Rigby and Kingston & Ors
[2020] FamCA 958
•13 November 2020
FAMILY COURT OF AUSTRALIA
| RIGBY & KINGSTON AND ORS | [2020] FamCA 958 |
| FAMILY LAW – COSTS – Litigation funding – Circumstances justifying order – Where the husband seeks further litigation funding – Where the wife is in a far superior financial position to that of the husband – Where the proceedings involve complex property issues –Where the wife has already paid at least $412,000 towards the husband’s legal costs since the commencement of the proceedings – Where if the wife is successful in the substantive proceedings the sums already paid by her to the husband will be unable to be taken into account or repaid – Where the further sum sought by the husband will not bring the matter to a conclusion – Where on balance it is not just to make a further litigation funding order – Application dismissed. FAMILY LAW – SPOUSAL MAINTENANCE – Where the husband seeks interim spousal maintenance in the sum of $962 a week – Where the husband’s employment has been recently terminated and he has been unable to obtain another job – Where the wife contends that the husband has failed to satisfy the onus of establishing that he is unable to support himself adequately – Where the husband should be afforded a reasonable time within which to find new employment – Where the wife is ordered to pay the husband $962 a week in spousal maintenance until April 2021. FAMILY LAW – PRACTICE AND PROCEDURE – Case management – Where this matter has proceeded on the basis that there will be a series of trial dates addressing particular issues – Where findings have been made in relation to ten specific issues however the dispute has not been resolved – Where the matter will be listed for a further series of trial dates for the determination of four further issues. |
| Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 117 |
| Breen & Breen (1990) 65 ALJR 195 Collins & Collins (1985) FLC 91-603 Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123 Hall & Hall (2016) FLC 93-709 Harris &Harris Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) In the marriage of Bevan and Bevan (1995) FLC 92-600 Kingston & Kingston (No.2) (1981) FLC 91-108 Kryiakos & Kryiakos (2013) FLC 93-528 Penfold v Penfold (1980) 144 CLR 311 Rakete & Rakete (2012) 48 Fam LR 325 Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 Salvage v Fosse (2020) 61 Fam LR 45 Stanford& Stanford (2012) 247 CLR 108 Strahan &Strahan (Interim Property Orders) Wall & Mitchell [2010] FamCA 1194 Wilson & Wilson (1989) FLC 92-033 |
| APPLICANT: | Mr Rigby |
| RESPONDENT: | Ms Kingston |
| THIRD PARTY RESPONDENTS: | Mr F Kingston (2nd) Mr G Kingston (3rd) |
| FILE NUMBER: | BRC | 12882 | of | 2016 |
| DATE DELIVERED: | 13 November 2020 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Carew J |
| HEARING DATE: | 9 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Dr Ingleby |
| SOLICITOR FOR THE APPLICANT: | HopgoodGanim Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Kirk QC |
| SOLICITOR FOR THE FIRST RESPONDENT: | Hartley Healy |
| COUNSEL FOR THE THIRD PARTY RESPONDENTS: | Ms Minnery |
| SOLICITOR FOR THE THIRD PARTY RESPONDENTS: | Hede Byrne & Hall |
ORDER
The husband’s application for litigation funding be dismissed.
The wife pay weekly spousal maintenance to the husband in the sum of $962 with the first payment to be made on or before 20 November 2020 and weekly thereafter until 16 April 2021.
A further series of trial dates be allocated for three days commencing on 13 April 2021 where the following issues will be determined:
(a) What are the wife’s existing legal and equitable interests in any property including in any companies and trusts comprising the “Kingston Group” as identified in schedule 1 to the Umbrella Deed dated 13 February 2014?
(b) What is the effect, if any, of the Umbrella Deed on any existing legal and equitable interests of the wife?
(c) Does the wife have a source of financial support, other than any property in which she has an existing legal or equitable interest, which she can reasonably expect will be available to her to supply a financial need or deficiency?
(d) Is it just and equitable to make an order under s 79(1) of the Family Law Act1975 (Cth)?
Each party be at liberty to file and serve one further affidavit of evidence in chief by each witness upon which they intend to rely in relation to the issues listed above on or before 12 March 2021 and be permitted to rely upon particularised paragraphs in previous affidavits filed in these proceedings.
The husband and wife file and serve a case outline no later than three business days prior to the commencement of the further dates for trial identifying with precision the material to be relied upon (including the particular paragraphs of previous affidavits) and a summary of argument.
The other respondents be at liberty to participate in the further dates for trial and if election is made to do so then the other respondents are also to file a case outline no later than three business days prior to the commencement of the further dates for trial identifying with precision the material to be relied upon (including the particular paragraphs of previous affidavits) and a summary of argument.
The husband file and serve amended Points of Claim in compliance with paragraph 3 of the order made 13 December 2019 on or before 1 February 2021.
If any of the parties at any stage forms the view that the matter may not be ready to proceed on the allocated dates, or may require a longer time for hearing than the allocated dates, or may require a shorter time for hearing than the allocated dates that party must contact the Case Coordinator by email to …@familycourt.gov.au on notice to the other parties to seek that the matter be urgently relisted.
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 Rigby & Kingston 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 BRISBANE |
FILE NUMBER: BRC 12882 of 2016
| Mr Rigby |
Applicant
And
| Ms Kingston |
Respondent
And
Mr F Kingston and Ors
Third Party Respondents
REASONS FOR JUDGMENT
These proceedings concern a financial dispute between Mr Rigby (“the husband”) and Ms Kingston (“the wife”) and a further nine respondents (“the other respondents”). The first of a series of trial dates involving only the husband and the wife was conducted over four days concluding on 4 June 2020, and findings of fact in relation to a number of agreed issues were made on 18 August 2020. The matter was listed for a further case management hearing on 9 September 2020. At that time, the husband’s interlocutory applications for further litigation funding and spousal maintenance were listed for hearing on 9 October 2020. Submissions were also made on the latter date as to when the next series of trial dates should be listed and what issues should be considered.
