Peele & Minney
[2023] FedCFamC1F 959
•13 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Peele & Minney [2023] FedCFamC1F 959
File number(s): ADC 1649 of 2021 Judgment of: KARI J Date of judgment: 13 November 2023 Catchwords: FAMILY LAW – COSTS – Litigation funding - Where the court has no power to make any orders pursuant to s 90SM of the Family Law Act 1975 (Cth) in circumstances where the threshold issue is yet to be determined - Where the applicant seeks an order for litigation funding pursuant to s 117 of the Act – Consideration of the nature and quality of the applicant’s claim that the parties were in a de facto relationship - Where there is no assertion that the applicant’s solicitors will not continue to act for her – Application dismissed
FAMILY LAW - PROPERTY - Interim application - Where it is agreed that the applicant took out at least one loan for the financial benefit of the respondent - Where the respondent had been making the loan repayments towards the applicant’s loans for a period of 19 years - Where the applicant seeks “holding orders” in order to maintain the status quo pending determination of jurisdiction - – Holding orders made to preserve the status quo
Legislation: Family Law Act 1975 (Cth) (“the Act”) ss 4AA, 90SM, 114, 117 Cases cited: Norton & Locke (2013) FLC 93-567
Salvage & Fosse (2020) FLC 93-966
Sinclair & Whittaker (2013) FLC 93-551
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466
Ton & Vu [2020] FamCA 957
Division: Division 1 First Instance Number of paragraphs: 77 Date of hearing: 14 September 2023 Place: Adelaide Counsel for the Applicant: Ms Conduit Solicitor for the Applicant: Marciano Lawyers Counsel for the Respondent: Mr Richards Counsel for the Respondent: Belperio Connell Lawyers ORDERS
ADC 1649 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PEELE
Applicant
AND: MR MINNEY
Respondent
ORDER MADE BY:
KARI J
DATE OF ORDER:
13 NOVEMBER 2023
THE COURT ORDERS THAT:
1.That until further order the Respondent do pay to the Applicant such sum as is necessary to meet the loan repayments for the following loans:
(a)ANZ Residential Invest Loan Account …04; and
(b)ANZ Equity Manager Loan Account …61 (“the loans”).
2.That the payments referred to in paragraph 1 be paid as follows:
(a)To such account as directed by the Applicant in writing; and
(b)No later than 7 days prior to the monthly loan payment on each loan becoming due and payable.
3.That save as to any cost applications:
(a)The Amended Application in a Proceeding filed 1 September 2023 be dismissed; and
(b)The Response to the said application filed 24 August 2023 be dismissed.
4.That the proceedings be listed for trial to determine the jurisdiction of the court on the earliest date available.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Peele & Minney has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These proceedings relate to an interlocutory application made by the applicant seeking two categories of orders:
(a)The first being orders for litigation funding; and
(b)The second being orders for the payment of two bank loans by way of holding orders preserving the status quo.
The interlocutory application sits within the broader context of the applicant having commenced financial proceedings seeking an adjustment of the parties respective interests in property. The applicant seeks to invoke the court’s jurisdiction on the basis that the parties were in a de facto relationship for a period of approximately 21 years between 1999 and 15 July 2020.
The respondent however denies that the parties were in a de facto relationship. He asserts that they were in a relationship for a period of 12 months commencing in about 1999, and therefore concluding in or about 2000. In those circumstances, it is the respondent’s position that the court has no jurisdiction to make any of the orders sought by the applicant, either on a final basis and importantly for present purposes on an interlocutory basis.
For the reasons that follow the application for litigation funding is to be dismissed, whereas orders for the payment of the two bank loans shall be made.
In addition, and given there appears to have been an inexplicable delay in the proceedings being listed for final hearing on the threshold jurisdiction question of whether the parties were ever in a de facto relationship, I propose to make orders expediting the listing of the same.
BACKGROUND
The applicant was born in 1943 and she is presently 80 years of age. She has been married twice prior to her relationship with the respondent. The first marriage subsisted for 27 years commencing in 1966, producing five (now adult) children. The second marriage was for a period of approximately 12 months commencing in 1997. There are no children from that relationship.
The respondent was born in 1943 and he is presently 80 years of age. He too has been previously married, and he has three adult children. For reasons which are not entirely clear on the applicant’s case, but on the respondent’s case because he and the applicant’s first husband were business associates, at the end of the applicant’s first marriage the respondent became financially embroiled in the applicant’s affairs.
As best can be understood, the parties appear to mutually agree the following significant matters in relation to their financial enmeshment:
(a)The applicant and her first husband were engaged in litigation and negotiations over an extended period of time both prior to and following the end of their marriage in relation to their financial affairs. Those negotiations were protracted as a result of the bankruptcy of the applicant’s first husband and the liquidation of companies he controlled.
(b)At some point, the respondent assisted the applicant in relation to that litigation and negotiations.
(c)The applicant and her first husband reached agreement as to property settlement (the terms of which have not been disclosed in these proceedings), which saw the applicant retain at least the former matrimonial home she shared with her first husband at B Street, Suburb C in the state of South Australia (“the B Street property”).
(d)In the course of negotiations with the applicant’s first husband’s trustee in bankruptcy and/or the company liquidator, an agreement was reached providing for the applicant to retain the B Street property on the basis that an amount of $50,000 be paid by the applicant to the trustee in bankruptcy and/or the company liquidator.
(e)The respondent paid this amount of $50,000 on behalf of the applicant enabling her to retain the B Street property.
