Ralic and Gatehouse
[2013] FamCA 802
•18 October 2013
FAMILY COURT OF AUSTRALIA
| RALIC & GATEHOUSE | [2013] FamCA 802 |
| FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Where the husband had been paying a sum of spousal maintenance to the wife post-separation – Where the parties cohabitated for a period of approximately nine years – Where the wife has been out of paid work for approximately eight years – Where the wife has been unable to obtain employment despite numerous employment applications. |
FAMILY LAW – APPLICATION – Litigation funding – Where the wife seeks an order for litigation funding – Where the financial affairs of the parties are complex – Where the wife lacks capacity to meet her own litigation costs.
| Family Law Act 1975 (Cth) s72(1), s74, s75(1), s75(2), s75(3), s79, s80(1)(h), s106B, s117(2), s117(2A). |
| Brown & Brown (2007) FLC 93-316. |
| APPLICANT: | Ms Ralic |
| RESPONDENT: | Mr Gatehouse |
| FILE NUMBER: | BRC | 2622 | of | 2013 |
| DATE DELIVERED: | 18 October 2013 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Hogan J |
| HEARING DATE: | 1 July 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Dr Brasch |
| SOLICITOR FOR THE APPLICANT: | Barry Nilsson Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Scott-Mackenzie |
| SOLICITOR FOR THE RESPONDENT: | Thynne & McCartney |
Orders
The Husband pay to the Wife, by way of spousal maintenance, the sum of $1,180.00 per week with the first such payment to be made on Monday, 21 October 2013 and, thereafter, on each Monday by deposit into a bank account nominated by the Wife.
The Husband pay to the Wife by deposit into a bank account nominated by the Wife, by way of spousal maintenance:
(a) $10,620.00 by 4.00 pm on Monday, 25 November 2013;
(b) $10,440.00 by 4.00 pm on Monday, 23 December 2013.
That, by way of spousal maintenance, the Husband continue to pay the cost of the Wife’s health insurance as and when such premiums become payable.
Within twenty-eight (28) days of the date of these Orders, the Husband pay or cause to be paid, to the Solicitors for the Wife, the amount of $38,969.46.
Within seven (7) days of the date of any payment made by or on behalf of the Husband of any monies in payment of accounts rendered by the Solicitors for the Husband in relation to expenses associated with the preparation of this case (“the Husband’s Account”), the Husband pay or cause to be paid, the same sum of money to the Trust Account of the Solicitors for the Husband with an Authority to transfer that amount to the Solicitors for the Wife.
Within twenty-four (24) hours of any payment made pursuant to clause (5), by or on behalf of the Husband to the Solicitors for the Husband in payment of any accounts rendered by them, the Husband shall cause to be given to the Solicitors for the Wife a memorandum stating the amount or amounts so paid to the Husband’s Solicitors.
All monies paid to the Solicitors for the Husband by or on behalf of the Husband with respect to the Husband’s Accounts shall be held in Trust by the Solicitors for the Husband and shall not be applied in payment of any accounts rendered by them until such time as the same amount has been paid, by or on behalf of the Husband to the Solicitors for the Wife.
In the event that the payment to the Solicitors for the Wife referred to in clause (5) is not made by or on behalf of the Husband in the manner prescribed by that clause, the Husband shall forthwith direct his Solicitors to pay fifty per cent (50 %) of whatever has been received and held in Trust by his Solicitors the Solicitors for the Wife.
The amounts paid pursuant to this Order to the Solicitors for the Wife are to only be applied by them in payment of the costs and disbursements incurred by the Wife in the conduct of these proceedings.
The question of categorisation of any payment made pursuant to this Order shall be a matter for determination by the Trial Judge.
Pursuant to section 114(1)(e) of the Family Law Act 1975 (Cth) an injunction issue restraining the husband from dealing with, purporting to sell or causing to be sold or otherwise encumbering or dealing with the property known as H Street, Suburb F in the State of Queensland more particularly described as Lot … on RP …, County of U, Parish of C without first obtaining the Wife’s consent in writing.
That the Husband provide to the Wife’s Solicitors by close of business on 31 October 2013 a valuation of his interests as conducted by his accountants, I Accounting.
The Wife shall within twenty-eight (28) days after receipt of the valuation of the Husband’s interests as conducted by his accountants I Accounting, advise the Husband in writing whether she accepts the valuation or not.
In the event the Wife advises she does not accept the Husband’s accountant’s valuation she has liberty to apply for the appointment of a single expert for the purpose of valuing the Husband’s interests.
That the Husband direct that his accountants, I Accounting, answer in writing all reasonable requests made by or on behalf of the Wife in relation to the valuation of the Husband’s interests prepared by that firm.
That any request made by or on behalf of the Wife to I Accounting, in relation to the valuation of the Husband’s interests prepared by that firm, be in writing and provided to the Husband’s Solicitors.
That within fourteen (14) days of this Order the Husband provide to the Wife copies of the his personal bank account, credit card or cred union account statements from January 2012 to date, noting that the following have already disclosed by the Husband:
(a)statements for the National Australia Bank account number … up to 5 November 2012;
(b)statements for the Commonwealth Bank account number … up to 31 May 2013.
That within fourteen (14) days of this Order the Husband provide to the Wife copies of the financial statements for the financial year ending 30 June 2012 for the following entities:
(a) W Pty Ltd;
(b) BG Family Trust/BG Pty Ltd;
(c) Gatehouse Family Property Trust; and
(d) X Property Trust.
That within fourteen (14) days of this Order the Husband provide to the Wife a copy of any Deed of Variation in relation to the BG Family Trust whereby Mr P Gatehouse was appointed as the appointor of that Trust.
That within fourteen (14) days of this Order the Husband provide to the Wife a copy of the signed resolution of BG Pty Ltd appointing Ms V Gatehouse as a director of BG Pty Ltd.
That within fourteen (14) days of this Order the Husband provide to the Wife a copy of the signed resolution of BG Pty Ltd removing and/or acknowledging the resignation of Mr Gatehouse as a director of BG Pty Ltd.
