Montoya & Rosales
[2023] FedCFamC1F 1016
•30 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Montoya & Rosales [2023] FedCFamC1F 1016
File number: MLC 323 of 2012 Judgment of: MCGUIRE J Date of judgment: 30 November 2023 Catchwords: FAMILY LAW – PROPERTY - Interlocutory application by de facto wife seeking a partial property settlement and/or litigation funding – application opposed by de facto husband – Application dismissed Legislation: Family Law Act 1975 (Cth) ss 90SM, 117(1), (2), 117(2A) Cases cited: Harris & Harris (1993) FLC 92–378, [1993] FamCA 49.
Penfold v Penfold (1980) 144 CLR 311, [1980] HCA 4
Salvage & Fosse (2020) FLC 93-966, [2020] FamCAFC
Strahan & Strahan (2011) FLC 93–466, [2009] FamCA 116
Zschokke & Zschokke (1996) FLC 92-693, [1996] FamCA 79
Division: Division 1 First Instance Number of paragraphs: 53 Date of hearing: 16 November 2023 Place: Melbourne, delivered in Hobart J445Counsel for the Applicant: Mr Geddes K.C. Solicitor for the Applicant: Sage Family Lawyers Counsel for the First Respondent: Ms Wheeler Solicitor for the First Respondent: Collins Law Pty Ltd Counsel for the Second Respondent: No appearance ORDERS
MLC 232 of 2012 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ROSALES
Applicant
AND: MR MONTOYA
First Respondent
MONTOYA PTY LTD
Second Respondent
ORDER MADE BY:
MCGUIRE J
DATE OF ORDER:
30 NOVEMBER 2023
THE COURT ORDERS THAT:
1.The de facto wife’s application filed 25 October 2023 for an interim property settlement and/or an order for litigation funding be 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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym of Montoya & Rosales has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCGUIRE J:
APPLICATION
There are substantive property settlement proceedings between the parties pursuant to section 90SM of the Family Law Act 1975 (Cth) (“the Act”). The de facto husband, Mr Montoya, is the applicant in the substantive application.
The respondent de facto wife, Ms Rosales, is the applicant in an interlocutory application seeking variously a partial property settlement and/or an order for litigation funding. For ease of understanding, she will be referred to as the applicant in these Reasons and the de facto husband as the respondent.
As a then self-represented litigant, the applicant filed an application in a proceeding on 25 October 2023 seeking an order inter alia:
…
4.That the [respondent] pay [the applicant] the sum of $700,000 being part settlement in these proceedings.
That application was and remains opposed by the respondent.
At an initial mention of the application on 31 October 2023 I made an order listing the application for hearing on 16 November 2023. I also ordered that each of the parties make, file and serve sworn financial statements within 14 days of those orders being by 14 November 2023. The respondent has complied with that order albeit arguably one day late. The applicant has not complied with that order.
It eventuated that the applicant instructed solicitors shortly prior to the hearing date and an outline of case document was filed on 15 November 2023 on behalf of the applicant which then particularised the orders sought as follows:
1.By no later than 5pm on 17 November 2023 the applicant transfer:
(a) $325,000 to the respondent’s solicitors, Sage Family Lawyers.
(b) $375,000 to the respondent’s nominated bank account.
…
Leaving aside the ambiguity as to applicant/respondent, the same outline of case properly then identified the power sought to ground the order as follows:
1.The de facto wife seeks an interim order for the provision of litigation expenses pursuant to section 117(2) of the Family Law Act …
The applicant’s solicitors briefed Mr Geddes of Kings Counsel to appear at the hearing. It is proper to note that submissions made by Kings Counsel on behalf of the applicant focused on the aforementioned source of power under s 117(2) of the Act with little or no reference to any other available power. When challenged in this respect, Mr Geddes of Kings Counsel was equivocal in his response whilst maintaining that his instructions continued to seek a total of $700,000 apparently grounded on separate sources of power under the Act.
BACKGROUND FACTS
The applicant is 49 years of age. The evidence suggests that she is not engaged in remunerative employment but may receive some income from investments.
The respondent is 74 years of age. He describes himself as a part-time director of a family business. By consent I have made orders joining the respondent’s family group of companies, Montoya Pty Ltd, as a second respondent to the substantive proceedings.
In 2022 the parties endured nine days of hearing in respect of the jurisdictional issue as to whether or not they had lived in a de facto relationship. I am told, and accept, that the respondent conceded the de facto relationship existing between 2009 and 2019 before the matter went to judgment. Further, I am told and accept that the respondent then made a payment of $300,000 towards the applicant’s legal costs incurred and did so by consent.