For the reasons which follow, I propose to dismiss the husband’s application for litigation funding. I propose to order that the wife pay spousal maintenance to the husband until 16 April 2021, and to list the matter for a further series of trial dates in relation to a number of identified issues.
Background
The background to the dispute is set out in my Reasons for the factual findings delivered on 18 August 2020 at [7] to [15]. In short, after a long marriage which produced two children, the husband retains very few assets and is currently an unemployed finance professional living in a share house while the wife estimates her wealth to be in the vicinity of $7,000,000, including superannuation, and her average weekly income is $3,749. The husband and wife separated in 2015.
In my Reasons earlier referred to, I have described this case as unique, in circumstances where:
a)The wife’s wealth was largely derived from her father;
b)After their marriage in 1991 and until 2007, the husband and wife kept their finances separate and shared joint living expenses;
c)After 2007, the wife assumed a greater than equal share of the joint expenses and there was some minimal intermingling of their financial arrangements;
d)The joint expenses throughout the marriage did not include accommodation expenses which were met solely by the wife;
e)The husband and wife never owned property jointly nor operated joint bank accounts;
f)They maintained ledgers of their respective expenditure which were adjusted at regular intervals;
g)There were significant periods throughout their marriage when the husband was unemployed or underemployed;
h)Despite his greater availability, the husband’s contributions as homemaker and parent did not exceed those of the wife; and
i)The wife worked in her family’s business throughout the marriage and her financial contributions during the marriage greatly exceeded those of the husband.
In recounting the above matters, I am referring to matters of common ground or the factual findings made by me on 18 August 2020 as set out in the Reasons at [33], [38], [61] – [64], [88] – [89], [92], [94], [100]. [101], [104], [111], [118], [119], [121], [123].
Prior to his death in 2008, the wife’s father made it clear to her and her two brothers, Mr G Kingston and Mr F Kingston (both of whom are respondents in these proceedings), that he did not want the wealth created by him over his lifetime distributed to any spouse of his children or grandchildren. His Will reiterated those intentions and the testamentary trust established by him (the JM Kingston Testamentary Trust) sought to protect that wealth in accordance with those stated intentions.
Under the testamentary trust, the wife and her two children and the wife’s two brothers and their children are included as beneficiaries, as are any company in which any of the identified beneficiaries are a shareholder and any trust of which they are eligible beneficiaries. As at July 2019, Mr G Kingston had four children and Mr F Kingston had two children and four grandchildren.
The trustees of the trust are the wife and her two brothers.
On 13 February 2014, the testamentary trust was varied by the wife and her two brothers and one consequence of the variation was to extend the cessation date of the trust from 2026 to 2040 or a date unanimously agreed in writing by the wife and her two brothers (so long as they remain ‘active members’ as defined therein). The deed is referred to as the “Umbrella Deed”.
The Umbrella Deed recites that:
a)The wife and her two brothers are the remaining trustees appointed under their father’s Will (their mother having passed away);
b)Each of them work in the business/es of the Kingston Group and is entitled to share in any income or capital distributions made under the Will;
c)They have certain intentions in regards to:
i)Their ongoing entitlements until 2040;
ii)Their ongoing entitlements in the event that they retire etc;
iii)The ultimate winding up of the Kingston Group on the cessation date.
The Kingston Group is defined by reference to schedule 1 to the Umbrella Deed.
The underlying principles for the arrangement set out in the Umbrella Deed include (unless the wife and her two brothers unanimously agree in writing to the contrary) that:
a)The wife and her two brothers shall remain active in the Kingston Group and share in the management;
b)They shall administer the Will according to its terms;
c)They shall each be paid an equal minimum annual dividend determined in accordance with an annual program and a share of profits not exceeding ten percent of net profits (the annual program relates to the Kingston Group);
d)In addition, they shall each be paid a salary;
e)No other directors are to be appointed;
f)No further shares or units will issue in any entity within the Kingston Group;
g)No shares or units will be transferred or redeemed; and
h)They must do everything required to wind up the Kingston Group on 30 June 2040.
Upon the winding up of the Kingston Group, the net amount realised is to be distributed equally among the wife and her two brothers subject to any adjustments required under the Umbrella Deed.
The husband commenced the substantive proceedings in 2016 and by his Initiating Application he seeks 35% of the property of the wife and himself (although the property in his name is de minimis). The wife argues that it is not just and equitable to make any property order.
A major source of dispute in this matter relates to the nature of the wife’s interests in the Kingston Group. The wife concedes that she has a right to due consideration as an eligible beneficiary of certain trusts within the Kingston Group and a right to due administration, but argues that as she does not control the Kingston Group, her interests represent, on a practical level, at best, a financial resource. The husband argues that the wife’s interests represent ownership of one third of the value of the Kingston Group. As such, he seeks, among other things, to bring forward the vesting date of various trusts within the Kingston Group, including the Kingston Testamentary Trust and a distribution to the wife of one third of the value thereof.
