Monaghan and Farrer

[2018] FamCA 178

FAMILY COURT OF AUSTRALIA

MONAGHAN & FARRER [2018] FamCA 178

FAMILY LAW – PROPERTY – Spousal Maintenance – Interim – Where the applicant sought orders in relation to litigation funding and de facto spousal maintenance – Where the respondent is in a reasonably strong position to resist the applicant’s application to set aside the binding financial agreement (“BFA”) – Where there is a risk the respondent will not be able to recoup the money from the applicant if the applicant’s substantive application fails – Concluded the application for the lump sum costs order be dismissed – Where the BFA between the parties does not preclude the applicant’s claim for de facto spousal maintenance – Concluded the applicant is unable to support himself adequately – Ordered the respondent shall pay the applicant $750 per week by way of de facto spousal maintenance until the finalisation of these proceedings

Family Law Act 1975 (Cth) ss 90SE, 90SF, 117

APPLICANT: Mr Monaghan

RESPONDENT: Ms Farrer

FILE NUMBER: SYC 757 of 2017

DATE DELIVERED: 14 February 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Austin J

HEARING DATE: 14 February 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stenmark SC

SOLICITOR FOR THE APPLICANT: Malouf Solicitors

COUNSEL FOR THE RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE RESPONDENT: Pearson Emerson Meyer Family Lawyers

Orders

1. The Application in a Case filed by the applicant on 10 March 2017 is dismissed.

1. The oral application for costs made by Ms B and C Pty Ltd against the applicant is dismissed.

1. The respondent shall pay to the applicant the sum of $750 per week by way of de facto spousal maintenance on the following conditions:

(a)The first payment is due seven days from the date of these Orders.

(b)Payment should be made by way of direct deposit into the applicant’s account held with the St George Bank:  BSB …79; account number …48; and

(c)This Order terminates on finalisation of these proceedings.

1. Otherwise, save as to costs:

(a)The application for interim relief set out in the Initiating Application filed 8 February 2017 is dismissed;

(b)The application for interim relief set out within the Response filed 24 January 2018 is dismissed; and

(c)All other outstanding applications for interim relief are dismissed.

1. By consent, no order as to costs as between the applicant and respondent in relation to the interim hearing.

Notation

A.The parties do not require the publication of reasons for Orders 1 & 2 hereof.

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 Monaghan & Farrer 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: SYC 757 of 2017

Mr Monaghan

Applicant

And

Ms Farrer

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. In or about January 2016, the applicant and respondent separated and their de facto relationship of about five years duration ended.

2. These proceedings were commenced by the applicant about a year later in February 2017. The applicant seeks orders to set aside a binding financial agreement that the parties executed in March 2011, consequential property settlement relief under Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”), and additional orders for spousal maintenance.

3. So far, the proceedings only concern the applicant and respondent but, since at least March 2017, the applicant has contemplated the joinder of his former lawyers to the proceedings in expectation the Court would entertain his prospective claims against those lawyers in both tort and contract as those causes of action allegedly accrue to the dispute between the de facto spouses under the Act. For reasons which need not presently be discussed, the applicant has not yet joined those lawyers as parties to these proceedings.

4. The relief as sought between the applicant and respondent is as set out in the Initiating Application filed on 8 February 2017 and the Response filed on 24 January 2018. The only aspect of their dispute listed before me today is the applicant’s application for interim relief (which is opposed by the respondent) in respect of:

   (a)Litigation funding in the guise of a costs order under s 117 of the Act; and

   (b)Interim orders for de facto spousal maintenance under Part VIIIAB of the Act.

Evidence

1. The applicant relied upon:

   (a)his four affidavits filed on 8 February 2017, 4 April 2017, 5 July 2017          and 12 February 2018;

   (b)his financial statement filed on 12 February 2018;

   (c)the two affidavits of his solicitor, Mr Malouf, filed on 14 August 2017 and 25 September 2017; and

   (d)the financial report of the respondent current to 30 June 2017 (Exhibit          A1).

2. Despite contrary provisions of the Family Law Rules 2004 (Cth) (“the Rules”), the respondent did not object to either the multiplicity or lateness of the affidavits relied upon by the applicant.

3. The respondent relied upon:

   (a)her affidavit filed on 24 January 2018;

   (b)her financial statement filed on 24 January 2018;

   (c)a schedule of the applicant’s employment applications (Exhibit R1);  and

   (d)the applicant’s amended points of claim against his third-party lawyers        (Exhibit R2).

4. Without intending disrespect, there was a ridiculous amount of material adduced in evidence to deal with such limited issues. The enormous waste was revealed by there being only fleeting references made to the evidence in the course of submissions. To read the material thoroughly would have taken days, not hours. The parties were told those parts of the affidavits and exhibits not referred to in submissions would not be read and neither demurred. 

