Murillo & Murillo
[2021] FedCFamC1F 227
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Murillo & Murillo [2021] FedCFamC1F 227
File number(s): SYC 3325 of 2017 Judgment of: ALTOBELLI J Date of judgment: 30 September 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Cost of single expert report – Where husband asserts he is unable to pay the cost of the report – Order made for the father to initially meet the cost of one single expert report and contribute to the second expert report – Balance of second expert report to be paid from offset account.
FAMILY LAW – INJUNCTIONS – Application to preserve property pending final hearing – Orders made restraining First Respondent to preserve the matrimonial pool.
Legislation: Family Law Act 1975 (Cth) ss 75, 106A Cases cited: Redman & Redman (1987) FLC 91-805; [1987] FamCA 2
Williamson & Williamson (1978) FLC 90-505; [1978] FamCA 57
Soblusky & Soblusky (1976) FLC 90-124; [1976] FamCa 90
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 22 Date of last submission/s: 29 September 2021 Date of hearing: 29 September 2021 Place: Sydney (via videoconference) Counsel for the Applicant: Mr Todd Solicitor for the Applicant Mills Oakley Lawyers Solicitor Advocate for the First Respondent Mr Layson Solicitor for the First Respondent: Sarah Bevan Family Lawyers The Second Respondent: No appearance ORDERS
SYC 3325 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1) BETWEEN: MS MURILLO
Applicant
AND: MR MURILLO
First Respondent
MS B
Second Respondent
ORDER MADE BY:
ALTOBELLI J
DATE OF ORDER:
30 SEPTEMBER 2021
THE COURT ORDERS BY CONSENT THAT:
1.Dr BB is appointed as the single expert in the parenting proceedings in lieu of Dr EE as ordered on 30 June 2020.
2.That within seven (7) days of the date of these orders, the Applicant and First Respondent shall jointly instruct and forward the joint letter to the single expert, Ms C of F Accounting Firm (“Ms C”) to prepare as to the forensic accounting works otherwise set out herein, for the following entities:
(a)GG Group Services (formerly known as “V Pty Ltd”)
(b)HH Pty Ltd;
(c)JJ Pty Ltd;
(d)KK Pty Ltd
(e)LL Pty Ltd;
(f)MM Pty Ltd;
(g)NN Pty Ltd;
(h)OO Pty Ltd; and
(i)PP Pty Ltd.
THE COURT ORDERS THAT:
3.The First Respondent is to pay all costs associated with Dr BB’s report as requested by the Independent Children’s Lawyer.
4.The First Respondent is to pay $10,000 towards the costs of Ms C’s report and the balance of the same be paid from the Company E Mortgage Offset Account, being Loan Account No. …40, when requested by Ms C.
5.Other than as provided for in these orders and pending further order, the First Respondent is restrained from dealing with the cash of the Entities or the funds held in the accounts of the Entities at any given time, except for payment of wages or invoices, contractors and subcontractors, ordinary business expenses and for which the Entities are required at law, to pay in the ordinary course of their operation, without the prior written consent of the Applicant.
6.That other than as provided for in these orders and pending further order, the First Respondent is restrained from doing any other act or thing to divest his interest in the Entities or any asset held in the name of the said entities, including, but not limited to, selling, disposing of, transferring his interest, encumbering and/or further encumbering any interest or asset held in the name of the said Entities without the prior written consent of the Applicant.
7.That each party shall do all things necessary, including all consents, to give effect to these orders in the time periods prescribed in these orders.
8.That, in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to any or all these orders, then the Registrar of the Court shall be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to such deed, document or instrument upon the Registrar being provided with verification of such refusal by way of affidavit.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
(Revised from the transcript)ALTOBELLI J
INTRODUCTION
These are my oral reasons for judgment. The matter came before me on 29 September 2021 and has been before me on a number of occasions. There is an element of urgency in making the determination before the Court and providing reasons for judgment, given a reasonably imminent hearing. Hence, these reasons for judgment are in oral form and will be abbreviated. On 24 May 2021 I made orders in relation to the payment of the mortgage arrears and delivered reasons for judgment on that date. The background to this matter is adequately set out in those reasons. On 29 September 2021 I dealt with a range of interim matters that had not been dealt with on previous occasions.
The issue from the applicant wife’s (“the wife”) perspective was in relation to the appointment of Ms C to value certain entities controlled by the respondent husband (“the husband”) and by the parties, with the major question being: at whose cost? The wife contends it should be at the husband’s cost while the husband contends it should come from the mortgage offset account. The wife sought an order that, if the husband did not pay the fees, the matter would proceed on an undefended basis. However, this was withdrawn after a series of exchanges between the bench and the bar table about the practicability of such an order.
