Pearson and Pearson

[2016] FamCA 558

FAMILY COURT OF AUSTRALIA

PEARSON & PEARSON [2016] FamCA 558

FAMILY LAW - INTERIM COSTS – Where the husband seeks an order for lump sum costs pursuant to s 117(2) – Where the husband seeks spousal maintenance – Where there is a consideration of the matters under s 117(2A) – Where there is a disparity in financial positions between the parties – Where the husband does not have any asset which could be accessed to repay the lump sum in the event that it is found that the interim costs order should not have been made – Where it is unclear if the wife has a current capacity to make periodic spousal maintenance payments to the husband – Where both applications are dismissed.

Family Law Act 1975 (Cth)

Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578

Strahan v Strahan (2011) FLC 93-466

APPLICANT: Mr Pearson

RESPONDENT: Mr Pearson

FILE NUMBER: SYC 8557 of 2015

DATE DELIVERED: 4 July 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 20 June 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Marsdens Law Group

COUNSEL FOR THE RESPONDENT: Mr O'Brien

SOLICITOR FOR THE RESPONDENT: Aitken Lawyers

Orders

Order made 20 June 2016

1. I note that by way of interim order, today the husband presses orders 2, 3, 4, 5 and 6 of the interim orders sought in the Application filed 30 December 2015. I dismiss those applications. I reserve my reasons for doing so.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pearson & Pearson 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 8557 of 2015

Mr Pearson

Applicant

And

Mr Pearson

Respondent

REASONS FOR JUDGMENT

1. On 20 June 2016 I made an order dismissing the husband’s application for an order for lump sum costs pursuant to s 117(2) Family Law Act 1975 (Cth) (“the Act”) and for spousal maintenance of $500 per week. These are the reasons for the order dismissing those applications.

BACKGROUND

1. The husband was born in 1956 and the wife was born in 1962. They commenced cohabitation in 1980 and married in or around that time. The parties have three adult children. The husband says that the living arrangements after separation is a matter of contention but it seems an agreed fact that the parties separated under the one roof in 2007. The wife brought a divorce application in 2015 on that basis and a divorce order was made on 30 May 2015.

2. On 7 November 2007 the parties executed an application for final orders for property settlement pursuant to s 79 of the Act. Consent orders were made in the Suburb B Local Court on 26 November 2007 (see Exhibit 13).

3. On 30 December 2015 the husband filed an application seeking an order, pursuant to s 79A of the Act, that the orders made in the Suburb B Local Court in November 2007 be set aside (the application has been filed incorrectly and asks for orders made in 2011 to be set aside). In the event that the husband is successful in obtaining an order under s 79A, the husband seeks a new property settlement order and seeks 65 per cent of the overall pool of assets that the parties currently have.

4. The application filed on 30 December 2015 also sought interim orders for spousal maintenance pending the determination of the husband’s s 79 application should his s 79A application be successful. The husband has not, at this stage, made an application for a final order for spousal maintenance, whether periodic or lump sum.

5. The lawyer for the husband indicated that the basis for the husband seeking to set aside the consent orders was that there had been material non-disclosure by the wife or alternatively the outcome for him in 2007 was so poor and outside a normal range of results that a court would find it amounted to a miscarriage of justice.

6. The husband’s affidavit filed on 23 December 2015 indicates that there was an agreement in 2007 for the parties to separate under the one roof as at the time the husband could not find alternate accommodation as he was not working; he did not have an income; the wife had control of all the finances and he didn’t know how he could obtain funds to move out of the matrimonial home. The parties had four jointly owned properties at this time. The husband says he went to Centrelink and they would not give him any payments because he was a joint registered proprietor of three investment properties. He says that the wife suggested that the matrimonial home at C Street, Suburb D and two units in E Street, Suburb D, be transferred into her sole name. That is what the consent orders achieved. The husband in his affidavit asserts that it was part of the agreement between the parties that they would still be able to live at the matrimonial home under the one roof after the property transfers took place. He also asserts that although he attended upon a lawyer to sign the documents, it was a lawyer arranged by the wife and he, in effect, received no independent legal advice. The other jointly owned property at Suburb F was not mentioned in the application for consent orders.

