Pember and Bryson

[2013] FamCA 968

FAMILY COURT OF AUSTRALIA

PEMBER & BRYSON [2013] FamCA 968

FAMILY LAW – PROPERTY – Interim Orders – Where the husband seeks an interim order for lump sum payment provision of litigation costs – Where such order is sought pursuant to s 79, s 74 or s 117(2) – Where the Court made Orders by consent in relation to the same issue, on the same facts only a few months prior to this hearing – Where the husband is a discharged bankrupt – Where the husband is facing criminal charges in relation to fraudulently obtaining a mortgage over the matrimonial home.

Family Law Act 1975 (Cth) s 72, s 74, s 79, s 80(1)(h), s 117(2), s 117(2A)

Strahan & Strahan (Interim Property Matters) (2009) 42 Fam LR 203 Stanford & Stanford (2012) 247 CLR 108 Kowaliw & Kowaliw (1981) FLC 91-092 Wilson & Wilson (1989) 13 Fam LR 205 Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578
APPLICANT:	Mr Pember

RESPONDENT: Ms Bryson

FILE NUMBER: BRC 8546 of 2010

DATE DELIVERED: 11 December 2013

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 2 December 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sullivan QC

SOLICITOR FOR THE APPLICANT: Hopgood Ganim

COUNSEL FOR THE RESPONDENT: Ms Carew QC

SOLICITOR FOR THE RESPONDENT: Attwood Marshall

Orders

1. That the applicant husband’s Application in a Case filed 1 November 2013 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pember & Bryson  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 BRISBANE

FILE NUMBER: BRC 8546 of 2010

Mr Pember

Applicant

And

Ms Bryson

Respondent

REASONS FOR JUDGMENT

1. This is an application by the Husband for interim provision for litigation costs. He is a party to substantive proceedings against his former wife in which he seeks property adjustment pursuant to s 79 of the Family Law Act. He also faces serious criminal proceedings, currently being charged with fraud, where it is alleged that he forged the Wife’s signature on mortgage documents to obtain around $10,000,000 from the Commonwealth Bank which has been lost to the bank.  He is also involved in other litigation in the Supreme Court in which he is seeking to recover money from the Liquidator of one of the family companies, the former corporate trustee of trusts in which much of the family’s wealth was held.  In addition, he proposes litigation to attempt to recover other money that had been invested by him, that is currently lost to the family.

1. In his Application in a Case filed on 1 November 2013, the Husband sought that the Wife pay $1,186,000 to his solicitors as provision for his legal costs and outlays in all of these current and foreshadowed legal proceedings. During the hearing of the application on 2 December 2013, counsel for the Husband informed the Court that the Husband now only seeks that the Wife pay the sum of $893,600 as provision for his costs in the current proceedings in this Court and the pending criminal proceedings. That total sum is made up of the amount of $461,000 that the Husband seeks to use in his criminal proceedings and $432,000 that he seeks to use in the proceedings in this Court.

1. For the Husband, it is argued that the payment should be ordered by way of interim property adjustment pursuant to s 79 and s 80(1)(h) of the FLA or by way of interim spousal maintenance pursuant to s 72 and s 74 or by way of interim costs order pursuant to s 117(2).

1. The Wife opposes the application and seeks to have it dismissed.

1. For years now, this Court has recognised the legitimacy of a party to proceedings under the FLA seeking provision of funds to enable payment of his or her legal costs of participating in the proceedings.[1] It now appears accepted that such an order may be made utilising the power available to the Court through the sections I have just referred to in paragraph 3 above, provided that, whichever is the source of power, the necessary preconditions and relevant considerations for the making of the order are identified and considered.[2]

[1]See for example Barro & Barro (1983) FLC 91-300 and Hogan v Hogan (1986) FLC 91-704 (per the Full Court) and also Breen v Breen (1990) 65 ALJR 195 (per the High Court).

[2]See Strahan & Strahan (Interim Property Orders) (2009) 42 Fam LR 203 citing with approval Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578.

1. In Strahan[3], Boland and O’Ryan JJ said at [86]:

If the source of jurisdiction is 117(2) of the Act then the court may make such order as it considers just provided there are justifying circumstances. If the order is sought under s 79 of the Act then the court may make such an order as it considers appropriate provided it is satisfied that it is just and equitable to make the order. If the order is sought under s 74 of the Act then the court may make such order as is proper.

