Norton and Wilkins

[2017] FamCA 992

FAMILY COURT OF AUSTRALIA

NORTON & WILKINS [2017] FamCA 992

FAMILY LAW – PROPERTY AND MAINTENANCE – INTERIM – PRACTICE AND PROCEDURE – COSTS  – Where the applicant seeks maintenance and litigation funding – Where there is dispute between the parties as to the validity of a financial agreement – Where there is no prospect of the sum sought by the applicant being repaid.

Family Law Act 1975 (Cth)

In the Marriage of Zschokke [1996] FamCA 79; (1996) 20 FamLR 766; (1996) FLC 92-693
Norton & Locke (2013) 50 Fam LR 517; (2013) FLC 93-567
Rakete & Rakete [2012] FamCA 267
Penfold v Penfold [1980] HCA 4; (1980) 144 CLR 311
Strahan v Strahan (interim property orders) [2009] FamCAFC 166; (2009) 42 FamLR 203; (2011) FLC 93-466
Wall & Mitchell [2010] FamCA 1194

APPLICANT: Ms Norton

RESPONDENT: Mr Wilkins

FILE NUMBER: SYC 3110 of 2017

DATE DELIVERED: 29 November 2017

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Carew J

HEARING DATE: 27 November 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hackett

SOLICITOR FOR THE APPLICANT: Aubrey Brown Partners

COUNSEL FOR THE RESPONDENT:	Mr Kearney SC
SOLICITOR FOR THE RESPONDENT:	Hopgood Ganim Lawyers

Orders

1. The application for maintenance and litigation funding filed on 6 September 2017 (interim orders sought) is dismissed.

2. That pursuant to Rule 10.13 of the Family Law Rules 2004 there be a separate hearing as to:

   (a)the relief sought by the Applicant in paragraphs 1 and 2 of the Amended Initiating Application (Family Law) filed 6 September 2017; and,

   (b)the relief sought by the Respondent in paragraphs 1 and 2 of the Response to Initiating Application (Family Law) filed 24 October 2017.

3. All extant applications for interim orders are otherwise dismissed.

IT IS FURTHER ORDERED BY CONSENT:

1. The Applicant have leave to amend paragraph 5 of the Interim Orders sought in the Amended Initiating Application so as to accord with paragraph 17 of the Applicant’s Case Outline filed in Court on 27 November 2017 and the addition of paragraph 7(c) below.

Disclosure

1. The Respondent disclose such of the following documents (if any) within his possession or control within 14 days:

   (a)       documents from the Respondent’s computer relating to the date he:

   (i)Scanned the Financial Agreement; and

   (ii)Made the diary entry.

   (b)       documents relating to:

   (i)when the letter by B Lawyers to C Lawyers dated 11 July 2014 (letter) was created;

   (ii)whether the letter was transmitted by email and sent by post; 

   (iii)the receipt of either email or letter by C Lawyers of the letter or, to the contrary, its return; and documents relating to

   (c)documents relating to receipt by the Respondent from his solicitors of the Financial Agreement for signature by him.

Points of Claim

1. That within thirty (30) days hereof the Applicant shall file and serve a Points of Claim document, pleading the particular provisions of the Family Law Act 1975 and any contentions of law she relies upon as grounds for the relief sought by her in paragraphs 1 and 2 of the Amended Initiating Application (Family Law) filed 6 September 2017 and all the material facts she contends will support the relief she seeks, but not the evidence by which the facts are to be proved. 

2. That within thirty (30) days of the date of service upon the respondent of the Applicant’s Points of Claim document, the Respondent shall file and serve both:

   (a)a Points of Defence document; and,

   (b)a Points of Claim document, pleading the particular provisions of the Family Law Act 1975 and any contentions of law he relies upon as grounds for the relief sought by him in paragraph 2 of the Response to Initiating Application (Family Law) filed 24 October 2017 and all the material facts he contends will support the relief he seeks, but not the evidence by which the facts are to be proved.

3. That within fifteen (15) days of the date of service upon the applicant of the Respondent’s Points of Claim document, the Applicant shall file and serve a Points of Defence document.

4. The Points of Claim documents shall include particulars necessary to define the issues for, and prevent surprise at, the separate hearing, and to enable each party to plead in response, and support any matters specifically pleaded.

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 Norton & Wilkins 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 BRISBANE

FILE NUMBER: SYC 3110 of 2017

Ms Norton

Applicant

And

Mr Wilkins

Respondent

REASONS FOR JUDGMENT  

1. The applicant and respondent cohabited in a de facto relationship for a number of years before separating on 20 November 2016. The substantive proceedings relate to whether or not there was a financial agreement entered into between the parties on 20 February 2013 and, if so, whether it should be enforced or set aside. If it is not a valid financial agreement or is set aside, the applicant seeks an order for the payment to her of $1,000,000 pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”) and spouse maintenance pending payment.

