SIMPKIN & SIMPKIN
[2016] FamCA 766
•9 September 2016
FAMILY COURT OF AUSTRALIA
| SIMPKIN & SIMPKIN | [2016] FamCA 766 |
| FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Where the wife sought orders that the husband pay for repairs to the former matrimonial home – Where the orders sought purported to be an application for an interim distribution of property – Where the correct course is to deal with the application as an application for injunctive orders under s 114 of the Family Law Act 1975 (Cth) – Where the parties’ proposals pre-date information provided by the insurer as to what repairs are necessary – Where it is not necessary or appropriate for the Court to make such orders – Application dismissed. FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – Application for interim costs – Where there is an insufficient evidentiary basis for the Court to depart from the presumption in s 117(1) of the Family Law Act 1975 (Cth) that each party bear his or her own costs – Application for interim property settlement – Where the wife seeks funds for future legal expenses – Where the wife has already received substantial funds for legal costs from the husband – Where it is not in the interests of justice to make the orders sought by the wife – Where the evidence is insufficient to establish that it would be just and equitable to make the orders sought – Application dismissed. |
| Family Law Act 1975 (Cth) ss 79, 80, 114, 117 |
| Edgar & Strofield [2016] FamCAFC 93 |
| APPLICANT: | Ms Simpkin |
| RESPONDENT: | Mr Simpkin |
| FILE NUMBER: | SYC | 3606 | of | 2011 |
| DATE DELIVERED: | 9 September 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 27 July 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Anderson |
| SOLICITOR FOR THE APPLICANT: | Pigdon Norgate Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Lloyd SC |
| SOLICITOR FOR THE RESPONDENT: | Swaab Attorneys |
Orders
The Application in a Case filed by the wife on 23 June 2016 is dismissed.
The Application in a Case filed by the wife on 8 July 2016 is dismissed.
Notations
A. Costs in relation to the Applications in a Case filed 23 June 2016 and 8 July 2016 are reserved pursuant to Order (2) of the Orders of 27 July 2016.
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 Simpkin & Simpkin 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: SYC 3606 of 2011
| Ms Simpkin |
Applicant
and
| Mr Simpkin |
Respondent
REASONS FOR JUDGMENT
Introduction
Listed before the Court on 27 July 2016 were two applications filed by Ms Simpkin (“the wife”). Counsel for the wife advised that the first application, an Application in a Case filed on 23 June 2016, was not pressed. Accordingly I will dismiss that application noting that costs in relation to the first application are reserved pursuant to my orders of 27 July 2016.
The second application before the Court was an Application in a Case filed by the wife on 8 July 2016. In that second application the wife sought orders relating to two issues.
The first issue relates to the parties’ former matrimonial home. The property suffered water damage during the heavy rain storms that occurred in Sydney in January 2016. The damage was exacerbated by further storms in June 2016. Fortunately, the parties were insured and the insurer is prepared to meet the costs of internal repairs to the property. However, understandably, the insurer requires the parties to address an underlying drainage problem prior to those repairs being carried out. The parties essentially agree that the drainage problem should be addressed but disagree on how that should be done and, specifically, how much should be paid for such work to be carried out.
The second issue before the Court is an application by the wife for an order “by way of further interim costs” to meet legal fees associated with preparing for and conducting a five-day final hearing. That aspect of the application is made in the context where in the period since October 2011, the wife has received a total sum of $530 000 to meet her legal costs.
Orders sought
The orders sought by the wife in her Minutes of Order handed up during the hearing are as follows:
Repairs to [U Street], [Suburb N]
1. The Respondent Husband do all things and pay all sums as necessary to complete all internal and external works required to repair [U Street], [Suburb N] (“[N] property”) as identified by the insurer, Chubb Insurance Co of Australia Ltd (“Insurer”), the builder and/or [D] & Partners Pty Ltd, or such other contractor as engaged in relation to the works, it being noted that the works are required as a result of storm damage in January 2016 and June 2016 and to carry out external works to avoid further water ingress.
2. For the purposes of the implementation of Order 1, the Husband be responsible for and forthwith do all acts and things necessary to identify and retain appropriate consultants and tradespersons to undertake the works identified pursuant to Order 1 and to pay the costs of same as and when they fall due.