[3](2009) 42 Fam LR 203.

1. Before having greater regard to the relevant considerations, it is appropriate to set out some more detailed background.

1. The Husband is a highly intelligent and well educated man. He graduated in law and commerce with outstanding academic results. He worked as a solicitor for a national law firm for a few years before going into practice with other members of his family in a small firm with a commercial practice. In that practice, he developed connections with successful business persons who he then joined up with, arranging an Initial Public Offering of shares in a successful private company, ASX listing and massive international expansion of the business. He became CEO of that business, acquiring through family companies and trusts that he controlled, highly valuable interests in the company.

1. The Husband exited this international business in 2003 and caused the family entities to divest themselves of their interests in the company, generating many millions of dollars in capital for the family. He was then involved in the creation, development and acquisition of other business interests for several years with high degrees of success.

1. The Husband and the Wife had married in 1996. The Wife was operating a small business that did not generate a great deal of income. The undisputed evidence is that the Husband made unmatched initial contributions to the purchase of the couple’s first home, although there is apparent disagreement about the value of the Husband’s initial contributions and the extent of financial contributions made at the time by and on behalf of the Wife by her family of origin.

1. The couple had three children between 1998 and 2001. They are now 15, 13 and 12 years of age respectively. The Wife ceased running her business with the first pregnancy and engaged in parenting and homemaking for the family on a full-time basis from then on.

1. The income generated through the Husband’s business activities through the late 1990s and early 2000s provided the family with a fortunate lifestyle. Valuable land was bought in a prime location and several million dollars were spent on the demolition of the existing home and the construction of a new family home on that land. Other very valuable real estate was purchased for the family’s weekend and holiday use. Contract domestic services such as house cleaning, pool cleaning, car washing and in-home child care were readily procured for the family’s needs. The children were apparently sent to very expensive private schools. The couple bought and raced thoroughbred horses, not unusually, spending more on this activity then they won back in racing prize money.

1. The Husband says that in 2006 he invested in the acquisition of a department store in Country B. In his affidavit of evidence filed in support of this Application in a Case, he deposes, relevantly, to the investment of $65,452,374 in “the [Country B] transactions”, adding that the majority of that money came from third parties and not “matrimonial assets”. However, he does depose to personally borrowing $13.5 million from the Commonwealth Bank between December 2006 and August 2008 to be used in the Country B investment. The Husband’s evidence is that those borrowings were secured by guarantee from the corporate trustee of the family trust and mortgages over the very valuable family home and holiday property. The evidence is that the Wife was the sole director and shareholder of the corporate trustee. Accordingly, her signature was apparently required on security documentation provided to the bank to procure the borrowings.

1. Although the Husband does not expressly say it in his affidavit, it appears that the family’s investment in Country B has been lost to them, at least to this point in time. Things went horribly wrong for the Husband.  He says he was deceived by the persons who promoted the Country B investment. Apparently, he could not service or repay the debt to the CBA. The Husband was declared bankrupt on 4 March 2009. The CBA issued a demand to him under the loan on 9 March 2009. The family’s holiday home was sold by the bank and lost to them. Unsurprisingly, the bank also sought to exercise its power of sale of the family home.

1. The Wife asserted that she had not signed the relevant security documents and that the Husband had forged her signature without her knowledge. She clearly thereby asserted that the bank had no right to exercise power of sale of the valuable family home or to recover the monies it had lent to the Husband from her.

1. The marriage was not able to survive the turmoil that the couple faced in 2009 as a consequence of these circumstances and the couple separated in October of that year. Their marriage was dissolved in May 2011. That same year, in the Supreme Court of Queensland, the Wife successfully defended proceedings brought against her by the bank to recover in excess of $10,000,000 on the guarantee and mortgage documentation. In dismissing the bank’s claim against the Wife, Justice Phillip McMurdo found that the Husband had forged the Wife’s signature on the security documents. The criminal proceedings the Husband is now facing arise out of that set of factual circumstances.

1. A further consequence of the financial devastation the couple faced in 2009 has been the liquidation of the corporate trustee (“C”) through an external administrator. The Wife was a creditor of C at the time of its demise but also was pursued by the Liquidator for what was considered a preferential payment made to her out of C’s assets in the period just prior to the liquidation. I shall return to this again later.