On 24 November 2017, I dismissed the husband’s application that the wife make further and better disclosure, he having failed to establish that the wife had not met her obligations to make full and frank disclosure of all documents in her possession or control. The husband succeeded in obtaining leave to inspect and copy documents produced to the Court pursuant to a subpoena issued by him to the accountant for the Kingston Group. No further formal procedures appear to have been undertaken by the husband to obtain access to any further documentation, despite making a repeated complaint throughout these proceedings that he has had inadequate access to relevant documentation.
Despite raising the possibility of a need to involve third parties in this litigation as early as 2016, it was not until the middle of 2019 that the husband purported to join a further 30 respondents to the proceedings. On 26 May 2020, I removed 21 of those respondents on the basis that the husband had joined them for an improper purpose. The obligations of the remaining nine other respondents have been stayed pending the husband’s compliance with the order made on 13 December 2019 to properly particularise his claim against them. No amended Points of Claim has yet been filed by the husband.
The husband has previously succeeded in obtaining orders for litigation funding from the wife. On 11 July 2017, I made an order pursuant to s 117 of the Family Law Act 1975 (“the Act”) that the wife pay the husband $135,000 for his legal costs. On 14 January 2020, I made a further order pursuant to s 117 that the wife pay the husband’s future legal costs on an ‘dollar for dollar’ basis (i.e. any money paid to her own solicitor was to be matched by a payment to the husband’s solicitor) up to the conclusion of the first four hearing days on 4 June 2020, and a further sum of $10,000 so the husband could prepare Points of Claim in relation to his action against the other respondents. The order made on 14 January 2020 was made with the consent of the wife. To date, the wife has paid $562,768 to the husband, of which at least $412,000 was to pay his legal costs.
The husband’s previous application for interim spousal maintenance was dismissed on 11 July 2017 as the husband failed to establish that he was unable to support himself adequately. It seems that from at least January 2018, the husband obtained contract work for 20 hours per week and by September 2018, his hours increased to 30 hours per week. As at June 2020, the husband was earning $93,600 per annum (see my Reasons dated 18 August 2020 at [11]). From November 2019, the husband was working five days per week for CQ Company but with the advent of the COVID-19 pandemic his work reduced to four days per week, and on 2 September 2020 he contends that his contract was terminated.
The husband has registered his consulting business, DD Trust trading as Rigby Consulting, for JobKeeper 2.0 (a Commonwealth Government financial assistance scheme introduced in response to the COVID-19 pandemic) and according to the husband he will be eligible for two fortnightly payments of $1,200 each. It is not apparent whether or not this will be an ongoing payment nor whether or not it is subject to a means test. If the payments are subject to a means test I must disregard them (see s 75(3) of the Act). No submissions were made in relation to the husband’s entitlements to JobKeeper.
the husband’s application for litigation funding and interim spouse maintenance
The husband seeks the following interlocutory relief:
(1)That the respondent wife pay or cause to be paid to the applicant husband within 7 days as follows:
(a)Future costs for a further 4 days of trial dates in the sum of $221,078; or
(b)Future costs for an amended Points of Claim in the sum of $75,176.50.[1]
(2)That the respondent wife pay or cause to be paid to the applicant husband within 7 days as follows:
(a)Outstanding costs for the case-assessment conference on 9 September 2020 in so far as they related to the respondent husband’s litigation funding and interim spousal maintenance applications filed 7 September 2020 and 8 September 2020 (sealed 10 September 2020) respectively, including support affidavit material in the sum of $9,850;
(b)Future costs for the case-assessment conference and interim hearing on 9 October 2020 in the sum of $22,577.50; and
(c)Future costs for mediation in the sum of $32,133.75.
(3)That the characterisation of the payment in paragraphs 1 and 2 of these interim orders be adjourned to be determined by the trial judge in these proceedings or in the alternative that the said payments (or part of such payments as determined by this Honourable Court) is determined to be litigation funding.
(4)That the respondent wife pay or cause to be paid to the applicant husband within 7 days and weekly thereafter, the sum of $962 per week by way of interim periodic spousal maintenance.
[1] The sum claimed includes expenses relating to the drafting of the document (briefing/conferring with counsel, ASIC searches, subpoenas, conduct money – total expense being between $35,156.50 and $41,831.50) and also relating to responding to any application from the other respondents for summary dismissal in response to the husband’s points of claim and attendance at a hearing (this being estimated at $22,125 - $26,512.50 for reviewing the application, preparing the response and material, and solicitors and counsels fees for the hearing). I note that the wife has already paid $10,000 for the preparation of Points of Claim and the husband owes his current counsel $11,000 in relation to the Points of Claim.
The wife seeks that the husband’s applications for litigation funding, spousal maintenance, and costs be dismissed.
Litigation funding
Relevant principles
Contrary to the suggestion contained in the husband’s application at paragraph 3, when considering an application for litigation funding it is necessary to identify the source of power relied upon to make such an order.[2]
[2]Kryiakos & Kryiakos (2013) FLC 93-528 at 86,937, [37].
Although each party generally bears their own costs in this jurisdiction (s 117(1)), the Court has a broad discretion[3] to make such order as to costs as the Court considers just, where there are circumstances that justify it in doing so (s 117(2)).
[3]Collins & Collins (1985) FLC 91-603 at 79,877.
An applicant for costs bears no “additional or special onus” other than the establishment of “justifying circumstances”.[4]
[4]Penfold v Penfold (1980) 144 CLR 311 at 315.
In the exercise of the discretion to award costs, regard must be had to the factors set out in s 117(2A) of the Act, so far as they are relevant.
Those factors are as follows:
a)the financial circumstances of each of the parties to the proceedings;
b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the Court;
e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
g)such other matters as the Court considers relevant.
