SIMPKIN & SIMPKIN
[2020] FamCAFC 315
•17 December 2020
FAMILY COURT OF AUSTRALIA
| SIMPKIN & SIMPKIN | [2020] FamCAFC 315 |
| FAMILY LAW – APPEAL – LEAVE TO APPEAL – SPOUSE MAINTENANCE – Payment of spousal maintenance in a lesser sum ordered to afford the respondent a “financial buffer” – Consideration of the respondent’s ability to meet a spousal maintenance order – Failure to consider that an order may be varied or discharged – Error established – Leave to appeal granted in part – Discretion re-exercised – Order varied. FAMILY LAW – APPEAL – LEAVE TO APPEAL – INTERIM COSTS – Where the applicant sought a litigation funding order against the respondent in circumstances where she has access to superannuation – Where the applicant has failed to establish inability to meet her own expenses – Leave to appeal refused. |
| Family Law Act 1975 (Cth) ss 74, 79, 80, 83, 94AAA, 117 |
| House v The King (1936) 55 CLR 499; [1936] HCA 40 Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34 Zschokke and Zschokke (1996) FLC 92-693; [1996] FamCA 79 |
| APPLICANT: | Ms Simpkin |
| RESPONDENT: | Mr Simpkin |
| FILE NUMBER: | SYC | 8483 | of | 2019 |
| APPEAL NUMBER: | EAA | 87 | of | 2020 |
| DATE DELIVERED: | 17 December 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | 7 December 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 1 June 2020 |
| LOWER COURT MNC: | [2020] FCCA 1447 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Kennedy |
| SOLICITOR FOR THE APPLICANT: | ATW Family Law |
| COUNSEL FOR THE RESPONDENT: | Mr Kenny |
| SOLICITOR FOR THE RESPONDENT: | B Hayward & Co |
Orders
The applicant be granted leave to appeal from Order 1 of the orders made on 1 June 2020.
The appeal be allowed.
Order 1 of the orders made on 1 June 2020 be varied by deleting the figure “$750.00” and inserting in lieu “$1,327”.
The application for leave to appeal be otherwise dismissed.
Any application for costs be made by filing written submissions of no more than three (3) pages with the Appeal Registry within twenty‑eight (28) days. Any documents in support of that application are to be attached to the written submissions. The written submissions are to be served electronically within seven (7) days of filing.
Submissions in response of similar length (plus attachments) are to be made in writing within twenty‑one (21) days of service and are to be served electronically within seven (7) days of filing.
Any written submissions in reply of no more than two (2) pages are to be filed within seven (7) days of service and served forthwith.
Any application for costs will be determined without a further oral hearing.
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).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EAA 87 of 2020
File Number: SYC 8483 of 2019
| Ms Simpkin |
Applicant
And
| Mr Simpkin |
Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed 29 June 2020, Ms Simpkin (“the applicant”) seeks leave to appeal orders made on 1 June 2020 as to interim spousal maintenance and the dismissal of her application for an interim costs order. The application for leave to appeal and the appeal were heard together.
Mr Simpkin (“the respondent”) and the applicant are married but separated. The respondent seeks to uphold the decision of the primary judge and resists the application for leave to appeal.
In accordance with s 94AAA(3) of the Family Law Act 1975 (Cth) (“the Act”) the Chief Justice directed that this appeal be determined by a single judge.
An applicant for leave to appeal must satisfy the court that in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court and that substantial injustice would result if leave were refused (Medlow & Medlow (2016) FLC 93-692).
The Orders
Pursuant to s 74 of the Act, the respondent was ordered to pay interim spousal maintenance as follows:
· a weekly payment in the amount of $750 (Order 1); and
· a lump sum payment of $10,000 (Order 2).
The applicant had sought a weekly payment of $1,800 and a lump sum payment of $20,000 by way of spousal maintenance. The applicant also sought a lump sum payment of $50,000 by way of an interim costs order and, for the respondent to meet the outgoings on former family home.
The primary judge declined to make an order that the respondent pay council and water rates as well as building insurance for the family home in which the applicant resides. The effect of this is that the parties would meet those costs equally.