There are two children of the parties aged 14 and 9 years. They live with the applicant. The respondent pays $2,206 per month child support.
In his further amended initiating application filed 26 January 2023 and confirmed by his counsel’s submissions in this interlocutory application, the respondent’s primary position is that there be no adjustment of property interests between the parties with reference to s 90SM(3) of the Act. He pleads in the alternative, however, that the applicant receive 12 per cent of the parties combined assets.
On the material before me, it does not appear that the applicant has yet particularised the orders she seeks in the substantive application, but it is reasonable to assume on that evidence that she considers her entitlement to be much greater than the 12 per cent proposed by the respondent in the alternative.
THE APPLICANT’S CASE
The applicant relied on her own affidavit sworn 13 October 2023 and an affidavit of her solicitor, Casey Ieraci, affirmed 15 November 2023.
The applicant’s own affidavit deposes generally that during the relationship the respondent would give her $4,000 each month whilst also paying for all the general household expenses, social activities, travel, holidays and contributions to rent and the applicant’s motor vehicle. In her affidavit she confirms receipt of some $2,600 per month for child support. She confirms the payment of $300,000 by the respondent in respect of legal costs incurred in the nine day jurisdiction hearing where such payment was made by consent.
The applicant estimates her further costs, including instructions to Kings Counsel, junior counsel, solicitors and valuations to be “as high as $400,000” for the forthcoming substantive trial.
Notably, at [7] of her affidavit the applicant deposes:
Once my current cash is exhausted, I am unable to source any further cash funds i.e. cannot borrow from banks and I am not entitled to withdraw from superannuation etc.
As mentioned above, the applicant did not comply with my order to file an up to date sworn financial statement. She does not, therefore, particularise her “cash funds”. She does not particularise her apparent unsuccessful efforts to borrow from banks.
The applicant estimates at [9] that the value of the assets in her possession and control approximate $3.5 million and that the respondent holds or controls assets “in the vicinity of $52 million”. Whilst not necessarily accepting the value of the assets held or controlled by the respondent, she mathematically calculates that a 12 per cent distribution to her equates to $6.24 million requiring a further payment from the respondent of $2.74 million and thereby obviously well covering the ambit of her claim here for $700,000 by way of part property settlement.
The applicant deposes to this year paying $32,931.25 towards valuations and $2,300 towards a mediation.
I accept the above being submissions by the applicant, then unrepresented, being in respect of the litigation funding grounded by the source of power at s 117(2) albeit not then specified by the applicant.
The applicant continues more generally, and presumably in respect of a partial property settlement, that Motor Vehicle 1 is now some 14 years old and perhaps not ideal for the towing of a trailer for her daughter’s sporting equipment and where she previously had the use of a Motor Vehicle 2 financed through Montoya Pty Ltd, but where the respondent no longer allows use of that vehicle. Further, she argues that the respondent formerly paid for repairs and maintenance on the motor vehicle but does not now do so.
At [16] the applicant argues that she has a debt to the “Australian Taxation Office in excess of $32,500 and plus PAYG debts each quarter exceeding $2,500”.
No particulars are given as to how the debt accrued and in respect of particular income.
At [17] the applicant argues that she has outstanding invoices for building works in respect of a property at C Street, Suburb D “in excess of $35,000”. There is no greater particularisation.
The affidavit of the applicant’s solicitor, Casey Ieraci, deals specifically with the application under the power for litigation funding. He references at [4] a costs agreement with the applicant and says at [5]:
Sage Family Lawyers will not continue acting for [the applicant] if our invoices are unpaid and without being provided with funds in trust for disbursements that [the applicant] will incur in the proceedings.
At [6] Mr Ieraci estimates costs to be incurred to approximate $325,000 although some references and particularly that at [6(c)] being “Further costs associated with the hearing on 16 November 2023 – E $150,000” are, as pointed out by counsel for the respondent, dubious.
At [9] Mr Ieraci informs that the applicant has instructed them to engage Mr Bruce Geddes KC to represent her at the interim hearing on 16 November 2023 and the final hearing to commence 29 January 2024 and annexes a costs agreement accordingly.
Mr Ieraci does not address issues otherwise than that sourced by the power at s 117(2).
