Narron & Narron
[2021] FCCA 377
•8 March 2021
FEDERAL CIRCUIT COURT OF AUSTRALIA
Narron & Narron [2021] FCCA 377
| File number(s): | NCC 2853 of 2020 |
| Judgment of: | JUDGE TERRY |
| Date of judgment: | 8 March 2021 |
| Catchwords: | FAMILY LAW – property – application by the wife for sole occupancy of the former matrimonial home, spousal maintenance, a lump sum property settlement and litigation funding – dispute about the choice of expert to value a business. |
| Legislation: | Family Law Act 1975 (Cth), ss 77, 79, 114 |
| Cases cited: | Davis & Davis (1976) FLC 90-062 Durnin & Durnin [2019] FamCA 253 Stanford & Stanford [2012] HCA 52 |
| Number of paragraphs: | 91 |
| Date of hearing: | 5 November 2020 |
| Place: | Newcastle |
| Counsel for the Applicant: | Ms McMahon |
| Solicitor for the Applicant: | Delaney Roberts Family Lawyers |
| Counsel for the Respondent: | Mr Weightman |
| Solicitor for the Respondent: | Mark Graham Solicitor |
ORDERS
| NCC 2853 of 2020 | ||
| BETWEEN: | MS NARRON Applicant | |
| AND: | MR NARRON Respondent | |
ORDER MADE BY: | JUDGE TERRY |
DATE OF ORDER: | 8 MARCH 2021 |
THE COURT ORDERS THAT:
Pending further order, the Wife have the sole right to occupy the property at B Street, Suburb C in the State of New South wales and more particularly described in Folio Identifier ... and for that purpose:
(a)The husband pay all instalments pursuant to the mortgage and all rates, taxes and outgoings on the property as they fall due.
(b)Neither party encumber or further encumber the property without the consent of the other party.
Order 1 of the Orders made on 28 September 2020 be discharged.
The husband pay the wife $1,320.00 per week spousal maintenance commencing 7 days from the date of this Order.
The husband shall deposit that amount into the wife’s account BSB: ...00.
The husband shall within 7 days of the date of these Orders pay the wife the sum of $33,000.00 by way of partial property settlement.
Within 14 days of the date of these orders the husband also pay or cause to be paid to the wife by way of partial property settlement the sum of $50,000.00 by direct deposit into the trust account of the wife’s solicitors Roberts Legal Services Group Limited Law Practice Trust Account for the purposes of assisting the wife to fund her litigation.
Within fourteen (14) days of the date of these orders the parties do all acts and things necessary to jointly instruct Mr D of E Valuations as a single expert witness to prepare a valuation of:
(a)The business, F Group; and
(b)The husband’s shares in the company, G Pty Ltd.
For the purposes of implementing order 7 above:
(a)Within seven (7) days of the date of these orders, the wife’s solicitor shall provide to the solicitor for the husband a draft joint letter of instruction addressed to Mr D of E Valuations;
(b)Within a further seven (7) days, the solicitors for both the husband and wife shall communicate in good faith with respect to any amendments proposed by the husband and send the joint letter of instructions to Mr D of E Valuations; and
(c)The husband shall be responsible for the costs of the single expert valuer appointed pursuant to order 6.
The matter is adjourned to 9.30am on 18 March 2021 for further consideration.
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 under the pseudonym Narron & Narron is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TERRY:
Introduction
The wife has applied for a number of interim orders in the context of a property settlement application, namely that:
(a)She have sole occupancy of the former matrimonial home at B Street, Suburb C.
(b)The husband pay her periodic spousal maintenance of $1,320.00 per week if she is given sole occupancy of the home and $1,800.00 per week if she is not.
(c)The husband pay her $33,000.00 by way of partial property settlement.
In the wife’s further amended initiating application she sought an order that the husband pay her a lump sum of $33,000.00 if she was not given sole occupancy of the home. At the commencement of the interim hearing her counsel indicated that she sought a lump sum of $33,000.00 regardless of whether she was given sole occupancy and that it was sought on the basis that the husband had recently sold shares to the value of $48,515.00 and had retained the proceeds.
(d)The husband pay her $50,000.00 for the purposes of funding her litigation and that the court also make a “dollar for dollar” costs order.