3. In the event any of the costs paid by the Respondent Husband pursuant to Order 1 are reimbursed by the Insurer, such reimbursements be remitted directly to the Respondent Husband.
Interim Costs
4. By way of further interim costs, the Respondent Husband deposit into the Applicant Wife’s solicitors trust account the amount of $300,000 as follows:
3.1 $100,000 within 28 days of the date of these Orders;
3.2 $100,000 within 56 days of the date of these Orders; and
3.3 $100,000 within 84 days of the date of these Orders.
5. The Respondent Husband pay the Applicant Wife’s costs of and incidental to this Application.
In response, Mr Simpkin (“the husband”) sought orders dismissing the wife’s application and an order for costs.
Evidence
The wife relied on her affidavit filed on 8 July 2016 and the husband relied on his affidavit filed on 27 July 2016.
Background
The wife is 49 years of age and the husband is 48 years of age. The parties commenced living together in March 1998 and were married in early 2000. The parties separated on a final basis in April 2011, although they continued to live together in the former matrimonial home at U Street, Suburb N (“the N property”) for several months after that.
There are three children of the marriage; M aged 17 years, L aged 16 years and K aged 11 years. The wife lives with the children in the N property although they spend a substantial amount of time with their father.
An Initiating Application for property and parenting orders was filed by the wife on 14 June 2011 and since that time there have been numerous court events.
The parties agree that the value of the N property as at 2 June 2015 was $8 million. The wife asserts that the value of matrimonial asset pool, including various business interests, is between $35 million and $42 million.
The husband pays spousal maintenance to the wife, which essentially includes the cost of maintaining the N property and meeting the living expenses of the wife, to the extent of $14 000 per month. The husband also pays the private health insurance premiums of the wife as well as gap payments, other than in respect to one medical procedure that is not presently relevant. In addition, the husband pays for the children’s education and heath expenses through the provision of child support.
The insurer accepts that the cost of repairing the stormwater damage to the internal area of the N property is $14 943.50. From that amount, however, there is a deductible of $5000. The insurer has also made a payment of $5955 in respect to damaged furniture.
By letter dated 25 July 2016[1] the insurer advised the parties that the work, which requires rectification prior to commencement of the internal repair work, are measures to address the following:
a)The absence of a suitable seal being provided at the overlapping junction point between the base of the concrete block wall and the edge of the concrete floor slab.
b)The absence of a suitable seal being provided at all concrete infill slab to the concrete block wall junction points.
c)The absence of a suitable subterranean drainage system located in behind the Western and Southern concrete block wall construction down to the invert level of the concrete floor slab.
d)The absence of a suitable waterproofing system to the concealed back faces of the Southern and Western Concrete Block Walls.
e)The absence of a suitable seal surrounding the PVC pipe work penetration of the Western concrete block wall.
[1] Annexure “E” to the affidavit of the husband filed 26 July 2016.
These interim proceedings were commenced by the wife on 8 July 2016, being a date before the insurer advised the parties as to the nature of the external remedial work required prior to the insurer meeting the cost of the internal remedial work.
Issue one: Insurance claim
The Outline of Case document provided by counsel for the wife relied upon Strahan & Strahan (Interim Property Orders)[2] which is a well-known authority of the Full Court dealing with orders providing for the interim distributions of property pending final hearing.
[2] (2011) FLC 93-466 (“Strahan”).
The case, as initially presented by counsel for the wife, characterised the wife’s application in respect to repairs to the N property as an application for interim property orders. Senior counsel for the husband argued however that, insofar as the wife’s application requires the husband to take responsibility for undertaking specified building works and does not seek a specific monetary sum, it is not seeking an interim distribution of property.
I respectfully agree with the submission by senior counsel for the husband. Insofar as the wife’s application for orders 1, 2 and 3 is characterised as an application for interim property orders, it must be dismissed.
However, in reply, counsel for the wife submitted that the Court has power to make an order requiring the repair of the N property pursuant to s 114 of the Family Law Act 1975 (Cth) (“the Act”). That section relates to the jurisdiction of the Court to grant an injunction.
Senior counsel for the husband justifiably objected to the expansion of the characterisation of the application to one seeking orders of an injunctive nature at that stage of the hearing. Nevertheless I will address the issues raised by that characterisation.