It is sufficient for one factor in s 117(2A) to be present.[5]
[5] Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Anor (2005) 33 Fam LR 123 at 130, [41].
Discussion
In this case the subparagraphs of s 117(2A) that appear to have some relevance are (a), (c), (d) and (g).
There is a vast disparity between the financial circumstances of the parties. The wife on her own case has assets, including superannuation, of about $7,000,000 and receives a weekly income of $3,749 while the husband lives in shared accommodation and has recently lost his job. He has minimal savings.
The husband’s proceedings have been on foot since 2016 and despite his frequent complaint that the wife has failed to comply with her disclosure obligations and that he does not have access to relevant documentation, he has previously failed to establish that the wife has been derelict in her disclosure obligations. Further, he succeeded previously in obtaining a raft of documents from the accountant for the Kingston Group. If there are further documents that the husband requires it does not appear he has taken any formal steps since 2017 to obtain them despite the wife having paid over $400,000 towards his legal costs to date.
The husband remains in breach of the order made on 13 December 2019 to properly particularise his claim against the other respondents, and I note that 21 of the respondents joined by the husband were removed on 20 May 2020 and a finding made that they had been joined for an improper purpose.
Without further litigation funding, the husband is unlikely to be able to retain his current lawyers and interstate counsel of choice. The husband already owes his solicitors a considerable sum and they have indicated that they are not prepared to continue to act for him without further litigation funding. The husband also has outstanding fees to his counsel.
In Rakete & Rakete[6] (“Rakete”) Kent J, when considering an application for litigation funding based on the costs power said - “the question of justifying circumstances necessarily involves consideration of the potential outcomes of the claims advanced, and comparison of the competing considerations so far as the effect of that upon the parties”.[7] Rakete concerned the attempt by the wife to set aside a binding financial agreement in circumstances where she alleged, among other things, that the husband had threated to kill her if she did not sign it. If the binding financial agreement stood, the wife would have no rights to claim a property settlement order. His Honour found that as the case concerned complex legal issues and the allegations made by the wife were so serious, there were justifying circumstances that warranted an order for litigation funding. In coming to this conclusion, Kent J compared the circumstances in Rakete with those in Wall & Mitchell[8] (“Wall”) where Johnson J refused an application for litigation funding when the “potential injustice to the applicant in denying her interim costs of $150,000 … was held … to be lesser than the potential injustice done to the respondent in circumstances where … it was nigh-certain that the applicant would be unable to repay the respondent should her application be unsuccessful”,[9] and found that the facts in Wall were “very different” to the facts in Rakete.[10]
[6] (2012) 48 Fam LR 325 (“Rakete”).
[7] Ibid at 335, [43]; See also Salvage v Fosse (2020) 61 Fam LR 45 at 55, [24] –[25].
[8] [2010] FamCA 1194 (“Wall”).
[9]Rakete (above n 6) at 336, [30] per Kent J discussing Wall (above n 8).
[10] Ibid at 336, [50].
In the current case, the husband’s approach to the substantive proceedings seems to assume that just because he and the wife were married for a long time he is entitled to receive a property settlement. Such an assumption has been expressly rejected by the High Court in Stanford & Stanford[11] (“Stanford”). There must be a “principled reason” to interfere with the existing legal and equitable interests of a party to the marriage.
[11] (2012) 247 CLR 108 at 121, [39]–[40] (“Stanford”).
A summary of the findings already made in this case include the following:
a)The husband and wife agreed prior to their marriage that they would keep their finances separate and they largely acted in accordance with that agreement after the marriage;
b)Until 2007, the husband and wife maintained a rather elaborate system of maintaining ledgers of their respective expenditure and made regular adjustments to reflect equality of joint expenses;
c)Joint expenses did not include accommodation which was provided throughout the marriage by the wife;
d)After 2007, the wife met a greater than equal share of the joint expenses;
e)There was some minimal intermingling of their financial arrangements after 2007 when the husband did not have a regular income from employment and he received distributions from the wife’s trust from which he contributed to the joint expenses;
f)The evidence does not establish that the husband made substantial contributions to the acquisition and conservation of property in the wife’s sole name for which he was not recompensed;
g)The husband resolved his informal claim for underpayment, termination and commissions arising from his employment with the Kingston Group which concluded in 1999, by offsetting the sum he was allegedly owed by the Kingston Group against the debt he owed the wife in 2003;
h)The contributions of the husband as homemaker and parent did not exceed those of the wife as homemaker and parent;
i)The husband’s financial contributions during the marriage comprise taxable income of $1,198,924 in circumstances where the only client of his consultancy business from 2007 was the wife and as such over $700,000 of his financial contribution was sourced from the wife;
j)The wife’s financial contributions during the marriage including from salary, family trust distributions, property sale proceeds, and inheritances total about $10,000,000.
These findings are likely to make the husband’s claim in the substantive property proceedings against the wife more difficult.
The wife has already paid a significant sum for the husband’s legal costs to date. Unless the husband succeeds in his substantive claim to some extent, the sums paid by the wife will be unable to be taken into account and there is little prospect of the wife ever recovering the sums already paid if the husband’s claim is dismissed.
The wife resists the payment of further litigation funding to the husband describing it as “drip feed[ing]” in circumstances where the funds now sought by the husband will not bring these proceedings to a conclusion. The wife has already paid $562,768 to the husband, at least $412,000 of which was in payment of his legal costs. The husband also contends that he has borrowed $100,000 from his mother to meet legal costs. In addition, the husband’s outstanding legal costs as at 7 October 2020 were $246,530. The wife notes the husband’s ongoing choice to engage counsel from interstate, one of whom allegedly rendered a bill in relation to a one day hearing on 13 December 2019 of $35,000. The wife also argues that she should not be required to fund the husband’s claim against the other respondents.
