Novakovic and Novakovic and Ors

[2012] FamCA 809

FAMILY COURT OF AUSTRALIA

NOVAKOVIC & NOVAKOVIC AND ORS [2012] FamCA 809

FAMILY LAW – INTERIM PROPERTY – Interim costs order sought by Applicant and Case Guardian for Fourth Intervener to enable those parties to continue to prosecute their respective cases – Respondent and two intervening parties opposed the Applicant’s application on the grounds of an interest in the relevant funds by way of an alleged constructive trust – Applicant’s application upheld but for a lesser sum than sought – Fourth Intervener’s application dismissed as no evidence to establish need for funds

Family Law Act 1975 (Cth)

Barro v Barro (1983) FLC 91-300; (1982) 8 Fam LR 855
Breen v Breen (1990) 65 ALJR 195
Hogan & Hogan (1986) FLC 91-704; (1986) 10 Fam LR 681
Poletti (1990) 15 Fam LR 794

APPLICANT: Ms Novakovic

RESPONDENT: Mr Novakovic

FIRST INTERVENOR: Mr M Novakovic

SECOND INTERVENOR: Ms B Novakovic

FOURTH INTERVENOR: N Novakovic

FILE NUMBER: PAC 5234 of 2008

DATE DELIVERED: 3 July 2012

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Collier J

HEARING DATE: 2 July 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd, SC.

SOLICITOR FOR THE APPLICANT:

Mr West

Cox West Lawyers

COUNSEL FOR THE RESPONDENT: Mr O’Brien

SOLICITOR FOR THE RESPONDENT: Mr Low
Low Doherty & Stratford
PO Box 147
BLACKTOWN NSW 2148

SOLICITOR FOR THE FIRST

INTERVENER:

Mr Nott

McDonnell Schroder Solicitors

SOLICITOR FOR THE SECOND

INTERVENER:

Mr Kearney / Mr Ford

Matthews Dooley & Gibson

COUNSEL FOR THE FOURTH

INTERVENER:

Ms Paraska

SOLICITOR FOR THE FOURTH

INTERVENER:

Mr McKay

Bell Lawyers

Orders

1. That the husband shall pay to the applicant’s solicitors, within twenty-eight (28) days of this date, the sum of $120,000 to be utilised for the wife’s costs in prosecuting her claims in these proceedings including present and future costs in relation to solicitors, counsel, accountants, valuers and other legal costs and disbursements that may be appropriate in all the circumstances incurred.

2. That in the event that the sum is not paid in the time specified, then immediately on the expiration of twenty-eight (28) days, the husband and, if necessary the wife, shall do all things and execute all documents necessary to cause to be paid from the monies held in a controlled money account by the husband’s solicitors an amount of $120,000.  Such sum is then to be paid to the wife’s solicitors and the wife’s solicitors shall apply that sum in accordance with the conditions set out in order 1 above.

3. It is to be noted that a determination, as to the manner in which the sum referred to in order 1 above is to be treated as a part of the wife’s entitlement to property settlement or otherwise, shall be reserved to the Trial Judge at the final hearing of these proceedings.

4. That the application of the 4th intervener for payment of monies for costs shall be and is hereby dismissed.

5. That the applicant’s Application in a Case filed 5 December 2011 shall be and is hereby dismissed.

6. That I reserve the costs of today of each of the parties to the final hearing. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Novakovic & Novakovic and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5234 of 2008

Ms Novakovic

Applicant Wife

And

Mr Novakovic

Respondent Husband

And

Mr M Novakovic

First Intervener

And

Ms B Novakovic

Second Intervener

And

N Novakovic

Fourth Intervener

REASONS FOR JUDGMENT

Introduction

1. This matter involves applications by the wife, the Applicant in these proceedings, and the Fourth Intervener, an infant child of the parties, by his Case Guardian. 

2. Both of those parties seek that they be paid monies to enable them to participate in the final hearing of this matter.  Whilst the matter has not been fixed for hearing for specific dates, it now appears that, on the best estimates available, some eight days will be required to conduct the hearing.