When proceedings are before the Court, the Court has broad powers to grant injunctive relief including for the purpose of preserving the property of the parties, and/or otherwise regulating the conduct of the parties, pending final hearing.[3]
[3] See G and T (2004) FLC 93-176 at 78,989 – 78,990 at [53] – [54] and where it is “just or convenient to do so”: see Mullen and De Bry (2006) FLC 93-293 applying section 114(3).
In those circumstances, pursuant to s 114(3), the Court must be satisfied that it is just or convenient to grant such an injunction or make an interlocutory order.[4]
[4] Mullen and De Bry (2006) FLC 93-293 at 80,999.
The applicant seeking an injunctive order bears the onus of satisfying the Court that the circumstances justify the making of that order.[5]
[5] Sieling and Sieling (1979) FLC 90-627.
It is also important for a party seeking an injunction to be aware of the general principle that “equity intervenes to the minimum extent necessary to do justice”.[6] In the context of family law, in Sieling and Sieling,[7] the Full Court said:
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order, and frame its order in such a way as to impose no further restriction than is necessary to achieve the protection of the applicant’s interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim.[8]
[6] See Giumelli v Giumelli (1999) 196 CLR 101 at [10] referred to in Norton & Locke (2013) 284 FLR 51 at [72].
[7] (1979) FLC 90‑627 at 78,264.
[8] See also Menotti & Lamb [2014] FamCA 518 at [41] and Auricchio & Auricchio and Ors [2014] FamCA 185.
The wife has not satisfied me that the circumstances set out in her affidavit justify the making of orders 1, 2 and 3 which relate to external repairs to address the drainage problem at the N property.
The husband agrees that external waterproofing work needs to done but he disputes that the wife’s proposal is reasonable and proportionate.
The wife relied upon a report prepared by D & Partners Pty Ltd (“the D Report”) dated 15 June 2016 to argue that the following remedial work is necessary:
1.Install a drainage pit at the rear corner of the building on the western side;
2.Excavate along the western wall of the building to the foundation level and waterproof the western wall to the full height to ground level;
3.Install a subsoil drainage system with the appropriate filter material along the wall;
4.Connect the subsoil drainage and the water that is collected by the pit installed at the rear corner to the street kerb and gutter;
5.Ensure that the existing roof guttering system is fully cleaned including the down pipes to ensure that the current system is maintained at its full capacity;
6.Ensure that all the down pipes are checked to ensure that they are fully connected to the existing system and;
7.Carry out a storm water assessment for the entire site and provide a design to estimate the water that is collected on the site to determine measures to dispose of the collected water.
In response, the husband relied upon a report dated 25 July 2016 by X Property Inspections Pty Ltd (“the X Report”).[9] That report supported the taking of practical measures to ensure existing drainage is working effectively but expressed the view that the remedial work proposed by the wife was not “economically feasible”. Specifically, the report stated at paragraph 3.2.1:
It is my opinion that provision of suitable waterproof membranes including protective membrane liner and suitable vertical and horizontal subsurface drainage elements encased in geotextile fabric around the external side of the lower level stairwell foyer walls is not economically feasible. To install these required elements the area requires manual excavation/demolition/disposal of debris due to the limited clearance and access restrictions for use of suitable excavation machinery and plant.
[9] Annexure “D” to the affidavit of the husband filed 26 July 2016.
The X Report estimated that the cost of undertaking such work would be in the vicinity of $75 000 to $85 000.
Instead, the X Report proposed a more limited scope of work, set out in paragraph 3.2.2, which they believed would address the problem and be at a cost of approximately $17 000.
As the Full Court recently said in Edgar & Strofield [2016] FamCAFC 93 at [15]:
…the limits to an interim hearing are well known. Disputed issues of fact cannot be resolved at an interim hearing…
In these interim proceedings I am not in a position to determine what building work is necessary or appropriate. Moreover, my attempt to resolve that matter may well be a futility insofar as both the wife’s and the husband’s proposals pre-date the insurer’s advice as to the nature of the work required before it will meet the cost of the internal repair work. As noted, that advice from the insurer is set out in a letter dated 25 July 2016.
