Sappho & Sappho (No. 2)

[2021] FamCA 175

FAMILY COURT OF AUSTRALIA

Sappho & Sappho (No. 2) [2021] FamCA 175

File number(s):

ADC 885 of 2020

Judgment of:

BERMAN J

Date of judgment:

1 April 2021

Catchwords:

FAMILY LAW – PROPERTY – Interim distribution – Where the wife seeks that the husband pay her solicitors an amount by way of partial settlement of property – Where the husband redrew a significant sum on the parties’ home loan account – Where the husband considers the parties could each retain a portion of the redrawn funds for legal fees – Where the parties are in dispute as to the amount they should each retain – Where the parties have provided information as to current costs and estimates as to future costs – Where it is not reasonable for the solicitors to be provided with funds up to and including any final hearing where the parties intend to participate in mediation – Orders.

FAMILY LAW – PROPERTY – Interim distribution – Where the husband seeks a sum of money to purchase a business equipment for his business – Where it is important for the husband to be able to maintain his business – Where the husband pays a number of expenses for the wife and children – Where more evidence and information should be provided.

FAMILY LAW – PRACTICE AND PROCEDURE – Discovery – Where the wife seeks that the husband make disclosure as to certain information – Where the husband considers the information has already been the subject of disclosure – Where the wife’s solicitors have not yet had an opportunity to consider the extensive disclosure of documents provided. 

Legislation:

Family Law Act 1975 (Cth) ss 79, 117

Number of paragraphs:

46

Date of hearing:

23 March 2021

Place:

Adelaide

Counsel for the Applicant:

Ms Dickson QC

Solicitor for the Applicant:

Clelands Lawyers Adelaide Pty Ltd

Counsel for the Respondent:

Ms Lewis

Solicitor for the Respondent:

All Family Law

ORDERS

ADC 885 of 2020
BETWEEN:	MS SAPPHO Applicant
AND:	MR SAPPHO Respondent

ORDER MADE BY:	BERMAN J
DATE OF ORDER:	1 APRIL 2021

THE COURT ORDERS:

1.The husband and wife do all things necessary to cause the following sums to be redrawn from the National Australia Bank Home Loan account … …58:-

(a)To the trust account of Clelands Lawyers for and on behalf of the wife the sum of SIXTY THOUSAND DOLLARS ($60,000);

(b)To the trust account of All Family Law for and on behalf of the husband the sum of FIFTY THOUSAND DOLLARS ($50,000);

PROVIDED THAT the parties are restrained from using the sums held by their solicitors other than for the payment of legal fees.

2.That save as to paragraph 1 of these orders the parties be restrained and an injunction granted restraining each of them from drawing against the National Australia Bank Home Loan account … …58 without their prior written consent.

3.That paragraph 3 of orders made 23 March 2021 be discharged.

Note:   The form of the order is subject to the entry in the Court’s records.

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 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sappho & Sappho been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

BERMAN J

INTRODUCTION

1. On 18 February 2021, the Court heard and determined orders sought by Ms Sappho (“the wife”) by her Amended Application in a Case filed 28 January 2021 and by Mr Sappho (“the husband”) in his Response to an Application in a Case filed 16 February 2021.  Interim orders were made in respect of the wife’s application for periodic spousal maintenance and the payment of her trauma insurance premiums with DD Insurance.

2. The wife’s application for litigation funding in the sum of $50,000 was the subject of the following orders:-

   3.That paragraphs 3 and 4 of the Amended Application in a Case filed 28 January 2021 are adjourned for further hearing to 9.00 am on 23 March 2021.

   4.That on or before the adjourned date the solicitors for each of the parties must give their party a written notice of:-

   (a)The party’s actual costs both paid and owing up to and including the Court event;

   (b)The estimated future costs of the party up to and including the anticipated conclusion of the proceedings; and

   (c)Any expenses paid or payable to an expert witness or, an estimate of those expenses; and

   5.That the statements of costs provided for in paragraph 4 are to be filed and served.