2. The parties jointly seek a discrete hearing of the issues relating to the financial agreement and I consider a discrete hearing to be appropriate. In addition, the parties have agreed to disclosure on the limited issue to be determined at that hearing.

3. In the interim, the applicant is applying for maintenance of $425 per week and litigation funding of $53,377.27. There was an issue about a motor vehicle but that has resolved. The respondent opposes the interim relief sought.

background

1. The applicant contends that cohabitation commenced in 2009. The respondent contends that cohabitation commenced in April 2011. The parties agree that separation occurred on 20 November 2016.

2. There are no children of the relationship.

3. The applicant is 34 and employed in administration earning approximately $65,000 per annum plus superannuation.

4. The respondent is 34 and works in a commercial industry.

5. At commencement of cohabitation the applicant owned few assets (a car, furniture and nominal superannuation) and was working in the service industry earning approximately $40,000 per annum.

6. It is not in contention that the parties maintained separate residences until moving in together in April 2011.

7. The applicant contends that upon moving in with the respondent she contributed $200 per week towards the accommodation costs. The property into which she moved was owned by the respondent.

8. The parties established a joint account to which they each contributed an equal amount to pay for groceries and household expenses. At times, the applicant borrowed money from her parents to enable her to make her contribution to the joint account.

9. In May 2012 the applicant signed a document (“the agreement”) which purported to be a financial agreement pursuant to s 90UC of the Act.

10. The agreement was not signed by the respondent until the 19 February 2013 and the date of the agreement is stated to be 20 February 2013 (being the date the respondent intended to return it to his solicitor).

11. The agreement includes an introduction which provides inter alia:

    a)The parties commenced living together in April 2011;

    b)The respondent receives an annual income of $1,200,000;

    c)The applicant receives an annual income of $45,000;

    d)The parties intend the agreement to operate in substitution of their rights under the Act;

    e)Neither party contributed to the assets of the other specified in the schedules;

    f)Before signing the agreement each party had received advice as required under the Act;

    g)The agreement was to come into effect when signed by both parties and the solicitor’s certificates of advice are signed and the original is provided to one party and a copy to the other;

12. The operative parts of the agreement provide inter alia:

    a)Each party shall retain the property identified in the respective schedules;

    b)If they separate without having had children, $50,000 of the assets retained by the applicant shall be attributable to maintenance at the rate of $5,000 per annum for ten years.

13. Schedule 1 of the agreement lists the respondent’s net property as having a value of about $3,000,000. Schedule 2 of the agreement lists the applicant’s net property as having a value of about $24,000.

14. The agreement annexes the certificates signed by the parties’ respective solicitors confirming that the requisite advice was given.

15. Contrary to the certificate and the acknowledgement in the agreement signed by the applicant, it is contended by her that she did not receive the requisite advice. It is also contended that, because of the delay between the applicant signing the agreement and the respondent signing the agreement, there was no agreement as it was not signed within a reasonable time. The applicant also denies receiving the original or a copy of the agreement.

16. An aide memoir was provided by Mr Kearney SC, for the respondent, setting out the property retained by the applicant for the purpose of the agreement. It provides as follows:

Asset	Value	Comment
Proceeds of joint bank account	2,592.80
Car	8,500	Respondent says it is worth $14,990
Jewellery	10,000	Respondent says it is worth $30,500
Contents	5,000
Sunsuper	26,068	Applicant is unsure if this figure is accurate although the information from Sunsuper dated 7 November 2017 confirms the figure
REST super	3,500
$55,660.80

1. The applicant relies upon an estimate of costs prepared by her solicitor to support her claim for $53,377.27. It is not immediately apparent how that figure is arrived at by reference to the document annexed to her affidavit. The annexure sets out a total of $69,814.99 and includes fees incurred to date of $12,844.99. It also includes fees associated with the interim hearing of $10,000. I note that the applicant intends to retain senior counsel from Sydney which might explain the estimate fees for counsel for a one day discrete hearing including preparation of $27,500.

maintenance

1. Mr Hackett, counsel for the applicant, quite properly concedes that until there has been a determination as to the validity of the financial agreement the Court does not have jurisdiction to determine the application for maintenance.[1]

   [1] See s 90SA of the Act; Norton & Locke (2013) 50 Fam LR 517; (2013) FLC 93-567

2. He nevertheless submits that such an order could be made because it is consistent with the agreement itself. Not surprisingly Mr Hackett was unable to cite an authority in support of such a proposition and I reject it. In any event, it does not seem to be seriously in contention that the value of property retained by the applicant exceeds the $50,000 sum referred to in the agreement.

litigation funding

1. The application for litigation funding is made pursuant to s 117 of the Act. That section provides:

   (1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.