(e)Mr D of E Valuations be instructed to value the business F Group and the husband’s shares in G Pty Ltd and that the husband pay the costs of the valuation.
The husband proposed that:
(a)The wife’s application for sole occupancy be dismissed.
(b)He pay spousal maintenance $420.00 per week if the wife remained in the home or $1,320.00.00 per week plus $20,000.00 to cover costs of her relocating from the home if she chose to vacate the home.
(c)He pay the wife $30,000.00 to assist her to fund her litigation and that the payment be characterised as a partial property settlement. The husband’s counsel did not address in submissions the issue of whether a dollar for dollar costs order should be made.
(d)H Valuations be appointed to value the business and that the husband initially pay the costs of the valuation but that the wife reimburse him for half of the costs at the conclusion of the proceedings.
Evidence
The wife’s application for interim orders was heard on 5 November 2020 and proceeded by way of submissions.
The wife relied on her further amended initiating application, affidavit and her financial statement filed on 3 November 2020.
The husband relied on his amended response, affidavit and financial statement filed on 30 October 2020.
Background
The parties met in 1985 and lived together on and off for ten years before marrying in 1995. They separated under one roof on 31 May 2020 after a 25 year marriage preceded by some on off cohabitation.
The parties have two children: Ms J born in 2001 (19) and X born in 2003 (16). At the time of the interim hearing both girls were living in the former matrimonial home. Ms J had been attending the University earlier in 2020 but was at home due to COVID-19 issues impacting on the University being open for personal attendance by students. X was in Year 11 at high school.
The husband is a health care professional and was a health care professional throughout the relationship/marriage.
The wife worked as a Manager and sales consultant for a variety of companies until 2007. However she was diagnosed with a medical condition in 1996 and thereafter her employment was disrupted by several acute episodes of ill-health. In 2006 she commenced working part-time and in 2008 she ceased employment altogether. She has not worked since then save for being employed for six months in 2017.
Prior to separation the wife was on the books of the business as an employee and was receiving $900.00 per week. The husband also brought home $450.00 per week net. If I understand the wife’s evidence correctly, the total of $1,250.00 was given to her each week and she used the money to meet household expenses including purchasing food and household items and paying the cleaning/ironing lady.
The wife said, and it was not in dispute, that all of the other expenses for the former matrimonial home, including mortgage payments, rates, utilities, insurance and the employment of a gardener were paid by the business.
The wife’s evidence, which was not contradicted by the husband, was that the loan secured by mortgage over the B Street, Suburb C property was a loan taken out in connection with the acquisition of K Street, Suburb L from which the business operated. She said that G Pty Ltd paid rent for those premises to the M Unit Trust which in turn made the mortgage repayments.
The wife’s evidence was that the parties separated on 31 May 2020 when the husband said words to her to the effect of “we are separating, you are going to have to find somewhere else to live”. The husband agreed that the relationship broke down in May 2020. He did not admit asking the wife to move out but he did not provide any information in his affidavit about anything that was said at the time which inclines me to accept the wife’s evidence.
The parties both continued to live in the former matrimonial home after 31 May 2020.
On 12 August 2020 the wife filed an application for a property settlement. She sought leave to particularise the final orders she sought after the husband made full and frank disclosure. She sought interim orders for sole occupancy of the former matrimonial home and spousal maintenance of $900.00 per week or in the alternative the sale of the former matrimonial home and a payment of $100,000.00 to her by way of interim property settlement.
The wife also sought an order that once all issues of disclosure and valuation were attended to the matter be referred to arbitration.
The husband filed a response seeking different orders both as to final and interim matters. His solicitors indicated in a letter sent to the wife’s solicitors dated 29 October 2020 that the husband was agreeable to the matter being referred to arbitration if it could not be settled by private mediation.
When the matter came before me for directions on 28 September 2020 it was revealed that the husband and wife were still sharing the same bedroom. The wife was unhappy about this but said that she had nowhere else to go because the other three bedrooms were being used as Ms J’s bedroom, X’s bedroom and the husband’s study.
During the mention the husband agreed that he would move out of the main bedroom and commence sleeping in the study.
