Moroni and Moroni and Ors (No 2)

[2016] FamCA 731

FAMILY COURT OF AUSTRALIA

MORONI & MORONI & ORS (NO 2) [2016] FamCA 731

FAMILY LAW – PROPERTY – Interim – Where an order for the husband to pay the wife’s legal costs on a dollar for dollar basis has previously been made – Where the husband has not paid his lawyers for accounts rendered and where the husband’s lawyers are now acting on the basis that they will be paid at the conclusion of the proceedings – Where the wife seeks orders for a lump sum to be paid from the parties’ frozen account on account of her lawyers’ costs – Where the wife has brought an application under s106B in relation to the husband’s disposal of shares in two companies – Where the single expert indicates that husband’s interest in those companies may have been of greater value but it is submitted by the husband that an adversarial expert may have a different view –Where the respondents submit that if seven debts are established the liabilities of the marriage will exceed the assets – Where no joint statement between experts has been produced – Where the respondents assert that until the court determines the wife’s assertion that the parties are not liable for the debts the court should not distribute any funds to the wife for her legal costs – Where the wife would not be able to repay the lump sum fund if her application for final orders fails – Where the wife’s application is dismissed.

Family Law Act 1975 (Cth)

Residential Tenancies Act 2010 (NSW)

APPLICANT: Mr Moroni

RESPONDENT: Ms Moroni

2^nd RESPONDENT: Mr E Moroni

3^RD RESPONDENT: G Pty Ltd

4^th RESPONDENT: BB Pty Ltd

5^th RESPONDENT: M Pty Ltd

FILE NUMBER: SYC 7444 of 2012

DATE DELIVERED: 31 August 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 26 May 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Givney

SOLICITOR FOR THE APPLICANT: A.B. Mezzanotte

COUNSEL FOR THE RESPONDENT: Mr Wong

SOLICITOR FOR THE RESPONDENT: Craddock Murray Neumann

COUNSEL FOR THE 2^ND – 5^TH RESPONDENTS: Mr Lloyd, SC

SOLICITOR FOR THE 2^ND – 5^TH RESPONDENTS: Tilley Family Law

Orders

1. The wife’s Amended Response to an Application in a Case be dismissed.

2. Costs in respect of that application are reserved.

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 Moroni & Moroni and Ors 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 7444  of 2012

Mr Moroni

Applicant

And

Ms Moroni

Respondent

And

Mr E Moroni

2^nd Respondent

And

G Pty Ltd

3^rd Respondent

And

BB Pty Ltd

4^th Respondent

And

M Pty Ltd

5^th Respondent

REASONS FOR JUDGMENT

1. By way of Amended Response to an Application in a Case filed 18 March 2016 the wife sought orders that two motor vehicles owned by the husband be sold or alternatively either $164,000 or $224,000 be paid in lump sum from the parties’ frozen joint Commonwealth Bank account on account of her lawyers’ costs.

2. The sum of $224,000 was quantified by way of reference to paid and anticipated legal costs. The wife says that her legal costs and disbursements owed to her current lawyers billed from the commencement of instructions on 8 April 2014 are in the sum of $103,176.97. The balance of the $224,000 primarily consists of the costs of the proceedings before me on 26 May 2016 and the estimated costs (including counsel’s fees) for the preparation of the final hearing.

BACKGROUND

1. On 20 August 2014 I made an order for the husband to pay the wife’s legal costs on a “dollar for dollar” basis. Since that date, the husband’s solicitors have not been paid by the husband for accounts that they have rendered. The husband’s lawyers have remained in the case and I infer that they anticipate that they will be paid when the case is concluded. Unless the dollar for dollar order is discharged, for every two dollars the husband’s lawyers are then paid, they will be obliged to pay one dollar to the wife’s lawyers.

2. The wife’s solicitors in evidence indicate that they seek a payment of $224,000 from the funds presently invested in the Commonwealth Bank (an amount of about $254,000) in order to continue to act for the wife in the proceedings.

3. The parties were married for 20 years and had four children. The wife commenced part time work for four days per week in April 2015 after being out of the work force for about 15 years.

4. The husband and wife have two main assets. The first is an unencumbered matrimonial home at N Valley with an agreed value of $950,000. The second is the amount in the controlled monies account which as I have said is an amount of about $254,000. The husband also has an interest in the Moroni Retirement Fund. Ms I, the single expert, indicates that that interest was $202,000 as at December 2014. The wife has superannuation of about $65,000. The husband also has three motor vehicles.

5. A central feature of the history of this case is the disposal by the husband of his shares in M Pty Ltd (the 5^th respondent) and G Pty Ltd (the 3^rd respondent) in June 2013 to his father (the 2^nd respondent). The wife has brought an application under s 106B Family Law Act 1975 (Cth) (“the Act”) in relation to those dispositions by the husband to his father on 27 June 2013. The sale price of the shares was approximately $250,000. The single expert’s report on its face would indicate that the husband’s interests in those two companies may have been of significantly greater value than the value at which they were disposed. It is submitted on behalf of the husband that Mr CC, an adversarial expert, may have a different view. Orders have been made for the experts to confer. The order required the experts to have produced a joint statement prior to the date of this hearing but that had not happened.

