Osferatu & Osferatu (No 3)
[2013] FamCA 1035
•18 December 2013
FAMILY COURT OF AUSTRALIA
| OSFERATU & OSFERATU (NO 3) | [2013] FamCA 1035 |
FAMILY LAW – Interim property order (2nd) sought halfway through a ten week trial– large dispute about the value of net assets ($40 million or $108 million) – application of principle in Strahan case and Stanford case – whether “claw back” could be achieved if wife ultimately restricted to the orders sought by the husband – In such circumstances is the court restricted to considering the husband’s application as possibly the “high water mark” for the wife’s case – relevance of alleged extravagant expenditure by the wife with the first $5million of interim property provision
| Bevan & Bevan [2013] FamCAFC 116 |
| Family Law Act 1975 (Cth) Evidence Act 1995 (Cth) |
| APPLICANT: | Ms Osferatu |
| RESPONDENT: | Mr Osferatu |
| FILE NUMBER: | SYC | 2318 | of | 2011 |
| DATE DELIVERED: | 18 December 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Le Poer Trench J |
| HEARING DATE: | 28, 29, 30 31 October, 1 November 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton |
| SOLICITOR FOR THE APPLICANT: | Watts McCray |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson SC; Mr Kearney SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan |
Orders
On or before the 27th January 2014 the husband is to pay to the wife’s solicitors, Watts McCray, for account to her, the sum of $850,000. Such sum is payable as interim property pursuant to a determination under section 79 and 80(1)(h) of the Act.
Should the husband require the wife to enter into a mortgage or other security arrangements in order to raise funds necessary to meet the orders made herein then the wife is to sign all documents necessary to complete such mortgage and/or security but only to the extent that the sum so secured is the amount of the sum to be paid to the wife by the orders made today together with the cost of obtaining the mortgage.
Each party has liberty to apply, on short notice, should there be any matter arising between the parties as to the operation of or implementation of the above orders.
The wife may apply on short notice for orders as may be necessary to enforce the order made by the court herein.
Paragraphs 3 and 4 of the wife’s application in a case filed 22 October 2013 are adjourned and may be relisted by the wife on short notice should the husband fail to meet his obligations under the orders made herein.
Paragraphs 7, 8 and 9 of the husband’s Response to the wife’s application in a case filed 22 October 2013 is consolidated with the orders sought by the husband in the principal property proceeding.
For abundant clarity, the court orders that order 7 made 31 May 2012 is to continue until further order.
Nothing in order 7 hereof affects any of the other order made by the Court on 31 May 2012
IT IS NOTED that publication of this judgment by this Court under the pseudonym Osferatu & Osferatu 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 SYDNEY |
FILE NUMBER: SYC 2318/2011
| Ms Osferatu |
Applicant
And
| Mr Osferatu |
Respondent
REASONS FOR JUDGMENT
On 22 October 2013 the wife filed an Amended Application in a Case which sought six orders. The second order sought is as follows:
That the husband pay to the Applicant wife or as she directs the amount of $2,000,000:00 within seven (7) days from the making of these orders.
The wife moves on that application, as the order she principally seeks in this interim application. She also seeks orders for enforcement of the above order in the event the husband does not make the payment in the terms ordered.
Order 4, as sought in the wife’s application is as follows:
That the determination as to whether the payment of the sum referred to in Order 2 above is to be treated as part of the wife’s or the husband’s entitlement to property settlement, the provision of maintenance of the wife or the husband or in payment by the husband of the wife’s costs or by the wife of the husband’s costs is to be determined by the trial judge.
Notwithstanding the order 4 being sought, the wife ran her case as an interim property case. In the circumstances this order sought was not specifically addressed.
In support of that Application the wife relied upon the following affidavit evidence.
·Affidavit sworn by the wife on 8 August 2013;
·Affidavit sworn by Mr O on 29 October 2013;
·Affidavit sworn by the wife on 29 October 2013;
·Affidavits of Ms P sworn 18 October 2013 (2)
The wife also relied upon her affidavit in chief filed 7 June 2013 and her Financial Statement filed 7 June 2013.
The husband by his Response, filed 28 October 2013, seeks the dismissal of the wife’s application. He moved on paragraphs 3 to 6 and 10 (as amended) of his response document. He ought an order that paragraphs 7 to 9 of the Response be consolidated with his application for Final Orders (that application was unopposed). Order 10 as sought by the husband is as follows:
In the event that contrary to the case of the husband the Court makes orders granting the wife funds other than for the limited purpose of payment of her legal costs then paragraph 2 and submission-paragraph 3.1 of the orders made on 31 may 2012 for the payment of interim spouse maintenance be discharged.
It should be noted that the wording in paragraph 10 was clearly not intended to invite the court to make orders for the advance of funds by the husband to the wife to meet legal fees incurred or to be incurred by her. The submissions of the husband made that clear.
In support of his case, he relies on his affidavit (paragraphs 1-43) sworn 25 October 2013. He also relies on an affidavit sworn by him on 29 October 2013. He reads, in this interlocutory case, the reasons for judgment and orders made by Watts J on 31 May 2012. By that judgment and those orders, inter alia, the husband was required to pay $4.3 million to the wife as interim property order.
10.At the time the parties identified the evidence they relied upon the court was informed of an agreed fact, namely, that on 2 September 2013 the husband paid to the wife $37,000 being the amount required to meet a costs order.
11.An application was made by the husband to cross-examine the wife and her witness Mr O in the application. The husband referred the court to Rule 5.10. That Rule provides as follows:
FAMILY LAW RULES 2004 - Rule 5.10
Hearing time of interim or procedural application
(1) The hearing of an interim or procedural application must be no longer than 2 hours.
(2) Cross-examination will be allowed at a hearing only in exceptional circumstances.
12.Given that the application was clearly not to be contained to two hours, and given that I made a finding that the nature of the application gave rise to exceptional circumstances, I ruled that the husband could have a limited cross-examination of the wife and her witness Mr O. I permitted the husband thirty minutes of cross-examination of the wife. The husband outlined the topics which would be the subject of cross-examination and in the circumstances of the case, I considered it appropriate to allow such cross-examination. The cross-examination proceeded for approximately thirty minutes and thereafter I permitted re-examination of the wife by her counsel.
13.In relation to Mr O, the topics and issues sought to be addressed by the cross-examination were explored further by me with the husband prior to that cross-examination taking place. Whilst initially agreeing to allow some limited cross-examination of Mr O I was later required to consider a further application made the wife to revoke my order permitting cross-examination of Mr O. I did revoke that order and provided reasons for so doing.
14.The wife sought to cross-examine the husband on his evidence in this interlocutory application. Given that the husband was still under cross-examination by Mr Kirk SC (the wife’s engaged senior counsel) and given that he was not available to cross-examine the husband, it was conceded by junior counsel for the wife, Mr Campton, that the rule in Phillips & Phillips (1966) 7 FLR 456 would operate to prevent cross-examination of the husband by another counsel. Further, on this issue, the husband gave notice that should the court permit cross-examination of the husband in this application by Mr Campton, then the husband would oppose further cross-examination of himself in the parenting and property proceedings by counsel other than Mr Campton. That was a matter that clearly those who instruct Mr Campton took on board and no doubt played some part in the concession made by wife in relation to Mr Campton relinquishing the opportunity of cross-examining the husband in this application.
Background Facts
15.The proceedings in this case commenced on 15 April 2011, when the husband filed an Initiating Application. In December 2011, Watts J heard an application filed by the wife, inter alia, for the payment of $5 million by way of interim property settlement. At the time the application was heard, the wife conceded that the husband had paid her $700,000 pursuant to an order made on 29 August 2011. The balance of her application for $4.3 was pursued.
16.In his judgment, his Honour referred to the parties’ stated estimate of the value of their assets at that time. The husband had stated the present value of the parties’ assets to be approximately $88 million, and the wife’s estimate was in the region of $200 million. Having considered the evidence and the applicable law, his Honour made an order providing for the husband to pay the wife $4.3 million by way of instalments over a 180 day period.
17.In July and August of this year, a three week hearing took place. Such hearing time had been estimated by the parties to be sufficient to dispose of the outstanding applications. As it transpired, the estimate of time required was significantly wrong, and further hearing dates have now been allocated to commence in February 2014 and to continue until the case has concluded. The parties’ best estimate, at this time, is that approximately five weeks will be required to conclude the hearing. Since making that estimate of time required to conclude the hearing I am pleased to note that the parties have resolved their parenting issues and final parenting orders have now been made.
18.The wife’s case, in a nutshell, is that the $5 million, which she has received by way of interim property settlement from the husband since the proceedings commenced, is almost exhausted. She has some of that fund still in bank accounts and has a credit with her solicitors. She has the benefit of a maintenance order which the husband is paying, however he seeks that order be discharged if the order sought by the wife in this application is granted.
19.The wife has paid nearly $2 million in legal costs and expenses associated with the proceedings. The wife says she has insufficient funds to continue to engage her lawyers for the further hearing in this matter and at the same time maintain the lifestyle which she says she has become accustomed to. She says she has made some savings in her expenditure which I will address later in these reasons.
20.The wife says that the application of s 79 to the facts which are known to the court at this time concerning the history of the relationship between the parties, set against what is known about the available pool of assets, must give rise to a conclusion that the amount of property to be received by her by way of order of the court would significantly exceed the amount she currently seeks as a further interim order, namely $2 million.
21.The husband’s case is that the wife has received and/or retains in excess of $7 million worth of property post separation. He says, given the facts known to the court, the application of s 79 to those facts, is unlikely to give rise to an order providing for the wife to receive any more than the property which she currently holds or has received. Further, the husband says the wife has it within her power to complete a transfer of a property in the southern highlands which is referred to in this proceeding as Property R which has a value of $1.85 million. The husband says that the wife for her own reasons has refused to register a transfer of the property from the I Trust into her name. He says that she produces no evidence of having endeavoured to raise funds against her own property to meet her legal costs.
