Raman and Raman
[2018] FamCA 871
•29 October 2018
FAMILY COURT OF AUSTRALIA
| RAMAN & RAMAN | [2018] FamCA 871 |
| FAMILY LAW – PROPERTY – Interim application – Where the wife seeks that orders be made for spousal maintenance – Where the wife seeks that orders be made for an interim property distribution in her favour – Where, in the alternative to an interim distribution, the wife seeks a dollar for dollar order in respect to legal costs – Where the husband seeks that orders be made for the sale of the parties’ former matrimonial home with a subsequent interim distribution to the wife – Where the husband is the primary financial contributor – Where the wife is the homemaker and primary carer for the parties’ children – Where the Court finds that the wife cannot reasonably support herself –Where the Court finds that the husband has financial resources which enable him to pay spousal maintenance – Where the Court finds that the wife cannot adequately fund her litigation – Where the Court considers it proper to make a dollar for dollar order – Orders made for spousal maintenance – Dollar for dollar order made. |
| Evidence Act 1995 (Cth) s. 140 Family Law Rules 2004 rr. 4.15, 13.01, 13.04 |
| Atkins & Hunt (2018) 57 Fam LR 128 Briese and Briese (1986) FLC 91-713 Brown & Brown (2007) FLC 93-316 Drysdale & Drysdale [2011] FamCAFC 85 Edgar & Strofield [2016] FamCAFC 93 Graf-Salzmann and Graf [2015] FCWA 68 Hall v Hall [2016] 257 CLR 490 In the Marriage of Farr (1976) FLC 90-133 Jefferson & Coulston [2014] FamCA 1083 Kirk v Industrial Relations Commission of New South Wales (2010) 239 CLR 531 Livesey and Jenkins (1985) 1 All ER 106 Maroney & Maroney [2009] FamCAFC 45 Martin & Martin and Ors [2013] FamCA 222 McCrossen & McCrossen (2006) FLC 93-283 Medlow & Medlow (2016) FLC 93-692 Mitchell & Mitchell (1995) FLC 92-601 Philips & Samuels [2017] FamCA 125 Quayle & Perceval [2018] FamCA 664 Saxena and Saxena (2006) FLC 93-268 Stanford v Stanford (2012) 247 CLR 108 Stein & Stein (2000) FLC 93-004 |
| APPLICANT: | Ms Raman |
| RESPONDENT: | Mr Raman |
| FILE NUMBER: | SYC 5368 of 2018 |
| DATE DELIVERED: | 29 October 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 17 September 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Harper |
| SOLICITOR FOR THE APPLICANT: | Swaab Attorneys |
| COUNSEL FOR THE RESPONDENT: | Mr Tockar |
| SOLICITOR FOR THE RESPONDENT: | DA Law Group |
Orders
THE COURT ORDERS, PENDING FURTHER ORDER, THAT:
The husband pay to the wife spousal maintenance, as follows:
(a)The sum of $241 each week by way of cleared funds, such funds to be paid into the wife's nominated bank account;
(b)All arrears of and ongoing mortgage repayments due on real property situate at and known as B Street, Suburb C (“the Suburb C property”) as and when they may fall due;
(c)All arrears of and ongoing council rates and water rates referable to the Suburb C property as and when they may fall due;
(d)All arrears of and ongoing building insurance and home and contents insurance payments referable to the Suburb C property as and when they may fall due; and
(e)All arrears of and ongoing comprehensive motor vehicle insurance and motor vehicle registration payments for the motor vehicle in the wife's possession as and when they may fall due.
Within seven (7) days after any future payment by or on behalf of the husband of any money in payment of accounts rendered by his solicitors, including in relation to the expenses associated with the preparation of his case, the husband pay or cause to be paid the same sum of money to the solicitors for the wife.
Within 24 hours after the payment by or on behalf of the husband of any money referred to in order 2 herein, the husband cause to be given to the wife's solicitors a memorandum stating the amount or amounts so paid to his solicitors.
The husband instruct his solicitors that all money paid to them, including on his behalf, pursuant to order 2 herein, are to be held in trust by them and not applied in payment to them until such time as the relevant amount has been paid by or on behalf of the husband to the solicitors for the wife.
If the payments referred to in order 2 herein are not made within seven (7) days, the husband is to direct his solicitors to pay 50 per cent of whatever is received (as held by them in trust pursuant to order 4 herein) to the solicitors for the wife.
The wife is to instruct her solicitors that amounts paid to them pursuant to these orders are to be applied by them in payment of the costs and disbursements incurred by the wife in the conduct of these proceedings.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Raman & Raman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5368 of 2018
| Ms Raman |
Applicant
And
| Mr Raman |
Respondent
REASONS FOR JUDGMENT
Introduction
This decision concerns an application by the wife for interim spousal maintenance, together with a dollar for dollar order whereby the husband would be required to pay to the wife’s solicitors an equivalent amount to that which he pays his own solicitors in respect to legal fees to be incurred in the proceedings.
Comparatively, the husband seeks that orders be made for the sale of the former matrimonial home at B Street, Suburb C NSW (“the Suburb C property”). In terms of the proceeds of that sale, the husband seeks that 70 per cent of those monies be paid to the wife by way of partial property settlement and that the balance be held in a controlled monies account in the joint names of the parties. Further, the husband accepts that he should make spousal maintenance payments to the wife, but contends that a much lower figure should be paid and further, payments should only be made until settlement of the Suburb C property.
Background
The husband was born in 1977 and is currently aged 41 years. He is employed as a health professional.
The wife was born in 1978 and is currently aged 40 years. She is employed in retail.
In 2008, the parties were married.
In March 2009, the wife ceased working.
On 8 April 2009, the parties’ child X was born. X is currently aged 9 years.
The husband contends that, in 2009, the parties purchased a property in their joint names at D Street, Suburb E NSW (“the Suburb E property”). The wife contends that the Suburb E property was purchased on 29 October 2007.
In 2011, the parties’ child Y was born. Y is currently aged 7 years.
The husband contends that, in 2012, the Suburb E property was sold and the parties purchased a property at F Street, Suburb G (“the F Street property”). The wife contends that the Suburb E property was sold in August 2011 and that the F Street property was purchased in June 2011.
In 2012, the parties’ child Z (“Z”) was born. Z is currently aged 6 years.
In May 2013, the husband obtained specialist accreditation.
In 2015, X commenced school at H School.
In May 2015, the parties paid a deposit and stamp duty in order to purchase a property “off the plan” in Suburb J (“the Suburb J property”).
In 2016, Y and Z commenced school at K School.
On 12 February 2016, the company L Pty Ltd (“LPL”) was established with a view to setting up and renting out clinics to doctors. The husband is one of three directors of LPL. The Raman Discretionary Trust (“the trust”) is the beneficial shareholder of LPL. The husband is the sole principal and trustee of the trust.