In the circumstances, the wife has not satisfied me that it is necessary or appropriate to make the orders she seeks. Moreover, given the change in circumstances since the application was made, I am satisfied that the parties should be able to come to an agreement regarding the repairs and it is unnecessary to impose upon the husband the compulsion of an injunctive order. I therefore propose to dismiss the wife’s application for orders 1, 2 and 3.
Issue two: Application for an order for interim costs
At paragraph 23 of her affidavit the wife states:
Since October 2011 I have received a total sum of $530,000 by way of interim costs orders, which obliged [the husband] to pay funds into my solicitor’s trust account.
In that context, it appears that the last order made in that respect were consent orders made on 8 July 2015. The substance of those consent orders were relevantly as follows:
Interim Costs
4.By way of further interim costs, the husband deposit into the wife’s solicitors trust account the amount of $70,000 as follows:
4.1. $50,000 within 7 days of the date of these Orders;
4.2. $20,000 within a further 14 days,
it being noted that nothing in this order prevents the wife from making a further application for interim costs.
5.That the characterisation of the payments at Order 4 be determined by the Trial Judge.
Similarly, order 4 proposed by the wife in her current application is as follows:
4. By way of further interim costs, the Respondent Husband deposit into the Applicant Wife’s solicitor’s trust account the amount of $300,000 as follows:
4.1$100,000 within 28 days of the date of these Orders;
4.2 $100,000 within 56 days of the date of these Orders; and
4.3 $100,000 within 84 days of the date of these Orders.
(Emphasis added)
On its face the proposed order is stated to be “by way of interim costs”. Despite that characterisation, the case presented by the wife was that the application should be considered as an application for an interim distribution of property. In that context the wife again relied on the authority of Strahan.
Senior counsel for the husband argued that, however characterised, the application should be dismissed on the basis that it lacks an evidentiary basis.
Interim costs
The power to make an order for costs on an interim or final basis is set out in s 117 of the Act. That section relevantly provides:
Costs
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(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.
In Klearchos & Klearchos and Ors[10] the Full Court confirmed that a trial judge, in considering an interim application for costs, is required to consider the matters set out in s 117 and, specifically, s 117(2A) of the Act.
[10] [2015] FamCAFC 217.
The wife’s affidavit filed on 8 July 2016 describes, in paragraphs 22 – 27, the complexity of this matter which she states has resulted in her incurring substantial legal fees. At paragraph 28 of her affidavit, by reference to annexure RS10, the wife sets out anticipated legal fees up to and including the finalisation of a five-day hearing.
The wife also refers to her estimate of the matrimonial asset pool as being between approximately $35 million and $42 million.
However, the wife has not provided the Court with sufficient information that would lead me to depart from the presumption set out in s 117(1) that each party shall bear his or her own costs.
This is not merely a technical or theoretical concern. For instance, annexure RS10 to the wife’s affidavit sworn 28 June 2016 includes a $40 000 component for:
Up to and including at least two Interim Hearings (including Senior Counsel’s fees at $10,000 per day)
It is simply not possible, on the basis of information that has been provided by the wife, for me to determine whether such interim applications would be of merit or how the considerations set out in s 117(2A)(c), (d), (e), (f) or (g) should be applied.
While these are interim proceedings, that does not relieve the applicant:
…from the obligation of establishing the necessary prerequisites for the grant of the relief sought. The Applicant, therefore, must still prove, to the requisite standard, those matters fundamental to the successful prosecution of [their] claim”.[11]
[11] Acton & Burton [2015] FamCA 469 at [29].
In summary, the information provided by the wife does not enable me to fulfil the function I am required to perform as a trial judge considering the application of s 117 of the Act.
Interim property distribution
For completeness I will also consider the application in the context of an application for an interim property distribution pursuant to ss 79 and 80.
Given the potential size of the matrimonial property pool, the Court could be satisfied that an interim property distribution for the amount sought by the wife in this application would be “capable of alteration at any time prior to, or as part of, the final exercise of the s 79 power”.[12]
[12]Gabel v Yardley (2008) FLC 93-386 at 82,970 at [126].
However, once again, the wife has not presented sufficient evidence to satisfy me that the requirements of the Act have been met and that a payment is justified.