22.The property known as Property R assumes some additional importance for the purpose of the determination of this Application in a Case. Annexure HO45 to the affidavit of the wife, read in the main property proceeding, is a copy of a Financial Agreement entered into between the parties on 4 May 2010. The wife in the main property proceedings seeks to have that agreement set aside. Nonetheless, it must be the case that, until that application is determined by the court the provisions of the agreement are presumed to bind the parties. Part of Financial Agreement provides as follows:
If the parties separate the husband will forthwith cause Property R to be transferred into the wife’s name.
23.As stated earlier the husband says he has done everything necessary to complete his obligation to transfer to the wife the Property R under the terms of the Financial Agreement. As I understand the wife’s case, she has not registered the transfer of the Property R to her name, nor has she taken any action to rent or sell the property. Her case appears to be that as she seeks to set aside the agreement she does not wish to take any action which might adversely affect that application. She has also said she does not want the Property R as part of the property orders.
24.I recite the above history in order to make what follows comprehendible.
25.The above is a brief summary of each party’s case which I will explore, and where necessary, expand later in these reasons.
The evidence
26.For the purpose of this proceeding I have been referred to exhibit X3. That is a document titled “draft balance sheet” and has been prepared by the parties at my direction and for the assistance of the court. The document is incomplete, as there is still work to be done by the single expert and there are a number of entries with the letters “NK” indicating “not known”. However, the document shows that on the wife’s case the available assets total $108,273,000 and on the husband’s case approximately $42 million (see later this figure has been amended to be closer to $40 million). The largest area of contention in respect of the balance sheet relates to the value of the I Trust. The wife says that the Trust has a value of $68 million in total. The wife says the whole of that value is beneficially owned by the husband. The husband says his interest in the I Trust has a value of $5 million.
27.On the husband’s case, the value of his interest in the I Trust is said to be dependent upon the cost to him to convert all of the units issued in the I Trust to his beneficial interest. The amount required to convert those units to his beneficial interest has not been determined, however, the parties have during this week agreed to conclude a further letter of instruction to the single expert which might enable that exercise to be completed prior to 13 November 2013, being a date upon which the parties commence a two day mediation in an endeavour to resolve the proceedings.
28.The only other item on the balance sheet X3, which appears to have a substantial difference between the parties is the value of the property at B Street, Suburb Z. The wife asserts the property is worth $27 million and the husband asserts that it is worth $21 million.
The evidence of the wife
29.In the wife’s affidavit sworn on 8 August 2013, paragraphs 1-10 recite history of the filing of evidence for the property and parenting proceedings. The contents of those paragraphs were not objected to. Paragraphs 11-17 were the subject of objection, and what remains in evidence is further history of the filing of documents by the parties in the main proceedings. The relevance of that history appears to be, based on the wife’s submissions, that at the time the estimate was provided for a three week hearing, she had no indication that the husband would be relying on in excess of 50 witnesses. Accordingly, had she known the husband would be filing those additional affidavits, the estimate of time for hearing would have been considerably different.
30.The wife relies on her Financial Statement filed 7 June 2013. I will refer to that document shortly. She annexed a document said to be a copy of the costs agreement entered into between she and her lawyers, Watts McCray, on 24 June 2011. The annexed document is signed by the wife, however, it bears no date. The document is expressed to be “an offer to enter into a costs agreement with you.” The offer is said to be accepted by the wife by inter alia “signing and returning a copy of this document”. The wife annexed to her affidavit a copy of the retainer agreement she entered into with Mr Tom Kirk, SC, on 1 July 2011. She also annexed a copy of the fee agreement she had entered into with Mr Peter Campton, barrister, on 6 June 2012.
31.The wife relied on exhibit W6 in the proceeding, a document authored by her solicitors and tendered by her on 24 July 2013. That document is a costs memorandum. She also annexed as exhibit D to her affidavit sworn 8 August 2013, a costs memorandum from her solicitors as at 7 August 2013. This document was the subject of objection on the basis that, inter alia, the fees calculated in respect of senior and junior counsel for the further trial had not been properly proved, nor had the authenticity of the document been properly proved to the extent of knowing who had compiled it and the basis upon which it had been compiled. I allowed the wife to rely upon the document subject to determinations as to weight.
32.The said annexure “D” has some confusing aspects to it, assuming that it is capable of being given weight. I am prepared to accept that the document was prepared by the wife’s lawyers and supplied to her. I am prepared to give weight to is the assertion that the wife has paid to those solicitors $1,867,005.70 to date in relation to her Family Law proceedings. I am prepared to accept the wife incurred costs for the week 28 October 2013 which was required for the hearing of her application currently under consideration. I am prepared to accept that Mr Todd was charged out for those days at $3,542 per day. I am prepared to accept that Mr Campton charged $5,500 per day. The wife thus incurred not less than $45,210 for that week. I observed Mr Todd and Mr Campton in court on each of those days. Mr Kirk did not appear at the hearing on those days. I am prepared to accept that the wife can expect to be charged fees for Mr Todd of $88,550, for Mr Kirk SC of $200,000 and fees for Mr Campton of $137,500 for the estimated 5 weeks of further trial in February 2014. Those fees alone amount to $426,050. I am prepared to accept the wife’s solicitor will be required to perform further work on her behalf before the resumed hearing and I am prepared to accept each of her counsel will require substantial periods of time to refresh their knowledge of the case and prepare for further evidence before the hearing.
33.I accept, based upon the above matters, that the wife’s legal fees incurred, by the conclusion of a further 5 week trial, will be in the order of $700,000 to $900,000. I further accept that the wife understands from her solicitors that unless sufficient funds are deposited with that firm to cover the anticipated costs, as quantified by them, they will terminate the retainer they hold with her.
34.In paragraph 25 of her affidavit the wife details how she has expended the $4.3 million which she received from the husband in May 2012. In that table, the wife said she had paid from her $4.3 million, $2,438,868 to her solicitors Watts McCray. That figure was not read on the basis that it was conceded it was erroneous. The wife also detailed that $205,102 had been paid to the ANZ Bank, Q Pty Ltd and credit cards. She said this sum had been paid by the husband and deducted from the $4.3 million before payment to her. She made no claim that had the husband not made the payment on her behalf, she would not have been required to meet the payment. Amongst the payments made, the wife listed a payment of $130,000 to Ms AB, who, it transpires, is her sister. She gave further evidence about the circumstances of that payment during the hearing of the application. Between May 2012 and the date of swearing of the affidavit, the wife said that she had expended $537,989 on day-to-day living costs. She still retained $838,000 as savings. Part of her expenditure includes $150,000 paid to Mr BC, an accountant who has been assisting the wife in relation to these proceedings.
35.The wife relied on an affidavit sworn 23 October 2013. Paragraphs 2-11, paragraph 15 and paragraph 17 of the affidavit were struck out. The affidavit was clearly prepared in order to support a schedule, being a summary of exactly how the wife had spent the $4.3 million received by her pursuant to the order of the Court made 31 May 2012. The vast bulk of the 500 pages in the affidavit consist of annexures, being bank statements and similar documents as source documents to support the schedule. The source documents were permitted to be relied upon by the wife, however, the court was referred to them in any submissions made on her behalf.
36.Paragraphs 12, 13, 14 and 16 of the affidavit update the wife’s financial circumstances. Using her Financial Statement sworn on 6 June 2013 as a base document, the wife says that she continues to receive amounts by way of interim spouse maintenance payments and child support, pursuant to the orders made 31 May 2012, save in respect of paragraph 4.1 (requiring $6500 per child per month to be paid in respect to S and E). That order has been varied so that the husband is no longer required to pay child support for E. As a consequence, the wife says she now receives $2403 per week, whereas she had received $3904 per week when she swore her financial statement on 6 June 2013. The wife updated information in respect of her superannuation entitlements. She attached a printout of her Westpac Bank accounts as at 23 October 2013 which showed a total credit balance of $541,296. She has a Westpac Mastercard credit card debit balance of $19,453.
37.In the wife’s Financial Statement sworn 6 June 2013 and filed 7 June 2013, she shows income of $4,459 per week. Of that, $555 is attributed to interest earned on bank accounts and the balance is provided by way of interim spouse maintenance and child support by the husband. She also records that the husband meets expenses associated with the property at Suburb Z in which she resides. He also meets costs associated with her motor vehicle other than fuel costs. I note that she pays no gas or electricity expenses as noted in Part N of the document, same consequently are met by the husband. The wife said she is required to pay minimum credit card payments of nearly $20,000 per month and that her total expenditure on a monthly basis is $24,324. This includes $4319 attributed to the heading of “total of all other expenditure”. That is item 32 on the Financial Statement. Item 32, in the experience of the court, usually encapsulates the total of expenses contained in item 60 under part N of the document. In this case, the total expenses claimed by the wife under part N are $18,068 per week. Of that sum, the wife attributes $7598 to herself and the balance to the children.
The oral evidence of the wife
38.In her evidence in chief, the wife was asked about an advance made by her to her sister of $130,000 in August 2012. Prior to that advance, her sister had told her she wanted to study at university, she had some credit card debts together with a car loan and she requested financial assistance. Her sister had told her she was proposing to study nursing and that it would be a four year course. It was a full-time course and therefore she would not be able to undertake employment. The wife, after some consideration, agreed to assist her sister by the advance of $130,000. Her sister had undertaken to repay the loan, if she could, on a weekly basis when she obtained employment at the conclusion of the course.
39.The wife was cross-examined by Mr Richardson SC. The following I noted as important evidence given by the wife. A transcript of the wife’s evidence was provided to the court and I have taken into account all of that evidence.
40.The wife conceded that throughout the entirety of the proceedings she, or a person on her behalf, has held a title deed in relation to the property “Property R”. It was put to the wife, that in addition to holding the title deed, she held, or others held on her behalf, a transfer document executed by the registered proprietor of the property sufficient to effect a transfer of the property to her. The wife did not answer that question. She was asked further questions in order to elicit an answer, and she said, inter alia, “I dispute the agreement.” This answer, I understand, to relate to the application by the wife to set aside a Financial Agreement entered into between she and the husband, one of the terms thereof being the requirement, upon separation between the parties, of the husband to transfer to the wife the title to the Property R. In answer to the questions about that property to the wife, she said “I don’t agree with the BFA therefore that has not been transferred under my understanding.”