1. Interestingly, the Husband does not appear to have given up hope of recouping the money lost in the Country B investment. He deposed in his affidavit to the following:

That investment has not yet returned any funds but significant assets could still be recovered. …

The business is still operating in [Country B].

He went on to say that he cannot calculate the amount likely to be recouped from the investment.

1. On 4 October, 2011, the Wife commenced proceedings in this Court in which she sought parenting orders in respect of the couple’s three children. The Husband joined those proceedings on 14 March 2012 and on 23 March 2012, just inside the limitation period and just after he was discharged from bankruptcy, he filed an Amended Response in which he also cross-applied for property adjustment orders pursuant to s 79 and for spousal maintenance orders pursuant to s 74 of the FLA.

1. In November 2012, I heard an application by the Wife for the Husband’s application for property adjustment pursuant to s 79 to be summarily dismissed. She argued that the right to make such an application was a right that had vested in his trustee in bankruptcy upon his bankruptcy and had not re-vested in him on discharge from bankruptcy. I delivered judgment, dismissing the Wife’s application on 6 February this year. I later ordered that the Wife pay the Husband’s costs of and incidental to that application.

1. The Husband then filed an Application in a Case on 24 March 2013 seeking interim provision for his litigation costs. On 9 August 2013, before that application had been heard, he filed an amended Application in a Case seeking interim provision for his litigation costs. That application was listed for hearing by me on 24 September 2013 along with other applications of the Husband for specific disclosure orders against the Wife.

1. After success in the Supreme Court proceedings brought against the Wife by the bank, the Wife had subdivided the property on which stood the former family home and had sold the house but retained the vacant block of land, subdivided off. By agreement with the Liquidator of C, she paid $4.175 million to the Liquidator from the proceeds of sale of the property in June 2013. The balance sale proceeds remained in the trust account of the solicitors who had acted for her in the Supreme Court proceedings (“ST”).

1. As a consequence of the payment to the Liquidator of that sum of $4.175 million by the Wife from the sale proceeds of the former family home, the wife, as a creditor of C, received an interim dividend of $143,000 from the Liquidator that also went into ST’s trust account. The money that has been paid into that trust account is now being held there pursuant to an undertaking given by the Wife to the Husband that it will be held in that trust account pending agreement between the parties or order of this Court in these proceedings.

1. On 24 September 2013, before the hearing of the Husband’s application for interim provision of litigation costs commenced, I was asked by the parties to make orders with their consent. By those orders, each of the Husband and the Wife received the sum of $400,000 from the money then held in ST’s trust account. Of the $400,000 payable to the Husband, the first $75,000 was ordered to be paid to the trust account of another firm of solicitors for the discharge, or partial discharge at least, of a debt that the Husband had secured against property said to be an asset of a trust of which the couple’s three children are said to be beneficiaries. The remaining $325,000 went to the Husband’s family law solicitors’ trust account.

1. By the orders that I made at the request of both parties, all other outstanding applications (namely the applications seeking specific disclosure orders) were dismissed. Additionally, the orders included notations, the terms of which were proposed by the parties, that payment to each of them of the amounts provided for in the orders does not preclude either of them from arguing at the final hearing of the s 79 proceedings that there should be no property adjustment orders made.

1. Just over two weeks after those orders were made at the request of the parties, the Husband told the Wife that he had “exhausted” the application of the money he had just received pursuant to the order of 24 September and further asked the Wife to allow him to make another draw of $200,000 from the funds held in ST’s trust account by way of interim funding towards meeting the costs of the trial of the proceedings in this Court, funding Supreme Court proceedings he was bringing against the Liquidator of C and funding proceedings for the recovery of other lost investments. The Wife was told that if satisfactory agreement could not be reached within 7 days then a fresh application for interim provision of litigation funding would be filed in this Court.

1. The Wife refused and the Husband then informed her that an application was being prepared for interim provision of litigation costs to the amount of $400,000. He offered her the prospect of avoiding that if payments of $60,000, $40,000 and $25,000 were authorised to be released to particular named creditors, and payments of $75,000 to each of the parties’ family law solicitors were authorised to be released from the money in ST’s trust account. That was a total of $275,000. The Wife apparently refused the Husband’s request.