Until 24 September 2020 the wife had continued to receive $900.00 per week net from the business. She tendered her resignation on 24 September and on 28 September her counsel made an oral application for urgent spousal maintenance pursuant to s.77 of the Family Law Act 1975 (Cth). The husband agreed that he would pay the wife $420.00 per week and an order was made to that effect.
The matter was adjourned to 5 November 2020 for consideration of the wife’s interim applications which have since been varied and are now as set out above.
The assets, liabilities and superannuation
The asset pool cannot be known with certainty at present but the parties agree that it contains the following:
Description Owner Value B Street, Suburb C NSW Joint $3,500,00.00 Loan to M Unit Trust for purchase of K Street, Suburb L Joint $896,508.00 Motor Vehicle 1 Wife $20,000.00 Bank accounts Wife $270.00 Motor Vehicle 2 Husband $18,000.00 Motor Vehicle 3 Husband $50,000.00 Proceeds of sale of N Company Shares Husband $12,794.00 Proceeds of sale of O Company shares Husband $4,455.00 Proceeds of sale of P Company shares Husband $9,611.00 Proceeds of sale of Q Company shares Husband $21,655.00 Other shareholdings Husband Unknown 80% interest in G Pty Ltd Husband Unknown Business as sole trader: G Pty Ltd Husband Unknown Bank accounts Husband $114,000.00 Total $3,750,785.00 plus unknown
The values assigned to the B Street, Suburb C property and to motor vehicles are taken from the parties financial statements and may vary when valuation evidence is obtained, and the value in bank accounts will fluctuate.
The wife’s counsel asserted during submissions that the pool may exceed $8 million in value. The husband’s counsel did not comment on this and it is not inherently improbable given the assets referred to above.
The following liabilities have been identified:
Description Owner Value Loan from R Bank secured over B Street, Suburb C Joint $896,508.00 S litigation funding Wife $33,409.47 Visa Card Wife $10,000.00 Visa Card Husband $7,428.00 Total $947,345.47
The wife’s litigation funding debt and the money owing on credit cards may not ultimately be treated as liabilities in which both parties should share.
The parties have the following superannuation:
Description Owner Value Narron Superannuation Fund as at 30 June 2019 Husband $1,377,843.00 Narron Superannuation Fund as at 30 June 2019 Wife $1,088,940.00 Total $2,466,783.00
In a letter sent by the husband’s solicitors to the wife’s solicitors after the parties began attending to disclosure the husband disclosed that his mother Ms T owned assets of about $5.2m in the form of shares, term deposits, bank accounts, a cash management account and antiques and artworks. How this resource, if it is correctly characterised as a resource, will play into the overall outcome in the property settlement is unclear to me, and does not matter for the purposes of determining the interim applications.
The parties circumstances
The wife
The wife is 56. It was not in dispute that she had no capacity to earn income and that her only income at present was $420.00 per week which the husband was paying her pursuant to the urgent spousal maintenance order made on 25 September 2020.
The wife has the following assets in her name:
(a)A Motor Vehicle 1.
(b)A Commonwealth Bank account which held $270.00 when she filed her financial statement.
(c)Superannuation worth $1,100,000.00 in the Narron Superannuation Trust.
She has an interest in the following assets jointly with the husband:
(a)The furniture and contents at B Street, Suburb C.
(b)The loan to M Unit Trust in the amount of $896,508.00.
The wife’s superannuation and her interest in the joint assets cannot be used to generate any income or sold or borrowed against to obtain cash.
The husband
The husband is 59. He is a health care professional and operates G Pty Ltd.
It is impossible to get a clear picture of the husband’s income, not because the husband is hiding anything but because of the way his financial affairs are structured.
The husband’s taxable income was $65,903.00 in 2017, $119,004.00 in 2018 and $78,000.00 in 2019. However in his financial statement he said that he paid the whole of the financial costs of the family by taking drawings from his business and that for the period 1 July 2019 to 31 August 2020 his net drawings were $242,481.00 or $3,975.10 per week.
The parties lived well prior to separation. They employed a gardener and a cleaning/ironing lady and the wife received cash of $1,250.00 per week or $65,000.00 per annum to pay for day to day living expenses.