Submissions by Kings Counsel for the applicant reference firstly the respondent’s capacity to meet the orders sought noting the respondents’ equity in real property at Suburb E of some $3.7 million with a gross valuation of $6.3 million and mortgage of $2.6 million. Further, the respondent’s financial statement sworn 14 November 2023 discloses superannuation entitlements of $3,166,644, but where argument at the substantive trial may centre around “undefined entitlements”, if any, held by the respondent in the “Montoya Family Entities” which the respondent himself values at $41,065,400.
In any event, the thrust of submissions by the respondent’s counsel in this matter were not towards the respondent’s capacity to meet any order, but more towards a lack of demonstrated incapacity by the applicant to meet her own needs with reference to considerations under s 117(2) of the Act and the relevant legal principles.
THE RESPONDENT’S CASE
The respondent relied on his affidavit sworn 14 November 2023.
The respondent confirms that he pays child support currently at $2,206 per month noting the assessment based on the applicant herself having a relevant annual income of $88,316 for the 2022 year and estimated at $41,999 for the 2023 year. Further, the respondent informs that he pays school fees for the children totalling E $70,000 per year and that these and other expenses for the children are met by distributions from the Montoya Family Trust with the “consent of the co–appointor of the trust”.
The respondent at [6(e)] references his understanding as to the applicant’s own financial position saying that she is:
… the owner of 2 unencumbered properties, at [F Street, Suburb G] valued at $660,000 and the other at [C Street, Suburb D] which comprises 2 completed [dwellings] worth in excess of $1,600,000 and a further property at [H Street, Suburb J] with an equity of over $900,000.
The respondent also addresses in his affidavit the applicant’s interests in a K Finance shares index fund. A document tendered by the respondent’s counsel during the hearing, and relevant as at 28 February 2023, indicates a value for the applicant in that fund of $531,198 noting its value as of 1 February 2023 at $614,625 with a consequent decrease in “units held” of some $27,000 during the month of February 2023 such not explained by the applicant. Again, the applicant did not comply with my orders to file an updated sworn financial statement for the purposes of this hearing and where the respondent now deposes to the applicant receiving, or anticipating, rental on one completed unit at C Street, Suburb D of $950 per week.
Where, again, the applicant did not comply with my order to file an updated sworn financial statement, no submissions were made contrary to the respondent’s understanding of the applicant’s finances.
The balance of the respondent’s affidavit addresses his “undefined interest” in the Montoya group of companies which is valued by the single expert in the substantive proceedings at $41,065,400.
THE RELEVANT LAW
My understanding of the applicant’s application was one seeking a “partial property settlement” as opposed to an “interim” property order where the former would be anticipated to form part of the applicant’s ultimate entitlement under s 90SM of the Act. Of course, and inherent in her application prior to instructing solicitors and Kings Counsel was an element for “litigation funding” referencing, therefore, respectively s 90SM and s 117 of the Act, although not specified in her application.
Whilst historically these Courts may have been loathe to make interim property settlement orders and where circumstances needed to be “compelling”,[1] that situation appears to have eased with courts recognising frequent inequity in the distribution and control of assets pending a final trial. Whilst the circumstances now need not be compelling, there must be a case made out on some evidentiary basis of appropriateness[2] where the preferred approach is to make a once only and holistic consideration and determination at a final trial. The overarching consideration remains the interests of justice and then a consideration of the provisions of s 90SM including the orders sought relative to the ambit of the substantive claim and prima facie the likelihood of achieving such an award[3] and in some cases whether the order is “reversible” although this of itself is not determinative of the consideration,
[1] Harris & Harris (1993) FLC 92–378, [1993] FamCA 49.
[2] Strahan & Strahan (2011) FLC 93–466, [2009] FamCA 116.
[3] Zschokke & Zschokke (1996) FLC 92-693, [1996] FamCA 79.
In this matter, and where the applicant’s application is now apparently divided between one for litigation funding and one for an interim or partial property settlement, the applicant’s case is vague and unparticularised in respect of any requirements. Firstly, her solicitor’s affidavit is effectively silent in this respect. Secondly, the submissions of Kings Counsel for the applicant were directed almost entirely to the aspect of litigation funding. Thirdly, the applicant’s own affidavit references an aged motor vehicle and a debt to the Australian Taxation Office but does not reference any urgency where the trial of this matter is to be heard as soon as 29 January 2024 and specifically does not reference an inability to meet any such expenditure where the respondent particularises the applicant’s wealth in a way the applicant herself does not provide.
In those circumstances, I am not persuaded that the applicant has made out a case for an interim or partial property settlement order in her favour.