There was also an issue in relation to restraining orders. While the parties agreed to certain restraining orders, there were issues in respect to some specific orders that I will deal with in due course. A number of orders were made by consent, being Orders 5 and 6 in the husband’s Response to an Application in a Case and Orders 6.1–6.7 in the wife’s case outline. This matter is listed for hearing on 14 February 2022 for five days, for which trial directions have been made by consent and may be fine-tuned upon publication.
COMPETING APPLICATIONS
There are two issues for determination. The first issue is how the cost of the two expert reports should be paid. The two expert reports are those of Dr EE and of Ms C. The underlying issue of who should pay comes down to the husband’s capacity to meet these expenses, at least in the first instance, pending a final hearing when payment can be adjusted. The wife contends there is an underlying issue in relation to the husband’s non-disclosure. The second issue is in relation to the injunction sought by the wife at Orders 5 and 6.8 in her case outline. The wife presses these while the husband opposes these.
There are some underlying issues that permeate both issues. There is a question of whether adequate disclosure has been provided by the husband while the husband makes the same contention of inadequate disclosure about the wife. There are very clear underlying issues of mistrust between the parties. I will make some general observations and a few reminders to the parties. First, this is clearly a high-conflict, low-trust case. Second, these are interim proceedings and the best the Court can do is to form impressions from the material before the Court. The Court looks for consistency or inconsistency in the material as well as applying common sense tests of plausibility and forming impressions, but it needs to be emphasised that these are not credit findings.
Any impressions formed are no more than that as the evidence has not been tested. However, the Court does bring to this case its own experience as well as an understanding of human nature, without which the judicial process would be vacuous. There is a final hearing in February 2022 which is less than four and a half months away and there is a tremendous amount to be done, especially in relation to the two experts’ reports. I make it clear that this case cannot go anywhere without the reports of Dr EE and Ms C. I would have thought that it is in the interests of both parties that these reports be obtained but sometimes, it seems to the Court that what it believes to be in the interests of the parties are not necessarily considered by the parties to be in their best interests. For example, I would have thought it was very much in the husband’s best interests to obtain Dr EE’s report so that he can start seeing his children, which I perceive is ultimately his aim. It seems that it is very much in the wife’s best interests that Ms C’s report is obtained so that she can determine the asset pool and obtain an appropriate division.
EVIDENCE BEFORE THE COURT
The wife relied on the following documents in support of her case:
(a)Her Further Amended Initiating Application filed 9 April 2021;
(b)Her Application in a Case filed 15 April 2021;
(c)Her Affidavit filed 9 April 2021;
(d)Her Affidavit filed 6 August 2021;
(e)Her Financial Statement filed 9 April 2021;
(f)Her costs notice tendered as an exhibit on 29 September 2021; and
(g)The husband’s trust ledger tendered as an exhibit on 29 September 2021.
The husband relied on the following documents in support of his case:
(a)His Response to an Application in a Case filed 21 April 2021;
(b)His Affidavit filed 23 July 2021;
(c)His Financial Statement filed 23 July 2021; and
(d)His costs notice tendered as an exhibit on 29 September 2021.
THE APPLICABLE LAW
There was no contention that the Court lacked jurisdiction or power to make any of the injunctive or other orders sought.
The husband had, at all relevant times, a duty of disclosure to the Court concerning his financial affairs. The wife contended the husband failed to discharge that duty and as such, the Court should draw adverse inferences against him in relation to the issue at hand, even at an interim hearing. The Full Court in Weir & Weir (1993) FLC 92-338, 848 made it clear that it is open to the Court to draw adverse inferences against a party who has deliberately failed to disclose their financial circumstances.
Whilst it is true that an interim hearing is not “as final or exhaustive a hearing as would be the case if one were hearing the matter finally” (Williamson & Williamson (1978) FLC 90-505), it is nevertheless open to the Court to making findings, noting that these findings will not be so precise as findings made at a final hearing (Redman & Redman (1987) FLC 91-805).
The issue is, assuming the husband does have some capacity, whether he was entitled to structure his affairs in a way that prioritised the financial obligations he owes to his new family, as opposed to his old family. The husband’s responsibility to his new family is a consideration captured under s 75(2)(e) of the Family Law Act 1975 (Cth) (“the Act”), the operation of which is helpfully summarised by the Full Court in Soblusky & Soblusky (1976) FLC 90-124 at 75,589:
A Court is required under para. (e) to consider in a realistic way the fact that a party has assumed a responsibility to support another person, and the weight to be given to that fact depends upon the circumstances of each individual case. To adopt a view that in every case the responsibility referred to in that paragraph must be subjugated to the responsibility of the party of his or her spouse is in our view to unduly restrict the scope of para. (e) and may in particular circumstances produce a result which is unrealistic in the circumstances.
In considering this factor against the other factors under s 75 of the Act, on the facts of this case, I am satisfied that the husband was not entitled to prioritise his new family at the expense of his former family.
DOES THE HUSBAND HAVE CAPACITY TO PAY FOR THE EXPERT REPORTS?