In Part N of the financial statement the husband filed on 24 September 2020 the weekly expenses he disclosed included $280.00 per week for travel and accommodation and $368.00 per week for holidays, a total of $648.00 per week or $33,696.00 per annum. When his counsel was queried about this during the interim hearing he said that this represented the cost of two one week holidays which the husband took in Country U each year.
The wife said that the husband currently gave Ms J $500.00 per week and that Ms J was not required to use this money to pay rent or board or buy food. In submissions the husband’s counsel said that Ms J was working in the business. The wife disputed this and I cannot resolve that dispute.
The husband has the sole right to draw on the income of the business and he has the following assets in his name:
Description Value Motor Vehicle 2 $18,000.00 Motor Vehicle 3 $50,000.00 Proceeds of sale of N Company shares $12,794.00 Proceeds of sale of O Company $4,455.00 Proceeds of sale of P Company shares $9,611.00 Proceeds of sale of Q Company shares $21,655.00 Other shareholdings Unknown 80% interest in G Pty Ltd Unknown Business as sole trader: G Pty Ltd Unknown Bank accounts $114,000.00 Total $230,515.00 plus unknown
The sole occupancy application
Pursuant to s. 114(1) (b) of the Family Law Act the court has the power to make an order giving one party exclusive occupation of the former matrimonial home. On the facts in this case the order would take the form of requiring the husband to vacate the home.
The wife said that she did not wish to continue living under the same roof as the husband. She said that it was tense and uncomfortable and that she was finding the situation increasingly stressful. She said that Ms J and the husband often talked together and stopped talking when she walked into a room which made her feel very uncomfortable.
She said that she still did the cleaning at the home and was doing most of the laundry and ironing, including ironing the husband’s shirts, because the cleaning/ironing lady had had a knee replacement and was unable to return to work for over six weeks.
The wife said that her medical condition symptoms were inconsistent and flared up when she was tired or stressed and that the stress of living separated from the husband under one roof was impacting on the management of her medical condition.
The wife said that on or about 7 October 2020 she lost her balance and fell down the stairs at the former matrimonial home. She fractured her ribs and was admitted to V Hospital emergency department but has since returned home. She put the fall down to the toll which living under one roof with the husband was taking on her and provided a letter from a doctor who said that in his opinion the wife’s stress had led to the fall.
The doctor said that it was important that the wife be able to live in a stress-free environment.
The wife said that she found the idea of trying to find alternative accommodation very daunting and in the affidavit she filed for the interim hearing she said that the thought of it was so stressful to her that if the Court did not grant her sole occupancy of the home she would have to remain living there and enduring the stress of living separated under one roof.
The wife said that the court should not require to do this when the husband could easily find somewhere else to live. He had no health issues and had ample means to obtain alternative accommodation pending the finalisation of the property settlement proceedings.
The wife said that she wished to retain the former matrimonial home on a final basis and that she loved the area where the home was located and was on good terms with her neighbours.
The husband said that he should not be required to move out of the home. He said that it was a comfortable four bedroom home and that the wife was still doing some ironing and cleaning and the parties still had some meals together and were able to have civilised conversations.
The husband’s counsel submitted that the court should be mindful of the fact that there was no family violence in this matter and that the wife had not given any evidence about conduct by the husband which would justify the extreme step of putting the husband out of his home.
The husband said that given he had done nothing wrong, if the wife did not like sharing the home with him she should be the one to move out. He said that he was willing to provide her with $20,000.00 to assist her to set herself up somewhere else.
The husband’s counsel submitted that the husband had made it clear from the beginning that he wished to retain the former matrimonial home whereas in her Initiating Application filed on 12 August 2020 the wife proposed that the home be sold. By implication it was suggested that she had amended her application for final orders to seek to retain the home to bolster her case for a sole occupancy order.
This last point is not fair. The wife did not specify any of the final orders she was seeking in her 12 August 2020 application she said that she would do so after disclosure and valuations had been completed. Her proposal that the home be sold was an alternative interim proposal if she was not given sole occupancy, with the flow on effect that some cash would be freed up for her.
The wife has now amended her application to specify the final orders she is seeking, which includes retaining the home.
If there is ultimately a dispute about which party should have first option to retain the home the fact that one party has been in occupation of it for a period prior to the court determining the dispute will be a relevant consideration but it will not be the only consideration and I do not accept that the wife has amended her application for final orders for strategic purposes.