41.I understand the wife’s position to be in relation to the transfer of the Property R to her that she has not effected the transfer of the property to herself because she disputes the contents of the Binding Financial Agreement above referred to. It was put to the wife that as early as May 2012 in proceedings that took place before Watts J, she was present in Court when the husband made it clear that for the purpose of the proceedings, he agreed to the effecting of the registration of the transfer of the Property R to the wife without prejudice to any argument she wanted to advance about the Binding Financial Agreement. The wife denied that proposition.
42.A portion of paragraph 63 of the judgment of Watts J, in the earlier interim property application, was read to the wife. The portion read was “Counsel for the husband made it very clear that the wife could deal with [Property R], including its sale, without any prejudice to any claim that she might wish to make, asserting the Financial Agreement should be set aside.” When asked, the wife confirmed that she had read those words. The wife agreed that the husband had made that position clear in the hearing before Watts J in December 2011. The wife agreed that Property R has an unchallenged value from a single expert of $1.85 million. The wife agreed that the residence on the property has been sitting vacant for approximately 2 years, although she asserted the farming land surrounding the property was used by FF farm. She confirmed that the residence is a fully renovated three bedroom, two bathroom home. It was put to her that she had not made a single endeavour to obtain rental income from the property. She denied that proposition. She agreed that she had continued to retain the deed and transfer and had taken no step to register them. She agreed that she had made no approach to a financier in an endeavour to raise funds secured against the property.
43.The wife was shown a copy of a letter dated 18 March 2011 from the husband’s former solicitor to the wife’s former solicitor. She acknowledged the document was as described. The document was marked exhibit H15. That document evidenced delivery to the wife’s solicitors of two certificates of title and a signed transfer document pursuant to the Binding Financial Agreement entered into between the parties.
44.The wife was asked to acknowledge, and did acknowledge, that in May 2012, Watts J ordered that she was to receive the sum of $4.3 million and at the same time made an injunctive order restraining her from selling or encumbering the Property R. The wife acknowledged that notice of her further claim for an additional payment of $2 million (currently being considered) was made by her senior counsel on 9 August 2013 in Court. She acknowledged that was the first notice provided to the husband of her further claim. She acknowledged on 14 August 2013 a letter was received by her solicitors, by email, from the husband’s solicitors addressing that topic. She acknowledged she became aware at about that time, that the husband made it clear through his lawyers that he was willing to consent to the injunction restraining her use in respect of the Property R being discharged so that she was free to deal with the Property R. She acknowledged that no response to that proposal was provided by her solicitors or herself. She acknowledged that since that offer was made, she has taken no steps to endeavour to secure funds by way of borrowing on that property. She acknowledged that she had taken no step to sell the property. The wife acknowledged that her senior counsel on 9 August 2013 advised the court that one of the avenues available to the wife to obtain funds was the removal of the restraints in respect of Property R. She acknowledged that was the effect of the offer made by the husband some five days later.
45.By way of explanation to me about why she had taken no action to either borrow against the Property R or sell it for the purpose of funding her further legal proceedings, the wife said she considered it would be almost impossible for her to sell the property because of the close relationship between the husband and real estate agents in the Suburb CD area. Further, she claimed it would be impossible for her to raise further funds because she was already committed as a guarantor with the husband for the ANZ loan. She suggested that one further way in which the parties might jointly satisfy the wife’s need, would be to place a second mortgage on the Suburb Z property.
46.The wife was asked a number of questions about entering into an agreement with her solicitors Watts McCray. She agreed she entered into the agreement on 24 June 2011. The wife agreed at the time she entered into the costs agreement she had already incurred an owed costs of $165,000 to her former solicitors. She denied that at the time she entered into the agreement, she thought that she was facing an extensive and hard-fought battle with Mr Osferatu.
47.The wife was shown a page (being page 9) from an affidavit sworn by her on 1 August 2011. She confirmed that the page was part of that affidavit. It became exhibit H17. On that page, she set out her liability to her former lawyers of $165,407. She stated she had incurred a further $47,690 in legal fees with her solicitors recently engaged, namely Watts McCray. She attributed those costs in part to “a result of the aggressive manner in which these proceedings are being conducted on Theo’s behalf.” She acknowledged that the proceedings were complex and she necessarily had to retain the services of an accountant.
48.The wife was asked whether on or after 8 August 2013 she endeavoured to curb her expenditure in order to make provision to meet her legal costs. She said “I’ve lived reasonably as I have throughout the marriage.” When the question was explained further by myself the wife said that she had endeavoured to curb her expenditure and had worked closely with her accountant. Her expenditure had been at about $18,000 per week, and she had effected savings so that expenditure was now $15,000 per week.
49.In re-examination, the wife said that there will be a savings this year because there will not be an overseas holiday due to S’s illness. She also has been able to reduce her grocery bill from $2500 per week to $900 per week.
The husband’s affidavit evidence.
50.The husband relied upon paragraphs 1-43 or his affidavit sworn 25 October 2013. None of the content of those paragraphs was objected to.
51.The evidence provided in those paragraphs I summarise as follows. The affidavit principally addressed a response to the wife’s affidavit sworn 8 August 2013. The affidavit refutes any assertion that the husband is solely responsible for the hearing in the case requiring more time than originally estimated by the parties. The bulk of paragraph 12, together with all of paragraphs 13-17 inclusive of the wife’s affidavit in reply, were struck out, and it is therefore unnecessary to read the husband’s answers in relation to same.
52.In relation to the loan advanced by the wife to her sister Ms AB, the husband says he has not been provided with any loan agreement executed between the wife and her sister. Although having requested the details of the terms of the loan, none had been provided.
53.The husband also referred to a copy of an affidavit sworn by the wife on 23 October 2013, having been served on his solicitors on 24 October 2013. This document comprises 495 pages of annexure. It provides schedules which the husband said had not been provided to him at an earlier date.
54.The husband attested to the fact that pursuant to Court orders, he had paid the costs of the Independent Children's Lawyer in the first instance. The costs included counsel’s fees and the costs of the independent expert, Dr W. The amount paid as at 2 September 2013 was $351,013. There is still a small amount of fee outstanding.
55.The husband paid $11,475 as hearing fees for the trial which commenced on 22 July 2013. He estimates the fee for a further five weeks hearing will be $19,125. The husband notes that he was been served on 24 October 2013 with a costs memorandum prepared by the wife’s solicitor which noted that the solicitor holds in Trust the sum of $193,702.58.
56.The husband has paid for his own legal costs, since 9 August 2013, $434,207.04. He owes $178,446.75 in legal costs. He attests to the fact that he does not have funds available upon which he can presently draw to meet that account. Further, he has been unable to pay into his solicitor’s Trust account fees on account of Mr Grahame Richardson SC and Mr Michael Kearny SC. He also owed Newnhams, solicitors for the Independent Children's Lawyer, $3300.
57.The husband relied on an affidavit sworn by him on 29 October 2013. This affidavit addressed the Amended Application in a Case filed by the wife on 22 October 2013 and in particular, the order sought by the wife that the husband, in his capacity as a director and shareholder of B Pty Ltd., take action in the nature of causing funds to be paid from the I Trust.
58.The husband discloses that B Pty Ltd, in its capacity as Trustee for the I Trust, held three accounts with the ANZ Bank. One account is held jointly with DE Pty Ltd in respect of the partnership conducted for the property at AA Street, Suburb BB. That account held a balance of $104,279. Another account is held jointly with CC Pty Ltd in respect of the partnership conducted for a property at DD Street, Suburb EE. The current balance of that account is $43,476. A third account, conducted by the company on behalf of the Trust, contained no credit funds. The account is an overdraft facility of $100,000.
59.The husband otherwise attests that he has a personal account with the ANZ Bank with a balance of $11,665.
60.The point raised by the husband’s evidence is that should the court make an order as sought by the wife then money will have to be raised by borrowing funds or liquidating assets.
The Wife’s submissions
61.In the first place the wife relies upon specific submissions covered in paragraph’s 3.2 to 3.4, 3.8, 3.9 and 3.10(a) through to (d), and Paragraph 5 through to 7.5 of exhibit W5. I have had regard to those submissions however I do not repeat them here as they are already set out in writing.
62.The wife relied on the Full Court decision in Strahan& Strahan (2011) FLC 93-466.
63.The wife referred to the evidence provided by the husband throughout the course of the proceedings in relation to his interest in the I Trust. Pausing there, there is a clear issue between the parties as to the value of the husband’s interest in the I Trust. In the draft balance sheet produced by the parties, the wife values the husband’s interest in the I Trust at $68 million whilst the husband, via a different fashion, values his interest at about $5 million.
64.Without repeating verbatim the evidence referred to by the wife in her written submission, the wife referred to the following evidence. Exhibit W7, being paragraph 60 of the husband’s affidavit sworn 4 November 2011. In that he denied that his assets at the commencement of cohabitation were $7,497,000 as asserted by the wife. He referred to a significant change which had occurred in his financial circumstances in 1999 when he received a “golden handshake” from entities associated with X Group.
65.In Exhibit H10 (the husband’s Financial Questionnaire document dated 15 August 2012) the husband referred to an item “Cost to acquire FSUT 50 per cent $20 million”. In that document he also provided an explanation of what he meant by that phrase. One of the statements in the document was as follows “The husband contends that he was, in fact, entitled to become both the legal and beneficial owner of 100 per cent of the [I Trust] as at the date of commencement of cohabitation, but if he was not, the net value to him, taking into account the funds that he would be required to disburse, the transaction would be of little difference in net terms.”