In the event that either party seeks an order that the other pay the costs of and incidental to the application for interim orders heard on 1 July 2013:
(a)the party seeking an order for costs file and serve brief written submissions in support of such application for costs within fourteen (14) days of the date hereof;
(b)the party from whom costs are sought file and serve any brief written submissions in answer to any submission filed and served by the party seeking costs within a further fourteen (14) days thereafter;
(c)the party seeking costs file and serve any brief further written submissions strictly in reply to the submission served by the party from whom costs are sought within seven (7) days of its service,
and any such application for costs shall be determined in Chambers.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Ralic & Gatehouse 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 2622 of 2013
| Ms Ralic |
Applicant
And
| Mr Gatehouse |
Respondent
REASONS FOR JUDGMENT
On 27 June 2013, the wife filed an Amended Initiating Application seeking that, pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”), a number of “transactions” be set aside. In summary, these “transactions” involve the ‘removal’ of the husband as appointor of the B G Family Trust (“the Trust”), a discretionary trust, and the appointment of Mr P Gatehouse as appointor of the Trust and the resignation of the husband as a director of B G Pty Ltd, the corporate trustee of the Trust (“the corporate trustee”) and the appointment of Ms V Gatehouse as a director of the corporate trustee.
The husband says that the Trust was settled by his late father on 1 April 1977 just after the birth of his first child Mr J. It was to provide for the ongoing maintenance, education and benefit of all beneficiaries. The husband is one of a number of beneficiaries.
The corporate trustee was registered on 7 March 1979. The husband’s brother, Mr P Gatehouse, has been a director of it since it was registered. Mr J, one of the husband’s children from a previous marriage, has been a director since 27 June 2008. The husband was a director and secretary of the corporate trustee from the time it was registered until 24 September 2012, following which his other child from a previous marriage, Ms V Gatehouse, commenced as a director. The husband and Mr P Gatehouse each own one of the two ordinary shares issued by the corporate trustee.
The wife does not accept that the husband has relinquished control of the Trust. She expresses the belief that he is still involved in controlling the day to day business of the Trust and that the decisions implemented by him have been intended to remove Trust assets from proper consideration in property settlement proceedings between the parties.
The wife asserts that, at the time the parties commenced cohabitation in January 2003, by virtue of the fact that husband was the appointor of the Trust, a director of its corporate trustee and a beneficiary, he was, in effect its controller and the property held within it was, for all intents and purposes, the husband’s property.
Between 2003 and 2004 the husband received approximately $2,000,000.00 in assets from the respective estates of his deceased parents. I did not understand there to be dispute that these funds were used to acquire other property interests, including land at MS which was acquired on 4 May 2007 by the corporate trustee as trustee for the Trust. Nor does it seem to be disputed that this property was purchased primarily as a working cattle property and as a warehouse for trading stock of the business operated through Y Pty Ltd, shares in which are held by the Trust.
It is not disputed that, in February 2010, the Trust and the E Family Trust (the husband’s brother Mr D Gatehouse’s Family Trust) purchased property at Z “again investing inheritance monies received”. Using this property and the MS property the two trusts run, in partnership, a cattle farming business known as the LR properties.
I understood the effect of the husband’s evidence to be that he provided assets received by him personally – the inheritance monies – for the use of the Trust in circumstances where he now asserts that he has no interest, other than as one of a number of discretionary beneficiaries, in property owned by the Trust. Whilst this issue cannot be resolved at an interim hearing, it is relevant also to note that the Consolidated Balance Sheet, as at 30 June 2012, prepared by the husband’s accountants for the ‘BG Group’ records, within the non-current liabilities of the Trust a related party loan from the husband in an amount of $2,356,870. In the same manner, the husband lent MS Pty Ltd, the entity from which he receives dividends of about $50,000 per annum, $98,000.00.
The wife says that the husband ceased to be the appointor of the Trust in 2006, two days after the parties married. She says that he resigned as a director of the corporate trustee of the Trust on 24 September 2012 – around the time the parties separated, whether this was on 13 September 2012 (as the wife asserts) or on 27 September 2012 (as the husband asserts).
The husband says that, whilst he is one of a number of beneficiaries of the Trust, he has no control over it and any property held within this structure is not property of the parties for the purpose of s 79 of the Act. The Trust is, on his case, a financial resource from which he may, at the discretion of the trustees, obtain future benefits.
It is not disputed that the husband is the registered proprietor of real property situated at H Street, Suburb F (“the H Street property”). In February 2013, this property was appraised at between $1,200,000.00 and $1,300,000.00. It provides direct security for borrowings of $264,125.49.
The husband has provided a guarantee and indemnity to National Australia Bank (“the Bank”) in relation to facilities in the name of Y Pty Ltd, the entity through which a business is operated. Y Pty Ltd in turn supports, by way of guarantee and indemnity, borrowing in the name of the corporate trustee as trustee for the Trust. As I understand it, the consequence of these arrangements is that the H Street property is collateral security for more than $3,000,000.00 of additional liabilities. The husband’s evidence is that during the relationship he serviced these “significant other loans associated with the business and trust assets”.
The husband owns no property other than the H Street property and an interest in a self-managed superannuation fund (“the super fund”) initially valued at approximately $430,000.00. He has accessed the super fund to meet his own legal expenses to date.
The current Applications
The wife seeks a payment of $1,260.00 per week for interim spouse maintenance. In reliance on s 117(2), s 79 or s 80(1)(h) of the Act, she also seeks that the husband pay or cause to be paid the sum of $100,000.00 to meet her litigation expenses or, alternatively, pay a lump sum of approximately $40,000.00 and, thereafter, pay monies to meet these expenses by way of a ‘dollar for dollar’ order.
The husband opposes the making of any of these orders.[1]
[1] Amended Response filed 1 July 2013
Factual Matrix
The wife was born in 1965 in Country Q. She is 48 years of age. She is currently unemployed. The husband was born in Australia in 1946. He is 67 years of age and is a company director. He has two brothers, Mr P and D Gatehouse. He also has two adult children from a previous marriage, Mr J and Ms V, both of whom have children of their own. There are no children of the marriage.