The applications before the Court

1. The wife commenced this current round of litigation by her case application filed on 5 December 2011.  On that document, in orders 4 and 5 she sought that she be paid an amount of $120,000 to be used to defray costs and expenses in her preparation for and conduct of the trial.  There was a further order (order 6) sought concerning a motor vehicle, but Orders have been made already to dispose of that aspect of the matter.

2. In addition to the application, the wife has made available a minute of the orders she now seeks.  The terms of those two orders are in very similar terms with one significant difference - that the amount now claimed by the wife for costs has increased from $120,000 to $176,000.  In addition, the wife seeks that any order for costs that I might make be satisfied from monies held in a controlled monies account by the husband’s solicitors.  I am satisfied that as at 31 March 2012 that account held the amount of $424,772. 

3. The Fourth Intervener seeks costs as against firstly, the wife, and thereafter, in the alternative, the husband, in the sum of $67,000. 

4. The Respondent Husband, the First Intervener, who is the husband’s brother, and the Second Intervener, their mother, oppose the orders sought by both the Applicant Wife and the Fourth Intervener.

Brief background

1. A brief background to this matter is as follows:-

   ·The husband’s father was born in 1926 and his mother in 1930, both in South Eastern Europe. 

   ·The brother was born in 1956 and the husband in 1965. 

   ·The wife was born in Sydney in 1971. 

   ·Of what I imagine will be in significant dispute in these proceedings, it is alleged by the husband and the First and Second Interveners that the husband’s family then became involved in significant property transactions. 

   ·On 17 February 1992, the husband and wife commenced cohabitation and their first child was born in October 1992.  Their second child was born in June 1995 and their third child in November 1996. 

   ·The husband thereafter was engaged in the acquisition of real property and the manner in which that was funded or carried out will be a significant matter for dispute in these proceedings.

   ·The parties married in 2001.  The parties’ fourth child was born in July 2001. 

   ·In November 2001, the husband’s father passed away. 

   ·In December 2006, the parties’ fifth child was born. 

   ·The parties appear to have separated in about September 2009.

   ·Thereafter, there was the sale of properties and monies were invested, eventually finding their way into the controlled monies account to which I have already made reference. 

   ·The parties, as I have said, are involved in significant litigation with the matter to be listed for hearing for some eight days at the earliest opportunity.

Documents relied upon by the parties and the interveners:

1. Each of the parties have filed and relied upon a significant number of documents in this matter. 

2. The Applicant Wife indicated that she sought to rely upon:-

   ·An affidavit of her solicitor sworn 30 November 2011 and filed 5 December 2011;

   ·An affidavit of herself sworn 2 December 2011 and filed 5 December 2011;

   ·A statement of her financial circumstances verified by affidavit sworn 18 October 2011 and e-filed 18 October 2011;

   ·Her affidavit sworn 21 June 2012 and e-filed 22 June 2012;

   ·An affidavit of her solicitor also sworn 21 June 2012 and e-filed 22 June 2012; and

   ·The husband’s statement of financial circumstances sworn 20 November 2009 and filed 23 November 2009. 

3. The Respondent Husband, for his part, indicated that he relied upon:-

   ·An affidavit of himself affirmed 9 May 2012 and filed 10 May 2012;

   ·An affidavit of Mark Antony Ford (solicitor for the Second Intervener) sworn 25 May 2012 and e-filed 25 May 2012;

   ·An affidavit of Ms B Novakovic (the Second Intervener) sworn 25 May 2012 and e-filed 25 May 2012;

   ·An affidavit of Mr M (Case Guardian for the Fourth Intervener) sworn 9 December 2011 and e-filed 9 December 2011; and

   ·Some correspondence which was identified as being an annexure to an affidavit of Mr West sworn 7 May 2012 and e-filed 7 May 2012.

4. The First Intervener, for his part, sought to rely upon his affidavit sworn 5 May 2010 and filed 10 May 2010. 

5. The Second Intervener, the husband’s mother, relied upon:-

   ·Her own affidavit sworn 25 May 2012 and e-filed 25 May 2012;

   ·An affidavit of her solicitor, Mark Antony Ford, sworn 25 May 2012 and e-filed 25 May 2012; and

   ·An affidavit of Ms E sworn 25 May 2012 and e-filed 25 May 2012. 

6. It will be obvious that there is an overlap of affidavit material with parties relying on affidavits of other parties.