In addition to the dispute between the parties over whether they were ever in a de facto relationship (and any claim as to property settlement that might thereafter flow if jurisdiction is made out), the fundamental dispute between the parties appears to relate to the ownership of the B Street property. In that regard:
(a)The respondent asserts that he only met the payment of $50,000 to the trustee in bankruptcy and/or the company liquidator, together with the applicant’s legal fees relating to the bankruptcy/liquidation proceedings, on the basis that the B Street property would be transferred to him. The applicant denies this assertion.
(b)In addition, the respondent asserts that he additionally provided significant funds to the applicant and members of her family, all on the clear understanding that those monies would be repaid. It is the respondent’s position that those additional monies have not been repaid.
(c)In addition, the respondent asserts that he paid for various additions and improvements to the B Street property, including a building and a garage.
In her first affidavit filed 7 April 2021, the applicant described the B Street property and the parties living arrangements in the following terms:
24.… The property is approximately a five acre property with two dwellings on separate titles.
25.The first property title holds the main house, which stands alone by the roadside at the front of the property.
26.My daughter, [Ms D] and her husband with their child reside in the first main property.
27.The second property title holds a dwelling which is a single bedroom self-contained unit with all amenities situated at the rear of the property.
28.The respondent and I occupied the second property for the duration of the de facto relationship of 20 years up until around the date of separation.
In his first affidavit filed 18 June 2021, the respondent describes the B Street property and the parties’ living arrangements in the following terms:
22.I built a second [building] at the back of the property the cost to me in materials around $150,000. The [building] is 10 m x 10 m. I put a concrete slab on the roof of the [building] and about 600 mm of good soil as safety as the [building] backs onto a cliff face and keeps the [building] cool.
23.I built a […] garage out of steel. It cost me about $10,000. [It] was for the [vehicle] and up top was for the [birds]
Relationship finishes
24. The relationship (sexual) with [Ms Peele] ceased at about this time.
25.I moved in and lived in the second house, the [building] that I built behind the main house. That would have been 2001 I think.
26.Subsequently behind that I built a [building] as well which is built back into the [landscape].
27.In the meantime I immediately commenced to be in control of the maintenance, etc. at [B Street].
28.[Ms Peele] moved her daughter [Ms D] into the main house at [B Street] which I advised against, saying that [Ms D] needed to buy a house of her own. She was renting at [Suburb E] and could have bought there. Paying [Ms Peele] over $1,200 per week for rent would not have been sensible.
29.I was concerned as well that [Ms D] would not pay rent and [Ms Peele] would have no income.
30. [Ms D] moved in but didn’t pay rent. This was 2000 I think.
…
32.Since then I have continued to share the premises with [Ms Peele] but as ‘friends’ only. It has been a platonic relationship. I am however constrained in what I can do in the house.
33. I regard [Ms Peele] as a friend and someone who has needed my support which I have always been disposed to give to her. I have been reluctant to distress her.
34.I say that [Ms Peele] holds the title to [B Street] on constructive trust in my favour.
…
41.Even though we still shared the same bed in the second house there were different sheets on it, she had a bean bag on her side, different blankets, and different quilt on her side.
(As per the original)
Against that background and prior to the commencement of these proceedings, the respondent commenced litigation in the Supreme Court of South Australia in late 2020. By his Originating Application in those proceedings, the respondent (who is the applicant in those proceedings) seeks the following orders:
1.A declaration that the Applicant is entitled to possession of land situated at [B Street] [Suburb C] and associated land at [City L] (the land);
2.Alternatively an Order that the Applicant has an equitable interest in the land to be determined by the Court;
3.Alternatively an Order that the Respondent is estopped from denying to the Applicant an interest in the land when the Applicant has acted to his detriment;
4.An Order that the Respondent return to the Applicant the contents of the [building] on the land and in particular the [asset] held thereon;
5.In addition to Order 4 hereof an Order that the Respondent do repay to the Applicant, monies paid by him under a mistake of fact as to his purchase of the land and being:
(a)$50,000 paid to the liquidator of [F Pty Ltd];
(b)$20,000 paid at the Respondent’s request to assist her son [Mr G];
(c)$105,000 paid at the Respondent’s request to assist her daughter [Ms D];
(d)$15,000 paid at the Respondent’s request to solicitors acting on the Respondent’s behalf in relation to the liquidators claims against the land;
(e)$13,700 for plant and equipment for use on and at the land;
(f)$15,000 paid at the Respondent’s request relating to council rates in Queensland;
(g)$2,200 to the Respondent relating to speeding fines;
(h)$2,200 for a vehicle for the Respondent;
(i)$1,700 for a barbecue and oven for the Respondent.
6.Such further or other orders as the Court deems fit.
THE LITIGATION
These proceedings were commenced in the Federal Circuit Court of Australia (as it then was) by the Applicant on 7 April 2021. By her Initiating Application the applicant simply seeks the following final order:
1.That there be an equal division of the net asset pool.
The respondent filed a Response to that Initiating Application on 18 June 2021. By that document, the respondent asks the court to dismiss the Initiating Application with the following orders:
1.The Applicants claim be dismissed.
2.Costs of the application to be the Respondents.
(As per the original)
At the first hearing in the matter on 21 June 2021 orders were made for the parties to attend mediation. In that context and of some surprise given the notation to the orders record the contest about the jurisdiction of the court, orders were additionally made for valuations of assets and discovery of a range of documents.
Thereafter the matter proceeded across a number of hearings with valuation issues being procedurally managed by the primary judge.
On 14 June 2022, and for reasons that are not entirely clear, the proceedings were transferred to Division 1 of the Federal Circuit and Family Court of Australia. The notations to the orders made that day suggest that disclosure issues remained extant. The notations also record that the parties had “commenced the mediation process”, “but have not yet progressed to a joint mediation conference”.