The parties met online in about February 2002. The wife, who was employed as the head of an accounting and payroll department in what she describes as a medium range trade and distribution company, was living in Country Q and the husband, who was self-employed, was living in Australia.
After spending some time together in Country Q, the husband supported the wife in her application for a temporary work Visa to enable her to travel to Australia to work for a company (Y Pty Ltd) in which he had a one-third interest.[2] The Visa was granted on 17 December 2002.
[2] The husband’s brothers or entities controlled by them own the remaining 2/3 interest in Y Pty Ltd.
The wife arrived in Australia on 9 January 2003 and the parties commenced living together in the H Street property. The wife started working for Y Pty Ltd in March 2003. She remained employed there until December 2005 when she ceased working for remuneration. She has not been employed since then.
The wife says that her lack of engagement in the paid workforce was the result of the husband’s request. The husband says that the wife resigned her position and refused to obtain further employment despite his encouragement and support. Whilst it is impossible, on an interim hearing, to determine that which led to the wife ceasing engagement in the paid workforce, the reality is that she has not been so engaged for over seven years.
In January 2004, with the husband’s support, the wife applied for a temporary Australian Visa on the basis that she was the husband’s de facto partner. The Visa was granted on 5 October 2004.
In January 2006, the husband arranged for a draft Binding Financial Agreement to be drawn. Neither party signed it. However, its terms provided for the payment to the wife of substantial cash sums, ranging between $703,650.00 and $1,876,400.00 in the event that the parties separated within specified timeframes and the sum of $24,000.00 per annum for two years by way of spouse maintenance.
The draft Binding Financial Agreement was exhibited to the wife’s most recent affidavit. The husband has not responded on oath in relation to it. Whilst there may, in the future, be evidence from him which places its existence in a different context, I consider that, at this time, the figures it contains provide some support for a provisional finding that, at least at the time it was prepared, the husband’s view of his own financial position was that he would be able to meet such payments if the eventualities they rested upon occurred.
The parties married in 2006. As noted above, the wife alleges that husband ceased to be the appointor of the Trust on 26 June 2006.
I do not intend to canvass in significant detail the matters each party says led to their separation. In summary, the wife’s case is that, no later than May 2012, she became aware of email correspondence between the husband and another woman which suggested he had committed to a relationship with that person. In mid-August 2012 she became aware that the husband had made a Will which, unlike that provided to her after their wedding, did not include her as a beneficiary.
After this, but before the parties went on an overseas holiday, the wife sought legal advice. She was advised to, and did, lodge a caveat over the H Street property to ensure that it was not sold while the parties were overseas. She says she did this because of a concern that the husband was making arrangements to financially exclude her – she feared that she would be left financially destitute.
On 11 September 2012 and while the parties were overseas, the husband’s bank notified him that the wife had lodged a caveat over the H Street property. He was told that his access to a number of accounts had been restricted and that no withdrawals or redraws increasing the level of debt would be permitted until the caveat was removed.
The parties returned to Australia on 13 September 2012 at which time the wife moved to sleep in the guest room. From the wife’s perspective, separation occurred either in mid-August 2012, when she became aware that she was not a beneficiary under the husband’s new Will, or on 13 September 2012 when the parties ceased to sleep in the same room.
The husband asserts that, despite being concerned by the wife’s action in lodging the caveat over the H Street property, he considered the marriage to be intact. He says the first knowledge he had of the wife’s intention to separate was when he received correspondence, dated 27 September 2012, from her previous legal representatives informing him that the parties had separated on 13 September 2012.
The wife asserts that the change in the directorship of the corporate trustee as outlined above was directly linked to the breakdown of the relationship between the parties and the fact that she had sent the husband correspondence about property settlement. Conclusions about such assertion cannot, of course, be determined at an interim hearing.
Despite the matters referred to above, the parties continued to live together in the H Street property until the wife moved out on 17 October 2012. She did so after the parties reached agreement in relation to the removal of the caveat and the payment by the husband of interim spousal maintenance in an amount of $1,130.00 per week for six months. The wife undertook not to lodge any caveat over any property owned by the husband and the husband undertook not to deal with the H Street property without the wife’s written agreement or Court Order.
The husband’s payment of $1,130.00 per week spousal maintenance enabled the wife to meet her rental costs, under an agreement which ends in October 2013, in an amount of $430.00 per week - the remaining $700.00 was used to meet general living expenses.
The husband paid the wife the sum of $1,130.00 per week spousal maintenance until late March 2013 at which time he ceased making payments. On 9 April 2013, the wife filed an Initiating Application seeking, amongst other things, that the husband pay to her $1,350.00 per week spousal maintenance.
On 14 June 2013, the husband recommenced paying spousal maintenance in the amount of $600.00 per week. He did so on the basis that he would continue to make such payments for a period of six months.
spousal maintenance
The husband is liable to maintain the wife to the extent that he is reasonably able to do so if and only if she is unable to support herself adequately by reason of age, or physical or mental incapacity for appropriate gainful employment or for any other adequate reason: s 72(1) of the Act. If satisfied that the wife is unable to support herself adequately by reason of age, or physical or mental incapacity for appropriate gainful employment or for any other adequate reason, the Court may make such order as it considers proper for the provision of maintenance to the wife: s 74(1) of the Act. In exercising jurisdiction under s 74 of the Act, the court shall take into account only the matters referred to in s 75(2) of the Act: s 75(1) of the Act.
Is the wife unable to support herself adequately?
At the time she commenced proceedings, the wife was in good health.[3] However, at the date of the hearing of her application, she said that she was in poor health - the combination of the ongoing stress of the proceedings and the husband’s cessation of the payment of spouse maintenance had allegedly caused her to suffer depression, severe anxiety, panic attacks, insomnia and to have poor concentration and memory.[4] She had a medical certificate detailing that she was unfit for work until 19 July 2013 and said that she did not anticipate being able to return to work in the near future.