The purpose of the lump sum order was to give the applicant a capital sum to assist her with the cost of medical equipment [59]. The applicant has complex medical needs as a result of which she was medically retired from work in 2003 [5]. In 2019, the applicant was given a Disability Support Pension which reflects her present incapacity for work [8]. Although the applicant sought a larger payment for medical equipment, no challenge is made to her failure to secure the full amount.
The litigation funding order was pressed in reliance on s 117 of the Act; namely an order as to costs and, failing that, as an interim property settlement pursuant to s 79 and s 80(1)(h) of the Act. In this respect, the applicant pointed to the respondent’s savings in the vicinity of $106,000 of which, she in effect, sought half.
Interim spousal maintenance
The applicant contends that the findings justified an order that the respondent pays her $1,378 by way of interim weekly spousal maintenance and that in ordering $750 per week the primary judge failed to take into account a relevant consideration (see House v The King (1936) 55 CLR 499). There is no challenge to the primary judge’s statement of the principles which apply to an application for interim spousal maintenance and it is the application of those principles which is central to the challenges raised in the application for leave and the associated appeal.
Importantly, no challenge is made to findings as to the applicant’s inability to support herself or her reasonable needs. Nor, in relation to the respondent’s income, his reasonable needs, and that he has a sizeable surfeit of income over those needs.
By reference to the applicant’s Financial Statement, her weekly expenditure amounted to $2,091. Those expenses were examined and the applicant’s reasonable weekly living expenses were set at $1,615 [45]. The applicant owned savings and shares of approximately $17,000 [36] and superannuation valued at $560,000 [36]. Having determined that it was not reasonable to require the applicant to use capital to support herself, consideration was then given to the respondent’s financial circumstances and whether or not he should be ordered to pay spousal maintenance.
The respondent is employed in a managerial position at an annual salary of $240,000 with incentives (the potential for a bonus of an additional $160,000). He has superannuation of $1.126 million (which he cannot presently access) and savings of about $106,000. In determining that the respondent had $81,000 in savings, the primary judge appears to have overlooked the applicant’s most recent evidence that between when he filed his Financial Statement and the hearing, his savings grew by almost $30,000. Although nothing turns on this error, it is illustrative of the respondent’s ability to meet his reasonable needs and to accrue savings.
The respondent lives in rental accommodation for which he pays $895 per week and otherwise, his personal expenses at $1,155.29 per week did not “strike [the primary judge] as unreasonable in the circumstances” [38]. Given the nature of the application, the respondent’s financial support of the parties’ adult son, who is in full‑time employment, was excluded as a reasonable expense, which meant that the respondent has “a weekly excess of income over expenditure of $1327” [56].
In deciding to award less than the applicant’s reasonable needs, the primary judge explained:
56.…As I have previously said, it is reasonable to expect, even without any uncertainty as to employment prospects, that the [respondent’s] expenses will from time to time fluctuate and that the [respondent] should be left with some form of financial buffer to meet those vicissitudes.
57.I consider on balance that the sum of $750 per week should be paid by the [respondent] to the [applicant] by way of interim spousal maintenance. This will enable the [respondent] to continue to meet his own living expenses, to retain some income for savings and to meet the vicissitudes of life, but it may require him to consider whether or not he wishes to keep providing support to [the parties’ adult child].
The reference to “the vicissitudes of life” is to the respondent’s submission that the Court could not safely proceed on the basis that he would continue to earn at his current level and, there was a risk he could be made redundant. To this end, the respondent pointed to his having been made redundant in the recent past and that it took him in excess of 12 months to secure a new position.
However, the primary judge failed to consider that if the respondent’s circumstances suffered the feared setback, he could resort to s 83 of the Act and apply for it to be varied or discharged. Had the primary judge given this consideration the outcome would surely have been different. The primary judge would not have regarded it as appropriate to make an order which required the applicant to choose between forgoing her reasonable needs or drawing on her superannuation compared to the respondent whose reasonable needs were fully met (even if he did not receive a bonus) and he was able to save in the vicinity of $1,000 per week, thus supplementing his $106,000 safety net.
Based on the unchallenged findings as made, the primary judge should have determined that it was reasonable for the respondent to pay interim spousal maintenance in the sum of $1,327 per week and ordered accordingly. It follows that the applicant has established both elements for leave to appeal.
Litigation funding order
The gravamen of Grounds 1 and 2 is that the decision to dismiss the applicant’s application for $50,000 for legal costs was plainly wrong (Ground 1) as was the finding that there was no basis for an order for the payment of interim costs “at this point in time” [62] (Ground 2).