Upon the transfer of the proceedings to Division 1, the proceedings were managed by a Judicial Registrar. On 1 February 2023, orders were made following an unsuccessful mediation to refer the proceedings to the “list of matters awaiting trial allocation”.
It does not appear on the face of any of the orders made in the proceedings to date, that either of the parties have pressed for a trial listing of the threshold jurisdiction question. This is of some surprise, as these reasons bear out, because until such time that the jurisdiction of the court is established, the court has limited power to make any orders. The limitations on the court’s jurisdiction in these circumstances was considered in Norton & Locke (2013) FLC 93‑567 (“Norton & Locke”) and is long settled. That includes the court’s limitations to making orders for discovery and valuations on topics unrelated to the establishment of the threshold jurisdictional fact of whether the parties were in a de facto relationship within the meaning of s 4AA of the Family Law Act 1975 (Cth) (“the Act”). While consent orders have been made to undertake certain steps by agreement between the parties, the parties’ consent does not suddenly invest to the court with jurisdiction.
THE INTERLOCUTORY APPLICATION
On 28 July 2023 the present interlocutory application was filed by the applicant. By that Application the applicant sought the following orders:
1.That this matter be heard urgently.
2.That the respondent immediately resume the monthly payments for the following ANZ Bank Loan accounts:
2.1 ANZ Residential Invest Loan Account […04]; and
2.2 ANZ Equity Manager Loan Account […61] (“the loans”).
3.That the respondent, by way of interim property settlement, pay into the Marciano Lawyers’ Trust Account on behalf of the Applicant the sum of $226,636.65. That such payment be taken into account in any final adjustment of property either by consent or by trial hearing.
4.That as an alternative to paragraph (3) above, the property situated at [H Street], [Suburb J], South Australia […], Certificate of Title Register Book Volume […] Folio […] be sold and the whole of the net sale proceeds be paid into the Marciano Lawyers’ Trust Account for and on behalf of the Applicant and that such payment be taken into account in any final adjustment of property either by consent or by trial hearing.
5.That the Respondent pay the Applicant’s costs of and incidental to this Application.
6.Such further or other orders as this Honourable Court deems just.
By his response to the interlocutory application filed 24 August 2023, the respondent sought the following orders:
1.That the Application be dismissed.
2.That the Applicant pay the Respondent’s costs of and incidental to the Application.
The interlocutory application was listed for hearing before me on 30 August 2023. At that hearing the applicant (through her counsel) sought to orally amend the Application in a Proceeding. I did not permit that course of action, and ultimately, with the consent of the respondent, rather than dismissing the interlocutory application, orders were made for the applicant to file an Amended Application in a Proceeding. The interlocutory application was thereafter adjourned to a new hearing date of 8 September 2023. That hearing however was administratively adjourned to 14 September 2023 in circumstances of judicial unavailability due to illness.
The respondent filed an Amended Application in a Proceeding on 1 September 2023. The only amendment to the orders sought by the Applicant was that contained in paragraph 3 of the application, which was amended to provide:
3.Pursuant to Section 117(2) of the Family Law Act 1975 the respondent pay into the Marciano Lawyers Trust Account on behalf of the Applicant the sum of $156,886.52 for costs incurred up to the conclusion of trial on the threshold issue, and as per the actual costs and estimate of costs set out in the Costs Annexure attached to this Application, or such other sum deemed appropriate by this Honourable Court. That such payment be taken into account in any final orders either by consent of trial heading.
Counsel for each of the parties filed an Outline of Case for each the hearing on 30 August 2023, and the further hearing on 14 September 2023. Those outlines respectively identified the documents relied on by each of the parties, together with relevant authorities. Regard has been had to those documents and authorities.
DISCUSSION
It is readily understood from the material filed by the applicant and the submissions of her counsel that the foundation for both forms of the application which sees the respondent make a payment of funds to the applicant, is to place the applicant with the necessary funds to pursue these proceedings. As discussed by the plurality of the Full Court (Ryan and Aldridge JJ) in Salvage & Fosse (2020) FLC 93-966 (at [3]) (“Salvage”):
3.It might be thought that it is a big step for a court to order a respondent to proceedings to pay the applicant, his or her costs of prosecuting those proceedings, in advance. Such a concept is, however, far from novel in matrimonial cases because, not infrequently, all of the assets to be divided between the parties are held by one party. The unfairness of that party to be able to marshal those assets to pay lawyers to act for them, leaving the other party to attempt to respond to that legal representation without resorting to property that might subsequently be transferred to them is obvious.
However, as discussed in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (at [84), the identification of the source of power in the consideration of making any such order is critical, as different considerations will apply. For example, if an order is sought to be made by way of interim or partial settlement of property prior to the making of final property settlement orders, as against the source of power stemming from the costs provisions found in s 117 of the Act.
In the case of a de facto relationship, as succinctly enunciated by Watts J in his separate judgment in Salvage:
57.The four possible powers referred to by relevant authorities for the making of an order for interim provision of litigation expenses are the powers to make orders as to: property (s 90SM and s 90SS(1)(h) and (k)), costs (s 117(2)), maintenance (s 90SE) and injunctions (s 114(2A)(c)).
58.In a financial case involving de facto spouses, an order for litigation expenses will most usually be made relying upon the property power. If unavailable, for example because of the need to determine jurisdictional facts, the next most obvious source of power is s 117(2) of the Act (see Breen v Breen (1990) 65 ALJR 195) (“Breen”); Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at [2], [10], [60]–[62]; Zschokke and Strahan).