7. In the case of the Fourth Intervener, reliance was placed upon an affidavit by the Case Guardian, Mr M, sworn 9 December 2011 and e-filed 9 December 2011.  In addition, counsel for the Fourth Intervener sought to rely upon an affidavit of her instructing solicitor, Damien Ralph McKay.  That affidavit was sworn on 29 June 2012 and e-filed on the same day.  It will be recalled that an Order was made for affidavits to be filed by 22 June 2012 and that Order contained a provision that documents filed after that date could not be relied upon at the hearing.  I accordingly refused to allow the Fourth Intervener to rely upon the document.

The parties and intervener’s respective cases

1. The Applicant Wife’s case is that she needs funds which will enable her to properly prepare and conduct her case at hearing.  She seeks that the husband either make arrangements to pay that money from his own funds or that the funds she requires be made available from monies held in a controlled monies account held by the solicitors for each of the husband and the wife.

2. It is her case that if the funds were paid from the controlled monies account there would still be sufficient moneys available, so that in any event her entitlement at an eventual hearing, even on the figures promoted by the husband, would be sufficient to repay any moneys in the event the Interveners (or any of them) were successful in obtaining an order in their favour.

3. The Respondent Husband’s case, as I understand it, is that the wife should receive no monies, either from his funds or from monies held in the controlled monies account.

4. The First Intervener’s case, as I understand it, is that there should be no money paid from the controlled monies account.  I do, however, understand that the First Intervener is indicating to me that I have power to make an order, but if such an order were to be made, it should be made only and solely against the husband and should not in any way be satisfied from the controlled monies account.

5. The Second Intervener’s case is in very much the same terms as that of the First Intervener.  That is to say that I can make an order, but it should only be made as against the husband.

6. The Fourth Intervener’s case was, rather than opposing that which was sought by the wife, to seek for himself moneys to be paid to him, as Case Guardian of the infant child of the husband and the wife, to enable him to meet the cost of the ongoing litigation.

The matters in issue before me

1. The issues as I then ascertain them, as between the Applicant Wife and the Respondent Husband and the First and Second Interveners, are:-

   ·Can I make, firstly, any order for payment of moneys in favour of the Applicant as against the Respondent? 

   ·Secondly, can I require payment of any sum that I might specify, from the funds held in the controlled monies account by the solicitors for the husband and the wife?   

2. As between the Fourth Intervener and the other parties, can I make any order against either the wife or the husband, as is sought, for payment of costs to the Fourth Intervener who is, as I have said, the Case Guardian of the child?

The law to be applied

1. I am satisfied that I can make an order for funds to be paid under a number of heads of power.  Orders of this type are by no means unknown in the Family Court.  Cases such as Barro v Barro[1] and Poletti[2] make it clear that such an order is indeed an appropriate order.  It would seem that in cases such as Barro (supra) and also in Hogan & Hogan[3] and Breen v Breen[4] a common thread emerges as to what is required in cases of this type.  These are:-

   ·That the respondent or other party must have control of the assets and income;

   ·That the applicant has no financial means to adequately present a case;

   ·There is some complexity to the parties’ financial affairs requiring expert evidence;

   ·The parties had some wealth and that the applicant had been dependent upon the respondent; and

   ·That there was a strong prima facie case.

   [1] (1983) FLC 91-300; (1982) 8 Fam LR 855

   [2] (1990) 15 Fam LR 794

   [3] (1986) FLC 91-704; (1986) 10 Fam LR 681

   [4] (1990) 65 ALJR 195

2. It was argued before me by Counsel for the Respondent Husband that there was some question of onus in this situation.  It will be remembered that this is a rather difficult and somewhat unusual case.  The wife asserts that moneys and real estate are the property of the husband.  She seeks to include in the pool of assets a property currently registered in the name of the Fourth Intervener, who is an infant. 

3. The Respondent Husband, his brother and his mother say that the properties in the husband’s name are indeed not solely his properties.  Rather, it is asserted on behalf of the husband, his brother and his mother that the real ownership of the properties is as to the mother (the Second Intervener) 60 per cent, and to each of the brothers (the Respondent Husband and the First Intervener) 20 per cent each.