The husband says that, in early 2016, the F Street property was sold. The wife contends that the F Street property was sold in January 2017.
On 17 June 2016, the husband incorporated M Pty Ltd. The husband operates his medical practice through M Pty Ltd.
The husband contends that, in late 2016, the parties purchased the Suburb C property. The wife contends that the parties purchased the Suburb C property in January 2017.
On 1 February 2017, the parties split the mortgage in respect to the Suburb C property such that they had one facility of $600,000 and another with the remaining balance of $3,000,000. The husband’s outstanding tax liability of approximately $640,000 was paid from those borrowed funds.
In February 2017, the wife commenced employment with Company N. In his case outline document, the husband contends that the wife earned approximately $95,000 per annum in that employment. However, at the hearing, it was agreed that the wife’s pay slips for a three month period show that she received an income which, if projected, represented an income of approximately $73,000 per annum from that employment.
The husband contends that, in June 2017, the parties separated. The wife contends that separation occurred in March 2017. The parties remained living at the Suburb C property.
In July 2017, the husband says that the wife commenced a relationship with Mr O. The husband contends that the wife has failed to provide full disclosure of the nature of her relationship with Mr O and the extent to which he has the capacity to contribute to the wife’s expenses. The wife contends that her relationship with Mr O has not progressed to a level of seriousness that would require such disclosure.
On 10 September 2017, the husband asserts that the wife transferred the amounts of $20,000 and $130,933 from a joint ANZ account into her personal ANZ account (to which the husband had access).
In October 2017, the wife went on unpaid sick leave and eventually resigned from Company N in February 2018.
On 19 November 2017, a provisional Apprehended Domestic Violence Order (“ADVO”) was taken out against the husband for the protection of the wife. The husband then moved out of the Suburb C property.
On 20 November 2017, the husband contends that the wife transferred $20,091.92 from a joint NAB account into her personal ANZ account.
The husband contends that, on 28 November 2017, he consented to an interim Apprehended Violence Order (“AVO”) being made on a “without admissions” basis and that on 3 July 2018, the Police withdrew the ADVO.
On 29 January 2018, the husband purchased a motor vehicle for the wife and took possession of the motor vehicle that she had been previously utilising.
On 20 February 2018, the husband sold his motor vehicle for $80,000 and utilised those funds to discharge the balance of the lease on that vehicle in the amount of $74,624.93.
On 18 April 2018, the husband ceased making mortgage repayments in respect to the Suburb C property. The husband contends that he had previously advised the wife that he would not be able to continue making those repayments.
On 28 May 2018, M Pty Ltd entered into an agreement with the Australian Taxation Office (“ATO”) to repay a taxation liability in monthly instalments of $21,000 (or $4,846 per week), with a final payment to be made on 29 January 2019 in the amount of $2,304.44.
On 16 July 2018, the wife commenced working part-time. The wife contends that her gross wage is approximately $29 per hour. The husband contends that the wife’s current income is approximately $650 per week.
On 25 August 2018, the Child Support Agency assessed the husband as being liable to pay $1,387 per week by way of child support.
On 5 September 2018, M Pty Ltd entered into a second payment plan with the ATO to pay goods and services tax (“GST”) in the amount of $13,200 per month (or $3,300 per week), with a final payment to be made on 9 January 2019 in the amount of $2,490.06.
On 10 September 2018, settlement of the Suburb J property took place. The monthly repayments for the loan and related overdraft loan referable to the purchase of that property amount to $5,246.64. The husband states that he hopes to be in a position to lease the Suburb J property for approximately $800 to $850 per week, or $3,467 to $3,683 per month.
Applications
At the hearing, the wife sought that the following orders be made, in accordance with her Initiating Application filed on 23 August 2018:
2. That pending further Order:
(a) the husband pay to the wife spousal maintenance as follows:
(i) the sum of $800 each week by way of cleared funds, such funds to be paid into the wife's nominated bank account;
(ii) all arrears of and ongoing mortgage repayments due on real property situate at and known as [B Street, Suburb C] ('the [Suburb C] property') as and when they may fall due;
(iii) all arrears of and ongoing council rates and water rates on the [Suburb C] property as and when they may fall due;
(iv) all arrears of and ongoing building insurance and home and contents insurance payments on the [Suburb C] property as and when they may fall due;
(v) all arrears of and ongoing comprehensive motor vehicle insurance and motor vehicle registration payments for the motor vehicle in the wife's possession as and when they may fall due.
3. Within 7 days of the date of these Orders, the husband pay to the wife the sum of $50,000, such sum to be utilised towards payment of the wife's legal costs in these proceedings, the characterisation of this advance to be determined by the Trial Judge at a final hearing.
4. In the alternative to Order 3, within 7 days after any future payment by or on behalf of the husband of any money in payment of accounts rendered by his solicitors, including in relation to the expenses associated with the preparation of his case, the husband pay or cause to be paid the same sum of money to the solicitors for the wife.
5. Within 24 hours after the payment by or on behalf of the husband of any money referred to in Order 4, the husband cause to be given to the wife's solicitors a memorandum stating the amount or amounts so paid to his solicitors.
6. All money paid to the husband's solicitors including on his behalf pursuant to Order 4 be held in trust by his solicitors and not applied in payment to the husband's solicitors until such time as the amount has been paid by or on behalf of the husband to the solicitors for the wife.
7. If the payment referred to in Order 4 is not made within 7 days, the husband is to direct his solicitors to pay 50 per cent of whatever is received (as referred to above and held by them in trust) to the solicitors for the wife.
8. The amounts paid pursuant to these Orders to the solicitors for the wife are to be applied by them in payment of the costs and disbursements incurred by the wife in the conduct of these proceedings and the characterisation of these payments to be determined by the Trial Judge at a final hearing.