3. Paragraph 3 of the Amended Application in a Case sought an order that the husband pay to the wife’s solicitors the sum of $50,000 by way of partial settlement of property and paragraph 4 provided a default provision, that if the money was not paid then the property situate at B Street, Suburb C, South Australia (“the Suburb C property”) be placed on the market for sale, with the net proceeds to be disbursed as follows:-

   (a)$50,000 to be paid to the wife;

   (b)$50,000 to be paid to the husband;

   (c)The balance to be placed in an interest bearing account in the joint names of the parties.

4. Paragraphs 3 and 4 of the Amended Application in a Case mirror the orders made on 17 June 2020 that required the husband to pay the sum of $50,000 to the wife’s solicitors.  Those monies were paid and have been spent on legal fees.

5. By Response to an Application in a Case filed 16 February 2021, the husband sought parenting orders in respect of X born in 2010 and Y born in 2012 (collectively “the children”).  The husband sought orders that the children spend time with him from Thursday to the following Monday each alternate weekend, for seven consecutive nights in each of the short school holidays, for time with him on Father’s Day, Orthodox Easter and the children’s birthdays.

6. The wife’s response to the orders sought by the husband is set out in her Reply filed 16 March 2021.

7. Prior to the commencement of the hearing on 23 March 2021, the parties were able to reach agreement in respect of the interim parenting arrangements.

8. On 1 March 2021 the wife filed an Application in a Case seeking orders summarised as follows:-

   (1)That within seven days the sum of $198,982.35 be returned by the husband to the National Australia Bank Home Loan account … …58 (“the NAB Home Loan account”);

   (2)That the husband be restrained from drawing against the NAB Home Loan account without the prior written consent of the wife;

   (3)That the plant and business equipment of the Sappho Group be valued by “All Asset Appraisals”, with the husband to pay the costs of the valuation at first instance and the wife to reimburse the husband her half share at settlement;

   (4)That the husband make disclosure of all bank accounts in his sole name or jointly with any other person and/or under the banner of the Sappho Group of Companies for the period 30 June 2019 until the current date, including but not limited to the accounts as identified in paragraphs 5(a) to (e) inclusive of the application; and

   (5)That the husband make disclosure of the following:-

   (a)All plant and business equipment purchased by him since 18 February 2021 and evidence of disbursement of the funds referred to in paragraph 2 herein;

   (b)Invoices from his former solicitor, Tindall Gask Bentley; and

   (c)Evidence of monies paid to All Family Law Trust Account.

   CONTRAVENTION PROCEEDINGS

9. The wife filed a Contravention Application on 28 February 2021, alleging that the husband was in breach of paragraph 2.1 of orders made 24 April 2020 in that on 27 December 2020, without reasonable excuse, he failed to return the children to the wife’s care.  Consent orders were made as to the interim arrangements for the children and that the Contravention Application be dismissed with no order as to costs. 

   COSTS STATEMENTS OF THE PARTIES

   Wife’s Costs

10. By reference to a letter of advice forwarded to the wife by her solicitors dated 22 March 2021 (Exhibit “4”), the wife has incurred legal fees and disbursements to the total sum of $73,281.  Of that sum, $11,044 remains outstanding.

11. As required by the order made 12 March 2021, the wife’s solicitors have provided an estimate of the total future costs and disbursements to be within $110,000 to $160,000 (exclusive of GST) but more particularly $151,030.

12. A reasonable attempt was made to itemise the future costs which include the disbursement costs for single expert valuers for the total sum of $12,000.  There is agreement between the parties that the husband will pay the single expert disbursement costs at first instance, with the wife to reimburse him for one half of the total costs at settlement.

13. A more detailed consideration of the estimate of future fees and disbursements reveals that the costs for a future final hearing, including disbursements, totals $91,250.

14. It is the intention of the parties to undergo mediation as soon as valuations can be undertaken and a family assessment report prepared and published.