The first comment that might be made in relation to the application as originally filed, and as clearly understood by counsel in seeking to orally amend the application at the hearing on 30 August 2023, is that in circumstances where the jurisdictional fact of the existence of a de facto relationship has not been established, the court has no power to make any orders for the adjustment of property pursuant to s 90SM of the Act either on a final, or, importantly for present purposes, on an interlocutory basis.
The orders sought in paragraph 4 of the Amended Application in a Proceeding
In these circumstances, it is difficult to understand why it is that paragraph 4 of the orders sought by the applicant were not subject to some form of amendment commensurate with the amendment made to the orders sought in paragraph 3 of the Amended Application in a Proceeding.
While paragraph 4 of the Amended Application in a Proceeding is expressed in the alternative to paragraph 3 (which identifies s 117(2) of the Act as the source of the court’s power), the use of the words “such payment to be taken into account in any final adjustment of property either by consent or by trial hearing”, confuses the identification of the source of the court’s power. This is particularly so, where the same wording appeared in the initial orders sought at paragraph 3, but were re-crafted to remove the words “adjustment of property” when the amended application was filed.
While a charitable view might be to consider that the failure to amend paragraph 4 of the amended application was an oversight, I do not consider that this conclusion can be drawn in all of the circumstances here; particularly where the jurisdiction difficulties were canvassed at length at the hearing on 30 August 2023 and the proceedings were specifically adjourned to enable the applicant to amend her application to identify a different source of power.
I also do not think that there was an oversight in failing to amend paragraph 4 of the orders sought because during the course of oral submissions, counsel for the applicant asserted that the orders sought in paragraph 4 were essentially orders by way of enforcement if the court was minded to make the orders sought in paragraph 3 of the application. While I do not consider that this interpretation is open, if I am wrong in that regard, it would be premature to make any orders by way of enforcement in the absence of an order for litigation funding being made, and there being default in compliance.
In all of those circumstances, I do not consider that the court has power to make an order by way of partial/interim property settlement, or if an order by way of enforcement nor would it be appropriate to make the orders sought in paragraph 4 of the Amended Application in a Proceeding. Accordingly, paragraph 4 of the amended application shall be dismissed.
The orders sought in paragraph 3 of the Amended Application in a Proceeding
Turning to paragraph 3 of the amended application, which seeks orders for litigation funding identifying the costs provision contained in s 117(2) of the Act as the source of power.
The relevant provisions of s 117 of the Act provide:
117 Costs
(1) Subject to subsection (2), subsections 45A(6) and 70NFB(1) and sections 117AA and 117AC, each party to the proceedings under this Act shall bear his or her own costs.
(2) If, in proceedings under this Act, the court is of the opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A), (5) and (6) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
…
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
Again, as discussed by the plurality in Salvage (at [14] – [15]):
14.The critical question… [when the costs power is utilised is] …whether in all the circumstances the costs order is just. That question raises, at least, consideration of the strength of the applicant’s case and the effect of the order upon the respondent.
15.It would not be just, for example, for the respondent to have to pay the legal expenses of the applicant, where the case to be taken was weak, fanciful or misguided or where the effect on the respondent of such an order would work an injustice. We do not consider it helpful, however, for there to be a need to identify the applicant’s case as strong, persuasive or such like to justify an order. That invites a descent into semantics and an artificial characterisation of the strength of the proposed proceedings. The consideration should be whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs. This conclusion accords with Zschokke at 83,217, where the Full Court said:
… We agree that, as was submitted by [c]ounsel for the wife, the requirement of justice (which was expressly drawn to attention by the Full Court in Hogan and also implied by Brennan J in Breen) must remain a “basic” condition in the making of an order of the type in question under s 117(2).
(See also Strahan at [124]).
…
17.The position is somewhat analogous to an application for leave to commence property proceedings out of time pursuant to s 44(3) (or s 44(6)) of the Act. In such proceedings, the Court looks at, amongst other things, the likely costs of the proceedings and the probable range of results. If the costs of the proceedings do not justify the likely return and would not have the effect of alleviating the applicant’s hardship, then leave will not be granted (Gadzen & Simkin (2018) FLC 93-871 at [35]–[37]).
The plurality in Salvage then went on to comment as to the error in the approach taken by the primary judge in that case (which concerned the making of a litigation funding order utilising the costs power in circumstances where the jurisdiction of the court to make any orders adjusting the property of the parties to a de facto relationship was in question as a result of the parties having entered into a Cohabitation Agreement, with the substantive proceedings concerning whether that agreement be set aside), in the following terms (at [24] – [25]):
24.It was not suggested to his Honour that an evaluation should be undertaken of: the quality and nature of the claim to set aside the Cohabitation Agreement; the likely result that would ensue if a subsequent property division was undertaken; and the likely costs of such a course. No authority directly suggests such a course. We consider, however, that such a consideration is essential in a case such as the present.
25.How else can it be determined that an interim costs order is justified in all of the circumstances? In other words, what is missing is an assessment of the nature and quality of any property claim – what is the likely division that would follow, and are such proceedings justified by the nature and quality of the claim to set aside the Cohabitation Agreement and the likely costs involved?
Thus as summarised by Johns J in Ton & Vu [2020] FamCA 957 (at [35]), those matters to be considered by the court when confronted with a costs application prior to establishing the jurisdictional fact, are:
•The nature and quality of the applicant’s claim that the parties were in a de facto relationship within the meaning of the Act;
•If a declaration were to be made that the parties were in a de facto relationship as contended by the applicant, what is the likely result of her subsequent property and maintenance claims;
•The costs of such a course and are such costs justified taking into account the orders that may be made in property proceedings;
•Whether any interim costs order could be taken into account, adjusted or reversed at the final hearing.
I propose to adopt the same approach.