7. There was a dispute between the parties as to the extent to which the husband resided in the former matrimonial home after the separation under the one roof in 2007. Documents were tendered during this interim hearing (Exhibit 2) which would indicate on their face that the husband’s assertion as to the periods of time he spent in the home may not be entirely reliable, but that will be a matter for testing at the final hearing.

8. The application for consent orders itself discloses that on the face of that document the wife received $696,000 comprising of real estate, a motor vehicle and other chattels with a debt on that real estate of $285,000 and that the husband received $93,000 comprising of a motor vehicle, a life insurance policy and other chattels. Further, the application for consent orders indicated that the value of the husband’s superannuation at that time was $60,000 and the value of the wife’s superannuation was $33,000. The husband tendered in evidence a document that might indicate that the husband subsequently obtained access to his superannuation and that a significant amount of his superannuation fund ($33,000) found its way into a joint account of the parties.

SECTION 117(2) APPLICATION

1. The applicant seeks the sum of $100,000 by way of interim costs.

2. The respondent opposes that order being made.

3. The basic position under s 117 is that each party should pay their own costs.

4. The order sought by the husband can only be made if the court considers it just to do so.

5. In considering whether or not to make a lump sum costs order in the husband’s favour, the matters set out in s 117(2A) of the Act need to be considered.

6. The first is the relevant financial circumstances of each of the parties to the proceedings. There is no doubt that the wife is in a superior financial position to the husband. Based upon her assertions in her financial statement, the total value of the property owned by her is about $890,000 with debt of about $293,000. Her superannuation has a value of approximately $106,000.

7. In addition, after the application for orders was served on the wife, the wife drew down from a mortgage account (account number 9609) a total amount of $89,000 on 28 and 29 January 2016 increasing the account from a debit of about $93,000 to a debit of about $182,000. The wife transferred this amount to a personal account (account number 0252) on the same dates. On 29 January she withdrew $10,000 of that in cash. On 1 February she withdrew another $20,000 in cash; on 10 February she withdrew another $55,000 in cash (a total of $85,000 in cash in a period of less than two weeks).

8. The wife filed a belated affidavit setting out what she did with part of those funds but within the compass of an interim hearing, it is impossible to say whether or not that explanation is fully satisfactory. Between 2007 and 2015 however the wife had paid all payments in relation to the mortgages on the three investment properties. She says, and I accept, that she had deposited her own funds into the mortgage account and she was drawing them out again primarily to pay for an overseas holiday with her family that had been planned prior to her being served with the applications before the court. It is her case that none of this money currently remains. Whether or not that is so will be a matter for further testing at the final hearing but on an interim basis I am unable to conclude that she is not being truthful about that. The financial statement which she filed on 7 March 2016 indicated that she had $1,900 in savings at the bank and there is nothing to indicate on her financial statement that she was holding any cash at that time.

9. The wife asserts that her periodic income is exceeded by her expenditure.

10. In contrast, the husband has property worth $6,400 but has liabilities of $10,000. The husband relies on an income tested pension for his regular income.

11. I was not informed that either party was in receipt of legal aid.

12. Submissions were made by the husband from the bar table that the wife had made it difficult in terms of the provision of financial disclosure but I had no evidence before me to support that submission.

13. No offers in writing were brought to my attention and given that this is an interim application for costs, no party has yet been wholly unsuccessful.

14. In relation to other relevant matters, the wife is entitled to the presumption that the orders made by consent in 2007 are to be assumed final. Based upon the ground or grounds the husband has currently said he seeks to rely upon under s 79A(1), there is a risk that the husband’s application under s 79A will not be successful.