Comparatively, the husband sought that the following orders be made, in accordance with his Response filed on 14 September 2018:
1. That within 14 days of the date of the making of these Orders, the Applicant and Respondent shall do all acts and things and sign all documents necessary to effect a sale of the property located at B Street, Suburb C ("the property") for the best price reasonably obtainable as set out in the following manner:
a. The property shall be listed for sale by public auction with such real estate agent as is agreed between the parties and failing agreement within 14 days from the date of these Orders the real estate agent (hereinafter referred to as "the auctioneer") will be nominated by the President of the Real Estate Institute of NSW at the request of the parties or either of them, and the costs of and incidental to such appointment shall be borne equally by the parties;
b. The reserve price of the property shall be such amount as is agreed between the parties and failing agreement within 14 days of the date of these Orders the reserve price will be as nominated by the auctioneer;
c. The sale price of the property shall be any amount in excess of the reserve price but in the event of the reserve price not being reached the sale price of the property shall be such amount as is agreed between the parties or, failing agreement, any offer received after the auction to buy the property at a price that is at least 90 per cent of the reserve price shall be accepted by the parties;
d. The parties are to co-operate in every way with the real estate agent in relation to the marketing of the property for sale, including (without limiting the generality of the foregoing):
(i) making the key available to the auctioneer;
(ii) allowing inspection of the property at all times reasonably requested by the auctioneer;
(iii) doing or saying nothing to hinder or prevent a sale being effected;
(iv) ensuring that the property including the grounds are in a neat and clean condition at the time of inspection by the auctioneer and prospective purchasers;
(v) attending to all cosmetic work and minor renovations of the property as recommended by the auctioneer, to a maximum of $10,000 (unless otherwise agreed);
(vi) signing all documents requested by the auctioneer in relation to the listing of the property for sale;
e. The Applicant shall execute a contract for sale of the property in the form prepared by the solicitor having conduct of the sale at the sale price;
f. Neither party may confer on any agent without the consent of the other party any right to any sale or exclusive agency in respect of the property or to any commission;
g. The Respondent shall be entitled, upon reasonable notice once per fortnight to enter and view the state of repair of the property.
2. In the event that the property is not sold at auction pursuant to Order 1 above or within 14 days after the date of the auction by further negotiation, then the parties shall cause a further auction of the property to be held within three months after the date of the first auction, and for that purpose the provisions of Order 2 above shall apply, save that the reserve price will be reduced by 5 per cent.
3. The provisions of Order 1 above shall apply mutatis mutandis in the event of the property not being sold at the second auction, or at any subsequent auction.
4. The proceeds of sale of the property shall be paid in the following manner and priority:
a. all costs and expenses of sale, including legal costs and disbursements, auctioneer's commission and auction expenses;
b. discharge of the home mortgages with the National Australia Bank secured over the property;
c. the amounts required to pay all adjusted municipal and water rates outstanding with respect to the property;
d. costs of cosmetic work and minor renovations to the property;
e. repayment of the loan to the Applicant's mother in the sum of $37,701 ;
f. repayment of the loan to the Respondent's father in the sum of $120,525;
g. 70 per cent of the net proceeds of sale to be paid to the Applicant Wife by way of partial property settlement and the balance shall be deposited into a controlled monies account in the name of the Applicant Wife and Respondent Husband.
5. The Applicant shall continue to occupy the [Suburb C] property until completion of the sale of the [Suburb C] property and the Respondent shall pay the council rates, water rates, electricity and gas on the [Suburb C] property and the [Suburb C] property mortgage.
6. Pending the settlement of the sale of the [Suburb C] property the Respondent shall pay the Applicant an amount of $150 per week.
7. Both the Applicant and Respondent do all acts and things and execute all documents, authorities and writings as are necessary to give effect to all or any of these Orders.
8. That in the event for the period of 7 days, after written notice is provided, either the Applicant or Respondent refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975, to execute such deed or instrument in the name of the defaulting party and do all acts and things necessary to give validity and operation to the deed or instrument.
Issues
Therefore, the issues for determination in these proceedings are:
a)Whether there should be an order for partial property distribution in favour of the wife;
b)Whether such a distribution should be funded by the sale of the Suburb C Property;
c)Whether there should be an order for ongoing spousal maintenance and if so, in what amount; and
d)Whether there should be a dollar for dollar order in respect to the wife’s legal costs.
Limited asset pool
At paragraph 97 of her Affidavit filed on 23 August 2018, the wife estimates that the parties’ assets total $4,128,921. At paragraph 98, the wife estimates that the parties’ liabilities total $3,611,773. According to that assessment, the net property pool available for distribution is valued in the order of $517,148. Comparatively, in his written submissions, the husband contends that the net value of the parties’ assets is approximately $164,190.
The husband acknowledges that he has a substantial financial resource in the form of M Pty Ltd. The taxable income for that company during the financial year ending 30 June 2017 was $601,471. The husband acknowledges that he receives a weekly income of $8,900, being his salary of $1,538 and further expenses paid by M Pty Ltd of $7,362.
In circumstances where the parties have a limited asset pool, it is acknowledged that, if the matter is to proceed to final hearing, an issue of some significance will be whether the wife is entitled to receive ongoing spousal maintenance from the husband.
The effect of the interim orders sought by the husband would be to provide the wife with 70 per cent of the equity held by the parties in the Suburb C property, after deduction of expenses associated with the sale of that property and the repayment of loans to the parties’ parents. The husband proposes to pay spousal maintenance to the wife until the settlement of the Suburb C property and thereafter, provide no further financial assistance in terms of her personal expenses.
The wife’s concern is that those orders proposed by the husband would result in her receiving a lump sum and thereafter, she would be required to obtain and fund her own housing without ongoing financial assistance by way of spousal maintenance. The wife contends that the lump sum that she would be likely to receive from the sale of the Suburb C property would be insufficient to enable her to meet those ongoing expenses.
Partial property distribution
The husband seeks that orders be made for the sale of the Suburb C property and a subsequent partial property distribution in favour of the wife, for the following reasons:
a)Neither party is seeking to retain the Suburb C property on a final basis and, based on the matrimonial property pool, it is inevitable that the property will necessarily be sold;
b)The mortgages attributable to the Suburb C property, which is valued at approximately $4,000,000, total between $3,519,416 (according to the wife) and $3,546,896 (according to the husband);
c)The outgoings in respect of the Suburb C property, which, on the basis of figures provided by the wife, total $4,673 per week or $243,000 per annum, are “prohibitively high”; and
d)If the Suburb C property is not sold, the husband will be required to borrow substantial funds in order to meet the parties’ expenses, which will ultimately have the effect of further reducing the matrimonial property pool available for distribution.
The husband contends that, if the Suburb C property is sold, it is likely that the parties would realise net proceeds of approximately $450,000. The amount available for distribution, after the repayment of loans to the husband’s father and the wife’s mother, would be approximately $290,000. The husband, through his legal representatives, indicates that he is amenable to 70 per cent of those proceeds of the sale being paid to the wife by way of partial property settlement. In that regard, the husband contends that the wife would have “access to funds in excess of $200,000 (and possibly much more)”. From that amount, the husband contends that the wife, who is the primary carer of the parties’ children, would be able to meet her reasonable needs, as well as her legal costs.
The husband contends that the balance of the sale proceeds, being some $90,000, should remain in controlled monies account, pending final resolution of the matter.
Further, the husband proposes to pay to the wife $150 per week by way of spousal maintenance until the settlement of the Suburb C property, but nil spousal maintenance thereafter.