The nature and quality of the applicant’s claim that the parties were in a de facto relationship
As earlier identified:
(a)The applicant asserts that she and the respondent were in a de facto relationship for 21 years between 1999 and 15 July 2020.
(b)The respondent asserts that he and the applicant were in a relationship for a period of 12 months commencing in about 1999.
As discussed by the Full Court in Sinclair & Whittaker (2013) FLC 93-551 (at [51]–[56]):
51.In coming to the view that a couple had a relationship as a couple living together on a genuine domestic basis the court is to have regard to all of the circumstances of their relationship. Those circumstances may include those specified in ss 4AA(2).
52.Sub-section 4AA(3) highlights that no particular finding in relation to any circumstance is to be regarded as necessary in deciding whether the subject persons have a de facto relationship.
53. Sub-section 4AA(4) provides:
A court determining whether a de facto relationship exists is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.
54.Thus, whether or not a de facto relationship, as defined, exists will depend upon an assessment of all of the circumstances of the relationship, each to be given the weight the court thinks appropriate.
55.In Lynam v Director-General of Social Security (1983) 52 ALR 128 at 131 said:
Each element of a relationship draws its colour and its significance from the other elements, some of which may point at one direction and some in the other. What must be looked at is the composite picture. Any attempt to isolate individual factors and to attribute to them relative degrees of materiality or importance involves a denial of common experience and will almost inevitably be productive of error. The endless scope for differences in human attitudes and activities means that there will be an almost infinite variety of combinations of circumstances which may fall for consideration. In any particular case, it will be a question of fact and degree, a jury question, whether a relationship between two unrelated persons of the opposite sex meets the statutory test.
The factors which may be taken into account when determining whether persons were in a de facto relationship set out in s 4AA(2) of the Act are:
Working out if persons have a relationship as a couple
(2) Those circumstances may include any or all of the following:
(a) the duration of the relationship;
(b) the nature and extent of their common residence;
(c) whether a sexual relationship exists;
(d)the degree of financial dependence or interdependence, and any arrangements for financial support, between them;
(e) the ownership, use and acquisition of their property;
(f) the degree of mutual commitment to a shared life;
(g)whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
(h) the care and support of children;
(i) the reputation and public aspects of the relationship.
Accordingly, in order to assess the nature and the quality of the applicant’s claim, it is necessary to consider the evidence that she has put before the court addressing each of the indicia identified in s 4AA(2). Unfortunately, the written and oral submissions of the applicant do not address these indicia with any particularity or clarity. Nonetheless, that task is one that the court is still required to consider on this application.
To that end:
(a)As to the duration of the relationship, it is clearly understood that the applicant asserts that the relationship subsisted for 21 years.
(b)As to the nature and the extent of the parties’ common residence, it is unclear what exactly the applicant asserts to have been the nature and extent of the parties’ common residence, beyond an assertion of the parties both living in what she describes as the “second property” on the B Street property. The applicant however is not on oath as to the living and sleeping arrangements within that property, nor has she responded to the allegations made by the respondent earlier identified at [11], and otherwise in his affidavit filed 18 June 2021, including the respondent’s assertions that he was in various relationships with other women from about the year 2000, which saw him living in locations other than the B Street property.
(c)As to whether a sexual relationship existed, the applicant deposes no evidence in this regard.
(d)As to the parties’ degree of financial dependence and interdependence and arrangements for financial support, as identified earlier, at present it appears to be an agreed fact that the respondent provided financial support to the applicant and members of her family. The reasons and terms and conditions for the respondent having done so however are in dispute. In addition, the applicant deposes to various financial arrangements between the parties in her affidavit filed 28 July 2023, including:
(i)The taking out of a loans to the ANZ Bank in early 2001 of $285,000 and $150,000 registered over the B Street property (“the two ANZ loans”), to provide funds to the respondent to purchase land in Tasmania.
(ii)The servicing of the two ANZ loans by the respondent between January 2001 and August 2020, by making “regular payments” into the applicant’s bank account, which ceased, after the applicant’s alleged date of separation (15 July 2020), on 7 August 2020.
(e)The applicant however does not depose to the arrangements between the parties as to their day to day and other living expenses.
(f)As to the parties’ ownership, use and occupation of their property, the extent of the applicant’s evidence regarding the same has already been canvassed in relation to the B Street property (living arrangements and as security for borrowings). Otherwise, it appears that the parties did not own, use or acquire property together.
(g)As to the parties’ degree of mutual commitment to a shared life, the applicant does not appear to depose to any evidence in this regard.
(h)As to the care and support of children, the applicant deposes to providing support to the respondent’s son, which is denied by the respondent. The applicant does not otherwise engage whatsoever in the assertions made by the respondent as to the financial support he has provided to her adult children, nor his reasons for doing so.
(i)As to the reputation and public aspects of the parties’ relationship, these again are matters not deposed to by the applicant with any specificity, beyond bare assertions that the parties would have their children “over for dinner for a weekly catch up”,[1] spending “many Christmases and Easters spent together as a family”,[2] attendance together at the weddings of the applicant’s children, and holidays to Brisbane and New South Wales.[3] Again these are matters that the respondent largely denies.
[1] Applicant’s affidavit filed on 7 April 2021, paragraph 30.
[2] Applicant’s affidavit filed on 7 April 2021, paragraph 31.
[3] Applicant’s affidavit filed on 7 April 2021, paragraphs 33 - 35.
It is also important to note at this juncture that by Order 2 made on 21 June 2021, the applicant was directed to file and serve an affidavit responding to the respondent’s allegations, being those contained in his affidavit filed 18 June 2021. For reasons which are unexplained, the applicant has failed to do so. Significantly, that failure on the part of the applicant results in the court being in a position where there is limited evidence before the court enabling a meaningful assessment of the nature and quality of the applicant’s claim; beyond an understanding that there is a genuine contest between the parties as to whether they were ever in a de facto relationship.