15. In Strahan v Strahan (2011) FLC 93-466 the Full Court stated at [94]:

    In relation to an order under s 117(2) of the Act the Full Court in Zschokke at 83,216 said that provided such an order was by way of security or an interim order it is “desirable in most cases in the interests of according justice to each party” that an order or direction be made to the effect that “the sums paid pursuant to the order could be taken into account, or at least had regard to, in the determination of the property proceedings between the parties”.

16. In Strahan & Strahan at [96] the statement made by Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 was cited with approval that in relation to orders made pursuant to s 117:

    ·an applicant should have “at least an arguable case for substantive relief which deserves to be heard”: Chester v Chester (1995) FLC 92-612 (“Chester”) at 82,107 per Moss J;

    ·there should be evidence of the applicant’s “likely costs of the litigation”: see Wilson and Chester;

    ·“it is not an essential precondition” that the applicant’s legal representatives will not continue to act unless the costs are paid or secured on an ongoing basis: Columb and Columb (unreported, Family Court of Australia, Fogarty J, 27 November 1987); see however Coomes and Coomes [1995)] FamCA 103; (1995) FLC 92-558 per Cohen J;

    ·an order may “make a provision for litigation expenses at a rate that appears reasonable in all the circumstances”;

    ·an order can be made “in respect of costs already incurred as well as of future costs”;

    ·“whether an order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its’ quantum”;

    ·“any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended” and this may be done “by requiring that the funds be administered solely by the applicant’s solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs”: Breen.

17. The husband still has a half interest with the wife in a property at Suburb F. The husband estimates his half interest is worth $50,000. The husband does not have any asset which could be accessed to repay a lump sum of $100,000 to the wife in the event that it was found that the interim costs order should not have been made.

18. In this case the lawyer for the husband conceded that no evidence as to whether his lawyer would continue to act for him if no costs order was made, had been provided to the court.

19. Notwithstanding the disparity in the financial positions of the parties, this is not an appropriate case to make a lump sum costs order.

20. The lawyer for the husband attempted from the bar table to make an oral application for a dollar for dollar order but given that this application had been filed in December and leave to make the oral application was opposed, leave to make that oral application was not granted.

SPOUSAL MAINTENANCE APPLICATION

1. The husband is on a means tested pension and without that pension he has no income. That pension cannot be taken into account as income in the context of the spousal maintenance application. The husband has had a renal transplant due to chronic renal failure. He also has diabetes and hypertension. He is currently on a total disability pension due to his medical problems. There is no issue that the threshold test in respect of his need is satisfied.

2. On the face of the wife’s financial statement, she has expenses that exceed her needs on a weekly basis by an amount of $871 per week.

3. The lawyer for the husband points to four items on the financial statement which he says are either excessive or should not be paid in priority to a payment of spousal maintenance to the husband. They are the following:

Electricity	$73 per week
Telephone	$32 per week
Motor vehicle maintenance	$200 per week
Medical, dental and optical payments made on behalf of an adult child	$380 per week

1. Any excesses or inclusion of the four items referred to by the lawyer for the husband in Part N do not account for the $871 gap on the face of the financial statement.

2. Further, the lawyer for the husband submitted that the income tax estimate of $300 per week based upon a personal exertion income amount of $1,305 per week was excessive. Apart from that bold assertion, no reference was made by the lawyer to tax scales nor any other evidence filed that would support the submission that the estimate of tax provided by the wife was inaccurate.

3. Further, the lawyer for the husband pointed to the fact that the 29 year old son-in-law of the parties who is earning $1,500 per week was living in the former matrimonial home with the wife and the parties’ daughter and granddaughter rent free.

4. The lawyer for the husband seemed to accept that there was no further capacity to extend the borrowing on the loan facilities which had been “maxed out” by the monies withdrawn by the wife in early 2016.

5. On the basis of the available evidence, I am unable to say that the wife has a current capacity to make a periodic payment to the husband of $500 per week on an ongoing basis.

6. Accordingly, I dismissed the husband’s applications for interim lump sum costs and spousal maintenance.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 4 July 2016.

Associate: 

Date:  4.7.16