The wife’s solicitor estimates the wife’s further costs to the conclusion of this matter, if all matters are agitated, to be approximately $758,000 to $820,000. The wife has already paid legal costs of $951,175 (including those sums paid for the husband’s legal costs).
The husband is not of course seeking litigation funding sufficient to conclude the proceedings (at least not at this stage). No doubt there is an ongoing hope by the husband that further litigation funding in the sum sought by him will enhance the prospects of resolution.
All parties accept that the Court does not have power to order the parties to attend a private mediation and, while all of them agree to attend mediation, the wife does not agree to pay the husband’s costs in relation to it. I note the husband’s estimate of his costs for attending a mediation is over $32,000.
Conclusion
Litigation funding – s 117 (costs power)
This is a difficult decision. The prospect of the husband having to represent himself in the proceedings going forward weighs heavily in my consideration. However, the sums already paid by the wife which will never be taken into account or recoverable if she is ultimately successful in the substantive proceedings, is also a consideration, although of itself would not be a bar to further litigation funding if such an order were considered otherwise just.[12]
[12]Salvage v Fosse (2020) 61 Fam LR 45 at 52, [33] citing Kent J in Rakete (above n 6) at [55].
The wife is in a far superior financial position to that of the husband after a long marriage which produced two children. However, the findings already made in this matter are likely to have a significant impact on the quantum of any award made in the husband’s favour. The husband has not formally pursued his complaints about having insufficient access to relevant documentation and has not complied with his obligations under a previous order. His joinder of third parties was not initiated until mid-2019 and most of those joined were removed and a finding made they had been joined for an improper purpose.
The payment of the further sums sought by the husband will not bring this matter to a conclusion and it is certainly difficult for the husband to justify the wife being required to fund his claim against the other respondents.
On balance, I conclude that it would not be just to make an order for further litigation funding pursuant to s 117 of the Act.
The husband also submits that legal costs incurred by him for the case assessment hearing on 9 September 2020 should form part of the dollar for dollar litigation funding order made on 14 January 2020. The relevant part of that order is as follows:
1.The wife pay to the husband’s solicitors’ trust account ‘dollar for dollar’ all legal accounts relating to the factual issues noted in the order made by this Honourable Court on 13 December 2019 paid by the wife post 13 December 2019 up to the conclusion of the four (4) day hearing on 1 to 4 June 2020 in respect of those factual issues.
The Reasons for my factual findings were delivered on 18 August 2020 and the matter was listed for a further case management hearing on 9 September 2020. In my view, the ‘conclusion of the four day hearing’ could not be interpreted to extend beyond 18 August 2020 at the latest.
Accordingly, the husband’s application for the payment of $9,850 for the appearance on 9 September 2020 purportedly in reliance upon the order made on 14 January 2020 will be dismissed.
The husband also seeks the payment of his legal costs to attend a mediation. The sum sought is $32,133.75. The parties have all agreed to attend a mediation and a former judge of this Court has even been tentatively retained as mediator. However, the wife does not agree to pay the husband’s costs to attend the mediation and the husband contends that he cannot attend unless the wife pays his costs.
All parties agree that I do not have the power to order the parties to attend a private mediation other than by consent. Without considering that point in detail, I tentatively concur. In those circumstances, I can do no more than encourage the parties to proceed with the private mediation in the hope that a resolution of outstanding matters can be achieved. I simply observe that it may be money well spent by the wife.
Litigation funding – s 79 (interim property power)
While the husband “primarily” relies upon the costs power (s 117 of the Act) to support his application for litigation funding, and although the alternative sources of power to make a litigation funding order were not advanced in any detail in submissions, I turn to consider whether an order can or should be made by way of an interim property order under s 79, or by way of spousal maintenance under s 74 of the Act.
The legal principles to be applied in making an order for interim property settlement are well settled.[13] In summary, those principles include:
a)The discretion to make an interim property order must be exercised within the parameters of s 79, although not as thorough a consideration is required as would be if the Court were determining the matter on a final basis;
b)It is preferable to make only one order (a final order) in the exercise of the s 79 discretion;
c)The fact that it is an interim order requires a degree of caution;
d)An applicant for an interim property order need not establish compelling circumstances;
e)It is insufficient to establish merely that a property order of the type sought will be made at trial;
f)A significant factor is whether or not any interim order is capable of reversal; and
g)If made, an order need not limit the use to which the sum ordered may be put.
[13] Harris & Harris ; Strahan & Strahan (Interim Property Orders) ; Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) ; Stanford (above n 11).
In the circumstances of this case, there remains a real possibility that no s 79 order will be made. As already noted, the prospect of recovery of sums paid by the wife will be non-existent if the husband’s substantive claim fails or substantially fails.
In those circumstances, the husband must fail in his application to receive litigation funding pursuant to s 79.
Litigation funding – s 74 (maintenance power)
Finally, despite obiter dicta in various cases[14] suggesting an alternative source of power for litigation funding may be the maintenance power in s 74, I consider myself bound by the Full Court in Wilson & Wilson[15] which rejected that s 74 could be a source of power for such an order.
Spousal maintenance
[14] Breen& Breen (1990) 65 ALJR 195 at 195; Re JJT: Ex parte Victoria Legal Aid (1998) 195 CLR 184 at 189, [3] per Gaudron J cf 200, [41] per Kirby J.
[15] (1989) FLC 92-033 at 77,449; see also Rigby & Kingston [2017] FamCA 877 at [32] – [34].