66.The wife also pointed to paragraphs 86-88 of the husband’s primary trial affidavit filed in June 2013. The wife also referred to the contents of in excess of 400 pages of exhibit bundle H9, tendered after the trial had commenced on 31 July 2013. In addition, there was evidence contained in paragraphs 49-55, 60, 61, 64, and 66 of the husband’s affidavit of 31 July 2013 of what she described as the husband’s admissions and contentions during the course of the hearing as to his interest in the I Trust. The wife makes complaint about alleged failure to make proper disclosure on the part of the husband with respect to his interest in the I Trust. The wife submits that this alleged failure on the part of the husband has led to substantial additional cost on her part in endeavouring to ascertain the true position in relation to the husband’s interest in the I Trust. Further, she says that she has been put to additional and unanticipated cost in meeting the evidence contained in 50 additional affidavits lodged by the husband on the eve of the trial.
67.The wife submits there are uncontroversial facts which the court can take into account. They are as follows:
· At cohabitation the husband has substantial assets. The nature and quantum of those assets are in issue.
· The wife has had benefit of $700,000 by way of consent orders made 29 August 2011 and $4.3 million by way of interim property order made by Watts J on 31 May 2012.
· The wife has expended the majority funds provided to her pursuant to the consent order and the orders of Watts J on 31 May 2012. She had $546,908 to her credit in Westpac account as at 2 October 2013 ($541,296 at 23 October 2013 on the wife’s evidence). The wife also has a credit standing with her solicitors as referred to earlier of in excess of $190,000 (in submissions now said to be $171,000).
· The wife has used her capital to meet her costs, whereas the husband has primarily used income to meet his costs.
· The trial is listed to continue for about 5 weeks in 2014 (actually listed to commence in early February 2014 and continue until the trial is concluded). It would be 6-12 months from the date of the interim hearing (1 November 2013) until the wife might anticipate receiving judgment.
68.The wife asserts that her costs for the interim application and the February 2014 hearing will be in excess of $1 million. At the moment, her solicitors hold $171,000 in trust. There is a balance then required of approximately $900,000.
69.The wife asserts that the maintenance and child support received by her from the husband is insufficient to meet her maintenance needs and she has accordingly been required to use capital.
70.It is part of the wife’s case that her solicitors will not continue to act for her if she unable to provide funds prior to the hearing recommencing in February 2014. She therefore suffers a grave prejudice if her application is refused.
71.In relation to the competing applications for Final Orders, the wife submits that if she is able to establish the value of the husband’s interest in the I Trust, as contended for by her, then the orders sought by the husband which provide for her to retain the Property Y (I note by exhibit H12 the husband does not propose the wife retain the Property Y) and the Property R, together with the funds that have already been paid to her, represent less than 1 per cent of the available pool (as contended for by the wife). It is submitted on behalf of the wife that any reasonable application of s 79(4) (particularly s 75(2)) of the Act would have to see the wife receiving a property settlement by court order at a level greater than that proposed by the husband.
72.It is submitted on behalf of the wife that she has no real capacity to borrow monies against the Property R. It was submitted through her counsel that the court has to look objectively at the non-controversial facts in the case, particularly in relation to contributions. She submitted that it is not the subject of dispute that the parties were married for about 12 years. The husband and wife had two children during that time. A third child was born to the family and the husband was the psychological (but not biological) father to that child. That does not immediately establish that contributions were made by the wife, but it certainly raises the possibility that meaningful contributions were made by the wife at that time. It is conceded by the husband by the husband (so submits the wife) that the wife did make a contribution as a homemaker. There is an issue as to whether she was the primary homemaker. It is common ground that the wife was employed by entities controlled by the husband during the course of the marriage. It is common ground that the wife guaranteed in excess of $30 million worth of borrowings on behalf of Osferatu entities. It seems common ground that the wife had some involvement in a number of discussions in relation to developments carried out during the course of the cohabitation. There is an issue as to the extent of the wife’s contribution in that regard. There is common ground that the wife supported the husband on a social level at least in relation to what might be regarded as business events. Again there is an issue as to the extent to which this was a contribution. There is also common ground that the wife was involved, at some level, in the extensive renovations to the B Street Property. The nature and quality of her involvement as a contribution is in issue.
73.The wife further submitted that any reasonable objective view of the case must give rise to a view that the wife would receive an adjustment under s 75(2) as part of the determination of her property interest. The wife says that in the circumstances of this case that adjustment would be expected to be substantial in dollar terms.
74.The wife submits that even on the husband’s case, should the net value of the parties’ assets be $42 million, a result, having regard to the agreed period of cohabitation and the non-controversial concessions made by the husband in relation to the wife’s contributions, a result which saw her not receive any other distribution of property would be extreme. The wife submits that when the matter was listed for final hearing, she could not have determined that the trial would not be contained to the three weeks that were allocated. She submits it was the filing by the husband of approximately 50 affidavits by witnesses other than himself, which has substantially changed the amount of time required to determine the case.
75.In submissions, the wife’s counsel told the court that in relation to the Property R, the wife does not want it.
76.In further submissions, the wife dealt with the husband’s response to her application, and in particular, his order which he seeks to discharge the interim spouse maintenance order in the event of the wife being successful in whole or in part in her application for the payment of additional funds by way of lump sum. The wife submitted that if the interim maintenance order is to be dismissed, then sufficient lump sum would need to be received by the wife in order to support herself until the anticipated date of delivery of judgment.
77.In his response at paragraph 10 (as amended) the husband seeks that paragraph 2 and sub-subparagraph 3.1 of the orders made 31 May 2012 for the payment of interim spouse maintenance be discharged. That order would operate in the event of the court making an order as sought by the wife in paragraph 2 of her amended Application in a Case filed 22 October 2013.
78.The wife in her submissions, in answer to questions from myself, advised that the wife had a 70 per cent interest in the Property Y, and that property has a value of $3.25 million. The orders made on 31 May 2012 injunct the wife from dealing with that property.
79.In relation to my question about how the $2 million might be retrieved from the wife in the event that she does not ultimately achieve an order greater than that already paid to her by the husband, she advised that the Property R has a value of $1.85 million and the interest of the parties in Q Pty Ltd has a value which could be applied in the way of repayment. The wife acknowledged that the combined value of both of those items was still not $2 million.
Husband’s submissions
80.The husband commenced his oral submissions by calling for any document passing between the wife and/or her legal representatives and the husband and/or his legal representatives by which it is stated that the wife would seek to return the Property R to the husband. This request arose out of the submission made on behalf of the wife that she does not want the Property R. The request was answered in the negative, in that there was no document to produce.
81.The husband submits that the application under consideration invites summary procedure. He submits the court needs to approach the matter cautiously and regard the husband’s case at its highest in the context of ultimately determining whether the order sought by the wife would create irreparable damage or fail the claw-back proposition discussed in Strahan.
82.The husband contended that the submissions made by the wife in relation to the alleged change of position of the husband since the commencement of the proceedings and through the trial in relation to his interest in the I Trust is not relevant to the decision in relation to the wife’s application under consideration.
83.The husband submitted that if the court was going to make an order for an amount of money to be paid to the wife, then it should be restricted to being applied to legal fees. It was submitted that otherwise, the wife would engage in another “spending marathon” and would quickly dissipate all of the funds. The husband claims that contrary to the wife’s assertion that she is only spending $18,000 per week in supporting herself and the children, she is in fact spending $32,000 per week.
84.In submissions the husband’s counsel advised the court that if the court was to make an order for payment by the husband to the wife of between $1 million and $2 million, then he would have to make application to his bankers to borrow those funds. The husband counsel was uncertain as to whether the wife would have to be party to any loan application. The husband acknowledged, through his counsel, that he has not in his affidavit material read for this application, said that he would be unable to meet an order for $2 million if made.
85.In submission, Mr Richardson SC for the husband agreed with a submission which had been made on the previous day on behalf of the wife that in the balance sheet, the husband had not allowed for the fact that the Property R had been transferred out of the I Trust. As a result of same, there would be an additional liability in the balance sheet against the husband of $1.85 million, which would reduce his stated net equity to $40,212,490. Further, Mr Richardson stated that the balance sheet does not reflect any taxation consequences of transferring property. This is a matter which the single expert is apparently considering. One of the matters which the single expert has been asked to examine is the capital gains tax liabilities should properties be transferred to the wife.
86.Further, it was submitted that the concession by the husband in the financial questionnaire document that the wife achieve a property settlement which would see 15 per cent of the parties’ assets reposed in her would represent a little over $7 million. That figure was calculated on a pool of $42 million, however, the wife having pointed out the error in the balance sheet, Mr Richardson said that before any allowance for taxation, the amount of property which has been paid to the wife (not including the property known as Property R), would represent approximately 18 per cent. Should that be the ultimate determination of the court, i.e. that the net assets of the husband are $40 million, then on the husband’s current application a payment by the wife of the husband of $1 million would be required if he was successful. Further, the husband says that the amount of money paid by him to the wife in respect of child support for E, where such payment was ordered without jurisdiction, is to be repaid in the sum of $109,865. There is a further claim for damages by the husband which has its origin in the Financial Agreement entered into between the parties and which Financial Agreement the wife seeks to set aside. The husband says that damages arising from her breach of that agreement as at 23 October 2013 amounted to $510,000. The damages are calculated having regard to asserted fair market rental of $4250 per week for the Suburb Z property. Further to that, the husband seeks that the wife meet one half of the costs of the Independent Children's Lawyer which would mean a payment by her of $175,000 to the husband, consequently, it was submitted on behalf of the husband, there is already a shortfall in that which has been paid to the wife of $2 million, should the husband be ultimately successful in the orders he seeks.
87.The husband addressed the judgment of Watts J where at paragraph four and five, he addressed the asserted positions of each of the parties in respect of the size of the asset pool. In paragraph four, he referred to the estimate provided by the husband which approximates $88 million. The husband in his submissions says that has subsequently transpired to be $40 million on the husband’s case at its highest. The husband submits that in circumstances where Watts J referred to the value ascribed by the husband to his net asset pool of $88 million dollars, he made an order, in the nature of injunction, to protect the husband by “claw back” against the wife’s interest in Property R.