Counsel for the wife acknowledged that neither party is seeking to retain the Suburb C property on a final basis and that the costs associated with maintaining that property perpetuates a substantial financial burden for the parties. However, the wife objects to the Suburb C property being sold in circumstances where there is no provision for the ongoing payment of spousal maintenance to her following its sale. This would result in the situation where the wife would be forced to draw upon, what she contends is, a relatively small amount of capital in order to supplement her wages and the child support received by her in order to sustain herself and the children. This would necessarily include obtaining accommodation for herself and the children. Comparatively, the husband continues to be in receipt of an income of $8,900 per week.
Although not expressly stated, the husband’s proposed order for the sale of the Suburb C property enlivens consideration of the Court’s power under s 114 of the Family Law Act 1975 (Cth) (“the Act”) to make suchorder or grant such injunction as it considers proper in relation to thepropertyof the parties: Philips & Samuels [2017] FamCA 125 at [65].
In Martin & Martin and Ors [2013] FamCA 222 at [15], Cronin J said:
Section 114 of the Family Law Act 1975 (Cth) (“the Act”) enables the Court to provide a discretionary remedy. The fundamental principle is that an order should only be made if it is proper.
The term “proper” means “reasonable and just in [the] circumstances”: In the Marriage of Farr (1976) FLC 90-133 at 77,437.
In the circumstances of this matter, I am not satisfied that it would be reasonable and just to make an order for the sale of the Suburb C property, as no provision has been made to meet the accommodation expenses of the wife and the children following the proposed sale of that property. In making that determination, I have had regard to the decision of the Full Court Mitchell & Mitchell (1995) FLC 92-601. In that case, the Full Court considered the entitlement of a wife to spousal maintenance in circumstances where she had also received a distribution of marital property. The following passage from that decision, at 81,995 to 81,996, is particularly instructive:
… Under the orders which her Honour made the wife was to receive $247,532 plus the furniture and some shares but was to be responsible for the $10,000 order. It was a modest amount in the circumstances and that still remains so allowing for the increase which we have made.
It needs to be borne in mind that those orders proceed on the basis that the home is to be sold. Consequently, out of that capital sum the wife has to meet the expenses of removal for herself and perhaps her two sons and is entitled to consider the purchase of a smaller home or unit. Additionally, she will have substantial legal fees. Although we have no evidence as to the quantum of those fees they will clearly be substantial because there were at least three interim hearings, and then a three day trial which involved accountants. Further, her age and her limited earning capacity would make it legitimate for her to set aside a reasonable capital sum by way of a nest egg against future contingencies and uncertainties such as illness or holidays or other significant changes in her life which may call for expenditure which would go beyond the parameters of a small income.
It is also necessary in determining this issue to have regard to the standard of living of the parties and the financial circumstances of the other person: s. 75(2)(b) and (g). The days are long gone when it is necessary for an applicant for maintenance to use up all of her assets and capital in order to satisfy the requirement that she is unable to support herself “adequately”. Where the line is to be drawn will depend upon the circumstances of individual cases. It appears to us to be beyond controversy that the amount which the wife in this case is to receive from the property order would not disqualify her from obtaining maintenance. …
In summary, I am not satisfied that the lump sum that the wife would receive would be adequate to meet her ongoing accommodation expenses and provide for future contingencies. For those reasons, I decline to make orders for the sale of the Suburb C property.
Comparatively, the wife seeks that orders be made for $50,000 to be released to her by way of partial property settlement. However, in the absence of an order for the sale of the Suburb C property, it is not feasible to make and order for the partial distribution of property. The parties are already heavily in debt and the husband has indicated that he will be required to go into further debt in order to satisfy an order for spousal maintenance. In Stanford v Stanford (2012) 247 CLR 108 at [35], the High Court stated:
In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
The High Court further stated, at [40], that the determination as to “whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them …”
These principles apply as much to interim proceedings as they do to final proceedings. In this matter, I am not satisfied that it is just and equitable to make an order for the partial distribution of property at this point in time.
Further, there is insufficient information before the Court to determine the value of the parties’ net asset pool. The husband contends that that value is $164,190, while the wife contends that it is $517,148. I note that an adjustment of $50,000 as sought by the wife, would, if the husband’s assessment is correct, reduce the available property pool for distribution at final hearing to just $114,190. I am not in a position to determine that such a small remainder would enable the Court to make any necessary adjustments to account for the proposed interim distribution at final hearing.
In that respect in Medlow & Medlow (2016) FLC 93-692 at 81,090, the Full Court said:
The onus was clearly upon the husband [in that case the applicant for the order] to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat the wife's property claim. The onus was not on the wife to adduce such evidence.
I am not satisfied that, in this interim application, the wife has discharged that onus.
Spousal maintenance
As stated, the wife has sought that the husband pay the following by way of spousal maintenance:
a)The sum of $800 per week;
b)All arrears and ongoing repayments in respect to the mortgages secured over the Suburb C property;
c)All arrears and ongoing payments in respect to council and water rates for the Suburb C property;
d)All arrears and ongoing payments in respect to building, home and contents insurance for the Suburb C property; and
e)All arrears and ongoing payments in respect to the comprehensive third party insurance and registration of the wife’s motor vehicle.
In Hall v Hall [2016] 257 CLR 490 at 496, the High Court describes the “gateway” that the Court is required to have regard to in determining an application for interim spousal maintenance, as follows:
… The gateway to the operation of Pt VIII in relation to spousal maintenance is in s 72(1). That sub-section provides that "[a] party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately … having regard to any relevant matter referred to in [s] 75(2)".
In Saxena and Saxena (2006) FLC 93-268, Coleman J explained that, in determining whether to make an order for spousal maintenance, the Court should answer the following questions:
a)Can the applicant support themselves adequately?
b)If not, what are the applicant’s reasonable needs?
c)What capacity does the respondent have to meet those needs?
d)What order is reasonable, having regard to s 75(2) of the Act?
Making findings in respect to these issues can be difficult in interim proceedings. As the Full Court said in Edgar & Strofield [2016] FamCAFC 93 at [15]:
…the limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing...
Nevertheless, despite these limitations, in Hall v Hall (supra) at 497, the High Court confirmed that:
No doubt, on an application for an interim order “[t]he evidence need not be so extensive and the findings not so precise” as on an application for a final order. But there is nothing to displace the applicability to an exercise of the power conferred by s 74(1) of the ordinary standard of proof in a civil proceeding now set out in s 140 of the Evidence Act 1995 (Cth). [References omitted].
The wife’s ability to support herself
Section 72 of the Act relevantly provides:
Right of spouse to maintenance
(1) A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
(a) by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
(b) by reason of age or physical or mental incapacity for appropriate gainful employment; or
(c) for any other adequate reason;
having regard to any relevant matter referred to in subsection 75(2).