4. At this time, there is no evidence before me that would clearly indicate the existence of a trust by means of any documentation.  There is nothing before me, as yet, to indicate that there was ever a deed of trust entered into.  I am not saying that that is an essential ingredient for the existence of a trust but, in any event, in this case it is lacking.  Also, there is no evidence as yet, as I understand it, that the relevant parties conducted themselves in accordance with what they now assert to be a trust insofar as payments are concerned, and the manner in which they dealt with any income that was income of the trust and ought to have been distributed in accordance with what they seem to assert to be the entitlements pursuant to that trust.

5. I am satisfied that there is significant complexity to this matter and I am satisfied that the husband has control of the assets and income of the parties.  I am satisfied that, on what I have been made aware of, the wife has an arguable case that the trust is in the nature of a sham.  I am not satisfied that I can make a concluded finding on this, nor do I believe I am required to do so, at this time.

The wife’s claim 

1. The Applicant Wife’s case is, thus, that I should make the order for costs, and those moneys are to be applied as set out in an affidavit of her solicitor, to which I will refer shortly.  In the minute of the Applicant Wife, further orders were sought that it should be left to the trial judge as to the manner in which he or she would deal with and categorise such payments.  Senior Counsel for the Applicant Wife submits that her case is a strong one, and further, the cases of the First and Second Interveners are, at this stage, somewhat hard to understand and, with respect, they appear underdeveloped.

2. The amount that the Applicant Wife claims for costs is set out in the affidavit of her lawyer, which deals, with some precision, as to what is required.  It is the Applicant Wife’s case that the Interveners have not provided evidence to support their claims.  Dealing with them out of order, so far as the Second Intervener is concerned, Senior Counsel referred to an affidavit sworn by her (that is the Second Intervener) on 27 April 2012.  The purpose of that affidavit was to answer, or provide material sought in response to specific questions asked.  An affidavit was employed, properly, because the answers were required to be verified.

3. Objection was taken, as though the document had been filed, to paragraphs 4(1)(a) to (f) inclusive.  It was submitted by Senior Counsel for the Applicant Wife that without those paragraphs, there was no claim that the Second Intervener could mount.  He argues that, with those paragraphs struck out, the Second Intervener has no material to support her claim to be entitled to a percentage of the real estate or of the controlled monies account. 

4. In paragraph 19 of her affidavit sworn 25 May 2012, the Second Intervener asserts that since the commencement of these proceedings, she has been told what her interest or entitlement under the purported trust is.  I find that somewhat disingenuous and, to my mind, it makes it somewhat difficult for the Second Intervener to make positive assertions as to her entitlement.

5. Further, there is no material by the Second Intervener to establish how she is entitled to assume what she appears to assert to be the interest that she now holds as a result of her late husband’s death. 

6. Counsel for the Respondent Husband makes the point very clearly that the wife would have difficulty in repaying any amount advanced if she did not succeed.  Senior Counsel for the Applicant Wife referred to the Respondent Husband’s Amended Response filed on 10 August 2010.  That document has never sought to be further amended or replaced since it was filed.  The significance of this document is two-fold.  It indicates that the Respondent Husband, accepting his assertion, can find an amount in excess of $300,000 in 14 days to pay the wife her entitlement. 

7. Further, it would indicate that he is prepared to pay this amount by way of property settlement.  It is thus somewhat difficult to accept that this would be an amount that the wife would not achieve in money or moneys worth, as her entitlement, at the final hearing.

8. The Respondent Husband has produced a table in which he asserts that the assets of the husband, based on the asserted entitlement of 20 per cent, is $444,041.  When one takes the amount the husband concedes in his Amended Response, that is, $317,176, as a percentage of the amount alleged to be the total interest of the parties, some 71.43 per cent is arrived at.  On the material that I have before me, this percentage would be by no means unachievable in a final hearing.

9. The solicitor for the First Intervener acknowledged that I could make an order, but seemed to assert only as against the Respondent Husband.  It is his (the First Intervener’s) case that he consented to moneys in which he has a 20 per cent interest being invested, provided his interest was protected.  Nowhere can I find any specific indication of this, nor can I find anything that might lead me to believe that this was so by implication.  This assertion is not supported by his affidavit of 5 May 2010, at paragraphs 12 and 13.  In those paragraphs, he refers to consenting to sale, not to placing money in any account.  No mention of protecting his interest is made.  His case is that no order should be made as against those funds.