   (2)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) and (5) 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.

(2A)  In considering what order (if any) should be made under subsection (2), the court shall have regard to:

(a)the financial circumstances of each of the parties to the proceedings;

(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;

(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;

(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

(g)such other matters as the court considers relevant.

…

1. It is not in contention that the Court has power to make an order for litigation funding. The substantive proceedings concern the validity, enforceability and effect of the agreement and even if the agreement is found to be valid and enforceable it only ousts the jurisdiction to make orders for spousal maintenance or property settlement under Part VIIIAB of the Act (see s 90SA).[2]

   [2] See also Rakete & Rakete [2012] FamCA 267; In the Marriage of Zschokke [1996] FamCA 79; (1996) 20 FamLR 766; (1996) FLC 92-693 and Strahan v Strahan (interim property orders) [2009] FamCAFC 166; (2009) 42 FamLR 203; (2011) FLC 93-466

2. The High Court in Penfold v Penfold[3] held:

   It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

   Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s. 117 (2) in “a clear case”.

   [3] [1980] HCA 4; (1980) 144 CLR 311 at 315

Applicant’s argument

1. Mr Hackett, counsel for the applicant, submits that the circumstances in this case justifying an order for litigation funding are:

   a)There is a significant disparity in the financial circumstances of the parties such that the respondent is in a position of relative financial strength relative to the applicant;

   b)The respondent has the capacity to meet his own costs and the applicant does not;

   c)The applicant has an arguable case;

   d)There is evidence as to anticipated and incurred costs and disbursements;

   e)The applicant has good prospects in the substantive proceedings involving the validity of the agreement;

   f)While the applicant would find it difficult to repay any sum, if the substantive proceedings failed, she could do so if provided sufficient time.

Respondent’s argument  

1. In resisting the order for litigation funding, Mr Kearney of Senior Counsel, submits the following matters counter against an order being made:

   a)There is a serious question to be tried, being whether the agreement precludes the granting of any relief as sought by the applicant;

   b)This is a short de facto relationship in which there is no controversy that the both parties entered into a financial agreement freely and willingly. There is no suggestion of duress or unconscionability;

   c)At least prima facie, the limited substantive relief available to the applicant if she were to succeed in her attack on the agreement – having regard to the short duration of the relationship, the limited nature of the parties financial relationship, the absence of any substantial contribution by the applicant, the absence of children and the improved position of the applicant in terms of her income compared to the commencement of the relationship. The applicant is young and working full time.

   d)The applicant has no capacity to repay any sum provided to her.

2. Mr Kearney SC submits that the comments by Johnston J in Wall & Mitchell[4] are apposite:

   43. Would it be just within the meaning of s 117(2) to order the respondent to pay money to the applicant to be used by her to fund the costs of her litigation with the respondent when it is far from clear that there is at least some likelihood that the Court would make any substantive order in her favour? In my view, if the Court was to make a preliminary costs order, and ultimately it turned out to be the Court’s finding that there was no basis upon which the respondent could be required to make a substantive payment to the applicant, this would be most unjust to the respondent. This is because it is clear that the applicant has no means by which any such preliminary payment could be refunded to the respondent.

   [4] [2010] FamCA 1194

discussion

1. I consider there to be much force in the arguments made on behalf of the respondent. While the applicant may have an arguable case in relation to her challenges to the agreement (although her success very much depends on findings of fact yet to be made), her prospects of success in the substantive proceedings are far from clear. It may well be that in the circumstances of this case a court would not find it just and equitable to make any order. In addition, the applicant is in full time employment earning $65,000 per annum. While the applicant’s expenses may exceed her income the applicant would have to establish that she is unable to support herself adequately and that her expenses are reasonable.

2. There is no prospect, in my view, of the sum sought by the applicant being repaid. Given the submissions made on her behalf viz. that her car is required for her employment, the property which could be disposed of in order to repay the respondent is limited to her jewellery which she contends is worth $10,000. The applicant contends that her current expenses exceed her income hence even allowing time to pay would not improve the prospect of the applicant being able to repay the respondent.

3. Accordingly, I propose to dismiss the application for litigation funding.

I certify that the preceding Thirty-one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 29 November 2017.

Associate:

Date:   29 November 2017