FAMILY LAW – APPEAL – LITIGATION FUNDING – Application to set aside financial agreement and apply for a property settlement order – Litigation funding order made in relation to application to set aside financial agreement – Application of costs power for litigation funding orders – Where the primary judge found that the respondent had “at least an arguable case” – Whether the case to be raised by the applicant is sufficient, in all of the circumstances, as to its nature and prospects, to justify an interim order for costs – Failure to evaluate the likely result of any property division and consider costs to the parties – Irreversibility – Leave to appeal granted – Appeal allowed in part.
FAMILY LAW – APPEAL – INTERIM DE FACTO SPOUSAL MAINTENANCE – Where the financial agreement came into effect after the breakdown of the relationship between the parties – Section 90UI of the Family Law Act 1975 (Cth) restricts the ability to exclude or limit the power of the Court to make a maintenance order pursuant to s 90SE and s 90SG – Meaning of “came into effect” discussed – Leave to appeal refused – Costs order made.
Australian Constitution s 51(xxxvii)
Commonwealth Powers (De Facto Relationships) Act 2003 (Qld) s 3 and s 4 Family Law Act 1975 (Cth) ss 44, 79, 79A, 90F, 90SA, 90SE, 90SF, 90SG, 90SM, 90SS, 90UB, 90UC, 90UD, 90UF, 90UG, 90UH, 90UI, 90UM, 114, 117 Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Salvage & Fosse [2020] FamCAFC 144
Case
[2020] FamCAFC 144
Decision Date
CaseChat Overview and Summary
In the case of Salvage & Fosse, the Court addressed appeals concerning a financial agreement between de facto spouses and the associated litigation funding order. The primary judge had set aside a financial agreement and made an order for a litigation funding order in relation to the application to set aside the financial agreement. The appellant, Fosse, appealed against the litigation funding order, arguing that the respondent had failed to evaluate the likely result of any property division and consider the costs to the parties. Additionally, Fosse argued that the case did not justify an interim order for costs due to the irreversibility of the order. The respondent, Salvage, sought to appeal the primary judge's refusal to make an order for interim de facto spousal maintenance, arguing that the financial agreement came into effect after the breakdown of the relationship.
The court had to decide whether the respondent had “at least an arguable case” concerning the litigation funding order and the interim de facto spousal maintenance order. In addressing the litigation funding order, the court considered the essential clauses of the Cohabitation Agreement, particularly those under the heading “Separation.” The court noted that when making an order for litigation expenses, it is important to identify the source of power because that will determine the relevant considerations for making the order. The court identified that the most common source of power in financial cases involving de facto spouses is the property power under s 90SM and s 90SS(1)(h) and (k) of the Family Law Act 1975 (Cth). If unavailable, the next most obvious source of power is s 117(2) of the Act. The court found that the primary judge had failed to evaluate the likely result of any property division and consider the costs to the parties, and that the case did not justify an interim order for costs due to the irreversibility of the order. Therefore, the court granted leave to appeal and allowed the appeal in part.
The court further considered the issue of interim de facto spousal maintenance, specifically whether the financial agreement came into effect after the breakdown of the relationship. The court noted that Section 90UI of the Family Law Act 1975 (Cth) restricts the ability to exclude or limit the power of the Court to make a maintenance order pursuant to s 90SE and s 90SG. The meaning of “came into effect” was discussed, but ultimately, the court found that the respondent had not established “at least an arguable case” concerning the interim de facto spousal maintenance order. The appeal was refused, and costs were ordered in favour of the respondent.
In summary, the court allowed the appeal in part, setting aside the litigation funding order and remitting the matter for rehearing. The appeal against the interim de facto spousal maintenance order was dismissed, and costs were ordered in favour of the respondent. The court's reasoning focused on the source of power for making litigation funding orders, the need to evaluate the likely result of any property division, and the meaning of “came into effect” in relation to the financial agreement.
Orders
Orders of the court
1.
The appellant is granted leave to appeal Order 1 made on 14 June 2019.
2.
The appeal against Order 1 made on 14 June 2019 is allowed.
3.
Order 1 made on 14 June 2019 is set aside.
4.
The matter is remitted for rehearing of the respondent’s application for a litigation funding order.
5.
The appeal is otherwise dismissed.
6.
The appellant pay the respondent’s costs in the sum of $30,000.
Note: The form of the order is subject to the entry of the order in the Court’s records.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
At [13] of primary judge’s reasons for judgment (“the reasons”), his Honour sets out some of the essential clauses of the Cohabitation Agreement, the most important of which are the provisions under the heading “Separation” which are in the following terms:5.Separation5.1Neither will be required to pay maintenance to the other.…5.4That save as otherwise herein provided assets and resources accumulated in the name of one, other or both of the parties during the course of the relationship (“the Joint Property”) shall be deemed to be owned by the parties in the proportions described in any document evidencing title and if none then in accordance with their respective contributions thereto.5.5If either party acquires assets and/or financial resources after the date of this agreement in their own name then that party will be entitled to the benefit of that property or financial resource.… When making an order for litigation expenses, it is important to identify the source of power because that will determine the relevant considerations for making the order (see Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”); Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 (“Paris King Investments”) and Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466 (“Strahan”) at [221]). The four possible powers referred to by relevant authorities for the making of an order for interim provision of litigation expenses are the powers to make orders as to: property (s 90SM and s 90SS(1)(h) and (k)), costs (s 117(2)), maintenance (s 90SE) and injunctions (s 114(2A)(c)). In a financial case involving de facto spouses, an order for litigation expenses will most usually be made relying upon the property power. If unavailable, for example because of the need to determine jurisdictional facts, the next most obvious source of power is s 117(2) of the Act (see Breen v Breen (1990) 65 ALJR 195) (“Breen”); Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 at [2], [10], [60]–[62]; Zschokke and Strahan). Section 117(2) is available “in proceedings under this Act”. In this case, the respondent has commenced proceedings under s 90UM of the Act to set aside the Cohabitation Agreement. This section provides jurisdiction to, in effect, decide whether s 90SA(1) excludes the respondent from making an application under s 90SM. The availability of this Court to determine jurisdiction attracts the provisions of s 117(2). Section 117(1) expresses the general rule that a party to proceedings under the Act shall bear his or her own costs. However, the High Court in Penfold v Penfold (1980) 144 CLR 311 (“Penfold”), said at 315:It is an accurate description of s. 117 (1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117 (2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs…