SHELBOURNE & SHELBOURNE
[2018] FamCA 1135
•5 December 2018
FAMILY COURT OF AUSTRALIA
| SHELBOURNE & SHELBOURNE | [2018] FamCA 1135 |
| FAMILY LAW – PROPERTY – Costs – Interim financial orders – Where the wife seeks a payment of $100,000 by way of partial property settlement for payment of legal fees and a dollar for dollar order – Where the husband opposes the orders sought – Where the wife does not have capacity to meet her legal costs and she has incurred more than $100,000 in costs unpaid – Where the Court must make an order that is enforceable – Where there is no evidence of $100,000 in liquid funds – Where no order is made for partial property settlement – Where a dollar for dollar costs order is made. FAMILY LAW – SPOUSAL MAINTENANCE – Interim – Where the husband seeks that an order for spousal maintenance previously made be vacated – Where it is not reasonable to interrupt the arrangement shortly before the final hearing. |
| Family Law Act 1975 (Cth) ss 72, 74, 75, 79, 114, 117 |
| Gould and Gould [1994] FamCA 75 Kartal & Dutsanee [2016] FamCA 1158 Poletti and Poletti (1990) 15 Fam LR 794 Zschokke & Zschokke (1996) FLC 92-693 |
| APPLICANT: | Ms Shelbourne |
| RESPONDENT: | Mr Shelbourne |
| FILE NUMBER: | SYC | 4897 | of | 2017 |
| DATE DELIVERED: | 5 December 2018 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Loughnan J |
| HEARING DATE: | 5 December 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Dart |
| SOLICITOR FOR THE APPLICANT: | Clinch Neville Long Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Batey |
| SOLICITOR FOR THE RESPONDENT: | Fortis Law Group |
Orders
That pursuant to s 117 of the Family Law Act 1975:
(1.1)Within 7 days after any and all future payment(s) by or on behalf of the husband of any money in payment of accounts rendered by the husband’s solicitors and/or rendered by the husband’s barrister(s) and/or of any money in payment of a request made by the husband’s solicitors to hold funds in trust on behalf of the husband (but excluding for the payment by the husband of any single expert fees for which the husband is liable to pay), the husband shall pay or cause to be paid the same sum of money to the trust account of the solicitors of the wife, Clinch Long Woodbridge, on behalf of the wife on account of the wife’s legal costs and disbursements in these proceedings whilst ever the wife remains legally represented;
(1.2)Within 24 hours after the payment by or on behalf of the husband or any money referred to at Order 1.1, the husband shall cause to be given to the wife’s solicitors a memorandum stating the amount or amounts so paid to the wife’s solicitors;
(1.3)In the event that the payment referred to at 1.1 is not made within 7 days, the husband shall do all acts and things to direct and instruct his solicitors to forthwith pay 50 per cent of whatever sum is received by the solicitors for the husband from time to time, together with 50 per cent of all funds held on behalf of the husband’s solicitors in their trust account on behalf of the husband from time to time, to the solicitors for the wife on account of the wife’s legal costs and disbursements in these proceedings;
(1.4)The wife is at liberty to instruct her solicitors to apply all amounts paid by or on behalf of the husband to the trust account of her solicitors pursuant to this Order for the meeting of the wife’s legal costs and disbursements incurred in these proceedings; and
(1.5)Any and all money paid to the solicitors for the husband by or on behalf of the husband after the making of these Orders, together with all money held by the solicitors for the husband at the time of the making of these Orders, shall not be applied in payment of the husband’s legal costs and disbursements until such time as the same amount has been paid by or on behalf of the husband to the solicitors for the wife pursuant to these Orders.
Within seven days of today’s date the father provide to the mother an authority for her to collect from the repairers a Motor vehicle 1 and that she thereafter, until further order, have the use of that vehicle.
Otherwise, the Application in a Case filed 10 October 2018 and the Response filed 14 November 2018 are dismissed.
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 Shelbourne & Shelbourne 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: SYC4897 of 2017
| Ms Shelbourne |
Applicant
And
| Mr Shelbourne |
Respondent
REASONS FOR JUDGMENT
These are proceedings for interim financial orders. The parties have resolved some interim parenting issues. There are property and parenting proceedings outstanding. They were listed for hearing, I think, in September of this year and at the application of one or both of the parties the matter was put over for a longer hearing time. The proceedings are now listed for hearing before the Honourable Justice Gill over ten days starting on 18 February 2019.
The matters before the Court today are found in the wife’s Application in a Case filed 15 October 2018 where she seeks, relevantly, by way of interim financial orders:
(a)a claim for a payment of $100,000 by way of partial property settlement, and it is clear on her case that that is for the payment of legal fees; and
(b)an order for a payment of costs in the form of a dollar for dollar order, which is expressed at paragraph 19 in various terms.
The outcome of that would be that any moneys applied to the husband’s legal costs would result in a similar amount being applied to the wife’s legal costs or that one half of any moneys intended for the husband’s legal costs would be diverted to the wife’s legal costs.