With regard to the evidence that is presently before the court, and understanding that none of the indicia in s 4AA(2) of the Act are determinative of the threshold question, and cognisant that the evidence of the parties is untested, while I accept that the applicant’s case appears arguable at first blush, the evidence that she has proffered in support of her claim in its present form, would not in my view support a conclusion that the parties were in a de facto relationship; in particular as various bare assertions are made which are lacking in specificity and/or detail.
If however my conclusion in this regard is wrong, for the reasons that follow, it remains my view that there is presently insufficient evidence before the court on balance to support the making of an order for litigation funding invoking s 117(2).
The likely result of the applicant’s claim for property settlement if a declaration was made that the parties were in a de facto relationship
There is significant difficulty with this aspect of the matter, as the applicant has not engaged in this question in any meaningful way, beyond understanding that she seeks an “equal division of the net asset pool”.
While I accept that this may originally have been because the applicant had no meaningful understanding of the respondent’s assets prior to commencing these proceedings, the reality is that since commencing these proceedings there has been some discovery and valuations undertaken, the parties have engaged in mediation, and significantly, the respondent has filed documents in these proceedings including a Financial Statement on 18 June 2021 identifying his financial circumstances and setting out his net assets as $20,098,000 (calculated with regard to total property of $42,701,000 and total liabilities of $22,603,000 deposed at Part B).
Significantly, for present purposes the applicant has not deposed any evidence beyond that earlier identified, which might meaningfully assist the court to understand the applicant’s case so as to inform the legislative imperative set out in s 90SM of the Act; in particular:
(a)Whether it would be just and equitable to make an order adjusting the parties legal and equitable interests in property (s 90SM(3));
(b)The contributions of the parties to the acquisition, conservation or improvement of any property (s 90SM(4)(a)(i));
(c)The future needs of the parties (s 90SF(3)).
The failure of the applicant to address these matters generally, but specifically with respect to this application is critical and weighs against the making of an order for litigation funding pursuant to s 117(2).
The costs of such a course and are such costs justified taking into account the orders that may be made in the property proceedings
Again, the court has been provided with little assistance by the applicant in this regard.
On the question of the applicant’s costs, two Case Outlines have been filed; the first on 29 August 2023 in advance of the first hearing, and the second filed 11 September 2023 in advance of the second hearing. Unfortunately however, those outlines, when coupled with the matters deposed to by the applicant in her affidavit filed 28 July 2023, and the costs set out in the annexure to the Amended Application in a Proceedings filed 1 September 2023, make the costs incurred to date and those which are anticipated a little confusing. However doing the best that I can and with reference to those documents it appears:
The applicant has incurred $120,495.38 “in her family law matter”.[4] Additionally the applicant is incurring costs in relation to the Supreme Court litigation, which appears (although again it is not clear) to be ongoing.[5]
[4] Applicant’s Outline of Case filed 11 September 2023, paragraph 34.
[5] Applicant’s affidavit filed 28 July 2023, paragraphs 21 - 24.
The applicant’s solicitors have estimated that costs to be incurred up to and including the determination of the threshold question are anticipated to be $36,391.14.[6]
[6] Applicant’s Outline of Case filed 11 September 2023, paragraph 35.
By her amended application, the applicant seeks a total sum of $156,886.52. This amount is a reduction on the $226,636.65 originally sought which appeared to be calculated with regard to the costs incurred to date across both these proceedings and those in the state court ($126,636.65)[7], together with an amount of $100,000 to fund “my litigation with my solicitors”,[8] which presumably related to both sets of proceedings, given the estimate of future legal fees in these proceedings is only $36,391.14.[9]
[7] Applicant’s affidavit filed 28 July 2023, paragraph 24.
[8] Applicant’s affidavit filed 28 July 2023, paragraph 25.
[9] Noting that in the Case Outline filed 29 August 2023 there was a clear statement (at paragraph 26) that the amount of $100,000 was to fund the anticipated expenses of “both matters”.
The first comment that might be made is that these proceedings are not the proper forum to seek a litigation funding order in relation to the proceedings in the state court; whether it be those fees incurred to date and/or those anticipated in those proceedings. Implicit in the amendment made to the quantum sought by the applicant must be an acknowledgment in this regard.
The second comment of significance is that, there are no assertions on the part of the applicant nor her solicitors that in the event that the present application for litigation funding is unsuccessful, the applicant would be without legal representation. In addition, the court does not have the benefit of understanding the terms of the costs agreement entered into between the applicant and her solicitors. These factors are of some importance, given the applicant’s solicitors appear to have been prepared to await payment of their legal fees across both sets of proceedings for a period in excess of two years, and in an amount exceeding $126,000.
When considered together, all of these matters weigh against the making of an order for litigation funding pursuant to s 117(2).
Whether any interim costs order could be taken into account, adjusted or reversed at the final hearing
With regard to the applicant’s Financial Statement (now out of date) filed when she commenced these proceedings on 7 April 2021 it would appear at first blush that there is some capacity for the applicant to repay any order for litigation funding that is made. This is because the applicant owns property which could easily be sold to satisfy any order to repay the amount sought (or any lesser amount), namely the B Street property and a property at K Street, Town M in the state of South Australia.
Having said that, it is not clear to the court why in those circumstances it is that the wife is unable to raise funds from her own resources and/or borrowings to fund this litigation, given the real property she deposes to in her Financial Statement filed 7 April 2021, together with savings in bank accounts at that time of $52,000.