88.The husband points to the offer made by him through his lawyers not more than five days after 9 August 2013 to consent to the release of the injunction restraining the wife using the Property R for the purpose of raising funds to meet her legal costs. It was submitted that the wife has rejected that proposition unreasonably. The husband submits that the wife has been paid, or has retained, $7.2 million worth of assets. That includes the Property R, but does not include the Property Y. If the husband’s application for final orders is successful, then the wife will be required to pay him the sum of $2 million. If she is paid another $2 million, then her capacity to repay $4 million would not be contained within her available property. The husband says the wife should be denied making any order in her favour because she has failed to construct any case as to why she has not taken some action in relation the Property R. The husband says the wife has simply ignored that asset in the material she puts before the court.
89.The husband submits that it is necessary in this application to firstly consider whether the interest of justice require that the court embark on a further interim property hearing. The husband submits that there is an overlay to the Strahan decision which was not dealt with by Watts J in his decision, and that relates to the impact of the High Court decision in Stanford v Stanford (2012) 247 CLR 108. The husband effectively says that it has not been established that it will be necessary to make any further adjustment of property in the proceedings between the parties. He submits that s 79(2) would operate, upon proper application, to convince the court that no further order was required. It is further submitted that the court, without being able to pre-determine issues of contribution and s 75(2) could not ever be satisfied it would be just and equitable to make an order against the husband.
90.The husband further argues that the circumstances in which the wife finds herself are of her own making. She has expended, at an extraordinary level, the funds that have been made available to her by the husband.
91.The husband addressed the submissions of the wife in respect to the changing position the husband to the court in respect to his interest in the I Trust. It was submitted that what the wife had to say misrepresented the husband’s true position and, for example, in his Financial Questionnaire document, the wife failed to admit that he included an entry “cost to acquire FSUT $20 million”. That, it is submitted, is his estimate of the value of the half interest in the trust held by X Group at that time.
92.The husband’s counsel conceded that Ms P has valued the whole of the I Trust at $68,900,000. The husband says that another aspect of calculating the husband’s equity in that trust would involve a finding of a liability of $62,992,530. That sum represents the aggregation of the X Group 50 per cent interest in the I Trust together with the value ascribed by Ms P to the X Group B class units in the K Unit Trust of $27,254,601. This is identified at paragraph 17.26 on page 64 of the larger of the two reports from Ms P. Ms P then applies a 2.5 per cent minority share discount.
93.The husband highlights in his submissions the extent of the wife’s expenditure, particularly in recent time. He prepared a schedule which referred to specific evidence provided by the wife and/or was uncontroversial as between the parties. On 8 August 2013, the wife, in her affidavit, specified that she had $838,000 to the credit of her bank accounts. On 23 October 2013, she swore another affidavit which showed that the credit was $541,296. During that period, she received two months of maintenance and child support payments totalling $20,834. She also received $37,000, being payment of a costs order. The husband submits that over an 11 week period, the wife has expended $354,577. He submits that none of that includes payment of legal fees (I note that assertion is disputed by the wife).
94.As stated earlier, the wife does have a credit balance in the trust account of her solicitors.
95.The husband’s counsel focussed on some of the expenditure stated by the wife in her June 2013 Financial Statement, which included $1985 per week for groceries, $3500 per week for clothing and shoes, $1926 per week for entertainment and hobbies, and $3000 per week for holidays. The wife also expended $750 per week at the hairdresser and beautician.
96.The husband argues that if the wife sees the funds that have been paid to her thus far to be her property settlement, she is, as counsel for the wife submitted, entitled to spend it as she pleases. However, the husband says she ought not be able to spend money at the level which she has this year and then come to the court and require of the husband a further payment to contribute to her legal costs and support until such time as the property orders are made.
97.The husband’s counsel referred to the affidavit filed by the husband in relation to this application. That affidavit focussed on bank balances in particular accounts. The husband’s counsel said the wife in her submissions, critically described the affidavit as “cherry picking accounts”. The husband’s counsel said the accounts disclosed in the affidavit were for a particular purpose. That purpose was to address the Amended Application in a Case filed by the wife on 22 October 2013. By that application at paragraph 3, the wife introduced an order, which she sought, and such order would, if made, oblige the husband as director and shareholder of B Pty Ltd to cause the I Trust to advance funds to him to enable him to satisfy the order as sought in paragraph 2, namely the payment of $2 million. The affidavit therefore addressed the funds available through the I Trust. I note that the details of the account balances as set out in the affidavit of the husband sworn 29 October 2013 would fall well short of satisfying the order sought by the wife.
98.Mr Richardson said that as the wife now only pursues paragraph two of her Amended Application, the information provided by the husband in his affidavit addressing the possibility of the I Trust being available to make the payment sought by the wife from its available funds has become redundant.
99.The husband referred to paragraph 84 of the judgment of Watts J made 31 May 2012. In that paragraph, His Honour referred to the proposed order of $4.3 million, to be conservative in the circumstances of the case for two reasons. Firstly, that the husband was proposing the wife should receive 10 per cent of the parties’ available assets. At the same time, the wife was seeking a payment which would amount to 13.6 per cent by way of interim property adjustment. His Honour considered that the order sought by the wife could not be seen as outside a conservative range, however, lest ultimately it be determined the order was outside the range, he restrained the wife, with her agreement, to not further encumber the Property R and Property Y properties. The husband, in his submissions, in this hearing, points to the fact that in the proceedings heard by Watts J, the husband estimated the pool of available assets to be $88 million. As at the date of this application he estimates the pool to be approximately $40 million. It must be acknowledged that, as stated earlier, the pool contended for by the wife is a much higher figure.
100.In submission the husband drew the court’s attention to paragraph 66 of the Watts J decision. In that paragraph His Honour noted that the husband had argued the wife could rent out the Property R to provide her with an income. The anticipated income at that time was $575 per week. That argument failed to gain purchase with His Honour because at the time, the wife’s parents were using the property at Property R as their residence. That situation, as submitted by the husband, changed some considerable time ago.
101.In relation to the Property R, the husband submitted that the wife’s assertion, made for the first time in the hearing of this application, that she does not want the Property R is at odds with her action of July 2010 of placing a caveat on the title of the property.
102.The husband further submitted that in terms of the wife’s need for the payment of legal costs, exhibit W6 does not comprise evidence to underpin the application currently under consideration. The husband submitted that ss 23 and 24 of the Evidence Act 1995 (Cth) provide for evidence to be admissible only where it is sworn (I note those sections do not specifically say that. It may be inferred, however as no argument was received on that point). An exception to that can be found in s 190(3) of the Act, which would permit the court to treat as evidence a matter where there was no issue or controversy, and that would include a document.
103.In submission, I asked the husband’s counsel why I could not accept that the wife’s ongoing legal costs would be equivalent to those of the husband where there was evidence of the husband’s ongoing legal costs. Mr Richardson, on behalf of the husband, submitted that the wife’s costs might be more than those of the husband because it was contended that an unqualified paralegal was being charged at $360 per hour for 10½ hours every sitting day during the course of the hearing. Mr Richardson said “I have no idea. I have no basis upon which I could make that concession.”
104.Mr Richardson did say that the husband would not be submitting that it would be unreasonable for the wife to have both senior and junior counsel in the running of this case.
105.Mr Richardson then made submissions in respect of the impact of the High Court decision in Stanford. Those submissions are referred to in these reasons under the heading “Summary of Jurisprudence and Discussion”.
106.In the submissions in relation to Stanford, Mr Richardson submitted that the High Court made it clear in Stanford that s 79(2) imposes an independent substantive obligation by the court not to make an order unless it is just and equitable to do so. He submitted that this is a different application to s 79(2) as was referred to in Hickey and Hickey (2003) FLC 93-143, where it was seen to be examined as the fourth stage to the s 79(4) process. The way in which it was considered in Stanford was at the “beginning stage” of determining a property application. Mr Richardson submitted that there is a substantive obligation to be met. He submitted that if this was a case of a long marriage with a vast pool of property, all acquired during the course of the marriage, and where one party had all the property and the other had nothing, then the threshold might, in that example, be easily crossed. He submitted that the subject case is quite different. In this case, the husband asserts that there cannot be, on his case, an order in favour of the wife for the amount which she claims, even as an interim property payment.
107.Mr Richardson on behalf of the husband also took me to paragraphs 92 and 93 of the Full Court’s decision in Strahan. Those paragraphs have been set out in these reasons. He also referred the Court to paragraph 95 of Strahan, where a distinction was made between an interim property order relying on s 80(1)(h) of the Family Law Act and an application for costs under s 117. The husband points out that in this case, the wife makes no application under s 117.
108.The husband then referred the court to paragraph 136 of Strahan. Again, I have set out paragraph 136 in these reasons.
109.The husband’s counsel then made submissions in relation to the costs agreement entered into by the wife and her solicitors, the terms of which are in evidence. It was submitted on behalf of the husband that the evidence would support a conclusion that the circumstances in which the contract was entered into clearly make the contract voidable at the option of the wife. The husband then addressed that proposition by reference to the evidence.
110.My conclusion in relation to the attack upon the contract between the wife and her solicitors is as follows. Firstly, there is insufficient evidence for me to determine whether or not the contract is voidable. Secondly, if the contract is voidable, as alleged by the husband, then it is so at the instigation of the wife. There is no evidence to suggest she has challenged that contract or that she has any intention to do so. Quite apart from the assertions made on behalf of the husband in relation to the contract between the wife and her solicitors, there are other submissions made by the wife’s counsel which clearly would join issue with the assertion made by the husband in relation to that matter.
111.The husband, through his counsel, addressed other provisions of the costs agreement between the wife and her solicitors, and in particular the provision relating to the ability for the solicitors to increase the rates of charge annually. The husband submitted that the agreement was, “in any event, manifestly improvident to permit, as it does, unilateral increases without agreement that, which, in their application, are so substantial; 22 per cent after six days, 28 per cent after the next year.” The husband then addressed clause 3.2 which appeared on pages 17 and 18 of the agreement. That clause provided estimates of costs “based on our experience”. The upper figure provided there is $118,000. The husband submits that did not fulfil the solicitor’s obligation of good faith to the wife and provide her with any realistic assessment of what the costs may be. As stated by the wife she has already spent nearly a million dollars with this firm.