The wife seeks the possession of a Motor vehicle 1 which is in the husband’s possession.
For his part, in his response, the husband opposes those orders and he seeks that an order that he pay by way of urgent spousal maintenance $300 a week, which was made in September 2017, be vacated.
As to the interim costs, the Court has power to make an order for interim costs. There has already been a payment totalling $100,000, two lots of $50,000, under orders previously made. On the face of her financial statement, the wife does not have the capacity to meet her costs. She has a contractual obligation to her lawyers. She has incurred more than $100,000 in costs unpaid, and she needs and wants those costs paid in order to prepare for the trial.
The first question is one of a capacity to pay. It is argued in the wife’s case that the husband’s application for the purposes of the hearing in September of this year was that the wife receive $200,000. She has already received $100,000. The source of the funds for the payment sought by the wife could be the same source as where the husband planned to obtain the additional $100,000 for that payment. That is more of a debating point than it is a finding about capacity to pay. The Court must make an order that is enforceable.
There are a number of assets. There are a number of liabilities. What I am missing is a fund of $100,000 sitting in a bank account somewhere. The husband says in his financial statement that his assets exceed his liabilities by some considerable margin. He puts his assets at nearly $4 million and his liabilities at $2 million and he says he has about $90,000 in superannuation. In net terms there are assets available to fund the payment but that is not the end of the inquiry. As I say, there is not $100,000 in liquid assets. The husband estimates that all of his personalty would not reach $100,000 even if it was appropriate to order that all of his personalty be realised.
As Mr Batey says, the Court would not, in the normal course, require someone to borrow money for a purpose such as this. That is because there are collateral obligations that arise on the borrowing of funds, and the Court cannot step in the shoes of the borrower and make those collateral undertakings to the lender. In this case, the bank of choice is the husband’s parents, and the Court cannot order them to make the payment. They are not parties to the proceedings.
It is frustrating because I have little doubt that if the husband wanted to raise $100,000 for some purpose that pleased him, he probably could. But again, that is not the test.
The jurisdiction for the order is found in s 79 of the Family Law Act 1975 (Cth). On an interim basis the exercise of power must be undertaken in a conservative fashion in the case of particular assets, has to be done in a way that it can be undone. For example, the Court would not require on an interim basis that a party sell something that they wanted to retain and had a chance of retaining on a final basis.
The wife’s application is a proper one. As I said during the course of submissions, she does not need to demonstrate that her solicitors threatened to abandon her if she is not able to meet the obligations of interim billing.
These are property settlement proceedings. There is going to be property. On the husband’s case, until recently, he was confident that the wife would receive an additional $100,000 by way of property settlement. He says by way of submission today that he is going to change his mind about that, but there it is.
The wife has a good reason for seeking an interim distribution of funds. In my view there is little doubt that there could and should be a payment. The problem is that I cannot find a source of funds from which the payment can be made in a way that meets the requirements of the authorities.
The next application is an application for a dollar for dollar order. It was submitted such an order can be made but that there is an issue raised in first instance decisions as to whether such an order can be made under s 117 of the Act, which is the costs power, or s 114 of the Act, which is a very broad injunction power. For my part, I have made dollar for dollar costs orders. I made such an order in Kartal & Dutsanee [2016] FamCA 1158 (“Kartal”). In the reasons for judgment in those proceedings I canvassed the authorities and also addressed some of the issues raised in other first instant decisions in this registry. I concluded that there is power to make a dollar for dollar order.
As far as I am aware these are issues that have not been authoritatively determined by the Full Court. I referred to a reference in obiter by the Honourable Justice Kay in an appeal decision of Gould and Gould [1994] FamCA 75 that there was such a power. His Honour noted it was often wives who sought such an interim order and they often had a greater cost burden because of their deficit of knowledge and financial wherewithal compared to a husband in property proceedings. In any event I accept that there is no authoritative determination by the Full Court on this issue.
I am satisfied for the reasons that I expressed in Kartal that the Court has power to make an order, notwithstanding that it may apply to prospective costs. The important aspect of the judgment is that the order can level the playing field to some extent.
The aspect of the old authorities such as Poletti and Poletti (1990) 15 Fam LR 794 and Zschokke & Zschokke (1996) FLC 92-693 that survives to this day is that the exercise of judicial power can be jeopardised if one party is forced to litigate complicated proceedings with one hand tied behind their back, and particularly where the matrimonial pool, the assets of the parties, are for the time being virtually all held in the hands of one party. You could have a situation where only that party has the wherewithal to properly prepare for a case, to call the necessary supporting evidence, and the other party is left to try and prepare a case without adequate resources.
That could then have a damaging effect on the exercise of judicial power. That concern is as compelling today as it was in the days of those original authorities.
I am going to make the order that is sought. There is no downside to it, because the husband is on notice about the obligation created by the order. If a payment could cause prejudice to anybody, he can ensure that there will be no such payment of his costs. In that event not a dollar needs to be paid under such an order. That is perhaps why these orders have been found to be useful. The result might be that such an order simply stops the flow of funds to the lawyers for one party but it does prevent that appearance of one party having a war chest and the other not having any funds. I will make the orders sought by the wife in relation to the dollar for dollar order.