The wife’s counsel submitted and I accept that the wife did not have to establish threatening or overbearing or even intolerable conduct by the husband in order to persuade the court to make an order for sole occupancy. Whether the court makes such an order is a matter of discretion and how that discretion is exercised turns on the combination of facts in each case. In Davis & Davis (1976) the Full Court said as follows:
The criteria for the exercise of the power under section 114(1) are simply that the court may make such order as it thinks proper. The matters which should be considered include the means and needs of the parties, the needs of the children, hardship to either party or to the children and, where relevant, conduct of one party which might justify the other party in leaving the home or in asking for the expulsion from the home of the first party.[1]
[1] Davis & Davis (1976) FLC 90-062
In Davis & Davis (1983), Baker J said as follows:
Lindemayer J in an unreported decision of Price & Price, which judgment was delivered on 1 July 1982, extracted from the authorities the relevant principles of law in relation to applications for exclusive occupation of a matrimonial home which principles his Honour encapsulated in the following passage, and I quote:
``In my opinion, Page's case demonstrates a softening of the Court's attitude towards applicants for exclusive occupation orders. It seems to indicate that it is no longer necessary that such an applicant show that it is impossible or intolerable for him or her to continue in co-occupation of the house with the other party, or that there has been some conduct by the other party which justifies his exclusion from the home. All that is necessary, it seems, is that the Court should regard the situation between the parties as being such that it would not be reasonable or sensible or practicable to expect them to continue to remain in the home together.''
This passage, in my view, correctly states the principles of law to be applied in applications for exclusive occupancy of a matrimonial home. [2]
[2] Davis & Davis (1983) FLC 91-319
The wife’s counsel also asked me to have regard to the 2019 first instance decision of Durnin & Durnin[3] which she said was an example of the softening of the Court’s attitude toward applications for sole occupancy. However the only relevance of that decision is that Johnstone J relied on the above passage from Davis & Davis (1983) in coming to his decision. The outcome in Durnin & Durnin turned on its own facts, which included the ill-health of both parties, allegations of family violence and the need of the wife to provide a home for the parties’ young child.
[3] Durnin & Durnin [2019] Fam CA 253
For the following reasons I am satisfied that it is appropriate to make an order giving the wife sole occupancy of the home.
The wife said that the husband informed her that he wished to end the marriage and that she would need to find somewhere else to live. The husband did not seek to contradict this and did not provide any information about how the separation came about save to say that it ended in May 2020.
After the marriage ended the husband did not move out of the main bedroom or make his study available for the wife to use, which created an uncomfortable situation for the wife. He agreed to move out of the bedroom only after the matter was first mentioned in court.
The former matrimonial home does not have separate living areas each with their own kitchen and other facilities which meant that each party could occupy one part of the house and keep out of the others way. It may suit the husband for the parties to continue to live under one roof, for the family to eat meals together and for the wife to continue to do the cleaning, washing and shopping for the family and to iron his shirts, but it does not suit the wife. He did not suggest any way in which daily intermingling between the parties could be avoided if he remained in the home and the wife is clearly unhappy and uncomfortable with the situation.
I cannot find that the wife’s fall was the result of stress and would not have occurred if she was not living under one roof with the husband, but she has a serious medical condition with symptoms which fluctuate in severity and it is entirely understandable that she would want to put an end to a situation which I accept is causing her stress.
There might be cases in which this would not be sufficient to justify a sole occupancy order but in this case it is enough. The wife should not be required to continue to live in an unwonted situation which she finds stressful when the husband has the means to afford comfortable alternative accommodation and unlike the wife does not suffer from any health conditions which mean that the prospect of finding alternative accommodation until the property matter is settled is likely to be daunting for him.
I intend to make the order for sole occupancy sought by the wife. It does not specify a time for the husband to vacate the home but presumably the wife believes that once the order is made the parties will be able to organise this between themselves.
Spousal Maintenance
The wife is unable to support herself adequately without spousal maintenance and the husband has the capacity to pay the amount sought by the wife. It was his case however that the court should order a lesser amount because the wife had not established that she needed $1,320.00 per week.