    Husband’s Costs

15. The husband did not seek to tender a statement of his costs and disbursements, but rather provides the following information as set out in his affidavit filed 23 March 2021:-

    ·The husband does not know the extent of his legal fees incurred with his former solicitors Tindall Gask Bentley.  A request was made on 16 March 2021 but the information has not yet been forthcoming;

    ·Fees that remain unpaid to All Family Lawyers stand in the sum of $10,285;

    ·Counsel fees for the February 2021 hearing in the sum of $2,722.50 have been paid;

    ·The husband has transferred $25,000 to his solicitor’s trust account towards the disbursement cost of valuations;

    ·The husband estimates that the following sums will be incurred:-

    (i)$5,000 to EE Services for the family assessment report;

    (ii)$15,000 for additional valuation fees;

    (iii)Counsel fees for counsel’s attendance on 23 March 2020, estimated as $6,000;

    (iv)Costs for a 5 day trial including counsel fees of $45,000; and

    (v)An additional sum of $5,000 for expert evidence fees;

    (vi)$9,900 to Z Pty Ltd for accountancy fees.

16. It is self-evident that if the parties are not able to reach agreement and the matter proceeds to a final hearing, the fees incurred by the parties will represent a significant proportion of the total net property of the parties.

    DRAWDOWN FROM THE HUSBAND FROM THE HOME LOAN ACCOUNT

17. It is not controversial that on 22 February 2021 the husband redrew the sums of $48,982.35 and $150,000 from the Home Loan account.

18. The monies redrawn were paid into an account controlled by the husband and hitherto not the subject of disclosure.

19. The husband admitted that he redrew funds from the NAB Home Loan account and whilst in his affidavit, filed 23 March 2021, he sought to justify his actions and provide a basis upon which those monies either in whole or in part should be disbursed, his counsel conceded that the redrawn funds had not been disbursed and could therefore represent a source of money from which each of the parties could retain the sum of $50,000 to assist in the payment of their future legal fees, $60,000 could be returned to the NAB Home Loan account and the sum of $40,000 to be utilised by the husband to purchase a new business equipment.

20. The concession by the husband that the redrawn funds were not disbursed was the catalyst for the wife to amend her application to reflect that the total sum should be increased to $200,000 and each of the parties should receive one half.  On that basis, the wife abandoned her claim for the Suburb C property to be sold if there was a default in the payment of the settlement sum as originally sought.

21. The gravamen of the dispute between the parties is readily seen by the wife’s application which seeks that from the redrawn funds each of the parties receive $100,000 on account of their legal fees and the husband’s position that each party should receive $50,000.

    SUM TO BE RECEIVED BY EACH OF THE PARTIES ON ACCOUNT OF THEIR LEGAL FEES

22. Whilst there remains some uncertainty as to the extent of the legal fees paid by the husband to his former solicitors, that issue will be relevant at any final hearing but has no impact upon the decision as to the extent of the sum that is to be paid to each of the parties’ solicitors from the redrawn funds.

23. Each of the parties has made a reasonable attempt at setting out their likely costs.

24. If the wife’s anticipated final hearing costs of $91,250 and the disbursement costs of $12,000 are deducted from the sum of $151,030, the balance remaining is $47,780.  The amount outstanding to the wife’s solicitors is $11,044 which totals $58,824.

25. It is an observation that the husband’s anticipated costs of trial are approximately $50,000.

26. The husband is yet to pay costs and disbursements of $36,285 with a further $9,900 to be disbursed to Z Pty Ltd for accountancy fees incurred in preparing documents for the valuation of the Sappho Group of Companies.

27. In the circumstances of this case I do not consider that it is reasonable that the parties’ solicitors should be provided with funds up to and including the end of any future final hearing given that the focus of the parties is to use their best endeavours to resolve their differences at mediation.

28. I note that the husband has transferred the sum of $25,000 to his solicitors in anticipation of valuation fees.

29. It is reasonable that the Court strive to achieve a level playing field that will enable each of the parties to receive competent legal representation.

30. When considering any application for partial settlement of property pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) or litigation funding under s 117 of the Act, the Court should strive to limit the number of hearings required prior to final determination.