As to the motor vehicle, we have a rather unlovely debate. The wife wants the vehicle. The husband says it has a blown motor. He has an estimate of $7,000 to fix it. The husband does not want the damaged vehicle to go to the wife, because if he had it repaired, he would like to be able to drive it. I cannot think of anything nice to say about that argument and I will make the order sought by the wife in relation to the motor vehicle.
The final issue is the application of the husband for the maintenance ordered on 25 September 2017 to be vacated. This is a complicated thing, because an order has been made. I think somebody told me it might have been made by consent. The yellow sheet does not say that.
This is order 5 made on 25 September 2017. The order commenced with a payment on 29 September 2017 and thereafter, the husband was to pay to the wife by way of urgent spousal maintenance a sum of $300 per week. Urgent maintenance is a form of relief which is intended to keep the wolf from the door. The order is made until there can be a hearing on the merits of the issues, which would be a hearing about interim maintenance. In this case the order was expressed to be “until further order”. Sometimes urgent maintenance orders are expressed for a finite time or for a lump sum but nothing turns of that issue.
Either of the parties could have subsequently called for an interim hearing about maintenance. Neither of them did. That might have been because the main focus of the proceedings was parenting issues. It might have been because the parties had final hearing dates in August and they thought that they would wait. As it happens, the husband’s application has come in a response to the Application in a Case of the wife, filed on 15 October. In my view, learned counsel for the husband is correct and the onus falls on the wife, as it did originally, to demonstrate the case.
The effect of ss 72, 74 and 75 of the Act is that parties to a marriage, whether it is on foot or not, have an obligation to support each other where one party can demonstrate that they cannot adequately support themselves from their own resources, the other party can be called on to provide support to a reasonable extent.
As it happens, we are now right up against the final hearing. The hearing will commence in February 2019. This interim hearing occurs at a point of flux in the financial circumstances of the wife. She has a professional qualification but her ability to work depends on a police clearance to work with children and that was delayed because of apprehended violence proceedings between the parties in these proceedings. Her clearance has been restored and she is now able to work but we are now just days away from the commencement of the Christmas school holidays.
The wife has provided, through her financial statement from July, evidence about what she did when she couldn’t work. The wife was earning $592 a week. She has not gone into much detail, I must say, in her affidavit for these proceedings on the maintenance issue. The affidavits are mainly focused on parenting issues. The wife’s affidavit does not address the detail of her income over the holiday period; what she is able to do by way of some sort of combination, if possible, of the previous sources of income and work; whether she anticipates getting casual work at the start of the 2019 year, albeit that that would only be for two or three weeks before the final hearing.
The wife has provided in the form of a financial statement the detail of her outgoings, again from July. She shows a significant shortfall of $1,300 a week. Learned counsel for the husband invites the Court to extrapolate the wife’s income over various periods, not all at the same time, from:
(a)employment, from September to November this year;
(b)casual work in October, for one week;
(c)work in September and October, for two weeks; and
(d)work over the period March 2018 to July 2018.
From this you come to $2,501.39 per week. I doubt that a bank would be interested in lending money to someone based on Mr Batey’s projections, but he has done what he could. And, in fact, he has done more than the wife did in her affidavit. Life is not like that, of course. You rely of receiving a combination of the income you received in September and the income you had in March and so on. It is not a reliable way of paying the bills.
The authorities have it that the Court is permitted a broad brush in relation to interim maintenance. Any major error can be corrected, in terms of the findings the court would make, for example, in relation to contributions in the property case.
In interim proceedings, of course, the Court is not permitted to make a finding of fact on a disputed issue where there is no independent evidence that supports one version of events or contradicts another version. We have the circumstance whereby the husband and the wife have left the situation sit in place for a long time, more than a year. It pleased them to do that. That is fine but in my view it is not reasonable to interrupt those arrangements shortly before the final hearing.
On the face of the husband’s documents, he does not have the capacity to meet the payments out of income. However, there is no requirement for him to meet the payments out of income. Like many separated couples facing final property settlement final trials, the parties spend more than their income. The critical issue for the payment of spousal maintenance is not income. The criteria relates to the financial circumstances of the parties, their assets and their resources and their income. The parties have a final hearing in February and we are now in December. It seems to me that the order should be left in place.
There is a shortfall in the wife’s household. The husband says that there has been a significant change in his situation because his parents have said ‘enough is enough’. However, of the parties, he is the only one who has any flexibility. As I say, he is in control of something like $2 million of net assets. He has assets that he could sell, if he would like to. There is no suggestion of any complaint about him doing that, if that is what he needs to do to make ends meet. The contract that the parties took up when they married was to deal with each other decently and to provide for each other in times of need. There is a call on that contract through the Act. So the application of the husband to vacate the order for urgent spousal maintenance made on 25 September 2017 is dismissed.
I certify that the preceding thirty three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Loughnan delivered on 5 December 2019.
Associate:
Date: 19 February 2019