[3] See her affidavit filed on 9 April 2013.
[4] See her affidavit filed 26 June 2013.
The husband does not accept that the wife suffers from any physical or mental incapacity which prevents her from obtaining appropriate gainful employment. There is no expert evidence other than the medical certificate referred to above to support the wife’s contention in this respect.
The husband also submitted that the wife could obtain employment using her previous experience and qualifications. He says that are ‘numerous’ roles available in Brisbane for junior accounts clerks at a salary sufficient to meet the wife’s financial needs and that, alternatively, she could seek a role in retail customer services. He does not accept that she has made any genuine attempt to obtain employment.
The wife has bookkeeping skills which have not been used in paid employment since December 2005 when she ceased working for Y Pty Ltd. She has no experience in café or retail work. A perusal of her unsuccessful applications[5] reveals that she has applied for positions such as accounts clerk, bookkeeper, intermediate accountant, accounts receivable officer, accounts payable officer, intermediate accounts clerk, accounting support, accounts assistant in a small finance team, and accounts coordinator. I accept that she has applied, unsuccessfully, for 34 separate bookkeeping and accounting jobs, all of which seem to fall within her previous work experience.
[5] exhibited to her affidavit filed on 9 April 2013.
There was no challenge to the wife’s evidence that she lacks proficiency in certain computer software[6] routinely used in the type of roles for which she has applied. The husband challenges the need for the wife to undergo training in this software in Sydney, rather than Brisbane. However, sensibly, he did not challenge the desirability of the wife improving her skills in order to increase her prospect of re-joining the paid workforce.
[6] Excel and SAP.
Whatever is the current position in respect of the wife’s health, I accept, at this point in time, that, despite the efforts noted above, she has been unable to obtain paid employment.
While the wife is the registered owner of two pieces of real property in Country Q (“the S property” and “the K property”), it was not suggested by Counsel for the husband that either or both of these properties be sold to provide a fund from which the wife’s financial needs could be met.
The totality of the wife’s other property is a European motor vehicle (valued at approximately $7,000.00) and household contents (estimated to be valued at about $5,000.00). In addition to these items she has $7,640.00 in superannuation, which is, of course, unavailable to her.
In these circumstances, I am persuaded that, at this point in time, the wife is unable to support herself adequately for any other adequate reason.
What is the quantification of the wife’s need for adequate support?
Given my conclusion that, at present, the wife is unable to support herself, she is entitled to be maintained “adequately”, which imports a standard of living which is “reasonable in the circumstances”[7] this being the guiding principle. [8]
[7] Nutting & Nutting (1978) FLC 90-410.
[8] Stein & Stein (2000) 25 Fam LR 727, 729.
In Brown & Brown (2007) FLC 93-316, the Full Court summarised[9] the principles, which had emerged from previous authority, as follows:
a)“adequately” is not to be determined according to any fixed or absolute standard;
b)“adequate” does not mean a subsistence level of support[10];
c)where possible, both spouses should continue to live, after separation, at the level previously enjoyed if this is reasonable although their standard of living may have to be lower if financial resources are insufficient to maintain that standard;
d)in some circumstances, it may be “reasonable” for the parties to live at a higher standard than previously enjoyed;
e)it is not necessary for an applicant to use up all capital in order to satisfy the requirement that that party is unable to support himself/herself adequately;
f)an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
[9] At p.81,455.
[10] See also Mitchell and Mitchell (1995) FLC 92-601.
The wife says that she and that the husband enjoyed a high standard of living during their cohabitation. She particularises[11] a number of overseas holidays which the parties took during the relationship. Whilst the parties differ in their explanations for the reasons behind such travel, it is not disputed that it occurred or that the husband was the source of the funds which made such travel possible. The husband’s own evidence – namely, that most of the spending money and accommodation expenses were paid through borrowings from the business and on credit cards – makes it clear that, during the relationship he was able to obtain funds from the business for the purpose of purely discretionary expenditure.
[11] see paragraph 59 of the Wife's affidavit filed 9 April 2013.
The parties are in dispute about the financial contribution made by the wife in the period from March 2003 until December 2005. However, there is no dispute that, from December 2005 until separation, the husband was the source from which all of the parties’ financial needs were met.
By 2012, he was paying the wife $500.00 per week as well as meeting all these expenses. I understand his evidence to be to the effect that, in the same way as at least part of the holiday costs referred to above were met, he was able to obtain at least some funds from the business for the payment of these personal expenses.
It is against this background that the wife quantifies her adequate need for maintenance, inclusive of the costs of accommodation, in the sum of $1,260.00 per week.
The husband challenges the amount of the wife’s accommodation costs on the basis that he asserts she could find cheaper accommodation elsewhere. It is submitted that the reasonable measure of such costs ranges from $300.00 to $350.00 per week rather than the $430.00 per week claimed by the wife. In addition, he challenges some of the specific expenses claimed by the wife on the basis that items costing $372.00 per week are discretionary and not reasonably necessary for the wife’s support.[12] I note that the husband’s asserted expense for the same items is $370.00 per week.[13] I am not persuaded that any of these expenses are unreasonable and consider that, in the amounts, claimed they represent a standard of living which is “reasonable in the circumstances”.
[12] Husband's Outline of Argument, paragraph 47.
[13] Husband’s Financial Statement filed 8 May 2013.
It must also be appreciated that the husband’s challenge to the wife’s quantification of her reasonable needs occurs in the context of that he asserts that he needs $1,180.00 per week, exclusive of the costs of accommodation, to meet those commitments necessary for his own support. This amount equates to that arrived at by deducting from the wife’s quantification of her need for support ($1,260.00) the $80.00 difference between her current rental costs ($430.00) and the upper figure of the husband’s suggested rental costs ($350.00).
The wife was not employed when the husband ceased paying spousal maintenance at the end of March 2013. She had no source of income during the three month period which preceded him recommencing the payment of the same in mid June 2013. In such circumstances, I accept that her financial position deteriorated during this period and that, by the end of June 2013, she owed approximately $9,000.00 on a Commonwealth Bank MasterCard, in respect of which she is required to make minimum monthly repayments, and was about $1,700.00 in arrears in respect of a Commonwealth Bank Smart Access account.