1. On 1 November 2013, the Husband filed his Application in a Case referred to by me in the early paragraphs of these reasons for judgment.

1. The Husband asserts that the property that is available to be made subject to the Court’s property adjustment powers is as follows:

The vacant block of land that was subdivided off from                 estimated value

the former home (in the Wife’s sole name)  $2,000,000

Some real properties purchased in 2002 by a trust

the Wife is a trustee and principal beneficiary of that

are occupied by the Wife’s sisters  > $2,671,450

Money in Wife’s bank accounts as at August 2012   $10,773 app

Term deposit in Wife’s name at November 2011   

Plus interest earned on it over the term   $2,095,802

Money held in ST’s Trust Account   $1,250,000

Assets of another trust the Husband is appointor of

and the principal beneficiaries of which are two of the

parties’ children – the trust has part interests in 2 real

properties $800,000 app

Motor cars of both parties   $140,000

Wine collection in possession of Wife   $205,000

Artworks in possession of Wife   $180,000

Jewellery in possession of Wife  $175,000

The Husband’s superannuation interest   $16,600

Money received by Wife pursuant to Supreme

Court costs order against CBA   $950,000

1. The Wife agrees that she owns the vacant block of land and that it is likely to have a value of around $2,000,000. She denies that she has an interest, either legal or equitable, in any other real estate. She asserts that she has about $153,000 in the bank, being the balance of the $400,000 she received pursuant to the September 2013 consent order. She says she has shares in the public company, David Jones Ltd, valued at around $5,000, a motor car that she says is worth $100,000, household contents worth about $30,000 and $1,280,000 in ST’s trust account. She says she has two artworks by the artist, Mr D, but does not know how much they are worth.  She denies that she has wine, jewellery or artwork of the values ascribed to those things by the Husband in his affidavit.

1. The Wife asserts she has spent the $950,000 she received from the CBA in costs. She asserts that she has made extensive disclosure about this. It is undisputed that she used some $270,000 to prepay the three children’s private school fees for the rest of their private school education. As to the money that the Husband asserts the Wife had in her bank accounts post-separation, her response to that is that she has used that money, much of which was spent on funding her defence of the Supreme Court proceedings.

1. As to the value of the trust of which the children are said to be the principal beneficiaries, the Wife simply asserts that that property is the children’s not hers or the Husband’s.

1. There is no dispute then that there is real property worth about $2,000,000 registered in the Wife’s name, cash of $1,280,000 of the Wife’s in ST’s trust account, cash of about $153,000 of the Wife’s in her own bank accounts, some shares of the Wife’s, motor cars, furniture and contents, artworks and some wine and jewellery, all, it seems, property of the wife, save for, perhaps, a car in the husband’s possession.

1. The Husband seems optimistic that the Wife will also receive a further cash dividend from the Liquidator of C at some point in the future. That he has little in the way of property is not at all surprising given that he was a bankrupt until March last year.

1. As to his need for the funds that he seeks now to receive, the Husband deposed in his affidavit to having spent the $325,000 that he personally received pursuant to the September 2013 consent order in payment of $125,031 to his family law solicitors and the balance of approximately $200,000 to the solicitors acting for him in respect of his criminal charges (“PSL”), another firm of solicitors and “third parties who had paid legal fees on [the Husband’s] behalf”. There is no more particular breakdown of this expenditure and no evidence given by the Husband as to how he determined prioritization of these payments and repayments. The Wife points out to the Court that the Husband has made no disclosure to her of documents that support his evidence about this.

1. The Husband also deposed to currently still owing PSL the sum of $133,000, another firm $18,000, another firm $50,000, $65,000 to a firm of forensic accountants, and $60,000 in respect of the debt secured over the interests in property held by the trust of which the children are the principal beneficiaries.  By consent, the Court was informed that the Husband currently owes his family law solicitors the sum of $42,000. He also deposed to having been informed by his family law solicitors that the estimated fees to proceed to a final hearing in this Court may amount to $300,000 plus GST and outlays. In his affidavit, the Husband actually sets out a table of projected expenditure on fees and outlays in these proceedings. It totals between $367,146 and $494,275.