(2) The liability under subsection (1) of a bankrupt party to a marriage to maintain the other party may be satisfied, in whole or in part, by way of the transfer of vested bankruptcy property in relation to the bankrupt party if the court makes an order under this Part for the transfer.
In Brown & Brown (2007) FLC 93-316 at 81,455-56, the Full Court summarised the principles to be applied in determining whether a party has the capacity to support themselves adequately, as follows:
At a general level, we adopt the propositions identified by [the trial judge] as emerging from the authorities, in short:
• The word “adequately” is not to be determined according to any fixed or absolute standard.
• The idea that “adequate” means a subsistence level has been firmly rejected.
• Where possible both spouses should continue to live after separation at the level which they previously enjoyed if this is reasonable, although the parties’ standard of living may have to be lower if financial resources are insufficient to maintain that standard.
• In some circumstances it may be reasonable for the parties to live at a higher standard than previously enjoyed.
• It is not necessary for an applicant for maintenance to use up all capital in order to satisfy the requirement that he/she is unable to support himself/herself adequately.
• However, an applicant is not entitled to live at a level of considerable luxury or comfort merely because the other party is very wealthy.
In this matter, it is not in dispute that the wife has the care and control of the children of the parties’ marriage, who are currently aged nine, seven and six years. The husband acknowledges that the wife’s parental responsibilities impact upon her current ability to adequately support herself, but only to the extent of $150 per week. Moreover, the husband contends that the wife is failing to reasonably exploit her earning potential, which he contends in his case outline document is to the value of approximately $95,000 per year. That figure is based on the salary that the husband understood the wife to have been receiving during her employment at Company N. However, as stated, at the hearing, the husband accepted that the pay slips produced by the wife referrable to her employment at Company N indicate that she was, at that time, in receipt of an income of approximately $73,000 per annum.
As noted in Hall v Hall (supra), s 72(1) of the Act is a gateway requirement. Once it is established that a spouse is unable to adequately support themselves, for a reason set out in that subsection, the gateway is crossed. In this matter, I am satisfied that, it is reasonable to infer that having the responsibility for the primary care of the children impacts upon the wife’s ability to engage in full time employment, which in turn impacts upon her income and earning capacity and, hence, her ability to support herself adequately, in terms of s 72(1).
The wife’s reasonable needs
In McCrossen & McCrossen (2006) FLC 93-283 at 80,838, the Full Court, after referring to a number of earlier authorities, said that the question as to whether or not a person is able to support themselves “adequately” is:
… not to be determined upon a “subsistence level” but upon consideration of whether the applicant can support himself or herself “adequately” importing a standard of living reasonable in the circumstances. [References omitted].
In an application for spousal maintenance, it is necessary to distinguish between the expenses of the applicant and the expenses of the children of the parties’ relationship: Stein & Stein (2000) FLC 93-004.
In her Financial Statement filed on 23 August 2018, the wife sets out that her gross wages average $448 per week. However, the husband contends that three of the wife’s more recent pay slips show that she earns wages of approximately $636 per week.
Leaving aside the specific expenses that the wife refers to in her application for non-periodic spousal maintenance, at Part G of her Financial Statement, the wife contends her weekly expenses are, as follows:
a)Income tax at $100;
b)Private health insurance (not currently insured) at $129; and
c)Credit card repayments at $60.
Those expenses total $289.
Further, at Part N of her Financial Statement, the wife sets out her other expenditure, as follows:
a)Food at $100;
b)Household supplies at $40;
c)House repairs at $15;
d)Gas at $21;
e)Electricity at $56;
f)Telephone/Internet at $34;
g)Petrol at $60;
h)Motor vehicle maintenance at $23;
i)Fares/car parking at $20;
j)Clothing and shoes at $100;
k)Medical, dental and optical (not including health insurance premiums) and psychology at $60;
l)Entertainment/hobbies at $50;
m)Holidays at $90;
n)Chemist/pharmaceutical at $25;
o)Gardening/lawn mowing at $40;
p)Cleaning (house/pool) at $30;
q)Repairs – furnishings and appliances at $8;
r)Books and magazines at $10;
s)Gifts at $20;
t)Hairdressing and toiletries at $20; and
u)Other necessary commitments:
a. Foxtel at $25;
b. Water at $30; and
c. Gym at $50.
Those expenses total $927.
Therefore, the wife asserts that her weekly expenses total approximately $1,216.
The husband asserts that the wife has not established the basis for her claimed expenditure and challenges the following expenses as being unreasonable:
a)Clothing and shoes;
b)Holidays;
c)Entertainment and hobbies;
d)Gym;
e)Health insurance gap payments;
f)Gardening and lawn mowing; and
g)Cleaning.
The husband contends that those expenses should be either reduced or removed such that the wife’s weekly expenses are reduced by at least $200.
In addition, the husband contends that, in circumstances where the cost of private health insurance is not currently being incurred by the wife, that amount should not be included in her list of expenses. The husband also challenges the wife’s asserted credit card repayments, which he contends, in the absence of verification, potentially represent a duplication of Part N expenses.
As noted above, in Hall v Hall (supra), the High Court stated that even in interim proceedings, there nonetheless needs to be an evidentiary basis justifying the orders which are sought by an applicant for relief. In that respect, rule 4.15 of the Family Law Rules 2004 (Cth) (“the Rules”) provides:
Evidence to be provided
(1) On the first court date and the hearing date of an Application for spousal or de facto maintenance, each party must bring to the court the following documents:
(a) a copy of the party's taxation returns for the 3 most recent financial years;
(b) the party's taxation assessments for the 3 most recent financial years;
(c) the party's bank records for the period of 3 years ending on the date on which the application was filed;
(d) if the party receives wages or salary payments--the party's payslips for the past 12 months;
(e) if the party owns or controls a business, either as sole trader, partnership or a company--the business activity statements and the financial statements (including profit and loss statements and balance sheets) for the 3 most recent financial years of the business; and
(f) any other document relevant to determining the income, needs and financial resources of the party.
Note 1: Documents that may need to be produced under paragraph (f) include documents setting out the details mentioned in rule 13.04.
Note 2: For modification of a spousal maintenance order, see section 83 of the Act. For modification of a de facto maintenance order, see section 90SI of the Act.
(2) Before the hearing date, a party must produce the documents mentioned in subrule (1) for inspection, if the other party to the proceedings makes a written request for their production.
(3) If a request is made under subrule (2), the documents must be produced within 7 working days of the request being received.
That rule has not been complied with by either of the parties to date. Consequently, there is insufficient evidence to satisfy me that the wife actually incurs the expenses that she has set out in her Financial Statement. In those circumstances, it is appropriate to consider the reasonableness of the wife’s claimed income and expenditure.