In Part N of her financial statement the wife identified weekly expenses for herself of $945.00. The implication in her affidavit filed on 3 November 2020 was that her expenses may be somewhat understated. She said that between 28 September 2020 and 28 October 2020 she had paid $499.66 in medical expenses. In Part N she allowed $100.00 per week for medical expenses.
The wife’s expenses are not limited to those set out in Part N. She said that she was obliged to make credit card repayments of $100.00 per week and that motor vehicle registration was $25.00 per week and that it was by adding these expenses to the total of $1,195.00 in Part N that she came to a figure of $1,320.00.
In her financial statement filed on 3 November 2020 the wife said that she owed $10,000.00 on her credit card as a result and that friends had been providing her with money to meet some of her expenses. She also said that she had been obliged to withdraw $5,000.00 from the loan she took out to fund her litigation and had used it to buy food and to meet medical and other living expenses. She said that she could not afford to buy many of the things she used to buy.
The wife also identified expenses for the children of $100.00 per week for food, $100.00 per week for children’s activities and $50.00 for holidays.[4] The husband suggested that he could meet these expenses but it was the wife’s case that the children were likely to consume some of the food she bought for the house.
[4] There is a transcription error in the table; the $50.00 allowed for children’s holidays has not be carried across into the children’s column.
The parties lived well during the marriage and even if the wife has her housing costs met, an amount of $420.00 per week would not enable her to live in the manner to which she has become accustomed and in the manner in which the husband clearly intends to continue to live given that the expenses he set out in Part N of his financial statement included the cost of his bi-annual shooting holidays. The credit card payment may become unnecessary if the wife obtains a lump sum partial property settlement but there is no reason why the wife should be paid a bare minimum when the husband can well afford to pay more. I am satisfied that the husband should be ordered to pay spousal maintenance of $1,320.00 per week.
Partial property settlement
Although the power in s. 79 of the Family Law Act to make property settlement orders is usually exercised once and once only, the court has the power to make more than one order pursuant to this power until, as was recognised in Strahan & Strahan, “the power is exhausted”. In other words, the court has power to make an order for an interim property settlement, or a series of interim property settlements, although whether it does so is a matter of discretion.[5]
[5] Strahan & Strahan (2011) FLC 93-466
Three things are beyond doubt in this matter:
(i)It is appropriate for the court to make property settlement orders. The marriage has broken down and the parties can no longer jointly enjoy the assets accumulated during the marriage.[6]
(ii)The wife’s entitlement will well exceed the interim distribution she seeks even when added to the interim distribution she seeks to provide her with litigation funding.
(iii)The wife has no assets in her possession which allow her to generate cash and which will give her a buffer if unexpected expenses arise. The husband on the other hand has free use of the income from the business.
[6] Stanford & Stanford [2012] HCA 52
The husband has the means to pay the wife a lump sum by way of partial property settlement. In August 2020, he sold shares to the value of $48,515.00. In the financial statement he filed on 24 September 2020, he declared that he had $106,756.00 in an account in his name. It is called the business account but the husband also disclosed in his financial statement that between 1 July 2019 and 31 August 2020 his drawings from the business amounted to $242,481.00 after deducting the amounts he paid to purchase a motor vehicle and to purchase income protection insurance.
The husband proposed paying the wife $20,000.00 if she left the former matrimonial home but there is no reason why a lump sum payment for her own use should not be made to her if she remains in the home. The vast majority of the non-superannuation assets are controlled by the husband and I am satisfied that it is appropriate to make an order that the husband pay the wife $33,000.00 by way of an interim property settlement.
Litigation Funding
The wife sought an order that the husband pay her $50,000.00 by way of litigation funding and that the court also make a dollar for dollar costs order.
The wife has signed a costs agreement with her lawyers and when she filed her affidavit on 3 November 2020 she had spent $22,472.41 on legal fees. She has some fees owing to her counsel and estimated that her legal costs to a final hearing would be $95,000.00.
The wife cannot pay her legal fees from her own resources. The source of the funds to pay the legal fees to date is a loan of $60,000.00 the wife has taken out with S Legal. She has $33,406.00 left after paying the amount of $22,472.41 referred to above and withdrawing $5,000.00 for to meet her living expenses.