112.The husband addressed various other aspects of the contract between the wife and her solicitors, which, if proved correct, the husband submits, would make the contract voidable at the option of the wife.
113.In a final submission about the enforceability of the contract between the wife and her solicitors, counsel for the husband said “she says ‘I have an obligation with them (my solicitors) pursuant to this agreement, and they have a right, pursuant to this agreement, to withdraw.’ If you find that this agreement is voidable then there is no agreement relevant to the purpose of your consideration.” The consequence of there being no agreement is said to be that the wife would not be required to provide funds in advance of the further hearing dates set in this matter.
114.In exhibit H3, the husband provided a summary of his contributions and the s 75(2) considerations. The wife takes issue with the contentions made by the husband in that document and in particular that she was not the primary homemaker and parent. The husband submits there is a real issue in this case as to the contributions each of the parties made as homemaker and parent. There are also substantial issues in relation to contributions made the wife under ss 79(4)(a) and (b).
Wife’s submissions in Response.
115.In relation to the issue raised by the husband in respect of the authority Stanford, the wife draws the Court’s attention to exhibit H12, in which she says the husband is asking the court to exercise powers pursuant to s 79 as between these parties. This relates particularly to the orders sought in paragraphs 3.3, 3.4, 3.6, 4 and 7 of exhibit H12. In relation to the property at Property Y, which is owned as to 70 per cent at law by the wife, the husband is seeking a declaration under s 78.
116.As a result of the above submission, the wife contends that both parties are asking the court to exercise power pursuant to s 79. She submits both parties seek final orders under s 79.
117.In relation to the submission made by the husband that the Property R was conveyed to the wife and all that is necessary to place it in to her legal entitlement is to register the transfer document, the wife says that is not correct. She says the property still remains an asset of the I Trust and exhibit W8 records it as such as at 30 June 2013.
118.Counsel for the wife drew the court’s attention to the husband’s assertion that the expenditure by the wife since she swore her affidavit in June 2013 has been in excess of $350,000 and does not include payment of legal costs. However, the wife says that documents in both exhibit W6 and also in Annexure D to the wife’s affidavit sworn in August 2013 makes it clear that $204,000 is the increment in the value of legal fees and consequently her expenditure of capital has been $150,000 over twelve weeks as opposed to $350,000.
SUMMARY of JURISPRUDENCE & DISCUSSION
119.The Full Court decision of Strahan and Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) is the leading authority on the Court’s power to make orders for interim property settlement under ss 79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”).
120.In a joint judgment, Boland and O’Ryan JJ considered earlier authorities of this Court (notably, Harris and Harris (1993) FLC 92-378, Zschokke & Zschokke (1996) FLC 92-693 and Gabel v Yardley (2008) FLC 93-386) and distilled the relevant legal principles to be applied when deciding whether to exercise the power to make an order for interim property settlement in a particular case. Those now well-established principles, which guide this Court in the approach to be taken in determining such applications, can be summarised as follows:
Step one – the “procedural step”: The Court must ask whether it is appropriate, in the circumstances of the case, to exercise the power under s 79 and s 80(1)(h) of the Act? The “overarching consideration” here is the “interests of justice”, and “it is not necessary to establish compelling circumstances”: see Strahan at [132] and [133].
Step two – the “substantive step”: If the Court finds that it is appropriate to exercise the power, it must consider and apply the provisions of s 79 but in a limited manner, as it is not the final hearing. Again, there is no requirement for there to be compelling circumstances at this stage: see Strahan at [135].
The adjustment or “claw back” issue: The court must consider whether any order it proposes to make would give the applicant so much that it could not be capable of adjustment on a final hearing? In other words, the interim order must be capable of variation or reversal without resort to s 79A of the Act or appeal: see Strahan at [136].
THE JUDGMENT OF WATTS J IN OSFERATU
121.In the judgment of Watts J delivered on 31 May 2012, his Honour set out in some depth the legal principles to be applied when considering applications for partial property settlement. At the hearing before me, each of the parties’ Senior Counsel were asked whether they agreed with the law as it had been set out by Watts J.
122.Both agreed that they did, largely, but Mr Richardson SC took issue with paragraph [34] of the judgment of Watts J. He also drew the Court’s attention specifically to paragraphs [92], [93] and [136] of Strahan, which were not specifically referred to in the judgment of Watts J. The last of those paragraphs relates to the “adjustment” or “claw back” issue.
123.Watts J set out the applicable law at [31]–[45] of his Honour’s judgment:
THE LAW TO BE APPLIED
Approach to an application for an interim property order
31. The Full Court in Strahan and Strahan (2011) FLC 93-466 revisited the principles applicable to applications for interim property orders. An interim property decision involves two steps.
The first step
32. First, it must be established that s 80(1)(h) Family Law Act 1975 (Cth) (“FLA”) was enlivened to allow an interim property settlement under s 79 FLA. The test for this was not confined to ‘compelling circumstances’. The Court in Strahan revisited the earlier well known statement made in Harris and Harris (1993) FLC 92-378 where the Full Court had said:
The exercise of the power should be confined to cases where the circumstances presented at that time are compelling. As a generality, the interests of the parties and the Court are better served by there being one final hearing of s 79 proceedings. However, circumstances may arise before there can be a final hearing which dictate that some part of the property of the parties should be the subject of orders. A common example is where both parties agree to the disposal of some assets pending the trial. However, we do not consider that it is confined to cases where the parties consent. Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to preserve or obtain a home for or is otherwise necessary for the welfare of the children.
33. In Strahan, the Full Court said:
[132] In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. It is not necessary to establish compelling circumstances. All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after a final hearing.
…
[139] We also emphasise that in order to establish an appropriate case for an interim property settlement order more is required than the mere fact that upon a final hearing the applicant would receive the property being sought (or an amount in excess of the funds being sought) from the other party.
34. As explained by the Full Court, s 80(1)(h) FLA is a wide enabling provision for interim property decisions, and there is no reason to limit it, by requiring a finding of ‘compelling circumstances’. All that is required before the power to make an interim property order is exercised, is an assessment of whether it would be “appropriate” to make an interim order, with the “over arching consideration” being the interests of justice. There may need to be evidence of the likely cost of litigation, but only if that is the reason or part of the reason that is propounded as to why it is appropriate that the order be made.
Considerations about making an interim property order in “the interests of justice”
35. The notion of a “level playing field” is one which almost axiomatically is in the interests of justice and an important matter to consider when deciding whether it would be appropriate to make an interim property order.
36. In In the Marriage of J U and T Poletti (1990) 15 FamLR 794, Ellis, Strauss and Butler JJ quoted Ngyh J with approval at [796]:
…It is rather, as it certainly was in Wilson and Wilson [(1989) 13 Fam LR 205], a situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case...
37. One method sometimes adopted is to provide a disadvantaged spouse with a “dollar for dollar” order. That is, an order that the advantaged spouse has to pay the disadvantaged spouse one dollar for each dollar the advantaged spouse pays his or her own lawyer.
38. The implementation of such an order is not as clean cut as the interim property order sought in this case and there is more ambiguity about which power is being exercised and what evidence is needed. There has been previous discussion in cases as to whether or not an application of this nature relies upon s 79 and s 80(1)(h) or s 74 or s 117 FLA.
39. In Farnell and Farnell (1996) FLC 92-681, Kay J said:
In the Marriage of Gould, (Appeal EA 37 of 1994, judgment of 29 June 1994), the Full Court coram Fogarty, Kay and Graham JJ1, overturned an order of the trial Judge wherein her Honour had ordered that pending trial, for every dollar that the husband had spent on his lawyers, he should provide the wife with a similar amount for costs. The trial Judge had ought to make that order to create what she saw as ''a level playing field''. The Full Court disallowed the orders on the basis that the wife had adequate finances to provide for her own costs by reason of a substantial recent inheritance. In the course of my reasons for judgment I said this:
“I wish to make comment on ... the general philosophical views expressed by her Honour about endeavouring to achieve a level playing field by providing the wife with a dollar for dollar basis for costs. Whilst I agree with his Honour's [Fogarty J's] observations that this may not be an appropriate approach to these cases, I would also like to make reference to an article from the Chicago Daily Law Bulletin of 20 April 1992 which indicated that wives in these circumstances often have to spend much more than dollar for dollar to achieve a level playing field, particularly, and I quote - this is in reference to a survey of the American Bar Association Family Law Section:
‘Most of the lawyers agree that women will face higher legal bills in a divorce. Accordingly to 91 per cent of those surveyed women splitting from their husbands will have to pay more for discovery. Husbands traditionally have had full control over the family finances and economic information. This means the wife's attorney must often engage in discovery to gain equal knowledge about assets and income. The lawyer has an obligation to undertake discovery to find out if there are assets in just the husband's name, or if the wife has no knowledge of them.’
40. Putting the sexist language to one side, nearly twenty years later the position of a former spouse, now in highly conflicted litigation, who has not played a significant role in controlling the finances of the parties, has not much changed.
The second step
41. As was discussed in Harris and confirmed in Strahan, the second step in making an interim property order is to have regard to the usual matters in a section 79 order (ss 79(2) and 79(4) FLA). A detailed inquiry is not required, but there must be some assessment of section 79 factors. Given it is an imprecise exercise, the interim property order has to be “conservative” so that the final outcome of property settlement will not be compromised by the interim property order. Either the remaining property needs to be sufficient to meet the legitimate expectations of both parties at the final hearing, or the order that is contemplated needs to be capable of being reversed or adjusted if it is subsequently considered necessary to do so.
42. Being a preliminary property order, the wife may choose to spend the money however she wishes.
43. In Harris, the Full Court said:
As a generality, the interests of the parties and the Court are better served by there being one final hearing of sec 79 proceedings.