Her Honour’s reasons for rejecting the applicant’s claim are succinct and as follows:
60.In terms of the application for the release of $50,000 to meet the [applicant’s] legal fees, I do not consider at this point in time that the evidence indicates that an order for costs should be made as between these parties pursuant to section 117 of the Family Law Act 1975. The proceedings are still in their early stages. The [applicant] gives evidence that she believes that her solicitors will cease to act for her in the event that she does not pay her legal fees upfront. However, I am unaware from the evidence as to whether or not she has sought to negotiate anything further with them in this regard.
61.Furthermore, the evidence that she gives in support of her contention in this regard arises primarily by way of costs disclosure letters that were sent by her solicitor to her in or around September 2018, and I do not know whether or not there has been any further discussion between the [applicant] and her legal representatives about ongoing payment in this regard. In the event that an order was to be made for $50,000 in favour of the [applicant] to meet her legal fees, this could only come, as I understand the evidence, from the [respondent’s] bank account savings of $81,000.
62.Given that the orders that I have made for spousal maintenance are going to have a financial impact on each of the parties and upon the [respondent’s] bank account holdings, and given that not only will it reduce the [respondent’s] weekly disposable income but it will not see the [applicant] meet the total of the shortfall in her expenditure over income, I cannot see a basis on which I should make the order for the payment of interim costs at this point in time.
The documents upon which the applicant relied as to her financial arrangement with her solicitors established that they would not represent her unless their fees were secured and paid as they fell due. Furthermore, that thus far the applicant had utilised savings to pay legal expenses of approximately $25,150 and, in relation to future costs, her solicitors advised that an additional $80,000–$100,000 was required to take the matter to trial.
Although it is not completely certain, it seems that the gravamen of [60] and [61] of the reasons for judgment is that because the proceedings were unlikely to be listed for trial for a considerable period, it would not be just to require the respondent to now pay the applicant $50,000 from his bank account that she sought.
At first instance and on appeal, counsel for the applicant relied heavily on Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”) at 83,217–83,218 where this Court identified factors relevant to an application such as this. Namely:
1.a position of relative financial strength on the part of the respondent;
2.a capacity on the part of the respondent to meet his or her own litigation costs; and
3.an inability on the part of the applicant to meet his or her litigation costs.
As counsel for the applicant demonstrated, the first two factors identified in Zschokke were established in the applicant’s favour. However, and fatal to the application for leave to appeal, the third factor was not. Reference has already been made to the applicant’s superannuation, savings and shares which have a combined value of $576,000. The applicant does not wish to access her superannuation to pay her legal expenses and her preference is to receive a share of the respondent’s savings. A mere preference does not make the proposed order just and the question to be answered is whether the evidence established that the applicant is unable to meet her litigation costs. That question must be answered that she is able to meet her anticipated litigation costs in their entirety.
As counsel for the respondent properly acknowledged, the applicant’s use of superannuation to meet legal expenses, compared to the respondent’s ability to pay his legal expenses from income can be taken into account in the final settlement. This further dispels any notion of potential injustice being caused by an outcome which has the applicant access a portion of her superannuation to pay anticipated legal expenses.
Thus, by reference to the principles and authorities upon which the applicant relied, the case for a litigation funding order was not made out. It follows that the primary judge did not err in dismissing the application. Leave to appeal should be refused.
Conclusion and costs
It was common ground that, in the event leave was given and the appeal allowed, this Court would re‑exercise rather than remit for rehearing. Neither party wished to adduce further evidence and the re‑exercise would thus be undertaken having regard to the evidence adduced in the Court below and the submissions made to the primary judge.
For the reasons already given, the order for interim spousal maintenance should be varied to reflect the respondent’s capacity to pay the applicant’s reasonable needs. The variation should operate from the date the order was made below. Although this will have the effect of immediately creating an obligation by the respondent to pay not inconsiderable arrears, he has savings from which that sum can be sourced without causing him hardship or depriving him of his desired buffer for the vicissitudes of life.
As to the costs of the appeal, the respondent sought an opportunity to present further evidence pertinent to that question. Directions will be made accordingly.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 17 December 2020.
Associate:
Date: 17 December 2020
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