10. The solicitor for the Second Intervener asserted that notwithstanding the matters raised by Senior Counsel for the Applicant Wife, the funds in question – that is, within the controlled monies account – are his client’s moneys as to 60 per cent thereof, and if dispersed now, may never be recovered on behalf of his client.  I have already made reference to the situation as I understand it, as to what the wife would receive as a minimum at the final hearing.  I am satisfied that the wife’s entitlements would comfortably exceed the amount I have in mind to award as costs.  I am satisfied that provided the amount awarded is taken into account at the final hearing, no injustice is done to the Respondent Husband, or the First and Second Interveners.

1. As to the quantum of any award, the minute handed to me on behalf of the Applicant Wife now seeks a payment of $176,000.  This is an increase on the amount originally sought in her Application in a Case of $120,000.  On 12 December 2011, I ordered to be paid from the controlled monies account, $30,000 to each of the wife and the husband, and $20,000 to the Case Guardian of the Fourth Intervener. 

2. I am satisfied that the wife’s solicitor, Mr West, in his affidavit sworn 21 June 2012, summarises the wife’s costs in paragraphs 6 and 7 of that affidavit.  In those paragraphs, he indicates that costs from this point onwards would be some $157,000.  He estimates in paragraph 4 that an amount owing for accounts rendered, but unpaid, is some $10,458.54.   The wife has received moneys from the contents of a safe and from the controlled monies account, pursuant to my Orders of 12 December 2011. 

3. I am satisfied that in all the circumstances of this case, the full amount sought by the Applicant Wife is not an appropriate amount.  I am satisfied, however, that a lesser amount is appropriate, and doing the best I can, I fix that amount to be $120,000.  It is an amount well within the amount the husband seeks to pay the wife, in a situation where no property is to be transferred to him in return.  In other words, subject only to vacant possession being granted, that payment is otherwise unconditional.  I am satisfied that the wife is most likely to achieve an amount somewhat in excess of the $120,000 when the matter proceeds to final hearing and judgment is delivered. 

4. On the Respondent Husband’s case, there would be sufficient provision made for the interveners.  Based again on the husband’s figures as to the amount he seeks to pay to the wife, there would be sufficient monies received by the wife to satisfy any claims that may be made against her by any or all of the interveners. 

5. I will then order that the Respondent Husband pay to the Applicant Wife within 28 days the sum of $120,000.  If the amount is not paid within the time specified, I will order that it be paid out of the controlled monies account.  I will order that the said sum be taken into account at the final hearing.

The Fourth Intervener’s claim

1. The Case Guardian for the Fourth Intervener asserts that without further funds he cannot continue to conduct the infant child’s case, nor to assist the child. 

2. In his affidavit sworn 9 December 2011, at paragraph 10, he sought payment of an amount of $6,906.55.  That paragraph mentioned a requirement for further amounts of money for legal fees.  In that affidavit, those fees are not specified.  On the 12 December 2011, I ordered the release of $20,000 to the Case Guardian for the Fourth Intervener. 

3. I refused to allow the Fourth Intervener to rely upon an affidavit of his solicitor, filed on 29 June 2012.  That affidavit may have provided an explanation as to how the amount of $20,000 was expended and how the claim for future monies was calculated and made up.  Because the affidavit did not become evidence before me, there is a complete absence of material that would otherwise have assisted me in reaching a conclusion in respect of the claim on behalf of the Fourth Intervener. 

4. Further, and so far as the Case Guardian for the Fourth Intervener is concerned, this is a situation where there was a contested hearing as to who should be the case guardian for the infant child.  It was not put to me at that time that the Case Guardian was completely bereft of any funds to the extent that he would depend, at all times, on advances from either the parties – that is, the husband or wife – or payment from the controlled monies account to enable him to participate in the proceedings.

5. In the absence of appropriate information and explanation, it is my view that the application by the Fourth Intervener must fail.

6. I therefore make the Orders set out at the forefront of these reasons.

I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Collier delivered on 3 July 2012.

Legal Associate:       

Date:    21 September 2012