I have concerns that the weekly wages disclosed by the wife in her Financial Statement are no longer current and that her income is, as reflected in more recent pay slips, actually $636 per week.
I accept the submission of Counsel for the husband that some items listed in the wife’s claimed expenses are excessive or unsubstantiated and I will therefore alter them, as follows:
a)Credit card repayments removed;
b)Clothing and shoes reduced to $25;
c)Gap payments reduced to $30;
d)Entertainment and hobbies reduced to $25;
e)Holidays reduced to $50;
f)Gardening/lawn mowing and cleaning (house/pool) combined and reduced to $35; and
g)Gym reduced to $25.
It is entirely reasonable that the wife would seek to be in a position to maintain private health insurance and I will, therefore, allow that amount to be considered.
Accordingly the wife’s total weekly expenditure will be reduced to $877. I have assessed the wife’s income as $636. Therefore, the wife’s weekly needs, in addition the items set out in her application for non-periodic spousal maintenance, equate to $241.
The husband’s capacity to meet a spousal maintenance order
The husband asserts that he does not have the capacity to meet a spousal maintenance order over and above the amount of $150 per week. The husband’s submissions, in that regard, are set out his case outline document (Exhibit “2-H”), as follows:
2.3.1 The husband has a weekly income of approximately $8,900 (being his salary of $1,538 per week and the further expenses paid by [M Pty Ltd] of $7,362 per week).
2.3.2 His weekly expenditure exceeds his income.
2.3.3 As appears from his Financial Statement and from his Affidavit, the husband's total expenditure amounts to $9,748 per week.
2.3.4 This shortfall of $848 per week does not take into account:
• Mortgage payments of $4,192 per week - see wife's Financial Statement at item 21;
• Council & water rates and electricity & gas costs for the [Suburb C] property;
• Spousal maintenance of $150 per week for the wife (as tendered by the husband).
2.3.5 Having regard to the aforesaid, it will be seen that the expenses heavily outweigh the husband's income.
2.3.6 The husband will have to borrow heavily to:
• make the payments required of him and as set out at item 15 of his Financial Statement (amounting to $7,362 per week);
• pay his other expenses as set out at Part G of his Financial Statement ($2,385 per week);
• pay the mortgage ($4,192 per week), as well as council & water rates & electricity for the [Suburb C] property, as contemplated at paragraph 5 of the Interim Orders as sought by him in his Response);
• pay to the wife spousal maintenance of $150 per week.
2.3.7 It is submitted that the situation is clearly not sustainable on anything but a very temporary basis and that the only viable solution is to make provision for the immediate sale of the [Suburb C] property.
An unsatisfactory aspect of the husband’s case is that, while he has identified amounts that he is required to repay to the ATO, he has not identified the basis upon which M Pty Ltd has reached agreement to pay arrears at the rate of $4,846 per week in the period up to 29 January 2019, nor has he identified the basis upon which that company has agree to pay GST in the sum of $3,300 per week in the period up until 9 January 2019.
An important aspect of family law proceedings is a party’s obligation to comply with the rules of disclosure. That obligation exists both at common law and pursuant to statute. In Briese and Briese (1986) FLC 91-713 at 75,182, Smithers J applied the House of Lords decision in Livesey and Jenkins (1985) 1 All ER 106 in determining that:
… in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. [Emphasis added].
His Honour further stated at 75,181:
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties. [Emphasis added].
In terms of the parties’ statutory obligation of disclosure, rule 13.01(1) of Rules relevantly provides that:
Subject to subrule (3), each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner. [Emphasis added].
Further, rule 13.04(1)(a) provides that “[a] party to a financial case must make full and frank disclosure of the party's financial circumstances.”
Clause 6 of Part 1 of Schedule 1 of the Rules relevantly provides that:
(6) At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:
…
(i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute.
Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part). [Emphasis added].
The fact that the obligation of disclosure exists as a duty to the Court, as well as to the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute”, not simply one that attaches to the production of documents.
It is also significant that the obligation of disclosure includes an obligation to disclose “any disposal of property” that may “affect, defeat or deplete a claim”: rule 13.04(1)(g).
As noted by Walters J in Graf-Salzmann and Graf [2015] FCWA 68 at 287:
… a judge is entitled to take a "robust view" in relation to findings regarding a party's financial position (including party's capacity to meet any proposed order) where that party has failed to make full and frank disclosure of his/her financial position: see Chang v Su (2002) FLC 93-117 at [71] and [72].
The agreement entered into between M Pty Ltd and the ATO clearly impacts upon the income received by the husband, potentially to the extent of $8,146 per week. In circumstances where the husband receives what is, by community standards, a very high income and there has been inadequate disclosure of the arrangements entered into by M Pty Ltd and the ATO, the Court is entitled to take a robust view of the husband’s capacity to pay spousal maintenance.
Moreover, as was made clear in Maroney & Maroney [2009] FamCAFC 45 at [56], in determining the “capacity” of a party to satisfy an order for interim spousal maintenance, the Court is not confined to considering only that party’s income, but rather:
Once a party…establishes an entitlement to interim spousal maintenance, and such entitlement is quantified in accordance with that spouse’s reasonable needs, an order may be made notwithstanding that the liable spouse could only satisfy the order out of capital or borrowings against capital assets.
The husband acknowledges that he has the capacity to borrow funds to enable him to pay maintenance on a short term basis at the rate of $150 per week. While I propose making an order for the payment of an additional $91 per week over and above that amount, the husband’s concession is indicative of at least some residual borrowing capacity.
What order is reasonable having regard to section 75(2) of the Act?
Section 75(2) of the Act provides that, in so far as they are relevant, the matters to be taken into account in considering whether to make an order for spousal maintenance are:
(a) the age and state of health of each of the parties; and
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment; and
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years; and
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain; and
(e) the responsibilities of either party to support any other person; and
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party; and
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
(l) the need to protect a party who wishes to continue that party’s role as a parent; and
(m) if either party is cohabiting with another person—the financial circumstances relating to the cohabitation; and
(n) the terms of any order made or proposed to be made under section 79 in relation to:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i) a party to the marriage; or
(ii) a person who is a party to a de facto relationship with a party to the marriage; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and
(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and
(p) the terms of any financial agreement that is binding on the parties to the marriage; and
(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
In terms of s 75(2)(a), I note that the husband is currently 41 years of age and the wife is 40 years of age. It was not suggested that either party is in other than good health, although the wife contends that she was forced to resign from her employment with Company N in late 2017 as a result of anxiety she experienced associated with the break-up of her marriage and these proceedings. I accept the contention of the husband that there is no evidence before the Court as to the nature of the wife’s anxiety condition.
In terms of s 75(2)(b), the parties’ income, property and financial resources are set out in each of their Financial Statements. Both parties allege that their expenditure exceeds their income.