1. As to his capacity to pay this amount, the Husband deposed in his affidavit as follows:

I have no assets to potentially charge to raise legal funds, and no other capacity to fund my legal expenses.

As was pointed out by counsel for the Wife though, the Husband did not go as far as deposing to evidence that he could not borrow again from the same third party sources he had previously borrowed from and repaid with part of the $400,000 he already received from the Wife in September 2013.

1. In the draft order his counsel handed to the Court, the Husband seeks to be paid $432,000 to be utilised to meet his costs and outlays in prosecuting his claim in these proceedings.

1. The Husband also seeks payment of $461,000 to PSL’s trust account to be utilised to meet his costs and outlays of and incidental to the criminal proceedings he is defending.

1. On 20 December next, there is a day of hearing set down in the Magistrates Court in Brisbane. It is part of the committal procedure in respect of the criminal charge he faces. The Husband deposed to an intention to have the Wife cross-examined, the Wife’s father cross-examined and an officer of the CBA cross-examined. The Husband says that PSL requires payment of $39,600 to represent him and to instruct counsel to appear for him on that day. He says that he has been told that the criminal proceedings will cost him another $396,000 to the end of the trial.

1. There is no dispute between the parties that if the Husband is convicted of a charge or charges arising out of the circumstances surrounding the signing of the security documentation provided to the CBA to support the $13.5 million borrowings that he will be sentenced to a lengthy period of imprisonment.

1. The Husband says nothing at all about the availability or otherwise of legal aid funding for his criminal defence. 

1. Of the $1,280,000 that is still held for the Wife in ST’s trust account, the Husband, having recently received $400,000 from the Wife and with vague particularisation as to how half of that amount has been spent, seeks another $893,600. He submits that he will ultimately get the benefit of orders that adjust the property interests of the parties, such that he receives 80 per cent of the net property of the parties, after consideration of the matters set out in s 79(4), including the matters set out in s 75(2), of the FLA. Consequently, he submits that the Court can confidently determine to give him $893,600 of the Wife’s property valued at approximately $3,500,000 by way of interim property adjustment, satisfied that such an interim determination is just and equitable.

1. If the Wife actually agreed that, in all the circumstances of the case, it is just and equitable to make property adjustment orders on a final basis, but just differed as to the percentage share of her property that the Husband should have adjusted in his favour, it would probably be difficult for her to argue against an interim order that provided the Husband with cash up to an amount that equated with the percentage share that she was conceding in his favour, particularly if the balance of her cash and or property was considered sufficient to fund her own legal representation in the proceedings. However, this is not such a case.

1. In fact, the Wife argues that this is a case where, after identifying and valuing the property interests of the parties, this Court will determine, having regard most particularly to the alleged wilful conduct of the Husband in forging her signatures and fully encumbering her valuable property without her knowledge, thus causing so much loss to her, in addition to the loss of all of the rest of their property interests, that it will not be just and equitable to make a property adjustment order. The Wife points to the High Court’s decision in Stanford[4] in support of her submission. Indeed, it is worth remembering that at [36] of their reasons for judgment in that case, the plurality of the High Court said:

The expression “just and equitable” [included in s 79(2) of the FLA] is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.

[4] (2012) 247 CLR 108.

1. Their Honours went on then to observe that three fundamental propositions are not to be obscured when exercising power under s 79. Relevantly, for present purposes, the third of the propositions that they set out at [40] of their reasons for judgment was that determining whether it is just and equitable to make a property settlement order is not to be answered by beginning from the assumption that one or other party has the right to have the other’s property divided between them simply by reference to the various matters set out in s 79(4).

1. For the Husband, it was submitted that what the High Court said in Stanford should not be interpreted to somehow reintroduce concepts of “fault” into property adjustment proceedings determined pursuant to the FLA and, effectively, that property adjustment orders in this case that adjust property of the Wife in favour of the Husband will inevitably be determined to be just and equitable having regard to the Husband’s “contributions” and other relevant matters.

1. That submission, with respect, in my view, at least, belies the reality that since as long ago as the publication of the judgment in Kowaliw and Kowaliw[5] there has been acceptance by Judges of this Court that conduct having economic consequences which involves deliberate reduction of the value of assets or which involves reckless, negligent or wanton action with property of the parties that reduces or minimises the value of the property is indeed relevant in determining whether property adjustment orders in a particular case are just and equitable. I do not read Stanford as changing that at all. 