44. In Strahan, the Full Court said in exercising the wide and unfettered discretion conferred by s 79 and s 80(1)(h) FLA:
In oral submissions, Senior Counsel for the husband referred the Court to Toft & Royce [2013] FamCA 372 (“Toft & Royce”), which, it was submitted, would be of help to the Court when considering the interplay between Stanford and Strahan (discussed above).
In Toft & Royce, Cronin J made an order for an interim distribution of property to a party in proceedings under s 79 of the Act. His Honour set out the basis of the Court’s jurisdiction to make such an order under s 79 and s 80(1)(h), and then said as follows in relation to Stanford and Strahan at [10]–[11]:
10. In a joint judgment, two members of the Full Court in Strahan (Boland and O’Ryan JJ) recognised that although the s 79 power is ordinarily exercised at the final hearing, in appropriate circumstances the power may be exercised at an interim stage;
thus the first step is to resolve whether to exercise the power before a final hearing and if it is resolved to do so then the second step involves the exercise of that power.
Their Honours stated at [132]:
In relation to the first stage, in our view, when considering whether to exercise the power under s 79 and s 80(1)(h) of the Act to make an interim property order the “overarching consideration” is the interests of justice. … All that is required is that in the circumstances it is appropriate to exercise the power. In exercising the wide and unfettered discretion conferred by the power to make such an order, regard should be had to the fact that the usual order pursuant to s 79 is a once and for all order made after final hearing.
11. In other words, as put by Thackray J in the same case, once the Court has decided to proceed with the interim dispute,
it has no alternative other than to exercise (or decline to exercise) the power to make an interim order by application of the relevant provisions of the legislation. (at [225]).
The High Court decision of Stanford & Stanford [2012] HCA 52 (“Stanford”) provides guidance on how to exercise the power once the decision has been made to do so. The power is discretionary, without formal “metes and bounds” but not so broad as to amount to unguided judicial discretion; Stanford at [38].
Cronin J went on to say at [14]–[17]:
14. The High Court directed in Stanford that the first step in the consideration of whether to exercise the power under s 79 is to identify, according to ordinary legal and equitable principles, the existing legal and equitable interests of each of the parties in the property in dispute (at [37]). The practice of creating notional “add-backs” for assets that have been dissipated has no place in this assessment; however, it does not follow that unilateral behaviours resulting in the dissipation of property or premature distributions are no longer relevant – in appropriate circumstances they may affect the final order by virtue of s 75(2)(o). (See for example Omacini & Omacini (2005) FLC 93-218, Browne & Green (1999) FLC 92-873, and the discussion of Murphy J in Watson & Ling [2013] FamCA 57).
15. Once the assets have been identified, the Court must evaluate whether it will be just and equitable to alter the existing property interests (79(2)). Stanford emphasised that the starting position is not to assume that an alteration must be made. The power under s 79 is not at large but operates within the realm of the existing legal and equitable interests as identified between the parties. As the Court stated at [39]:
[t]he question presented by s 79 is whether those rights and interests should be altered.
This approach is consistent with that of the Full Court in Strahan as outlined above.
16. In determining what is just and equitable, it is clear from the words of the provision and the statements of the Stanford Court that the assessments under s 79(2) and s 79(4) are not to be conflated. While some or all of the factors in s 79(4) may be relevant to the just and equitable inquiry under s 79(2), it is not an exhaustive checklist. Therefore, once the Court has decided to use the power under s 79 to make an interim property order as it would be just and equitable to do so (79(2)), the pathway to be followed is that outlined in the legislation, which requires the next consideration to be the form that the order should take with regard to the indicia in s 79(4).
17. The facts of the case will determine the form the order should take to be just and equitable. In interim proceedings, the just and equitable inquiry encompasses both the circumstances at the time of the hearing and the likely effect on final orders (if any), to avoid the prospect of subsequent proceedings under s 79A.
Conclusion: The orders to be made
139.This is a most unusual case in a number of aspects. Not the least of these unusual facts is the level of fact issue between the parties relating to the wife’s alleged contributions under ss 79(4)(a) and (b). The 50 affidavits filed by the husband, as referred to earlier in these reasons, largely addressed segments from the wife’s affidavit where she stated that she had provided some instruction, idea or input to a development, improvement or business venture which was, as between the parties, controlled by the husband. There are also issues of fact as to each of the parties contributions under s 79(4)(c). It is in this factual matrix that the court is required to determine the wife’s application for the payment of $2 million as an interim property order.
140.One of the questions to be addressed is to identify how much the wife needs in order to meet her foreshadowed legal costs and also meet other financial needs. This also raises for consideration whether any order other than for provision of legal costs should be made.
141.In her submissions in reply the wife identified the financial position of the wife as identified in exhibit X3 and W6. Item 46 in exhibit X3 (the draft balance sheet prepared by the parties and dated 28 October 2013) identifies how the wife’s $5,053,283 (interim property orders made 29 August 2011 and 31 May 2012 have been expended). Inter alia this entry asserts that the wife had applied $2,846,176 to legal costs and disbursements. Of that sum the wife had a credit of $193,702 in her solicitors trust account. Further item 14 of exhibit X3 shows a balance in the wife’s Westpac Bank accounts of $500,000 (as asserted by the wife). The husband said the balance of her accounts with Westpac was $546,908 as at 2 October 2013.
142.In the wife’s affidavit sworn 23 October 2013 she sets out evidenced of the remaining balance of her Westpac Bank accounts ($541,296 at 23 October 2013 on the wife’s evidence). There was other evidence that on 2 October 2013 her credit balance was $546,908.
143.In submissions the wife’s counsel told the court the wife would need to have funds deposited with her solicitors of $1 million in order for them to continue to act for her in relation to the further hearing in this matter set to commence at the beginning of February next year. As stated above she currently has a credit of $193,702 with that firm (later evidence is to the effect that the credit is now in the order of $170,000). The husband said that item 42 on exhibit X3 does not disclose a payment/credit balance of $204,000 in the wife’s solicitors trust account at October 2013. He also says exhibit W6 and annexure “D” to the wife’s affidavit of 23 October 2013 do not provide evidence of any payment by the wife to her solicitors after the end of July 2013.
144.One of the matters to be addressed in this determination is how to repair any situation which might arise following the granting of the wife’s application in whole or in part. Thus if an order is made for the payment by the husband to the wife of $2 million and the wife does not ultimately achieve an order equivalent to all the property which she currently owns together with the interim property orders already maid plus any other adjustment such as repayment of child support wrongfully assessed, how would the shortfall be recovered. The husband says the only capacity the wife has to repay would be from the sale of the Property R or the transfer of her shares in Q Pty Ltd.
145.There may however be other ways to repay, such as through discounting or attaching to a spouse maintenance order, should one be ordered.
146.Strahan is the leading authority from the Full Court which addresses what has become known as interim property orders. The power to make such orders is found in s 79 and s 80(1)(h) of the Act. As stated earlier, the approach sanctioned by Strahan and other case sited earlier, requires three steps.
·Step one - the “procedural step”. This involves a determination of whether it is appropriate to exercise the power under s 79. Although the paragraph’s 132 and 133 of Strahan do not refer to section 79(2), it seems to me that the Full Court was raising for consideration the same point made by the High Court in Stanford. The court referred to the “overarching consideration” is “the interests of justice”. Some examples of where the court may make such an order were detailed.
·Step two - the “substantive step”. Should the court determine it is appropriate to make an order then it must consider s 79 in at least a limited manner. This is not the final hearing.
·Step three - the adjustment or “claw back”. The interim order must be capable of reversal without resort to s 79A of the Act.
147.The application of the decision in Stanford has been the subject of deliberation by the Full Court in Bevan. That court referred to paragraph 42 of Bevan where it was said “In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied observing that, as a result of a choice by one or both of the parties, the husband and wife are no longer living in a marital relationship.”
148.In this case it is common ground that the parties have both committed to a separate life and the end of their marital relationship. In deed they have been divorced for more than a year. There appears to be no common use of property nor any intention to do so. The principal reason the husband says an order should not be made is that the wife has received all of her entitlement to property settlement as viewed through s 79 of the Act. Further he says if the husband is required to pay further funds to the wife and should she ultimately not achieve an order which is greater than the property already vested in her then there is really no readily apparent prospect for the wife to effect repayment. This then is an argument that “claw back” is not possible.
149.The wife’s case is that she is in an urgent situation which must be redressed otherwise a serious injustice will occur. The urgent situation is that the wife does not have sufficient funds to meet the requirements of her solicitors to deposit $1 million into their trust account to cover her forecasted legal fees to conclude the hearing in February 2014. If the wife applies all her available cash to her lawyers, then that will not amount to $1 million and even if that was acceptable to her lawyers it would leave her with no funds to meet the considerable shortfall between her available income and her ordinary expenses.
150.Although not addressed, I consider the wife would be very disadvantaged should she be required to conduct the proceedings herself or, alternatively, have to instruct another firm of solicitors and counsel who would be prepared to act for her without the requirement for the securing of payment of fees by cash deposit to the trust account of the solicitor.
151.There has been submission made by the husband as to the evidence which the court can rely upon to ascertain how much the wife ought be required to pay to her legal representatives to complete the trial. I am satisfied that a figure of $1 million is likely to be required by the wife’s solicitors to continue to act for her.
152.In the decision of Watts J, in this case, as set out earlier considered the requirement, in the interests of justice, for there to be a “level playing field” between the parties in the contest before the court. He considered that was an important matter to be considered in this case. Neither party submitted that approach was wrong.
153.The second step, as confirmed in Strahan is to have regard to the matters in s 79. This does not involve a detailed inquiry, rather some assessment of the contributions and s 75(2) matters. That assessment needs to be conservative so that the final property order is not compromised by the interim property order. At the very least the interim order must be capable of being reversed.
154.Conducting an exercise in assessment of contribution in this case is very difficult given that there is so much in issue between the parties. Given that the major asset of the parties is the husband’s interest in the I Trust, the wife has understandably sought to place before the court her evidence of each contribution claimed. This is often stated in minute detail. The husband’s case is that if the wife made any such contribution it was inconsequential.
