are held by only one party, this is an obvious and principled approach because, it permits each party to deal with the property that he or she will receive as a result of the division of property as they see fit, including for the payment of legal fees. It recognises the inherent unfairness of a party being able to marshal all of the assets to prosecute their claim and leaving the other party to fend for themselves without that benefit.
8.… s 117 of the Act empowers the Court to make such orders as to costs and is of sufficient width to empower the making of the order sought by the respondent in the proceedings.
9.Such a concession merely accepts a now long-held and unimpeachable jurisprudence.
10. …
11.The considerations that apply to applications under s 79 and s 90SM and, s 117 of the Act, are quite different and some care must be taken in identifying the relevant principles that apply to each (Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 ("Strahan") at [84]).
12.Importantly, in property settlement proceedings it may be sufficient for an applicant to establish that he or she would be likely to receive a property settlement that would be "sufficient to cover the advance" (Zschokke and Zschokke (1996) FLC 92-693 ("Zschokke") at 83,216). There, the Full Court of the Family Court of Australia went on to adopt the following passage from Harris and Harris (1993) FLC 92-378 at 79,930:
… [T]he Judge must be satisfied that the remaining property will be adequate to meet the legitimate expectations of both parties at the final hearing, or that the order which is contemplated is capable of being reversed or adjusted if it is subsequently necessary to do so…
13.The power to make orders in the exercise of the property power may be exercised by a series of orders, with the crucial issue being whether or not the power to make orders for the settlement of property has been exhausted or spent. Unless it has, further orders may be made with respect to property the subject of earlier orders (Gabel & Yardley (2008) FLC 93-386 at [69] and [126]). In other words, that earlier order may be taken into account or, indeed reversed, prior to or as part of the final exercise of the s 79 (or s 90SM) power without resort to s 79A of the Act and its equivalents or, an appeal. However, the notion of orders being "reversed or adjusted" does not easily apply to costs orders made in the exercise of the costs power, especially if the applicant fails. The very nature of a litigation funding order is that the funds will be spent on the costs of the proceedings, which may or may not be successful. There is a real risk that the funds can never be recovered or otherwise taken into account.
14.The critical question therefore is whether the applicant has "any real prospects of obtaining justice unless the order sought is made" (Parker v Parker (1992) 16 Fam LR 458 at 461), or in terms of s 117(2) of the Act, whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant's case and the effect of the order upon the respondent.
15.It would not be just, for example, for the respondent to have to pay the legal expenses of the applicant, where the case to be taken was weak, fanciful or misguided or where the effect on the respondent of such an order would work an injustice. We do not consider it helpful, however, for there to be a need to identify the applicant's case as strong, persuasive or such like to justify an order. That invites a descent into semantics and an artificial characterisation of the strength of the proposed proceedings. The consideration should be whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs. This conclusion accords with Zschokke at FLC 83,217, where the Full Court said:
… We agree that, as was submitted by [c]ounsel for the wife, the requirement of justice (which was expressly drawn to attention by the Full Court in Hogan and also implied by Brennan J in Breen) must remain a "basic" condition in the making of an order of the type in question under s 117(2).
(See also Strahan at [124]).
16.In this matter, the respondent faced the task of persuading not only the primary judge that she had a claim to set aside the Cohabitation Agreement of sufficient merit to justify an interim costs order but also that her subsequent property application was of sufficient merit and value to justify that course. There would be no point in providing funding to pursue a case to set aside the Cohabitation Agreement, unless the Court was satisfied that the respondent would be likely to receive a property settlement of such value as to justify that course.
17.The position is somewhat analogous to an application for leave to commence property proceedings out of time pursuant to s 44(3) (or s 44(6)) of the Act. In such proceedings, the Court looks at, amongst other things, the likely costs of the proceedings and the probable range of results. If the costs of the proceedings do not justify the likely return and would not have the effect of alleviating the applicant's hardship, then leave will not be granted (Gadzen & Simkin (2018) FLC 93-871 at [35]-[37]).
The applicant deposed that her anticipated costs of the substantive proceedings are $100,000. She has funds considerably in excess of that sum. Therefore, the applicant cannot satisfy the Court that she has no “real prospects of obtaining justice unless the order sought is made”.
Some consideration must be given to the balance of the criteria set out in s 117(2A), of which the only relevant matter is the discrepancy between the parties’ respective financial positions. It is conceded that the respondent’s position is significantly superior to that of the applicant. However, he has not filed a financial statement and the extent of his assets is not known.
I do not, however, consider that factor alone is sufficient to justify a finding that it is just to make the order sought by the applicant.
The respondent has chosen to instruct senior counsel and I infer that he will pay, in costs, a significantly greater amount than the $100,000 which the applicant anticipates paying.
The parties have provided notices pursuant to rule 19.04 indicating costs incurred to date.
A “dollar for dollar” order would be likely to have the result that the applicant would receive more money on account of costs than she actually incurs. Such a result would be unjust.
I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 12 July 2021
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