Salvage & Fosse

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.