Turning to the discrete issue of litigation funding, the affidavit of Casey Ieraci estimates the applicant to incur future costs approximating $325,000 and as specified under the identified power of s 117 in the applicant’s case summary document.
The applicant’s own affidavit at [6] estimates costs “as high as $400,000”. Significantly, at [7] of her affidavit the applicant volunteers:
Once my current cash is exhausted, I am unable to source any further cash funds i.e. cannot borrow from banks and I am not entitled to withdraw from superannuation etc.
Whereas s 117(1) of the Act provides in general form that each party to proceedings under this Act shall bear his or her own costs, it is now well established that the general section must defer to s 117(2)[4] which provides:
If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
[4] Penfold v Penfold (1980) 144 CLR 311, [1980] HCA 4.
As observed by the Full Court Salvage & Fosse[5] at [14]:
The critical question therefore is whether the applicant has “any real prospects of obtaining justice unless the order sought is made” … 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.
[5] (2020) FLC 93-966, [2020] FamCAFC (“Salvage”).
Whilst it is difficult here to conduct any form of assessment of the strengths of the competing substantive cases, where the relationship was of some 10 years duration with two children living in the care of the applicant, and where the property pool is substantial (albeit not as substantial on respondent’s case as it is on that of the applicant).[6] I am not able to determine her case to be “weak, fanciful or misguided…” where their Honours in Salvage & Fosse (supra) say:
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. …
[6] Salvage at [15].
Consequently, whilst I am not appraised as to the particulars of the applicant’s substantive claim, I am aware of the salient facts and the spectrum of the property pool.
Whilst the question of whether or not an order is “reversible” is not determinative in an application such as this, it may be proper for me to address it in any event. Put simply, the applicant seeks $700,000 or, more particularly, $325,000 in respect of litigation funding. The best evidence before me is that she is a person of some wealth by way of real property and a share portfolio with a value in excess of $500,000. It seems to me entirely reasonable to conclude then that any such order sought by the applicant would be reversible.
SECTION 117(2) AND (2A)
In determining whether there are circumstances justifying such an order I consider the matters at s 117(2A) as follows:
(a)The financial circumstances of the parties are set out above. Put simply, the material before me satisfies me that either of the respondent or the applicant is prima facie in a financial position to meet the costs estimated by the applicant.
(b)I am satisfied that neither party is in respect of legal aid.
(c)The conduct of the parties to the proceedings is of limited, if any, relevance but where the Courts determination as to the parties’ relative financial circumstances is not assisted by the failure of the applicant to comply with an order to file an updated sworn financial statement.
(d)Subparagraphs (d), (e) and (f) are not relevant to my determination.
The question for me remains, therefore, as to whether it would be just to make the orders sought by the applicant. Whilst her case for substantive relief cannot be termed weak or fanciful and whilst there is no real challenge (perhaps with the exception of some mathematical anomalies in [6] of the applicant’s solicitors affidavit) as to the quantum of costs necessary to prosecute her substantive application to its conclusion, the issue of justice being served requires, in my view, a consideration of some relativity to the applicant’s own capacity to fund her litigation. In doing so I take account of the following:
(i)the respondent is 74 years of age and not in remunerative employment. The orders sought by the applicant would require a crystallisation of some asset, either held by him personally or through the umbrella of a trust and corporate entities, or a drawdown of his superannuation entitlement given that he is of an age where that would be available. In any event, orders sought by the wife would seem to inevitably diminish the property pool at least in the interim;
(ii)the applicant herself is in possession and control of assets including real property some of which seem to constitute investments rather than necessary abode and from which she may draw an income or potentially do so. The best evidence, being from her own liability to the Australian Taxation Office and from the respondent, suggests the applicant to have income or assets of an investment type;
(iii)the applicant holds a share portfolio to a value in excess of $500,000 and where there is no evidence that this could not be drawn down in order to meet her legal costs and should there be any argument as to the undesirability of utilising assets to meet such costs then it is clear that the respondent sits in a similar position to that of the applicant; and
(iv)the applicant’s own affidavit at [7] suggests that her own cash reserves are not yet exhausted but where she does not quantify those current reserves and where the Court is not assisted by the fact that the applicant herself has not complied with my order to file an up to date sworn financial statement.
In conclusion, therefore, I am not satisfied that the applicant herself has any incapacity to meet her own legal costs towards and for the conduct of the trial and in those circumstances, together with all of the above considerations, I am not persuaded that justice would be served in obligating the respondent accordingly.
The application will be dismissed.
I certify that the preceding fifty-three (53) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McGuire. Associate:
Dated: 30 November 2023
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