[5] (1981) FLC 91-092.

1. At this preliminary stage I do not consider it a fanciful proposition, depending on the findings of fact that are ultimately to be made in respect of the matters surrounding the loss to the parties of the many millions of dollars that the Husband controlled and invested and the losses to the Wife caused by the alleged forgery of the Wife’s signature on security documentation, that it could be determined to be not just and equitable to make orders that the Wife now pay large sums of money to the Husband by way of property adjustment. That, of course, will be a matter to be determined after a trial.

1. In circumstances where there can, at this point, be no certainty that the Husband will get the benefit of any property adjustment order at a final hearing of his s 79 application, let alone one that sees the Wife required to pay him in excess of $1.2 million dollars, and where there is consequent uncertainty that any interim property adjustment order now made that has him receiving another $893,000 of the Wife’s money, in addition to the $400,000 he has already received, can be efficaciously reversed on final hearing if necessary (given that the Husband will have spent it by then), I am unable to now determine, as required, that it is appropriate and just and equitable to order the Wife cause the Husband to be paid a further $893,000 by way of interim property adjustment. Accordingly, I will not do so.

1. For the Husband, it was argued that if the Court does not consider it appropriate to make an order that the Wife pay the Husband the money he seeks by way of interim property settlement, then he should receive it by way of interim spousal maintenance.

1. As I have observed already, pursuant to s 74 the Court may make such order as it considers proper for the provision of maintenance in accordance with Part VIII of the FLA. Thus, the Judge may use discretion in determining an amount or the amount to be ordered.

2. In Wilson,[6] Kay J expressed the view that “proper” in s 74 means “fit, apt, suitable; fitting, befitting; appropriate to the circumstances; right”. Nygh J, in the same Full Court decision, agreed with his Honour that “proper” in the context means “appropriate to the circumstances”.

[6] (1989) 13 Fam LR 205.

1. In Paris King Investments Pty Ltd v Rayhill[7] Brereton J at [30] said:

   Thus, where an interim order for litigation expenses is to be made as an interim costs order s 117(2), and probably also if it is to be made as a maintenance order s 74, there are at least three requirements: first, a position of relative financial strength by the respondent; secondly, a capacity on the part of the respondent to meet his or her own litigation expenses; and thirdly, an inability by the applicant to meet her or his litigation expenses from her or his own income assets or financial resources.

[7] [2006] NSWSC 578.

1. Boland and O’Ryan JJ in Strahan refer to Brereton J’s reasons in Paris King Investments in a manner that I consider displays clear acceptance of them as correct. Relevantly, their Honours included in that discussion at [96] the following:

   In Paris King Investments Brereton J at [30] and [31] said that in addition to the three matters described in Zschokke, where the order was made pursuant to either s 74 or s 117 of the Act:

   ·     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) 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 the 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 it’s 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.

1. In this case, it is clear that the respondent Wife has a position of relative financial strength at the moment. I consider it relevant that she arrives at that position through a combination of the Husband’s actions in losing all property of his own through his investment decisions and his bankruptcy, and her own actions in successfully defending complex and stressful Supreme Court litigation.

1. Whilst the Wife has apparently been able to pay her legal costs to this date, it seems clear that she has only been able to do so by using much of the $400,000 that she too obtained from the funds secured in ST’s trust account in September 2013, as she only has $153,000 remaining in bank accounts. She at least has that remaining amount at her disposal now, including to be utilised to meet future legal costs. Once that amount is used up though, there is no apparent source of funds that she can easily access without going back to the Husband and getting his agreement or without a further order of this Court. In the meantime, that capital is at least preserved and, presumably, earning interest.

1. The Husband asserts that he is unable to earn income whilst he faces the criminal proceedings although he does depose to being “engaged by [M] Bank in a consultancy role” for which he receives no income. He attributes the non-receipt of income in that role, without putting any written terms of the consultancy agreement into evidence, to the criminal charge that he faces. He asserts he has no assets or other financial resources from which he can meet all of the legal costs and outlays that the lawyers acting for him, and retained by him, project their representation of him will cost. He has put evidence of those likely costs before the Court. His evidence is that the lawyers have told him they will not continue to act for him if he is not able to pay or secure their fees.