Whilst the wife will be eligible to receive $246.30 per week by way of social security payments if the husband ceases to pay spousal maintenance, such entitlement must be disregarded: s 75(3) of the Act.
In the context of the matters outlined in paragraphs 42, 44, 46 and 47, none of the wife’s claimed expenses are extravagant. I am satisfied that the needs are reasonable and that the amount in which they are quantified represents a standard of living which is “reasonable in the circumstances”. I consider that the sum of $1,180.00 per week represents a quantification of the wife’s reasonable need for maintenance. This amount takes into account the prospect that, given her rental agreement ends in October 2013, the wife may be able to obtain accommodation at the upper end of the cost range identified by the husband ($350.00 per week) rather than the current rental amount. It coincidentally equates to the husband’s assessment of the weekly commitments necessary to enable him to support himself, exclusive of the costs associated with mortgage repayments.
To what extent is the husband reasonably able to maintain the wife?
As noted above, the husband previously paid the wife $1,130.00 per week spousal maintenance. He says he reluctantly agreed to make such payments in an amount higher than he could actually afford and that the business overdraft – the source from which such funds were obtained – is now at its limit.
In May 2013 the husband offered, on two separate occasions, to pay the wife $700.00 per week spousal maintenance for a period of six months. The first offer was conditional upon her withdrawing the application for interim spousal maintenance and interim litigation funding, whilst the second was conditional upon her agreeing, within 48 hours, to the sale of the H Street property. I can only conclude from these offers that the husband considered that he had the capacity to pay this amount at that time.
Following the wife’s non-acceptance of these offers, the husband arranged to pay her $600.00 per week spousal maintenance for a six month period commencing in June 2013. He says he did so in the hope the parties will reach agreement at a private mediation or the wife will find employment. He also is paying the wife’s private health insurance cover at a cost of $100.00 per month.
The husband also says that he has arranged to borrow the $600.00 per week from the business by making withdrawals from the business overdraft. In so doing he appears to me to have continued the practice of borrowing from the business to meet personal expenditure, albeit that this is now the payment of spousal maintenance whereas it was previously the payment of costs associated with holidays and household expenses.
The husband says that by paying the wife $600.00 per week spousal maintenance he is placed personally into further debt. The husband says[14] that his total monthly income is that received by way of monthly dividend from the X Property Trust and by way of a pension from the super fund. There appears to me to be some discrepancies in the amount each party asserts that the husband receives on a monthly basis. The husband says that he has a total monthly income of $7,177.00[15] ($1,656.23 per week) and a monthly surplus after paying his regular expenses (including the mortgage, rates and insurances on the H Street property) of $678.00 ($156.46 per week). It follows from this evidence that his regular monthly expenses are quantified at $6,499.00 ($1,499.76 per week).
[14] Husband's affidavit filed 24 June 2013, paragraph 3.
[15] Husband's affidavit filed 25 June 2013, paragraph 3.
The wife does not accept the husband’s evidence about his income. She asserts[16] that he has a minimum weekly income of $3,429.50, such that, after taking into account his monthly expenses of $6,499.00, he is left with a surplus of approximately $1,804.75 per week.
[16] Wife's affidavit filed 26 June 2013, paragraph 33.
I find that the following summarises the parties’ assertions about the husband’s income.
Income source Wife’s figure[17] Husband’s figure Distribution from X Property Trust $6,055.00 per month (said to be approximately $1,513.00 per week but, if calculated on an annual basis – $1,397.30 per week) $5,255.00 per month – Annexure “BWG – 1” husband’s affidavit filed 24 June 2013 ( $1,212.69 per week) Distribution from MS Pty Ltd $50,000.00 per annum (approximately $961.00 per week) E$961 per week: husband’s financial statement filed 8 May 2013[18] Income from rental of marina space $500.00 per month (said to be approximately $125.00 per week but, if calculated on an annual basis – $115.38 per week) Income from superannuation pension $480.50 per week - taken from the husband’s 24 June 2013 affidavit (but, if calculated on an annual basis - $443.54 per week) or the $690.00 per week estimated by the husband in his May Financial Statement $690.00 per week : husband’s Financial Statement filed 8 May 2013 or
$1,922.00 per month ($443.54 per week) : husband’s affidavit filed 24 June 2013
TOTAL per week $2,954.18 $2,863.69 [17]Wife's affidavit filed 26 June 2013,paragraph 33, using annualised figures.
[18]See also the entries in the bank statements for 18 September 2012, 11 October 2012, 26 October 2012, 8 November 2012, 22 November 2012, 6 December 2012, 20 December 2012, 30 January 2013, 14 February 2013. 27 February 2013, 14 March 2013, 27 March 2013, 11 April 2013, 29 April 2013 and 15 May 2013.
Given that the husband’s Commonwealth Bank Complete Access Account bank statements reveal that he received a payment of $6,055.00 from the X Property Trust on 3 September 2012, 1 October 2012, 1 November 2012, 3 December 2012, 2 January 2013, 1 February 2013, 1 March 2013, 2 April 2013, and 1 May 2013, I prefer the wife’s evidence about the quantum of payments received from this source.
Further, given that these bank statements also record that the husband received payments in relation to the rental of the marina berth attached to the H Street property in the amount of $500.00 on 4 September 2012, 2 October 2012, 5 November 2012, 5 December 2012, 19 December 2012, 5 February 2013, 4 March 2013, 26 March 2013 and 3 May 2013, I prefer the wife’s evidence about this issue.
It is the wife’s case that, in addition to the monies described above, the husband is likely to be receiving money from people living at the H Street property. She bases this on her assertion that, during their relationship, the parties received $350.00 per week from people who were living in part of the H Street property. For a period this was paid in cash and used to pay joint expenses and, later, was paid directly into a bank account. The wife says that she recorded the husband telling her that, whilst he had vacated the H Street property, the people who had previously lived there were still living there.[19] As the husband has yet to have a proper opportunity to respond on oath to these assertions, it is not possible at this stage to make findings about them.