There are essentially two stages to the consideration of an application for interim property orders:[13]
[13] Strahan at 85,641 at [118].
i)The first stage is a “procedural step” which requires an analysis of whether the circumstances of the case trigger the Court’s power to invoke s 80(1)(h) to make an order for interim property settlement before a final hearing. At this stage, the “overarching consideration” is the interests of justice.[14]
[14] Ibid at [132] at 85,645.
ii)The second stage is the “substantive step” where the provisions of section 79 must be considered and applied but with limitations, given that it is not the final hearing. [15]
[15] Ibid at [135] at 85,645.
I am not persuaded, on the material before me, that it would be in the interests of justice for such an order to be made in the circumstances of this case.
The authorities are quite clear that, wherever possible, the Court should endeavour to even out the playing field between litigants where one party, in this case the husband, has predominant control of and access to the matrimonial property pool.
Moreover, it has been observed that “cases involving complex commercial family disputes are often not a level playing field. It is important that if possible, an attempt is made to level that field.”[16]
[16] Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [60].
In the context of interim property orders, in Strahan, Boland and O’Ryan JJ analysed relevant authorities and noted:[17]
[17]Strahan at 85,631.
In Poletti and Poletti Nygh J, when describing an application for “interim costs”, referred to the reasons of the Full Court in Wilson and Wilson and said it is a “situation where one party to the marriage controls almost exclusively what might be described as the patrimony of the parties and has control of the bulk of the assets and funds of the parties, where an order may be made to ensure that the other party, who does not have the fortune of controlling those funds, at least has an equal or near equal opportunity to present his or her case”: see also In the Marriage of Polletti at 796 per the Full Court (Ellis, Strauss and Butler JJ). The Full Court in Zschokke at 83,220 made a number of relevant remarks about the “desirability of legal representation for both parties in family law proceedings”.
(Citations omitted)
While recognising the principles set out in those cases, in this case the wife’s application goes beyond that which is necessary to even out the playing field. The order would require the husband to place an additional sum of $300 000 in the trust account of the wife’s solicitors in circumstances where he has already deposited $530 000.
The additional funds now sought by the wife are for the completion of a five‑day final hearing and includes provision for two further interim applications that may be entirely without merit. Moreover, the amount sought appears to include a component for expert fees in circumstances where those fees have been paid for by the husband.
In those circumstances, I am unable to conclude that it would be in the interests of justice to make the orders sought by the wife.
In terms of the second consideration in respect to an application for interim property orders, I note that in Stanford v Stanford[18] the High Court stated:
[18] (2012) 247 CLR 108 at 112.
2 Under s 79(2) of the [Family Law] Act, a court shall not make a property settlement order unless satisfied that it is "just and equitable" to do so.
As the Full Court said in Medlow & Medlow (2016) FLC 93-692 at 81,089, in the context of considering an appeal concerning interim property orders:
This is not to be determined “by beginning from the assumption that one or other party has the right to have the parties’ property divided between them” (Stanford at [40]).
Even recognising this matter as an application for interim, and not final orders, the affidavit relied upon by the wife in these proceedings does not contain sufficient evidence to enable the Court to be satisfied in respect to the requirement of section 79(2) having regard to those matters set out in s 79(4) of the Act.
Senior counsel for the husband, properly in my view, objected to counsel for the wife referring to matters beyond those which are included in the wife’s affidavit, as providing an evidentiary basis for the orders sought by the wife. In those circumstances, the evidentiary deficiencies in the wife’s affidavit cannot be rectified by evidence given from the bar table.[19]
[19] Randwick City Council v Fuller [1996] NSWCA 444; and Crowe-Maxwell v Frost [2016] NSWCA 46 at [52].
Accordingly, irrespective of whether the wife’s application is characterised as one for “interim costs” or an interim distribution of property, the evidentiary deficiencies in the wife’s case are such that the Court cannot be satisfied of the matters set out in either sections 117 or 79 of the Act.
The Application in a Case filed by the wife on 8 July 2016 must therefore also be dismissed, noting that costs in relation to this application are also reserved pursuant to my orders of 27 July 2016.
I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 9 September 2016.
Associate:
Date: 9 September 2016
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Injunction
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Costs
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Jurisdiction
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Remedies
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