There is substance to the contentions of both parties that the other has failed to provide adequate disclosure in respect to their income. In those circumstances, the detriment of non-disclosure has been applied against the party who has failed to provide full and/or current disclosure, in respect to their income and, in the case of the husband the agreements he has entered into with the ATO.
Further, the husband alleges that the wife is not currently exercising her full income earning capacity. The parties accept that, during her employment at Company N, the wife was earning approximately $73,000 per annum. However, I find that the wife does not currently have the capacity to earn that amount on a sustained basis as a result of her parental responsibilities.
I accept that the wife has a greater earning capacity than she is currently exercising. On the other hand, as will be discussed, the wife has structured her employment to ensure that she has time to provide care for the children. I accept that it is desirable for parties to become as financially independent as soon as is reasonably possible following the breakdown of their relationship. In that context, in his second reading speech, introducing the Family Law Bill on 11 December 1973, the then Attorney General, the Honourable Lionel Murphy QC, said:
As for maintenance, where there are children of the marriage, especially very young children, there is no doubt that a woman who is divorced or separated from the father needs some financial assistance. On the other hand, where the children are older or where there are no children and the mother is still comparatively young, it is surely in the mother’s own interest that she should become economically self-sufficient by working. She may, however, need some financial assistance to undertake a period of training for the purpose of obtaining employment or establishing herself in a business.
In this matter, the children are young and attend primary school. I do not find that the wife has acted other than reasonably in obtaining part time employment consistent with her parental responsibilities.
In terms of s 75(2)(c), as stated, the wife is the primary carer of the children. This responsibility inevitably requires the wife to devote time to their care, which undoubtedly impacts upon her earning capacity. The wife will also inevitably incur expenses in providing for the children’s physical, emotional and intellectual needs.
In terms of s 75(2)(f), the wife has no superannuation entitlement, while the husband has an entitlement of $64,816. In terms of the wife’s future needs, the significance of the wife not having an entitlement to superannuation is a matter better addressed at final hearing.
In terms of s 75(2)(g), I have referred to the fact that the parties are entitled to enjoy a standard of living that is reasonable in all of the circumstances. I accept the contention of the husband that the parties’ level of indebtedness is such that it is unsustainable for them to maintain the standard of living that they had enjoyed throughout their relationship on an indefinite basis. In that respect, both parties acknowledge that it will be eventually necessary for the Suburb C property to be sold.
In the meantime, the wife is currently living with the children at the Suburb C property and, as will be addressed below, orders will be made for the husband to meet the costs associated with that property. With supplementation of her income by child support and spousal maintenance received from the husband, the wife will be able to maintain a standard of living that is reasonable in the circumstances.
Further, the husband says that the purchase of the Suburb J property has recently settled. In this way, he has the capacity to either live in or lease that property, which he anticipates would generate a rental return of $800 to $850 per week. While the husband has a significant tax debt, he continues to earn a very high income and should be able to maintain a reasonable standard of living, albeit with his ability to do so, in the immediate future, being supported by borrowings.
In terms of s 75(2)(j), in these interim proceedings, it is not possible to explore the extent to which the wife has contributed to the income earning capacity, property and financial resources of the husband. These will clearly be a significant issues if the matter is to proceed to final hearing. Nevertheless, the husband acknowledges that the wife has, during the marriage, taken on the responsibility of primary carer of the children. It is reasonable to assume that this was a factor that enabled the husband to obtain his specialist qualifications and develop a profitable business.
In terms of s 75(2)(k), it is noted that the parties were married for some nine years prior to their separation. The wife was not in full-time employment in the period between March 2009 and February 2017 as a result of her responsibilities as the primary carer of the children. It is reasonable to assume that those responsibilities have impacted upon her income earning capacity. In that respect, as I have noted, it is also relevant that the wife has not had the opportunity to accumulate any superannuation entitlement.
In terms of s 75(2)(l), I note that the wife wishes to continue to be the primary carer of the children. In circumstances where the children are spending a limited amount of time with the husband, it is inevitable that she will continue to fulfil that role. I further note that, in her capacity as primary carer of the children, the wife has referred to steps she is taking to engage in activities with the children, including taking an interest in their school council. In my view, she is acting entirely appropriately in doing so.
In terms of s 75(2)(na), as stated, the husband is currently paying child support of $1,387 per week.
In terms of s 75(2)(o), during the course of the proceedings, Counsel for the husband raised, as an issue of potential significance, the fact that, since the parties separated, the wife has formed a relationship with Mr O. That issue was raised in the context of the wife potentially receiving financial support from Mr O. The wife contends, however, that her relationship with Mr O is in its infancy and has no financial implications for her. In these interim proceedings, it is not possible to make a determination in respect to the parties’ respective contentions concerning the wife’s relationship with Mr O.
Evaluation
Having regard to those s 75(2) considerations to which I have referred above, I am of the opinion that the wife’s responsibilities as the primary carer of the children is the most relevant factor justifying the making of an interim spousal maintenance order. Her capacity to adequately support herself has been impacted by the period of time that she has been out of the workforce. Comparatively, the husband’s ability to enhance his qualifications and build a successful business during that time has undoubtedly been aided by the domestic support of the wife.
The current level of the parties’ indebtedness is clearly something that they need to address, however, I am satisfied that, in the period until final hearing or settlement, it is appropriate for the husband to pay to the wife spousal maintenance in the amount that I have determined to be the wife’s weekly needs. In addition, I will make orders for the husband to meet the expenses associated with the Suburb C property and the insurance and registration of the wife’s motor vehicle, as set out in the wife’s application. In that respect, as noted, I have assessed the wife’s weekly needs on the assumption that the husband will meet those expenses.
Dollar for dollar order
In the alternative to a partial property distribution, orders for which I have declined to make, the wife has applied what is known as a “dollar for dollar” order, whereby the husband would be required to pay to her solicitors an equivalent amount to that which he pays his own solicitors. That application is made on the basis that either s 117 or s 114 of the Act.
In Quayle & Perceval [2018] FamCA 664, I expressed the view that s 117 of the Act does not provide a basis for the making of a dollar for dollar order because, other than in respect to making an order for security for costs, s 117 applies to costs actually incurred, rather than costs to potentially be incurred during the course of future litigation. Specifically, at [83], I noted that:
.. the proposed dollar for dollar order does not specify an amount that is to be paid, nor does it identify a process for determining the amount by way of agreement or assessment. This is important because the absence of either of those criteria prevents the order being reviewed as a costs order, in order to determine that it is logical, fair and reasonable or, pursuant to Rule 19.34, that is it proportionate to the issues in the case.