There was no dispute that the husband should pay the wife a lump sum by way of litigation funding. The husband has not been obliged to borrow to pay his legal fees and he has the financial capacity to make a lump sum payment to the wife to assist her to pay her legal fees. The issues in dispute were:
(a)The amount: the wife sought $50,000.00 and the husband proposed $30,000.00.
(b)The characterisation of the payment: The wife did not address this in her application. The husband proposed that the payment be by way of a partial property settlement.
(c)Whether in addition to ordering the payment of a fixed sum the court should make a “dollar for dollar” costs order, so that the husband was obliged to make an equivalent payment to the wife whenever he made a payment to his lawyers in respect of costs, either by way of payment of an account or deposit into a trust account in advance.
The wife’s estimate of total fees does not seem excessive in the circumstances of this matter and if an order is made for the husband to the wife $30,000.00 as opposed to $50,000.00 she may be left with a shortfall which may necessitate further applications for an interim costs order. She has no means to generate further funds other than borrowing, which comes with borrowing costs, and the husband has the capacity to pay the $50,000.00 and I intend to order that it be paid.
The husband’s counsel did not make any submissions about whether the court should also make a dollar for dollar costs order.
If that order was made it might obviate the necessity for further applications if the wife runs out of money to pay her legal fees but such an order is capable of being defeated (by the husband choosing to make no payments to his solicitors). Also no information was provided about the amount the husband had paid his lawyers to date, and there is the risk that the husband might decide (because his solicitor required him to do so) to place a large sum into his solicitor’s Trust Account hot on the heels of payment of the $50,000.00 which might mean that he had to pay another large lump sum shortly after paying the $50,000.00.
I therefore intend to dismiss the wife’s application for a dollar for dollar costs order. If she requires further litigation funding it will have to be the subject of another application.
The expert to value the business and company
The wife proposed that Mr D of E Valuations be instructed to value the business G Pty Ltd and the husband’s shares in G Pty Ltd. She also proposed that the husband pay the cost of the valuation.
The wife’s counsel submitted that Mr D should be preferred to H Valuations because Mr D said that he specialised in business valuations, forensic financial analysis, taxation advice and strategic planning but that his expert work had been predominantly for family law purpose due to high demand.
In an email to the wife’s solicitors Dr D said that he could undertake 3 different levels of business valuation: a pre-valuation estimate for $2,970.00 inclusive of GST; a limited business valuation for $5,940.00 inclusive of GST; or a full business valuation for $10,340.00 inclusive of GST.
He said that if a party started with a lower option they could upgrade to the scope of engagement at a later time if this was required.
The wife’s counsel said that the wife had a concern about the husband having a relationship of some kind with the persons involved in H Valuations, the husband’s preferred valuer. However somewhat confusingly in her affidavit the wife said that she was prepared to consent to an order that H Valuations prepare the valuation if the husband paid the costs associated with the valuation because it would reduce her legal costs.
The husband proposed that the company and business be valued by H Valuations. They said that their firm specialised in providing management and financial advice to health care professionals. Mr W, a director and partner of the company said that the company completed about 100 business valuations a year including the valuation of health care businesses and that they gave advice to health care professionals about buying and selling businesses. They estimated that their fee for valuing the G Pty Ltd would be $5,000.00.
The husband’s counsel did not challenge Mr D’s expertise but pressed for an order that H Valuations be appointed the joint valuer on the basis of their specialisation in valuing businesses. He also pressed for an order that the costs of the valuation be shared.
Both experts have the capacity to carry out a valuation of the business but Mr D identified a particular expertise in preparing valuations for family law purposes. His price for a full valuation is double that of H Valuations but it is not an unreasonable amount or an amount which is incongruent with the likely value of the entity to be valued or an amount the parties are able to afford.
It is appropriate for the costs of the valuation to be shared and this can be done without immediate cost to the wife by ordering that the husband pay the costs of the valuation in the first instance and that the wife reimburse him 50% of the cost of the valuation contemporaneously with the finalisation of the property settlement.
Of the options on offer (Mr D, at the husband’s expense; Mr D, at joint expense; H Valuations at joint expense; or H Valuations at the husband’s expense) it is the option to be preferred and I intend to make an order to that effect.
| I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Terry. |
Associate:
Dated: 8 March 2021
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Expert Evidence
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Injunction
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Remedies
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