Relevant principles
Pursuant to s 72 of the Act, the wife is liable to maintain the husband to the extent that she is reasonably able to do so, if, and only if, the husband is unable to support himself adequately whether by reason of having the care of a child under 18 (which is not relevant in this case), or by reason of age or physical or mental incapacity for appropriate gainful employment (which is not relevant in this case), or for any other adequate reason.
A determination of an application for spousal maintenance involves: [16]
(a)A threshold finding under s 72;
(b)Consideration of ss 74 and 75(2);
(c)No fettering principle that pre-separation standard of living must automatically be awarded where the respondent's means permit it; and
(d)A discretion exercised in accordance with the provisions of sec 74, with reasonableness in the circumstances as the guiding principle.
[16]In the marriage of Bevan and Bevan (1995) FLC 92-600 at 81,982.
The husband’s case
The husband’s employment contract with CQ Company was apparently terminated on 2 September 2020. The husband received a termination payment of $13,200 most of which is already required to meet existing liabilities. The husband has applied for JobKeeper and anticipates receiving two fortnightly payments of $1,200. It is not explained by the husband why only two fortnightly payments will be paid, nor whether the payments are subject to a means test. For the purposes of my deliberation I have assumed that it will not be an ongoing payment.
Despite his employment only having been terminated on 2 September 2020, the husband contends that he has been unsuccessfully looking for alternative employment even while employed, and it is on this basis, in part, that he contends he is unable to support himself adequately. He also contends that he has minimal savings.
The husband deposes to having contacted a number of people including recruitment consultants and has been advised “that the current employment climate was either very slow or that the companies were not presently hiring in the areas of my expertise”. The husband also deposes to having applied for a position on 23 August 2020 as “General Manager – Services Division” but was unsuccessful. The husband deposes to having reviewed numerous jobs on Seek.com and LinkedIn over the period September 2019 to April 2020 but “found none to be suitable”. The husband further deposes to having followed up many contacts “with no sourcing of relevant job opportunities”.
In the period 9 September 2020 to 28 September 2020, the husband deposes to having unsuccessfully applied for eight “jobs and/or contracts”.
The husband also deposes to having ‘cold called’ executive recruiters, accountants, solicitors, financial planners, small business advisors, and LinkedIn contacts.
The wife’s response
The wife argues that the husband has a capacity to support himself but chooses to limit his search for employment to the level of General Manager or CEO. Reference is made to the husband’s LinkedIn résumé wherein the husband says he is “interested in any roles such as CEO, General Manager, Chief Officer/2IC or COO”. The wife notes that while the husband has “contacted an overwhelming number of people” including 21 Executive Recruitment Companies and added 615 contacts on LinkedIn in relation to possible employment opportunities, she argues that he “provides no evidence as to the nature of the work he has contacted these people for nor whether he has sought work commensurate with his skill level”. Further, that “cold calling” contacts instead of applying for actual jobs fails to satisfy the onus he bears, namely, of establishing that he is unable to support himself adequately.
The wife also notes that the husband deposes to having reviewed 217 employment positions but “none were found to be suitable”, yet the husband fails to depose “what type of work he is reviewing positions for nor whether it is commensurate with his skill level.” While it may be less than palatable for the husband to take a position which he regards as “beneath him”, the wife argues that the husband cannot, in those circumstances, establish an incapacity to support himself.
The wife identifies literally hundreds of positions advertised on Seek.com as at 2 October 2020 for which the husband has the requisite skills and for which he should have applied. Those positions fall into the following categories and all are full time and located in Brisbane:
a)161 chartered accountant positions;
b)966 accountant positions;
c)868 general manager type roles, including within the farming and hospitality sectors;
d)412 HR consultant positions;
e)817 management accountant positions; and
f)815 management consultant positions matching the husband’s most recent position at HH Company.
In addition, the wife has identified 165 full time bookkeeper positions advertised in Brisbane including a position as an “Accounts/Commercial Coordinator” for $75,000 per annum plus superannuation.
The wife submits that it is inconceivable that the husband, who is 55 years of age and a qualified chartered accountant in good health, cannot adequately support himself.
In relation to the quantum of maintenance sought, the wife challenges a number of the expenditure items claimed by the husband including what she describes as the “high” sum for entertainment and hobbies of $100 per week and a sum of $40 for holidays.
Even if the Court is satisfied that the husband is unable to support himself adequately, the wife submits that she does not have the capacity to pay spouse maintenance. The wife deposes in her Financial Statement that she has net assets of $6,675,751 and an annual gross income of $194,948.
The wife nevertheless points to her dwindling cash reserves (most of which were sourced from an inheritance) and having to borrow $300,000 from a related entity to meet her ongoing legal costs. Her current expenses of $10,050 per week (which includes $6,964 for legal fees) exceeds her weekly income of $3,749. She also contends that her responsibilities to support her adult children are about to increase as one child is returning to university in 2021 and she is committed to meeting his fees of $192 per week. The other child is relocating back to Brisbane with his partner and the wife is committed to meeting his living expenses until he can obtain a job.
The wife contends that the Kingston Group has experienced an overall loss of about 20% between March 2020 and 30 June 2020. As a consequence, she has not received and does not expect to receive distributions over and above her salary from any of the entities in the financial year ending 30 June 2021.
Due to the wife’s allegedly straitened financial circumstances, she has elected to sell her home in order to raise funds to meet her ongoing expenses.
The wife also contends that her health is suffering because of the stress of the proceedings. She describes a number of symptoms including severe chest pain and throat constrictions, which her medical advisers attribute to ongoing stress. The wife is currently consulting a psychologist.