[19] Wife’s affidavit filed 26/06/2013, paragraph 33.
While it appears that the pension received by the husband from the super fund has decreased from $690.00 per week in May 2013[20] to about $443.54 per week in June 2013,[21] no explanation for this decrease has been provided by the husband.
[20] Husband’s Financial Statement filed 8 May 2013.
[21] Husband’s affidavit filed 24 June 2013.
I accept, for the purpose of this interim application, that the husband receives about $2,954.18 per week. Using his figure of $1,499.76 per week for his regular expenses (including the mortgage, rates and insurances on the H Street property), I find that the husband has a surplus $1,454.42 per week.
I also consider that the evidence establishes the following matters which I take into account :
a)save for generalised assertions about the negative impact of the payments of spousal maintenance made so far on his financial position, the husband has not identified with any particularity the manner in which such payments are asserted to have negatively affected him nor has he provided clear evidence that he is now unable to continue to obtain funds to pay ongoing spousal maintenance as he has previously done;
b)the husband’s 2010/2011 taxable income of $37,200.00 (or $715.00 per week) which is insufficient to meet the $1,180.00 per week, exclusive of the costs of accommodation, he needs to meet those commitments necessary for his own support, does not reflect his actual financial capacity;
c)save for referring to the existence of guarantees and indemnities, the husband provides no explanation for why he personally rather than the business or the Trust services the Bank loans and overdraft facilities used by the business and Trust - particularly in circumstances where he says that he has no interest in the Trust or property owned within that structure other than as a discretionary beneficiary;
d)the husband’s draft individual tax return for the 2012 financial year [22] estimates that he will be entitled to receive a tax refund of $17,761.75 (or some $341.55 per week) which, when received, may provide another source from which the wife’s need for spousal maintenance can be satisfied.
[22] Exhibited to the husband’s affidavit filed 8 May 2013.
I conclude that, on an interim basis, the husband has the capacity to meet the wife’s reasonable need for spousal maintenance in the sum of $1,180.00 per week assessed by me.
Having taken into account the matters outlined above, I consider it proper that the husband pay to the wife the sum of $1,180.00 per week spousal maintenance from 9 April 2013, when the wife filed her Initiating Application in which she sought an interim order for the payment of spousal maintenance.
I calculate the wife’s entitlement to spousal maintenance from 9 April 2013 to the making of the Order to be in the amount of $21,060.00 which comprises :
a)$10,620.00 - $1,180 per week for the nine week period from 9 April 2013 until 14 June 2013;
b)$10,440.00 – $580.00 per week (the difference between $1,180.00 and the $600.00 per week paid by the husband) for the 18 week period from 14 June 2013 until the making of the Order.
It is, I consider, proper that such amounts, which represent the quantification of the wife’s need for spousal maintenance since the filing of the Application for the same less the payments made by the husband, be paid to the wife in two instalments over a two month period. In this way, the husband will have the opportunity to make whatever arrangements he considers appropriate, be this borrowing from the super fund or calling upon the Trust to repay him some of the funds he has lent it, in order to meet such payments.
The Application for Litigation Funding
The wife seeks the provision of litigation funding from the husband in the sum of $100,000.00 or, alternatively, $40,484.00 and the making of a dollar for dollar order. She says that, without an order that the husband contribute to her costs of litigation, she has no funds with which to pay the legal expenses associated with the proceeding.
Principles to be applied in determining an Application for the provision of funds for litigation
In Strahan v Strahan (2011) FLC 93-466, Boland and O’Ryan JJ said at [79]:
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: Blueseas Investments Pty Ltd v Mitchell (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
Counsel for the wife referred to Marlowe-Dawson & Dawson[23], a case in which Kent J discussed the source of power provided by s 117(2) and s 80(1)(h) of the Act. The wife relies on ss 117(2), 79 and 80(1)(h) of the Act as the relevant source of power for the making of the Order sought. Whilst preliminary identification of the source of power is necessary because this determines the necessary preconditions and relevant considerations for making the order sought,[24] it is clear that many of these are common to the respective sources of power.
Is there a position of relative financial strength on the part of the husband, does he have the capacity to meet his own litigation costs and does the wife have an inability to meet her own financial costs?
[23][2012] FamCA 702.
[24] Strahan & Strahan where, at par [84] and [86] Boland and O’Ryan JJ agreed with what Brereton J in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 stated that Zschokke and Zschokke (1996) FLC 92-693 had established.
The wife is not a director, or shareholder of any of the corporate entities in which the husband has an interest or is involved. She is not a trustee, beneficiary or appointor of any of the trusts in respect of which she alleges the husband is involved. Thus, she has no control over the entities which she asserts were the source of the funds for the parties during the relationship and which continue to be the source of the funds available to the husband post separation.
The wife owns the S property and the K property. The S property is said to be valued at about $111,899.00. It was purchased with funds lent to the wife by the husband. She wife asserts that she currently owes him approximately $137,896.00 as a consequence of this transaction. This is said to be repayable “on demand following separation”. I did not understand the husband’s position to be that the wife was not liable to repay to him such funds. It is obvious, therefore, that even if this property was sold, the wife would not obtain funds with which to fund the litigation. Further, any potential sale of this property is likely to be attended by a certain amount of delay as is so often the case with the disposition of real property.
The property situated in K, which is asserted to have a value of about $12,433.00, was gifted to the wife by her parents in 1997 on condition that they be permitted to live in it for the remainder of their lives. It is, at least on the face of it, subject to a life interest in their favour. In any event, the same comments about the potential delays attendant upon its sale apply.
Whilst the wife has a relatively minor entitlement to superannuation, she cannot access this because of her age.
It is clear that the wife is unable to meet her own legal costs.