155.Before considering the contributions the court would usually identify the assets, liabilities, superannuation and resources of the parties. Even in this exercise there are problems. The husband says that the Property R is the wife’s. He says it is hers pursuant to the Financial Agreement the parties entered into during the marriage. The wife says she is seeking to set aside the Financial Agreement. She says the property belongs to the I Trust and that can be seen from the valuation of that entity.
156.Otherwise the assets of the wife have dwindled quickly.
157.There is a very substantial difference between the parties about the value of the husband’s interest in the I Trust. The husband says it is worth about $5 million (making his net property worth about $40 million), whereas the wife says it has a value of about $69 million.
158.There will be substantial issue about what should be taken into account as notional assets. In the recent decision of the Full Court in Bevan the practice of including notional assets in a balance sheet is no longer appropriate because of the decision in Stanford. It would seem therefore that s 75(2) is an avenue for the court to consider such matters.
159.In submission’s counsel for the wife asked to court to consider the following uncontested facts.
·The parties cohabited from the date of marriage in 2000 (the wife says late 1999) until early 2011 ( which was about 11 years)
·At the commencement of cohabitation the husband had substantial assets.
·During that period the wife gave birth to two of the parties’ children and one of her own who has been raised as a daughter of the husband.
·During cohabitation it is not contested that the wife made a substantial contribution as a parent. (The contest appears to be the proportions of each parties contribution)
·Post separation the wife has had the predominant care of S and E. (The relevance of her care for E as a contribution has not been the subject of legal argument.)
·Post separation the husband has mainly cared for B.
·The husband concedes the wife made some minor (inconsequential) contributions as a homemaker.
·If, as asserted by the husband the wife’s entitlement is limited to 15 per cent of the parties assets then given the value of the balance of the assets there would seem to be only a small adjustment under s 75(2)(again not the subject of any meaningful submissions) The s 75(2) matters which stand out as drawing the greatest weight at this stage would be:
·The disparity in income earning capacity;
·The requirement of each party to care for children;
·The amount of property distribution to date;
·The disparity between the parties asset position following assessment of contributions;
·A standard of living which in all the circumstances is reasonable;
·The payment of child support;
·The extent to which the wife has had to use her assets to meet legal costs;
·How the husband has paid his legal costs: Is that from income as asserted by the wife or from capital?
160.In this case each party has labelled the orders sought by the other as outrageous. The husband says that the wife’s claim for half of the parties’ assets is not based on any proper application of s 79 and the jurisprudence of the court. The wife says it is below the reasonable range of probable outcome to suggest, as the husband does, that the wife’s property application would be satisfied by an order which vested in her only 15 per cent of the available net assets and superannuation.
161.When parties contest percentage outcomes they sometimes fail to consider whether the percentages contended for will be different depending upon the determination as to the size of the asset pool. In this case there have already been submissions made by the husband as to the consequence to the wife of a finding by the court, as proposed by her, that the husband was the absolute owner of the I Trust at the commencement of their cohabitation or shortly thereafter. Thus, should the pool contended for by the wife ($108 million net a seen in X3) be accepted, then 15 per cent would provide her with in excess of $16 million. Whereas should the net assets be $40 million then 15 per cent would provide her with $6 million. She has already been paid $5 million as interim property. She has the prospect of being required to repay all the child support paid by the husband for E to date. She may well have to meet half of the legal costs of the Independent Children's Lawyer and also the single experts engaged. If, on top of that she receives another $2 million as she claims then the husband says he will not be able to recover the deficit (claw back) in the event of his succeeding in the case he currently pursues.
162.One of the difficult aspects in considering the wife’s application is the requirement to be conservative in approach to making an interim property order. It must necessarily follow that the conservative approach must also apply to the limited extent to which the court is to regard the matters considered under s 79(4) of the Act.
163.In Dinci & Smith, referred to earlier, Murphy J concluded that approach “should result, in my view, in the matter being approached by referencing the prospective entitlement of the husband as 10 per cent and the “pool” as contended by the wife, it representing, as it were the ‘worst case scenario’ ultimately for the husband .”
164.The above proposition probably derives from the proposition that the wife could at any time accept the husband’s application by consenting to orders being made. Applying that proposition to the case before the court, the pool contended for by the husband of $40 million and the wife’s entitlement of 15 per cent would represent the worst case scenario for the wife.
165.It seems to me that the position proposed by Murphy J in the above referred to decision would be subject to restriction when confronted with the extraordinary facts. It needs to be remembered that the court is required by s 79(1) to make an order which is appropriate. The court is forbidden to make an order under s 79 unless the order is just and equitable (s 79(2)) If the court determines a proposed order is not appropriate or just and equitable then the court is empowered to decline to make a consent property order.
166.All of the above leads to the conclusion that the court should not be constrained to any significant degree when determining an interim property application by the final orders each party at that time might be seeking. Such an approach must be informed by the requirement to act conservatively however, within that constraint the court can move cautiously. To have an approach which is constrained to making interim orders which are within the parameter of the final order sought against the moving party for the interim order would be to invite litigants to make outrageous applications seeking property division which has no real regard to Part VIII of the Act or the jurisprudence relevant to the Act.
167.This determination poses a very difficult exercise for the court because of the major issue about the value of the husband’s interest in the I Trust. The evidence in relation to that issue is far from closed and each party mounts a forceful case in support of their contention, neither of which is apparently without merit. The court must be alive to the possibility that the determination of the issue could be as promoted by one or the other. The way the case is developing it seems unlike many valuation issues where the conclusion may be a figure somewhere between each party’s case. This answer appears to be confined to one version or the other because it depends upon a determination as to the existence of a liability against the husband relative to the acquisition of other interests in the trust and other entities. Those circumstances create a dilemma which generally gives rise to a conservative approach and outcome. The balancing of prejudices looms as a significant consideration. Here the wife says, without the provision of at least $1 million she will be unable to have the services of the legal team she has selected and has confidence in.
168.This is a very complex case where the husband controls most of the parties’ assets. Until recently, he appears to have been able to fund his legal costs from income earned and also continue to make substantial contributions of a financial nature from that same source. The wife has used her capital, provided by the husband as a partial property settlement, to fund her legal costs. Her contributions post separation include financial contributions towards the support of the children however, as the evidence lies at the moment they do not appear to be in the same proportion as the husband’s. There are of course other non-financial contributions being made by the parties.
169.One of the conclusions which flows from the matters mentioned lastly is that the wife would be significantly handicapped if she was unable to be represented by lawyers or unable to be represented by lawyers with the same experience and vigour as those she has currently engaged.
170.I have concluded that the conservative and cautious approach to this case permits the court to order that the husband pay to the wife the sum of $830,000 which will permit her to continue to participate in the litigation at the level she wishes to so participate. The amount to be paid should be paid to her lawyers for account to the wife. She currently has a credit balance with her solicitors of about $170,000 however I envisage that is rapidly reducing as further work is carried out on her behalf. In any event, the wife should have in excess of $900,000 available to deposit in her solicitors trust account as they require in order to continue to act for her. I would not by order prevent the wife from applying her funds otherwise than to pay her lawyers, however, the fate to the wife of choosing not to so apply her funds ought be obvious. It needs to be remembered that the wife has prosecuted this application under ss 79 and 80 of the Act rather than s 117. That then constrains the way in which the court should make the payment of funds conditional or restricted in a specific way.
171.In order to satisfy the requirement of “claw back” I propose to continue the injunctions made by Watts J in his orders made 31 May 2012.
172.Given that I have provided for the wife to receive funds which I am satisfied the wife will use to fund her lawyers I do not propose to vary, at this time, the spouse maintenance order or the interim spouse maintenance order made by Watts J on 31 May 2012.
173.The Property R has a value of $1.85 and is the wife’s property until the question of the validity of the Financial Agreement is determined. The husband in exhibit H12 seeks a declaration under s 78 that the wife is the sole owner of Property R. The husband otherwise seeks an adjustment by order so that the wife receives 15 per cent of the value of the balance sheet net assets as determined by the court.
174.Part of the husband’s case is that the wife should pay damages arising from her breach of the terms of the Financial Agreement. That remedy will await the determination of the validity of that document. The damage, as calculated by the husband would be $510,000 as at 23 October 2013 and continuing at a rate of $4,250 per week. The husband says the possibility of this order being made needs to be taken into account when considering the order which might be made by the court and the ability to reinstate the husband should he succeed in his applications as specified in H12.
175.Further the husband says other expenses such as the payment of the Independent Children's Lawyer’s fees and the payment of the experts fees need to be considered when looking at the position of reinstatement to the husband at the conclusion of the trial if that be necessary.
176.As stated earlier the court is not bound by the husband’s application as representing the high water mark for the wife in this case. The court is required to look conservatively at the probable range of result filtered through the requirements of s 79.
177.The court needs to consider the practicality of the orders sought in the sense of how the order will be met. I raised that matter with the wife during her oral evidence. Her suggestion, which I considered to have merit, was that the parties jointly draw on equity they may have in their jointly owned property (Suburb Z and Property Y) and borrow further funds to meet her current requirement. Should that occur then the ramifications could be taken into account under s 75(2) (or in any other acceptable manner) in the finality of the case.
178.The above matters lead me to the conclusion that it is appropriate for the court to make an order for interim property settlement in favour of the wife. I consider the wife has established a compelling need for such a payment although the authorities make it clear it is unnecessary for her to establish a compelling need. I conclude that it is in the interests of justice for me to make the orders as foreshadowed above. In reaching that determination I have considered the application of s 79 to the case to the extent that can be done at this stage of the final hearing. I consider there is, within the parameters of probabilities, ample ability to reinstate the husband should the wife ultimately not achieve a conclusion which is greater than that proposed by the husband in exhibit H12.
I certify that the preceding one hundred and seventy eight (178) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 1 August 2013.
Associate:
Date: 18 December 2013
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