Despite the many demands upon her finances, the wife has made an open offer to acquire a Brisbane business for the husband so that he can use his skills to support himself. The wife attaches certain conditions thereto, namely, that the husband enter into a binding financial agreement accepting the offer as a finalisation of his claim for spouse maintenance, but has received no response from the husband which lends weight, it is argued, to the husband’s alleged parting pledge to the wife – “Well now you can support me for the rest of my life”.
Conclusion – Spousal maintenance
The husband bears the onus of establishing that he is unable to support himself adequately for an adequate reason. He has impressive qualifications as a chartered accountant and has worked in a variety of business areas although his work history may not necessarily assist him in obtaining employment. Unfortunately, the husband appears to have largely limited his search for employment to “roles such as CEO, General Manager, Chief Officer/2IC or COO”. A number of the jobs he has applied for appear to be outside any of the areas in which he has any experience e.g. the science industry, animal transport and retirement accommodation.
I accept the wife’s submission that ‘cold calling’ businesses is a poor substitute for applying for actual jobs. The husband provides no explanation as to why he has not applied for any of the literally hundreds of jobs the wife particularises in her material for which it would appear he would be eminently qualified. However, the husband’s employment was only terminated on 2 September 2020 and my determination of his application occurs just over a month later. It seems to me that the husband should have a reasonable time to seek employment by applying for actual positions. As I propose to hear this matter further on in April 2021 I consider that to be a reasonable period.
The fact that the wife has made an open offer to purchase a business for the husband demonstrates that she has the capacity to pay spousal maintenance and I do not consider the sum claimed by the husband to be unreasonable. Accordingly, I propose to order the wife to pay weekly spousal maintenance in the sum sought by the husband until 16 April 2021.
case management
As already noted, this matter is unusual in that it has proceeded, with the consent of all parties, on the basis that there will be a series of trial dates addressing particular issues. The main reason this approach has been adopted is to hopefully assist the parties to resolve their dispute and with the aim of limiting the potential costs and outlays (including valuations estimated at $300,000) for the parties which have been estimated at $2,700,000.
To date, there have been four days of hearing and findings made in relation to ten specific issues. Regrettably, those findings have not resulted in overall resolution.
The husband submits that the next series of trial dates should determine the following issues:
(a)What is the Wife’s interest in the Kingston Group?
(b)Does anyone other than the Wife and her 2 brothers have any interest in the Kingston Group?
(c)What is the effect of the “Umbrella Deed” on the Wife’s interest in the Kingston Group?
(d)Which entities within the Kingston Group were the source of the distributions discussed in paragraph 489 of the Wife’s affidavit sworn 12 May 2020?
(e)Has anyone other than the Wife and her 2 brothers ever had any distributions from the Kingston Group since 12 January 2013?
(f)What is the relationship between the Divisions of the Kingston Group as set out in paragraph 366 of the Wife’s Affidavit sworn 12 May 2020 and the entities within the Kingston Group?
(g)What is the value of the Kingston Group?
(h)What is the value of each of the trusts in the Kingston Group?
If I am not persuaded that all issues identified above should be the subject of the next series of trial dates, the husband submits that at the very least the issues identified in (a), (b) and (c) should be determined.
The wife and the other respondents submit that no further dates for trial should be allocated until the husband complies with paragraph 3 of the order made on 13 December 2019 which required the husband to:
File and serve a Points of Claim document, pleading the contentions of fact and law, with specific reference to the particular provisions of the Family Law Act 1975 (Cth) relied upon as grounds for the relief sought by the applicant against each of the third party respondents in the Amended Initiating Application to be filed pursuant to subsection (a) and identifying, with reference to filed affidavits (including paragraph numbers in those affidavits), the contentions of fact to support each particular ground of relief.
The husband was required to file Points of Claim by 28 February 2020 and while Points of Claim were filed, the pleading did not comply with paragraph 3 of the 13 December 2019 order, and on 26 May 2020 an order was made in the following terms:
The obligations of the 2nd, 3rd, 8th, 9th, 12th, 20th, 23rd, 29th and 30th respondents [the only remaining third party respondents] are stayed unless and until the applicant husband complies with his obligations pursuant to paragraph 3 of the Order dated 13 December 2019.
The other respondents submit that any determination as to the rights and interests of the wife in the Kingston Group must necessarily involve them because if, as contended by the husband, the wife owns one third of the Kingston Group, such a finding would have “obvious consequences” for the other respondents. The other respondents further submit that any determination of the wife’s legal and equitable interests will require examination of the Umbrella Deed which they contend is “an administrative and managerial document only, which does not in any way change the terms of the testamentary trust”. It is argued that once it is accepted that the other respondents must be heard in relation to those matters, the need for the husband to file Points of Claim that comply with the order made on 13 December 2019 becomes “unavoidable” and that the other respondents are entitled to know the case against them before the matter proceedings to the next stage. For example, where the husband, as part of the relief sought, seeks to bring forward the vesting date of four unit trusts, he must plead the legal and factual basis upon which such relief could be granted in circumstances where the wife is not a unit holder in any of those trusts.
In the event that I am not persuaded to stay the further progress of this matter until the husband amends his Points of Claim, the wife submits that the next series of trial dates should determine the nature of the wife’s interests in the entities and trusts comprising the Kingston Group and the control that she exercises in relation thereto, and further the Court might well consider whether or not it is just and equitable to make any order under s 79 of the Act (“the Stanford point”).