The critical issue in this interim decision is whether the Court has formed the impression that the husband has the financial capacity to pay the projected costs of between $40,000 and $45,000 for the two expert reports of Dr EE and Ms C. The husband contends that he does not while the wife contends that he does. The Court finds that he does have the capacity for two main reasons. First, in my previous reasons for judgment dated 24 May 2021 I found that the husband had capacity to pay and nothing has changed. Second, the inconsistencies in the husband’s evidence about his income and expenditure as pointed out in submissions, the wife’s evidence, in the exchange between the bench and the bar table, as well as the sheer implausibility of what the husband contends in his case, leads the Court to conclude that he does have capacity.
A feature of the husband’s evidence is his ability to meet his substantial legal fees as and when they fall due without any of degree of transparency in his disclosed financial evidence about how he does so. I emphasise that there is more to it than these two points alone but for the present purposes it is enough to resolve it in my mind. The impression, and I emphasise it is no more than an impression, that I formed is that the husband can access money when he decides that it is a priority but if he does not consider it a priority then it is not paid. He clearly did not consider it a priority to pay Dr EE’s fees as previously ordered by this Court but there was no difficulty in paying his solicitor’s fees.
Having said that, the Court has to consider the reality of the situation. The husband has already not complied with orders, citing an inability to afford to do so as reason. If this Court orders the husband to pay all of the costs and he declines, the hearing will have to be deferred and the Court will need to revisit an undefended hearing. It needs to be noted that, whilst yesterday I was not prepared to consider an undefended hearing for the reasons that I articulated, if the husband declines to comply with the orders that I intend to make this afternoon, I will revisit that ruling and I have no doubt that counsel for the wife will revisit that application for an undefended hearing.
In many respects, the husband gets to decide his fate here. He either complies with the order or he opens the door to an undefended hearing, which will unleash the Court’s very broad discretion in cases where there are allegations of non-disclosure. The Court at times needs to draft orders that provide an incentive for parties to comply, being an incentive that is not limited to simple legal sanctions.
Therefore the Court is going to do the following. First, the husband is to pay all costs associated with Dr EE’s report as requested by the Independent Children’s Lawyer. This is the key to the restoration of the husband’s relationship with his children. The husband, it seems to me, wants the wife to be made accountable for her actions on what he says is alienation of the children. This is the key to achieving that. Second, the husband is to pay the first $10,000 towards the costs associated with Ms C’s report while the balance of the same is to come from the offset account. The impression I formed is that, whereas the wife is dependent on relatively limited financial resources, the husband has access to more diverse sources of income. The Court’s assessment is that, by giving him the incentive of only having to obtain $10,000 from his resources to fund Ms C’s fees, that it may be more achievable for him. The husband can prioritise payment of his legal fees, it is his choice, but the Court is not bound by his choices of prioritisation. Perhaps, if the husband cannot pay his fees, he needs to find some other firm of lawyers that will finance or carry the fees until the end of this matter.
INJUNCTIONS
In relation to the injunctions sought, being Orders 5 and 6.8 of the proposed orders in the wife’s case outline, the impressions I have formed about the husband’s finances and financial disclosure inform the present decision. The husband’s opposition to Order 6.8 is unfathomable, especially in circumstances where his transactions with his current partner are historical transactions. That in itself manifests the need to make the order. I cannot understand the resistance to this order.
The husband’s concern about Order 5 is more understandable, given that this is most likely the source of income that he has to pay the costs and the other expenses. The husband has sought that Order 5 be limited but the problem with that is self-evident from the wife’s perspective. If the husband uses the business income to meet personal expenses related to the litigation, the wife is subsidising the husband’s legal fees. It is no answer to say that it may be added back at a final hearing. The prejudice could be irreparable. As a matter of principle, it should not occur. I am satisfied that the way that the order is drafted still gives the husband scope to use the business income for whatever purpose he likes but he must categorise it as salary because the order allows him to pay a salary and at least, in so doing, it provides some transparency and accountability. Accordingly, I am going to make Order 6.8 and I am going to make Order 5 as proposed by the wife in her case outline.
DISCUSSION
The forensic report will be ordered in the terms proposed. I note that the letter of instructions is agreed amongst the parties. I note that there was a submission about the absence of an undertaking as to damages, but I am satisfied, in the circumstances where there is such an imbalance in the financial circumstances of the parties, that is not needed.
I would have thought there are ample assets from which any adjustment in the husband’s favour could be sought if the injunction is otherwise untenable from his perspective. While these are rough reasons, it is the best the Court can do in the circumstances. I confirm that I am making orders for the injunctions in terms of Order 6.8 and Order 5 of the wife’s case outline. The husband is to pay all the costs associated with Dr EE’s report and the first $10,000 towards the costs of Ms C’s report and the balance of the same to be paid from the offset account.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Altobelli. Associate:
Dated: 30 September 2021
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