1. I am satisfied that the Husband has an arguable case for property division and spousal maintenance. The actual substance and strength of that case is something I cannot clearly determine at this time.  Again, though, having regard to the fact that the Husband has only very recently been paid $400,000 on a similar application for interim provision of litigation costs that was resolved with orders the Court was asked to make by consent, coupled with the fact that he now seeks another $893,000 out of $1,280,000 that otherwise is preserved pending agreement or further order, I am seriously troubled by the risk of injustice to the Wife arising upon the Husband’s certain expenditure of the money prior to final determination of the substantive proceedings in which the Wife’s case, arguable as it currently appears to me to be, is that making an order in his favour at all will not be just and equitable. 

1. This is not an application for orders that oblige the Wife to contribute periodically to the Husband’s support. The Husband instead seeks a very large lump sum payment that he intends to spend solely on legal fees and outlays in these proceedings and the criminal proceedings he faces. In such circumstances, it is, in my view, extremely important to consider whether the lump sum payment he seeks is likely to be covered by the orders that might be expected to be made at the end of contested proceedings, even where the current order he seeks is sought under the Court’s maintenance power.

1. Without current conviction that the Husband is likely to receive by way of property adjustment or spousal maintenance a sum of money or an interest in property sufficient to cover such a large interim lump sum payment, I am not persuaded to consider such a proposed order to be proper at this point in time. I will not make such an order pursuant to s 74. 

1. As a final alternative position, for the Husband it was submitted that the lump sum payment he seeks can be ordered as a costs order pursuant to s 117(2). That is undoubtedly correct. As I have already observed, if the source of power for the order sought to be made is s 117(2) the Court may make such order as the Court considers just provided that there are justifying circumstances.

1. Section 117(2A) mandates matters the Court must have regard to in considering what order, if any, should be made under s 117(2). I consider that the matters that I have set out in [54]-[55] of these reasons and that I have already considered in the context of determining whether or not to make the order sought by the Husband pursuant to the spousal maintenance power contained in s 74 are all matters, as Brereton J, Boland and O’Ryan JJ acknowledged, that are able to be considered within the mandatory scope of s 117(2A).

1. Whilst I acknowledge that the conclusion in relation to the uncertainty of the amount the applicant may or may not receive on his substantive property adjustment and spousal maintenance applications is not necessarily fatal to an application under s 117(2), it is nevertheless one of the matters to be balanced in the exercise of the discretion.[8]  In my view, the large sum the Husband seeks to be paid on top of the large amount he has already recently received, in conjunction with the clear uncertainty of the ultimate outcome, militate against exercising the discretion in his favour.

[8]See Zschokke and Zchokke (1996) FLC 92-693 at 83,220 -83,221 cited again with approval in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466.

1. In addition, for the Wife, it was submitted that the applicant Husband’s conduct in making this application within weeks of settling by compromise a very similar application, that provided him with $400,000 of the Wife’s money, is a matter of relevance that also mitigates against exercising the discretion in his favour. True it is, as was submitted for the Husband, that more than one order may be made in the course of s 79 proceedings to fund the litigation expenses of a party and they can be made under different heads of power.[9]  However, I do consider the particular circumstances that present in this case are relevant to a determination of whether the order the Husband seeks is a just one, justified in these circumstances.

[9]         See Strahan at [85] citing with approval Kendling v Kendling  (2008) 39 Fam Lr 404 on the point.

1. Where a party makes application for interim provision of litigation costs based on certain evidence and reaches agreement with the other party, compromising the application in a way that sees him receiving a very large sum of money, there is a certain injustice, in my view, done to the other side when that same party makes a fresh application for provision of a whole lot more money within a few weeks of the compromise having been reached, relying on the same underlying facts as supported his first application.

1. Ultimately, I am not persuaded that the circumstances justify the making of an interim costs order pursuant to s 117(2) that provides for the Wife to pay the Husband $893,600 as he seeks.

1. I will not make the orders sought by the Husband as an interim property settlement, an interim spousal maintenance order or an interim costs order. I will dismiss the Husband’s Application in a Case filed on 1 November 2013.

I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 11 December 2013.

Associate: 

Date:  11 December 2013.