31. I propose to order that from the redrawn funds, the wife’s solicitors are to receive the sum of $60,000 and the husband’s solicitors the sum of $50,000 to be used for outstanding and future legal fees.

    HUSBAND’S BUSINESS EQUIPMENT

32. The husband refers to “an incident”[1] that occurred at his place of work in December 2020.  The husband contends that the current business equipment was not adequate.

    [1]Affidavit of the husband filed 23 March 2021, paragraph 24.

33. The husband’s business is the subject of accreditation assessment.  A report was provided to the husband by his accreditation consultant that the business equipment may need to be replaced.

34. The husband estimates the cost of the business equipment is likely to be in the vicinity of $40,000.

35. The husband seeks that of the redrawn sum, $40,000 be retained by him for the purposes of the purchase of a business equipment.

36. It is not suggested that the wife is unsympathetic to the husband’s request for funds to replace his business equipment, but rather, her opposition is as to the paucity of evidence that the husband presents in support of his application.

37. It was apparent that full instructions had not been obtained from the husband.

38. The husband employs the services of an accreditation consultant to assist him in the important task of gaining accreditation.  If advice has been given by the accreditation consultant then a report should have been sought and placed before the Court.  It should also have been possible for the husband to provide information as to the cost of the equipment and whether the funds that he seeks are necessary to secure the immediate delivery and installation of the business equipment, or whether there is a delay between the time of order and the delivery and installation.

39. It is recognised that it is important for the husband to be able to maintain his business at an optimal level.  The husband currently pays a raft of expenses for the wife and the children and it would be counterproductive if his ability to generate income was restricted by his inability to receive accreditation at the appropriate level.

40. The request for funds to purchase the business equipment was not the subject of a formal application and as discussed, the matters raised in paragraphs 24, 25 and 26 of the husband’s affidavit filed 23 March 2021, whilst not necessarily inaccurate, are nonetheless wholly inadequate in the absence of agreement for the Court to properly consider the funds as sought.

41. I do not reject the husband’s application out of hand, but consider that at the very least the following evidence and information should be provided to the wife and if still opposed then the Court:-

    ·A written report from the husband’s accreditation consultant;

    ·An invoice from the supplier of the business equipment;

    ·An advice from the supplier as to the terms and conditions required for the order of the new business equipment and its subsequent delivery and installation;

    ·An advice from the husband’s accountant as to the extent to which the costs of the business equipment and installation is a tax deductible item against the income of the entity which is to purchase the business equipment;

    ·The extent to which the existing business equipment is to be retained by the practice or is able to be sold and if so for what amount;

    ·Whether the business equipment and installation can be leased and if so on what terms and conditions.

42. If the provision of that information is strongly indicative of the need for the proposed business equipment to be purchased and that it can be delivered and installed in a timely fashion, then it is likely upon future application that the order the husband seeks would be made.

43. If the parties are able to agree then an order can be made in Chambers.  If not, then an Application in a Case can be listed at short notice.

    DISCOVERY

44. The husband’s counsel submits that the accounts set out in paragraph 5 of the wife’s Application in a Case filed 1 March 2021 have been the subject of discovery.  I accept counsel’s submission and I do not propose to make orders until the wife’s solicitors have had an opportunity to consider the documents that are comprised in the extensive disclosure of documents recently provided by the husband.

    EVIDENCE OF MONEY PAID TO THE HUSBAND’S FORMER SOLICITOR AND HIS CURRENT SOLICITORS

45. I accept the submission of the husband’s counsel and the husband’s affidavit of 23 March 2021, that a letter has been sent to his former solicitors on 16 March 2021 seeking a copy of the invoices.  I am also satisfied that the affidavit of the husband as prepared by his solicitors, by necessary implication is accurate as to the money paid by the husband to his solicitors and their advice as to current and future fees likely to be incurred.  No further orders are required.

    CONCLUSION

46. I make orders as appear at the commencement of these reasons.

I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman.

Associate:

Dated:       1 April 2021