Litigation Funding

1. The applicant sought an order compelling the respondent to pay him $200,000 to meet his legal fees in these proceedings. He relied upon s 117 of the Act as the source of power for the orders.

2. The respondent conceded the Court had power to make such an order, notwithstanding the pending dispute over the binding financial agreement depriving the court of jurisdiction to adjust the parties’ property interests. Rather, the respondent simply contended the Court should exercise its discretion by abstaining from making the orders sought by the applicant.

3. The parties each contended reasons under s 117(2A) would motivate exercise of the discretion under either s 117(1) or s 117(2) in their respective favour, to which considerations I now turn.

Section 117(2A)(a)

1. The enormous disparity in the parties’ financial circumstances is not controversial. The respondent’s net worth was conceded to approximate $50 million and the applicant relies on Centrelink payments to sustain himself. 

Section 117(2A)(b)

1. Neither party is in receipt of a grant of legal aid.

Section 117(2A)(c)

1. The applicant contended that his legal costs to date have been unnecessarily increased by the contrary conduct of the respondent, but I was informed the allegation was refuted and, since it was conceded no evidence before me addressed the issue, the submission is disregarded.

Sections 117(2A)(d), (e) and (f)

1. Neither party made a submission to engage these considerations.

Section 117(2A)(g)

1. The parties addressed numerous features of the evidence under the rubric of this statutory factor. 

2. The applicant contended the pressure allegedly exerted upon him by the respondent to enter into the binding financial agreement was a material consideration, but the submission is rejected. That is the primary controversy for determination in substantive proceedings, so it cannot be accepted as a proven fact in this interlocutory dispute. The respondent denies there are any grounds to deprive their financial agreement of its binding force.

3. The respondent contended and the applicant conceded that the claim to set aside the binding financial agreement was “uncertain”. The applicant has an arguable case but, by reference to the available evidence, it wears the appearance of a quite weak one.  He asserts the respondent exerted undue influence upon him to enter the agreement, which she denies. In light of the evidence so far adduced by the applicant, his submission that he has a “strong arguable case which is likely to succeed” is rather florid. 

4. Given the applicant’s financial predicament, he conceded he could not repay to the respondent any costs paid to him now if his claim against her eventually fails. That is a powerful factor when his case to set aside the binding financial agreement seems weak. But even if he succeeds, he acknowledges any subsequent property settlement orders made in his favour would be modest because of the relative brevity of the relationship and the overwhelmingly large contributions made by the respondent.

5. The applicant’s prospective claims against his former lawyers, for allegedly deficient advice sounding in damages, is not a feature of the evidence that favours the applicant in this interim dispute, as he seemed to assume. On the contrary, it hinders his claim against the respondent. In the prospective claim against his former lawyers, the applicant pleads that his loss and damages are “legal fees in commencing proceedings to set aside the BFA” and “the opportunity to negotiate and to amend the draft BFA in terms less onerous and more favourable to the applicant”. The applicant therefore foresees he should be able to recover from his former lawyers the costs of his legal fees in this current suit against the respondent. The applicant’s submissions did not answer the hypothetical question of why, therefore, the respondent should pay his legal fees in these proceedings if he expects to recover such fees in the form of damages from his former lawyers.

6. While the applicant may wish to pursue a prospective claim against his former lawyers, the respondent was able to forcefully contend she should not be called upon to fund it for him. The applicant intends to try and join his dispute with his former lawyers to these current proceedings. Indeed, the costs he has so far incurred represent the amalgamated cost of pursuing these proceedings against the respondent and taking interlocutory steps towards the joinder of his former lawyers to these proceedings. He sees the disputes as components of a single legal controversy. In reality, the respondent has no part in and wants no part of any litigious dispute between the applicant and his former lawyers. 

7. Another powerful feature of the evidence emphasised by the respondent was the quantum of fees already incurred by the applicant. The applicant was informed at the outset of the litigation that his fees were estimated at up to $250,000.  He seems to have already incurred fees of about $230,000 and the case is not yet close to final trial. The fees already incurred relate to both this dispute and the prospective dispute with his former lawyers. 

8. The applicant’s current offer to proffer undertakings, enjoining the respondent and the Court to trust his lawyers to quarantine and apply any costs paid to him by the respondent only to the dispute involving her, is insufficient insurance given the applicant regards the disputes as so inseparable that the common law dispute should be heard with the Part VIIIAB dispute as part of the court’s accrued jurisdiction. 