The husband says he does not have the ability to fund the wife’s legal costs, does not have any savings and his business overdraft and loan facilities are at their maximum limits. He says that he is unable to increase the overdraft facility. He currently owes approximately $20,000.00 on a personal credit card. In addition, he says that his request to borrow $100,000.00 to meet the wife’s legal costs was declined by the Bank due to the current level of debt for which he is personally responsible.
Whilst not accepting the husband’s position, the wife says that, irrespective of the matters he raises, he can access his entitlement to superannuation in the super fund which, as at 8 May 2013, was in an amount of $430,000.00. Counsel for the husband informed from the Bar table during the hearing that the husband’s interest in the super fund had reduced to $275,000.00. Given the husband’s evidence, I conclude that this is the result of the husband drawing upon this source to meet legal expenses. I am satisfied that, in the future, the husband will be able to access or borrow from the super fund in order to meet his ongoing litigation expenses.
On this basis alone, I am satisfied that the husband is in a position of relative financial strength vis a vis the wife.
Is there complexity in the financial affairs of the parties and a need for expert investigation?
The husband has interests in a number of entities particularised by the wife at paragraphs 53 and 54 of her affidavit filed on 9 April 2013.
Given that the husband’s legal representatives stated, in correspondence dated 2 April 2013[25]:
As you will appreciate, our client’s financial situation is complex and apart from the former matrimonial home, all of his property interests in trusts and other entities have numerous other interested parties. As such, it is taking us some time to collate a full and accurate list of our client’s assets and liabilities including the assets and liabilities of the numerous entities which we are completing with the assistance of our clients accountant,
I accept the wife’s contention that there is complexity in the husband’s financial affairs.
[25] Wife’s affidavit filed 9 April 2013, Annexure ‘RDR-22’.
That there is a need for expert investigation of the same is, at least in part, accepted by the parties’ consent to an order in May 2013 that the husband arrange for his accountants to prepare a valuation of his interests and provide the same to the wife.
I accept that, not only is the husband’s financial situation ‘complex’, the terms of the wife’s Application adds to the complexity of the proceedings before the Court.
Does the wife have at least an arguable case for substantive relief which deserves to be heard?
The parties cohabited for nine years during which both made various contributions as outlined in their respective affidavits. Whilst the degree and nature of these contributions remains in dispute and is incapable of resolution at an interim hearing, I consider that the wife has at least an arguable case for substantive relief which deserves to be heard.
What are the wife’s likely costs of the litigation?
The wife owes her previous solicitors the sum of $5,836.23. She owes her current solicitors $11,665.10 and has been advised that she will be required to pay a further sum of $21,468.13 in respect of work in progress. These amounts together total some $38,969.46. The wife has also been advised that the cost of proceedings to trial will be up to an additional $70,000.00.
Will it be possible to ‘take into account’ in the property proceedings any sum paid to the wife?
Counsel for the husband submitted that if an order was made requiring him to pay $100,000.00 to the wife by way of litigation funding, such sum may exceed that which the wife is likely to obtain in the proceedings. In contrast, Counsel for the wife submitted that such an amount amounted to no more than a small percentage of the value of the property amendable to orders of the court.
The significant difference in the submissions is understandable given the basic matter in dispute between the parties – that is, whether the Trust assets are property of the parties for the purpose of s 79 of the Act. In the event that the wife’s case succeeds, it may well be that the value of the property available for consideration is in the vicinity of about $4,000,000.00. If the husband’s case succeeds, the net property available for consideration may well be nothing.
Counsel for the wife handed up an alternative proposal which would see the husband pay a lump sum of about $40,000.00 toward the wife’s legal expenses and thereafter pay such expenses by way of a ‘dollar for dollar’ order. Such proposal has obvious advantages.
Whilst it may be necessary for the Court, in determining whether to make an order, to consider whether it will be possible to ‘take into account’ in the property proceedings any sum payable under an order, a conclusion about the uncertainty of the wife’s eventual property settlement award, as is the case here, is not necessarily fatal to her application but is just one of the matters to be balanced in the exercise of discretion.[26]
[26] Strahan & Strahan (2011) FLC 93-466, [95] referring to Zschokke & Zschokke (1996) FLC 92-693, 83,217 & 83,221.
Will the wife’s legal representatives continue to act for her in the absence of funds?
Understandably, there was no challenge to the wife’s evidence that she has been advised by her current legal representatives that they are unable to continue to act for her if this application is unsuccessful. Consequently, should the wife fail in her application for litigation funding, she will have to represent herself or try to engage new legal representatives in circumstances where she is unemployed, and has been so since December 2005, and owes money to two previous legal representatives.
Additional matters relevant to the consideration of wife’s Application pursuant to s 117(2) of the Act
In addition to the matters outlined above, it is also necessary to consider those matters contained in s 117(2A) of the Act where they are relevant.
The financial circumstances of each party have been summarised above and I do not intend to repeat them. Neither party is legally aided.
The wife has investigated whether she is likely to be eligible for Legal Aid funding and, from her investigations, has concluded that she does not believe she is eligible to receive the same. There was no submission by Counsel for the husband that I should reject this evidence and I consider it highly improbable that the wife would receive a grant of legal aid to assist her in the prosecution of this proceeding.
The wife asserts that the husband has caused her to incur substantial legal fees by refusing to cooperate with various requests for disclosure. The wife asserts that the husband failed to disclose his interest in a number of entities, his superannuation interests or any personal bank accounts or credit cards other than those particularised by her at paragraph 23 of her affidavit filed 26 June 2013. The wife also asserts that the husband failed to comply with the Orders made 9 May 2013 in so far as they related to disclosure to be made by him by 7 June 2013.
Whilst each party alleges that the other has failed to provide disclosure and that this conduct has either slowed the progress of the proceeding or in some way contributed to the legal costs so far incurred, it is impossible to determine the competing assertions at an interim hearing. In a similar way, I consider that I am unable to determine assertions about alleged failures to comply with a previous order relating to disclosure.