Again, when weighed together, these matters do not speak in favour of making an order for litigation funding pursuant to s 117(2).
Conclusion as to whether a litigation funding order should be made
As identified, on balance and taking into consideration all of the matters that I have identified, I do not consider it appropriate that there be any order for litigation funding pursuant to s117.
The orders sought in paragraph 1 of the Amended Application in a Proceeding
The orders sought in paragraph 1 of the amended application were described by the applicant’s counsel to be “holding orders” to maintain the status quo pending determination of the court’s jurisdiction.
The applicant’s case in relation to the payment of the two mortgages registered over the B Street property is grounded in those matters set out earlier in these reasons as to the circumstances of the borrowings (to fund the respondent’s purchase of land in Tasmania), and the fact that the respondent has serviced certain borrowings until 7 August 2020, being a date within short compass of the applicant’s alleged date of separation.
The applicant asserts that the loans towards which the respondent was most recently contributing were:
(a)Her ANZ Equity Manager Loan Account ending …04 (“the ANZ Equity Manager Loan”) in the amount of $2,100;
(b)Her ANZ Residential Loan Account ending …61 (“the ANZ Residential Loan”) in an unspecified amount.
The applicant additionally asserts that she has exhausted her capacity to meet the mortgage instalments for both loans, in circumstances where her income is limited and she has exhausted the redraw facility on the ANZ Residential Loan that had been available to her until 15 June 2023 to meet those payments; the same now being fully drawn to $150,000.
It is the applicant’s case that both mortgages were taken out to fund borrowings utilised by the respondent to purchase land in Tasmania. The respondent however only admits to one of the mortgages being utilised for his sole benefit; he says to support his business, without any further detail. The respondent otherwise asserts that the other mortgage taken out by the applicant was to fund monies loaned to the applicant’s daughter Ms D; the extent to which on his case there might be some overlap (if any) between this loan to Ms D and those earlier identified in these reasons is unclear.
Whatever the case may be, the respondent does not identify the terms upon which he and the applicant agreed for monies to be loaned by her and secured by the B Street property.
While the applicant acknowledged that the court does not have power to make the orders for the respondent to pay the mortgages pursuant to the s 114 injunction provisions in the Act, the applicant asserted that circumstances exist which warrant the court making “holding orders” until the jurisdiction of the court is able to be determined.
As discussed by the Full Court in Norton & Locke (at [43]):
43.This court, does, however, plainly have jurisdiction to determine if it has jurisdiction – in this case the jurisdiction to embark upon proceedings which seek to establish or deny the relevant jurisdictional facts. This court has the power to make orders that are necessary for the determination of issues relevant to that jurisdiction. Those powers include the power to control its own process; “[t]he power of each court over its own process is unlimited; it is a power incident to all courts, inferior as well as superior; were it not so, the court would be obliged to sit still and see its own process abused for the purpose of the injustice … ” (Cocker v Tempest (1841) 151 ER 864 at 865 by Alderson B, cited by Gaudron J in Jackson v Sterling Industries Pty Ltd (1987) 162 CLR 612, at 638). More specifically, this court has the power to, as Menzies J put it in Ex parte Bevan, “protect[…] its function as a court”.
44.Within that jurisdiction and within the ambit of powers just described, this court has the power to make what this court has described as “holding orders” pending the determination of the jurisdictional facts necessary to found jurisdiction. Orders of that type can include, specifically, orders for interlocutory injunctions (see, for example, Ex parte Green; Re LSH; and, Jackson v Sterling Industries Pty Ltd at 617, per Wilson and Dawson JJ). In both the High Court and this court orders of that type have been expressed as orders “preserving the status quo” pending resolution of the question of jurisdiction.
45.However, in our view, an analysis of the principles which form the foundation for that conclusion do not suggest that preservation of the “status quo” is per se the criterion for, or foundation for, the relief. If that were the criterion, an applicant would be entitled to relief almost as of right pending resolution of the jurisdictional question; the narrow ambit of the relief and the foundation for it suggest no such thing.
46.The language of “preserving the status quo” and the concept of a court deriving power from its capacity to protect its own processes and its “function as a court” can be seen used in the cases which shaped the remedy of Mareva orders in Australia (see, for example, Jackson v Sterling Industries Pty Ltd and Cardile v LED Builders Pty Ltd (1999) 198 CLR 380). Like this court, the Federal Court’s jurisdiction is derived from statutes enacted within the limits of constitutional power. However, in Jackson v Sterling Industries Ltd, while Deane J found that s 23 of the Federal Court of Australia Act 1976 (Cth) provided the power to grant Mareva orders “ … in relation to a matter in which the Federal Court has jurisdiction … ”, his Honour also held (at 623):
… even in the absence of the provisions of s 23, the Federal Court would have possessed power to make such orders in relation to matters properly before it, as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters. In that regard, I agree with the following comments of Bowen C.J. in his judgment in the present matter [(1986) 69 ALR 92 at 97]:
“In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words “inherent jurisdiction”. Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so, it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power for example to prevent abuse of its process, is similar to, if not identical with, inherent power.”
47.The clear foundation for the remedy is to prevent an abuse of the court’s process, as Dawson and Wilson JJ held specifically in the same case (at 627). The language of preservation of the status quo has been used in that context. For example, in Cardile at 403-4, the majority quote Dixon J (as the Chief Justice then was) in Glover v Walters (1950) 80 CLR 172, at 175-6:
[A Mareva order] is a drastic remedy which should not be granted lightly … A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to dealt with his or her assets. It is granted at the suit of the plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff …
(Square brackets in High Court judgment).