6. There are seven debts which the husband and the 2^nd to 5^th respondents (the husband’s father and three family companies) say are outstanding. The 2^nd to 5^th respondents filed a Response on 19 January 2015 seeking, pursuant to accrued jurisdiction, the recovery of amounts allegedly lent to and owed by either the husband himself or the husband and wife.

7. The first claim is an alleged loan by the 3^rd respondent of $60,000 to the husband and wife in June 1994. It is asserted that a mortgage was entered into dated 2 June 1994 which contained a provision that interest be payable at 10 per cent, however, the wife says the mortgage has no provision for interest. The mortgage related to a property which has subsequently been sold.

8. The second claim is a claim for $118,000 by the 4^th respondent for work allegedly done in carrying out renovations to the N Valley property between October 2010 and June 2012. There is no concession by the wife that labour and materials costing that amount were expended or that there was a contract for that amount. The wife also asserts that the husband’s father’s company would not pursue that claim other than in the context of the litigation against the wife.

9. The third claim brought is a claim by the 5^th respondent for rent payable by the husband and wife for residential premises at Suburb O from 2003 to 2010 in the sum of $146,172. The wife would argue that the statute of limitations applies to all but the last two years of that period. The wife asserts that the written agreement is not consistent with the Residential Tenancies Act 2010 (NSW) and there is no concession by the wife that the amount demanded should be paid. The husband still lives in the property and still works for the 4^th respondent.

10. The fourth amount claimed is by the 5^th respondent in the sum of about $564,942 which the 5^th respondent asserts is the balance owing upon an amount of $761,977 after $197,035 was paid by the husband pursuant to a Division 7A loan advanced in October 2010 for the purchase of the N Valley property. The 5^th respondent asserts that the wife holds her half interest in the N Valley property upon a resulting trust for the husband or in the alternative, the husband and wife hold their interest in the N Valley property subject to an alleged charge in favour of the 5^th respondent to secure the repayment of about $564,942.

11. The fifth amount alleged owing is an additional amount of $711,113, which the 5^th respondent alleges to be owing as at 30 June 2013 in relation to a Division 7A loan.

12. The sixth amount is a sum of $196,737 which the husband’s father asserts the husband owes him as a result of the husband’s father making a payment on 16 May 2013 to enable the husband to make a Division 7A loan repayment.

13. The seventh amount is the sum of $188,038 which the husband says is an outstanding debt to the Australian Tax Office.

14. It is the husband’s case, as well of that of the 2^nd to 5^th respondents, that the total liabilities of the parties to the marriage exceed their assets by a significant margin. This would be so if all the liabilities asserted by the 2^nd to 5^th respondents are established as owing by one or both the parties to the 2^nd to 5^th respondents and in particular, are established as owing or substantially owing by the wife.

15. The husband and the 2^nd to 5^th respondents assert that until the court determines the wife’s assertion that the parties are not liable in the way asserted, then the court should not distribute any funds to the wife for her legal costs.

16. The husband has worked throughout the marriage, initially as a director of the companies and more currently an employee of one of them. The husband asserts that he has reduced his working hours and that is the reason his remuneration from the company has fallen from $183,800 notional salary attributed by Ms I to an actual income of $124,800.

17. The valuations carried out by the single expert are, at least in part, to provide evidence about what the situation would be if the husband had not disposed of shares to his father. Uncertainties also arise from the fact that there seems to be different positions taken by the experts who are now to give evidence at the final hearing. Although I should have had it by the date of this interim hearing, I do not have the benefit of a joint statement from them so I do not know the nature of the disagreements between them. The single expert based her valuation on company accounts prepared by companies associated with the husband. It seems at least on the face of the single expert report that debts owing by the 3^rd, 4^th and 5^th respondents have been taken into account by the single expert when she was reaching her valuation of the parties’ interests in those entities. That evidence is yet to be tested.

18. Senior counsel for the 2^nd to 5^th respondents said that his clients had sympathy for the wife’s plight and conceded that the playing field was far from level. The sympathy did not however extend to agreeing that the wife should have some funds to be able to put her case with the assistance of her current lawyers.

19. It goes without saying that it is difficult without having the advantage of tested evidence and full submissions to know exactly what the final result in the proceedings will be.

20. Whilst it might be thought unlikely that the wife would walk away with no funds, it is possible that when all the evidence is tested and heard and the submissions taken into account, that is the result.

21. I am required to take a conservative approach.

22. Given that it is clear that the wife would not be able to repay the funds provided with any lump sum should her applications for final orders fail, her application for funds to cover costs must fail. I shall dismiss the wife’s application mindful that that may mean that she has to represent herself at the final hearing or find lawyers who are prepared to take a risk that she will be left with no funds at all at the end of the case. 

23. The “dollar for dollar” order remains in place.

24. I reserve costs in respect of this application.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 31 August 2016.

Associate:

Date:  31.8.16