Additional matters relevant to the consideration of wife’s Application pursuant to ss 79 and 80(1)(h) of the Act
The wife asserts that doing the best that she can at this point in time and subject to further valuations and disclosure the value of the property is, “at a minimum” $4,300.000.00. If this is the case, the $100,000.00 sought by the wife pursuant to the Application represents 2.3 per cent of such an amount. The approximately $40,000 lump sum sought represents about 0.93 per cent. It is submitted that, even if the husband’s case, colloquially summarised, that she did “next to nothing” during the period of cohabitation succeeded, the wife would receive an entitlement far greater than this.
Having regard to the various contributions made by the wife during the course of the parties relationship, it is, I think, obvious that she will receive more than 0.93 per cent or 2.3 per cent of the property of the parties amendable to the operation of s 79 of the Act. The difficulty is, of course, in determining what the value of this property might be given the fundamental difference between the parties as to what constitutes that property.
Given this difficulty, I am persuaded that the just approach to the matter makes it preferable that I rely on s 117(2) of the Act rather than s 80(1)(h) of the Act as the source of power for the making of the order sought by the wife.
I consider that the circumstances justify the making of an order for the provision of litigation funding and that it is just that such order be made[27] in terms which will see the husband meet the wife’s costs by payment of a lump sum in the amount of $38,969.46 and, thereafter, by way of a dollar for dollar order. The wife is unable to meet her own litigation costs without such an order. In contrast, the husband is in a relatively stronger financial position and has demonstrated a capacity to meet his own legal costs. Without such an order the wife, who has an arguable case for substantive relief, will be left to act on her own behalf in circumstances where there is admitted complexity to the husband’s financial affairs and her case involves some legal complexity.
[27] Strahan at [91] referring to Zschokke at p 83,218.
I am also confident that a dollar for dollar order will enable both parties to participate justly in the litigation currently before the court. The form of the order made meets the matters discussed in Strahan at [94][28] and at [95].[29]
[28] referring to Zschokke at p.83,216
[29] Where reference was made, with approval, to Brereton J. in Paris King Investments Pty Ltd v Rayhill at [30] & [31] and also at [153].
Order to retrieve property
The wife’s application that an order be made to facilitate her attendance at the former matrimonial home for the purpose of collecting personal items of property was not agitated before me and, consequently, I make no order in relation to this.
Restraint with respect to the Former matrimonial home
The wife seeks that the husband be restrained from dealing with the H Street property because, if it is sold, there will be minimal property in respect of which an order could be made.
The wife submits that, despite undertaking in September 2012,[30] not to sell, transfer, mortgage or otherwise deal with the H Street property, the husband entered into a contract for the sale of the same.
[30] referred to in the Husband’s affidavit filed 24 June 2013, paragraph 17.
It is not in dispute that the husband did so. However, he says that he did so in circumstances where interested parties offered $1,600.000.00 for the H Street property which had been appraised in February 2013 at between $1,200,000.00 and $1, 300,000.00. In addition to submitting that an injunction would put this proposed sale at this considerably higher price at risk, Counsel for the husband submitted that the Bank has been placing the husband under pressure to reduce the liabilities of the BG Group since August 2012 when the wife placed the caveat over the H Street property. It was submitted that, as the H Street property is the only asset under the husband’s control, it is the most amendable to disposition for the purpose of debt reduction. It is clear that, if the property is sold, the Bank will require all net proceeds of sale to be applied to the outstanding loans guaranteed by the husband.
Counsel for the wife submitted that there is no evidence from the Bank to suggest that the imposition of an injunction in the manner sought would place ‘at risk’ facilities granted to the husband by the Bank. I agree.
I also accept the submission that if the Bank requires debt reduction, Trust assets can be sold to meet what appears to me to be Trust debt, albeit supported by guarantees provided by the husband.
Whilst Counsel for the husband submitted that the injunction sought by the wife was unnecessary given the husband’s undertaking and his knowledge of the consequences of any breach of the same, it is clear that, despite providing it in September 2012, the husband entered into a contract for the sale of the H Street property. The further submission made by Counsel that the husband would not allow the contract to become unconditional in breach of his undertaking may well provide little comfort for the wife given his deliberate action in this respect.
Given the potential significance of the H Street property, the submission made on behalf of the wife that there is other property which could be realised to reduce the liability of the Trust in preference to it, the uncertainty in the absence of expert reports as to the value of the husband’s interests in various entities and the absence of any significant evidence to suggest that the Bank is pressing for a reduction in debt, I consider that the balance of convenience favours the making of an order in the terms sought by the wife.
The terms of the order are such that it will remain open to the parties to agree on the sale of the H Street property. Any asserted unreasonableness on the part of the wife in respect of the sale of the H Street property can be dealt with at a final hearing if necessary.
valuation of property and entities in which the husband has an interest
Counsel for the husband submitted that the wife should not be permitted to “re-agitate” the valuation of the properties and entities in which the husband has an interest given the parties’ previous agreement that his accountants prepare valuations of those prior to the agreed private mediation.
Counsel for the wife handed up an amended proposal which, in essence, provided that if the wife was dissatisfied with the valuations prepared by the husband’s accountants, a single expert be appointed to value the husband’s interests in various properties and entities. There is no evidence at this time as to the likely cost of such an exercise nor in relation to the source from which it is said that such expense could be met.
I consider, at this stage, that the most appropriate course is that contained in the orders appearing at the commencement of these Reasons. This will ensure that the funds already spent by the husband on having his accountants prepare valuations are not wasted. It will provide to the wife an appropriate opportunity to clarify matters with the authors of such reports should she wish to do so but will not lead to further delay in the parties undertaking their agreed private mediation.
If such mediation fails to bring about an agreed resolution, or the wife’s legal representatives identify substantial asserted failings in the reports prepared by the husband’s accountants or identify matters in respect of which their queries have not been satisfactorily answered, it will, of course, be open to the wife to re-agitate the appointment of a single expert or experts to undertake the necessary valuations.
I certify that the preceding one hundred and seventeen (117) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 18 October 2013.
Associate:
Date: 18 October 2013
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Injunction
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Discovery
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Procedural Fairness
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