In the event that I am not persuaded to stay the further progress of this matter, the other respondents submit that I should determine the wife’s legal and equitable interests. There was some discussion during the hearing on 9 October 2020 about whether the words “in property” should be added to the issue so described and the other respondents submitted that they should not be - the intention being that the issue as stated would be broad enough to consider the competing cases of the parties. As to the determination of the Stanford point as a discrete issue it is submitted by the other respondents that such a course is open and is the subject of their Application in a Case filed 26 July 2019 which was adjourned.
I note that on 11 July 2017, I dismissed an application by the wife to decide the Stanford point as a discrete issue at that time. It is not in contention that an interim order can be revisited if the circumstances have changed sufficiently to warrant a reconsideration. The husband submits, however, that to revisit that application in the circumstances of this case would be an abuse of process. In my view the fact that findings have been made in relation to a range of issues provides a proper basis to reconsider the interim application.
The best way forward in his case is not necessarily straightforward. I have determined though that there should be further trial dates allocated despite the husband’s failure to file amended Points of Claim.
In formulating the further issues for determination, I am particularly mindful of what the High Court held in Stanford, namely, that the requirements of s 79(2) which provide that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order” is not to be conflated with s 79(4) which prescribes matters that must be taken into account in considering what order (if any) should be made under s 79. Further, that “three fundamental propositions must not be obscured”, namely:[17]
(1)“[I]t is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property”;
(2)“[A]lthough s 79 confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion”; and
(3)“[W]hether 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 or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4)”.
[17]Stanford (above n 11) at 120–121, [36]–[38], [40].
I have come to the conclusion that the most appropriate next step involves a determination of the following issues:
(1)What are the wife’s existing legal and equitable interests in any property including in any companies and trusts comprising the “Kingston Group” as identified in schedule 1 to the Umbrella Deed dated 13 February 2014?
(2)What is the effect, if any, of the “Umbrella Deed” on any existing legal and equitable interests of the wife?
(3)Does the wife have a source of financial support, other than any property in which she has an existing legal or equitable interest, which she can reasonably expect will be available to her to supply a financial need or deficiency?
(4)Is it just and equitable to make an order under s 79 of the Family Law Act 1975 (Cth)?
In formulating the first issue to be determined, I consider it prudent to adopt the wording of the High Court in Stanford, discussed above. I do not intend however that the wife be precluded thereby from submitting that it is not necessary to definitively determine whether her interests in the Kingston Group are property as opposed to a financial resource. In formulating the second issue: as there is a fundamental disagreement about the effect, if any, of the Umbrella Deed, I consider it should be listed as a separate issue, although it may form part of the consideration of the first issue. In formulating the third issue I have had regard to the Full Court’s description of financial resource in Hall & Hall[18] where it was said:
54.The reference to ‘financial resources’ in the context of s 75(2)(b) has long been correctly interpreted by the Family Court to refer to “a source of financial support which a party can reasonably expect will be available to him or her to supply a financial need or deficiency”. The requirement that the financial resource be that “of” a party no doubt implies that the source of financial support be one which the party is capable of drawing. It must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that a party must control the source of financial support. Thus, it has long correctly been recognised that a nominated beneficiary of a discretionary trust, who has no control over the trustee, but has a reasonable expectation that the trustee’s discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation.[19]
55.Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual inquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
[18] Hall & Hall (2016) FLC 93-709 see especially at 81,456, [54]–[55].
[19] Kelly & Kelly (No.2) (1981) FLC 91-108 at 76,803.
In circumstances where I have already made findings on a range of issues (and propose to make further findings in the next series of trial dates about further issues) that will inform the exercise of the discretion about whether it is just and equitable to make a property adjustment order pursuant to s 79 of the Act, I consider that it is appropriate to consider the Stanford point at the next series of trial dates. Whether or not I can make a determination of that issue at the next stage of the proceedings will be open to argument.
In my view, the issues identified are matters primarily between the husband and wife but there is some force in the other respondents’ claim that findings made in relation to those matters may impact upon their interests. Accordingly, should they wish to participate in the further dates for trial they are at liberty to do so.
As to the number of listing days, I note that submissions made on behalf of the husband refer to a further four days for determination of the list of issues agitated by him and listed above. The wife’s submissions refer to a further two days. I will list the further issues for three days but should any party consider that the determination of the identified issues will require less time than three days or more time than three days then liberty will be provided to approach my associate to list the matter for mention.
On 26 May 2020, I stayed the obligations of the other respondents unless and until the husband complies with his obligations pursuant to paragraph 3 of the Order dated 13 December 2019, which was in the following terms:
3. That by 28 February 2020 the applicant:
(a) …
(b) File and serve a Points of Claim document, pleading the contentions of fact and law, with specific reference to the particular provisions of the Family Law Act 1975 (Cth) relied upon as grounds for the relief sought by the applicant against each of the third party respondents in the Amended Initiating Application to be filed pursuant to subsection (a) and identifying, with reference to filed affidavits (including paragraph numbers in those affidavits), the contentions of fact to support each particular ground of relief.
I note that the order made on 13 December 2019 was made by consent.
The husband filed Points of Claim on 28 February 2020 but the pleading did not comply with the husband’s obligations (see Reasons for Judgment dated 26 May 2020 at [51 – [58]). The husband was nevertheless provided with an opportunity to amend the Points of Claim. The husband has not done so and the other respondents request that the husband be required to do so by a particular date. I consider it to be reasonable for the husband to have until the end of January 2021 and I note that this was the time frame suggested on behalf of the other respondents.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 13 November 2020.
Associate:
Date: 13.11.2020
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