48.In Waugh, their Honours suggested that there were “ …essential differences which may exist between the proceedings in this Court … and the type of proceedings in other jurisdictions out of which those principles have sprung” (at [30]):
31. For example, we think it is important to bear in mind that there may be a distinction to be drawn between proceedings at law for a debt or damages in which the plaintiff seeks a Mareva injunction to restrain the defendant from dissipating assets to which it is expected that resort might ultimately be had to enforce a judgment obtained in the proceedings under s 79 of the Act in which one spouse seeks an interlocutory injunction to restrain the other from dissipating assets, which, although not the subject of a specific claim under s 79, represents property of the parties to the marriage to which the applicant spouse claims to have made a relevant contribution … In the latter case, there is an essential connection between the substantive proceedings and the relevant property, notwithstanding that the applicant spouse may not seek an order altering the parties’ interests in that property in his or her favour, but only the payment of a lump sum of money as a ‘settlement’. That essential connection between the property and the proceedings may not, and usually does not exist in the case of proceedings for a Mareva injunction in other jurisdictions.
49.Taken together, the authorities point to the Family Court having power – within its jurisdiction to determine if it has jurisdiction – to control its own processes and to protect its function as a court by granting interlocutory injunctions so as to “preserve the status quo” pending the resolution of the issue of jurisdiction.
50.However, the ambit of relief “preserving the status quo” is limited by the narrow ambit of the power itself and by the narrow jurisdiction within which the power is being exercised. As a result, the cautionary notes sounded by the authorities in respect of Mareva orders have a direct bearing upon the nature and ambit of interlocutory injunctions of the type under discussion. In particular:
a)the preservation of an existing state of affairs (the “status quo”) is not sufficient, of itself, to grant the relief – an injunction is not granted “as of right” when an assertion of jurisdiction and an entitlement to de facto financial relief is sought;
b)the injunction “…must be necessary to prevent the abuse of the process of the court” (per Wilson and Dawson JJ in Jackson at 617-8) or to “protecting its function as a court” (per Menzies J in Ex parte Bevan; Gibbs CJ in Ex parte Green);
c)the relief must be required by reference to an emergent state of affairs which demonstrate a clear danger to the applicant obtaining relief reasonably sought. That is where “ …the circumstances point compellingly to a need to preserve the status quo as an interim measure pending a hearing to determine whether interlocutory relief should be granted” (per Wilson and Dawson JJ in Ex parte Green);
d)the relief should be granted only “ … while the question whether [the court] had jurisdiction remained in doubt” (Ex parte Green);
e)the questions of fact and law upon which jurisdiction depended would have to be determined as a matter of the “utmost urgency” and “…once it appeared that jurisdiction was lacking, the injunction would have to be dissolved, however inconvenient that course might appear” (Ex parte Green);
f)the remedy is not to be used so as to “create security for the [applicant] or to require a [respondent] to provide security as a condition of being allowed to defend the action … ” (per Deane J in Jackson v Sterling Industries Pty Ltd);
g)pending a decision as to jurisdiction, regard must be given to the fact that the injunction “…imposes a severe restriction upon a [respondent’s] right to dealt with his or her assets” (per Dixon J in Glover v Walters);
h)proper regard must be had to the fact that jurisdiction has not been decided and the fact that, consequently, a possible outcome is that no remedy sought by the applicant may be granted. Equally, proper regard must be had to the nature, extent and value of the relief claimed by the applicant in the event that jurisdiction is established;
i)the remedy, if granted should go no further than that which is required to preserve property in respect of which a danger is established pending determination of the jurisdictional question.
As identified in Norton & Locke, the mere fact that jurisdiction is in question, is not sufficient to warrant the making of the orders sought by the applicant here for the payment of the mortgage.
However, in the present circumstances I consider that the following factors are relevant and point towards the court making holding orders:
(a)It is an agreed fact that at least one of the mortgages taken out over the B Street property in the amount of $285,000 was for the sole benefit of the respondent.
(b)The respondent made loan repayment payments to the applicant for a period of 19 years, he says at the rate determined by the bank, which at times was in the amount of $3,700 per month and in more recent times in the amount of $2,100 per month.
(c)The respondent however gives no further context or details about the arrangements between he and the applicant, and is vague and limited in the information he has sought to put before the court.
(d)What is not clear is how recently the sum of $3,700 was paid to the applicant and whether in fact that sum covered both loan repayments or not.
(e)Moreover, if the respondent is correct, and the parties were not in a de facto relationship, and the B Street property is held on trust for him by the applicant, then in light of at least the borrowings taken out to secure monies utilised by the respondent, it appears somewhat disingenuous for him to now assert that he has no obligation to pay the same; particularly in circumstances where he has done so over such an extended period of time.
I am cognisant that the combined amount of the two payments is presently an amount of $2,745.48 per month ($936.23 for the ANZ Equity Manager Loan and $1,809.25 for the ANZ Residential Loan).[10] This amount is less than the $3,700 the respondent deposes to having at times made in monthly payments for borrowings secured by the B Street property.
[10] Applicant’s affidavit filed 28 July 2023, paragraph 16.
In all of the circumstances, I consider it appropriate to make holding orders to preserve the status quo that existed until such time that the applicant asserts that the parties separated.
I also consider it appropriate to make those holding orders only until such time as the jurisdiction of the court can be determined; which at the time of writing I propose to hear within relatively short compass and if suitable to the parties, next month.
Conclusion
For all of the reasons that I have identified:
(a)I do not propose to make any litigation funding orders as sought by the applicant; and
(b)I do propose to make orders for the respondent to make payments to the applicant to satisfy the repayments of both loans as sought by her.
(c)I propose to list the matter for trial on the earliest date available.
I certify that the preceding seventy-seven (77) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 13 November 2023
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