9. Since the applicant is already indebted to his lawyers for $230,000, the whole of the money paid to him by the respondent (if ordered to do so) would be applied in only partial discharge of an existing liability. The Case Outline provided to the Court by the applicant’s lawyers claim they are not prepared to wait until the conclusion of the proceedings to be paid for their work and there is a real risk they will cease to act for the applicant if the costs are not paid. That is a real cause for concern because, even if the respondent pays $200,000 towards the applicant’s legal costs, the applicant will still be indebted to his current lawyers. They must be taken at their word. They might cease to act for the applicant, even if the funds are compulsorily paid by the respondent, because their existing fees will not have been fully paid and there is no prospect of their future fees being covered by the applicant. So making the orders sought by the applicant might not prevent him losing the benefit of their representation for the future anyway. 

10. As the respondent submitted, the applicant’s lawyers accepted his instructions knowing he had no funds to pay them and knowing his prospects of success in the litigation were uncertain. The amount so far incurred in legal costs is astounding and could scarcely be justified in any reasonable assessment exercise. The large volume of apparently irrelevant and unnecessary evidence provides some insight into the wasted costs. Albeit simplistic, the applicant has already incurred some $230,000 in legal fees to only reach the point of prosecuting his application to obtain $200,000 in legal fees from the respondent. It would be unhelpful to make any further remarks about the irony of that situation. 

11. The refusal to make the litigation funding order sought by the applicant may mean his lawyers will withdraw their representation of him, which would leave him at clear disadvantage in prosecuting his claim any further. That eventuality would be prejudicial to the applicant, but such prejudice is outweighed by the prejudice visited upon the respondent by making the litigation funding order when she seems in a reasonably strong position to resist the applicant’s application to set aside the binding financial agreement and not then be able to recoup any costs paid to him. 

12. The application for the litigation funding order under s 117 of the Act is dismissed. The ordinary rule under s 117(1) of the Act should apply.

Spousal Maintenance

1. The parties agree the existence of the binding financial agreement does not preclude the applicant’s claim for de facto spousal maintenance, either on a final or interim basis. 

2. The dispute centred upon the applicant’s ability to prove he is unable to support himself adequately (s 90SF(1)(b)). If the applicant could prove his need, there was no dispute about the respondent’s capacity to pay.

3. The applicant presently meets his living expenses by reliance upon a Centrelink benefit of $328 per week. His receipt of that benefit must be ignored when exercising discretion whether or not to make a maintenance order under section 90SE (s 90SF(4)).

4. The parties’ dispute essentially distilled to two issues:

   (a)whether the applicant is capable of adequately maintaining himself by attaining paid employment; and if not

   (b)what is the proper measure of his need. 

5. The applicant deposed to his efforts to get employment following the termination of the de facto relationship, which efforts the respondent was inclined to desultorily dismiss. Indeed, the evidence adduced by the applicant did have the appearance of forensic sophistry, for the reasons contended by the respondent. Job applications said to be made earnestly were made only seconds apart via the internet and he applied for jobs which he had no hope of obtaining: for example, as a psychiatrist and biostatistician.

6. Nonetheless basal uncontested facts should not be overlooked. The respondent is now 56 years old. He has not worked since he began the relationship with the respondent seven years ago in 2011. Even though she might have encouraged him to get work during the relationship, he did not get it. Since leaving the relationship, despite making hundreds of applications, he has not managed to find work. Many of the job applications were for employment in clerical or manual fields. He has no formal qualifications. While he has experience, his age and the period he has spent out of the workforce hampers his attempts to find work. On balance, the applicant proved he is currently unable to support himself adequately. Accordingly, attention must turn to the quantification of his need. 

7. The respondent contended the applicant’s need was capped at $328 per week because he currently lives within the means afforded by his Centrelink benefit.  While he can sustain a meagre existence at that level of income, it is not sufficient for his “adequate” support. He needs more.

8. The respondent contended the Court could not guess at the quantification of his proper need, which is true to a point, but the Court is not precluded from drawing inferences from available evidence. It is often done in reverse when an applicant claims an extravagant amount of expenditure and the respondent contends a lesser amount is much more commensurate with the applicant’s “adequate” maintenance. The lesser amount is estimated on the basis of the parties’ competing submissions.

9. The applicant only spends so little because his welfare income is so little. He lives in shared accomodation. He borrows from his family and friends to make ends meet. He cannot afford to maintain or run his car. He cannot even sustain a healthy diet. He can only afford to consult doctors who bulk-bill their services. He has $2,500 in the bank, an old car of minimal value, and a laptop computer. I find his need probably falls within the range of $500 to $1,000 per week, for which purpose I settle on the median figure of $750 per week. 

10. It should be remembered this hearing is limited to interim orders. What now happens to the substantive proceedings remains uncertain. The interim order I intend to make for de facto spousal maintenance should only endure for a finite period. The order will apply only until finalisation of these proceedings, since the applicant presses an application for the payment of de facto spousal maintenance on a final basis. The decree granting or dismissing that final application will overtake the interim order now made.  

11. For those reasons I make the following further orders. 

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin delivered on 14 February 2018.

Associate: 

Date:  23 March 2018