After referring to relevant authorities, at [80] to [81], I further commented that;
A dollar for dollar order does not permit an evaluation as to whether the costs order is logical, fair or reasonable, and it deprives a party who is adversely impacted by such an order of the opportunity to review it on that basis. As a related matter, such an order does not permit the party who is liable to make such payments to seek an assessment of costs so ordered, in which case Rule 19.34(1) would apply. That rule provides:
Assessment principles
(1) A Registrar must not allow costs that, in the opinion of the Registrar:
(a) are not reasonably necessary for the attainment of justice; and
(b) are not proportionate to the issues in the case.
Accordingly, even if I am wrong in my determination that s 117 does not empower the Court to make a litigation funding order, I would have nonetheless determined that proposed orders 7 to 12 of the orders sought by the wife cannot be characterised as seeking a costs order pursuant to s 117 of the Act. Adopting the language of Hayne J in Re JJT it is an order dealing with something other than costs than have been incurred.
Nevertheless, in Quayle & Perceval, I determined that an order can be made under s 114 of the Act to prevent a party with exclusive or predominate access to the property and financial resources of the marriage from obtaining an unfair advantage in the proceedings. In that respect, at [86] to [94] I stated:
86. In the case of F & F (1989) FLC 92-031 at 77,436, Lindenmayer J said:
I am of the opinion that so long as the Court is satisfied that the proceedings before it have their genesis in circumstances arising out of the marital relationship, the section constitutes a separate and independent grant of jurisdiction and power to the Court, and that it does not merely provide the machinery for enforcing rights, the existence of which must be found elsewhere in the statute, or in the common law. In short, this subsection gives the Court a whole new area of jurisdiction and power to make such order as it considers proper for regulating the conduct of the parties to a marriage in any circumstances which can fairly be said to arise out of the marital relationship.
87. Relevantly, in proceedings such as these, which arise “out of the marital relationship” (English & English (1986) FLC 91-729), s 114(1)(e) of the Act empowers the Court to:
(1) … make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
…
(e) an injunction in relation to the property of a party to the marriage …
88. Section 4 of the Act, relevantly defines property in relation to the parties to a marriage or either of them as meaning “property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.”
89. The term “property” has been generally given a wide meaning. Lord Langdale MR in Jones v Skinner (1835) 5 LJ Ch 87 at page 90 stated that it is:
…the most comprehensive of all terms which can be used inasmuch as it is indicative and descriptive of every possible interest which the party can have.
90. This quote was cited with approval by the Full Court of this Court in Duff and Duff (1977) FLC 90-217, where it was held that at p 76,131:
…the Act is to be read and construed widely and liberally with words and expressions being given their ordinary meanings…
91. Cash in the hands of the husband including cash at Bank is unquestionably property and can be the subject of an order pursuant to section 114(1)(e) of the Act.
92. It is clear that s 114(1) of the Act empowers the Court to make orders in positive, as well as negative, terms, as in the case of mandatory injunctions: Mertens & Mertens [2016] FamCAFC 136 at [56]. Such an order is discretionary and must be considered proper: Jeeves & Jeeves(No 2) [2008] FamCA 1148 at [29]; Tripp & Tripp [2013] FamCA 1107 at [53]. The term “proper” means “reasonable and just in [the] circumstances”: In the Marriage of Farr (1976) FLC 90-133.
93. In this matter, Senior Counsel for the wife referred to considerations identified by Watts J in Atkins & Hunt at [46] as providing examples of where the Court might consider exercising its discretion to make a dollar for dollar order “as a last resort”. Those examples identified by Watts J are, as follows:
46.1. Where:
46.1.1. The party who apparently controls significant financial purse strings pleads impecuniosity; and
46.1.2. The financially disadvantaged party cannot point to any particular fund or asset that might be available to help assist that party fund their litigation; but
46.1.3. The financially advantaged party seems to be able to fund their litigation through personal exertion income or structures that they directly or indirectly control (see for example, Zadenev & Zadenev [2014] FamCA 693 and Ryder & Bonham);
46.2. Where a financially advantaged party is a minority shareholder in a company and/or a discretionary beneficiary in a trust and directors or trustees seem more than willing to declare dividends or make distributions to fund litigation for the financially advantaged party against the disadvantaged party;
46.3. Where a financially advantaged party has relatives or associates who are prepared to fund the litigation against the financially disadvantaged party in circumstances where the financially disadvantaged party does not have the same support from third parties (Hurford & Hurford [2016] FamCA 328).
94. While, for the reasons I have set out, I am of the view that s 117 of the Act does not provide a basis for making the dollar for dollar orders sought by the wife, I am nonetheless satisfied that such a power is found in s 114(1)(e) of the Act. I respectfully adopt the considerations identified by Watts J in Atkins & Hunt as providing useful guidance in respect to the exercise of discretion, pursuant to s 114 of the Act.
In circumstances where I do not propose making an order for a partial distribution of property, having regard to the husband’s much greater income and earning capacity, it is appropriate to make orders consistent with those sought in proposed orders 4 to 8 of the wife’s application.
However, I will modify order 8 so as to remove the requirement for the amounts paid by the husband, in that regard, to be characterised at final hearing. In Jefferson & Coulston [2014] FamCA 1083 at [31] to [32], Tree J voiced doubt as to whether a trial judge “can, in effect, undo the juridical basis for a previous order”, which his Honour described as seeming to involve “some curious form of judicial alchemy”.
In Quayle and Perceval at [51], I noted that:
The difficulty with such an order is, however, that it requests the judicial officer to delegate to perhaps another judicial officer, at a subsequent point in time, the task of categorising the basis upon which the order is made. This effectively prevents the opportunity for review by the party who is adversely impacted by any such order. To make such an order would be inconsistent with the obligation placed on a judicial officer to act judicially and, specifically, to act in accordance with the principles of procedural fairness.
Further, in Kirk v Industrial Relations Commission of New South Wales (2010) 239 CLR 531 at [122], Hayden J cautioned that it was important for specialist courts not to lose touch with “traditions, standards and mores of the wider profession and judiciary”. The obligation for a judicial officer to provide reasons for the exercise of discretion is a fundamental legal principle. It is a principle that applies in interim proceedings, as much as it does at a final hearing.
In addition, I note that the wife’s proposed order 6 would bind the husband’s solicitors. I accept that s 34 of the Act empowers the Court, in appropriate cases, to make orders against a party’s legal representatives: Atkins & Hunt (2018) 57 Fam LR 128 at [68]. However, that order would, in my view, achieve no greater efficacy than if it were made in a form requiring the husband to provide relevant instructions to his solicitors. On that basis, I do not propose making orders against the husband’s solicitors.
Orders
For these reasons, I make the orders as set out at the commencement of these Reasons for Judgment.
I certify that the preceding one hundred and twenty-eight (128) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 29 October 2018.
Associate:
Date: 29 October 2018
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